Division(s): All	

ITEM BV14

BEST VALUE COMMITTEE – 10 DECEMBER 2003

FIRE SERVICE PROCUREMENT IMPLEMENTATION REPORT

Report by the Director for Community Safety and Chief Fire Officer

	Introduction

1.	On 29 November 2001 the outcome of the Best Value Review of Fire Service procurement was reported to the Best Value Committee as agenda item CM6.  The conclusions of the review developed into four key areas:

•	The procurement function

•	Savings opportunities

•	Management of stores and stocks

•	Measure of performance

Actions for Service Improvement and Current Position

2.	1.	Develop a procurement policy – completed

2.	Develop key contract strategies – As strategic contracts are reviewed, contract strategies are now developed – example, Fire Appliances, Hydraulic cutting equipment and PPE and uniform.

3.	Develop collaboration groups:  TV (Thames Valley) procurement collaboration, Successes: joint hydraulic cutting equipment Contract, joint uniform framework agreement, joint fuel contract and lease car agreement with BFRS. Also, SE Regional procurement collaboration group recently created. Project plan drafted and initial phase well under way. We are currently tendering on a collaboration framework a synthetic oils contract with Kent and East Sussex Fire Brigade.

4.	Review of non-fire fighting uniform – complete, new uniform on order, delivery December 03. Called off from TV collaboration agreement.

5.	Review of stores stock – complete, only operational stock now held. A large portion of the stores area has been cleared, allowing the space to utilised for other purposes.

6.	Development of performance indicators and management information to ensure levels of service are being achieved – Formal performance indicators have yet to be implemented – however, the number of complaints due to poor service has reduced significantly and deliveries of consumables are now next day direct from suppliers to Fire Stations. Operational stock items are picked up next day to go on to internal transport and delivered within the week. Previously, stock requisitions were delivered on a three monthly basis.

7.	Develop e-procurement (ordering on line, use of procurement cards) – Procurement cards have now been rolled out throughout the Fire Service and are widely used. The new uniform will be ordered via an e catalogue off a web based solution, available in Feb/Mar 04. Stores and ordering system is on track to transfer over to SAP during November 03 and using e procurement when the county rolls it out during 04. 

8.	Development of cost centre management – complete

9.	Market test Fire Service procurement activities – Completed on major items such as fire appliances, major operational equipment and Uniform. Although, these will be continually tested and revised as we develop our collaboration project.  Note:  I am providing consultancy work and advice on various areas to a number of other Brigades.

Further Actions for service improvement:

(a)	Establish a single procurement function to cover the brigades in Oxfordshire, Buckinghamshire and Berkshire. Form a project team by January 2002 to develop an implementation plan with specific timescales to achieve this. 

Due to the industrial action and subsequent white paper the Thames Valley Brigade collaboration has dropped back on its original time scales. However, the plan has been revived incorporating the South East Region.  This plan may need to be changed to realign it with the National Strategy for Fire Service Procurement currently being developed.

(b)	In the intervening period, develop more extensive collaborative working between the three brigades. Specifically, develop common replacement policies and specifications for fire appliances by May 2003, with a view to aligning procurement programmes where possible.

This has fallen back and due to the industrial action, also the highly controversial nature of the subject, this will not be realistically in place until 2005/6. It will also be apart of the National Strategy for Fire Service Procurement. Note, the cost base of the OFRS appliance is much lower than the other TV and SE region Brigades.

(c)	Establish a managed service for uniforms jointly with Buckinghamshire by December 2001, and seek to include Berkshire in the arrangements at a later date.

Completed, Berkshire to implement during early 2004.

(d)	Establish if there are any advantages in using the approach to risk assessment and design used by consortium groups that may benefit the fire service by March 2002

We have looked at both of the fire appliance consortium group projects, neither of which can offer us competitive products.

We have recently joined the Integrated Clothing Project, headed up by London Fire Brigade to design and tender for a common PPE (fire kit) and uniform. There are currently 44 Brigades signed up to this initiative.

(e)	Fully implement Cost Centres for all establishments by April 2002, and provide each Cost Centre Manager with purchase cards.

Completed

(f)	Rationalise the IT system used for stores management, to avoid duplication with the current LAFIS system and the proposed County MIS, by March 2002

Stocks rationalised and put on to SAP system in 2002. Unfortunately, training modules were not available until August 2003.  Now on target to be implemented November 2003. 

We are currently developing with ITNET a new Asset Management and Fleet system.  To incorporate all fleet, asset management and stores on to the MIS system, on target to implement by Jan 2004.

(g)	
Roles and responsibilities of other staff to be modified to suit the future needs of the function, dependent upon whether contingency stocks of operational equipment are retained centrally or stored elsewhere.

Following the reorganisation of the store, the supplies manager was made redundant and a part time member of staff was redeployed in to finance. Thereby, leaving a full time stores person and a part time clerical person.

The stores person post is flexible and also covers other duties such reception during times of holiday, sickness and busy periods. 

The siting of the stocks is constantly reviewed in line with the Brigades requirements.
 
South East Regional Fire Service Forum

3.	The Government have directed Regional Management Boards to consider six areas of work where there is scope for greater co-operational and collaboration.  One of these is procurement.  The Chief Officer of Oxfordshire is the lead officer.

A group consisting of representatives of the nine fire authorities in the South East have met and identified six areas which involve the procurement processes.

1.	Identification of the business need eg. identification of the need for an item of operational equipment through IRMP or for IT software to support a business process

2.  Research and development activity, including completion of risk assessments, co-ordination and evaluation of trials, production of supporting training materials or guidance notes

3.	Buying activity, including issue of OJEC notices, contracts, legal and finance tasks

4	Commissioning, including production of final safety and technical materials, training and distribution

5.	Maintenance, including the whole-life costs of maintaining the equipment or of a contract management

6.	De-commissioning and replacement, including a review of equipment or contract performance

7.	At the group’s first meeting, it was agreed that action will be focused on the following areas:

	Agreement on a standard Procurement Policy and Conditions of Contract

To prevent duplication, investigation to discover when/if national guidance will be forthcoming.  If not for some time, then lead to be taken within south-east.  Similar for Conditions of Contract.

	Joint research/technical back-up

Agreement and real commitment to this area to sub-divide work, crucially commit individual brigades to joint work outcomes and agreement to follow through procurement process on the basis of single brigade research

	Use of the matrix diagram (below) to prioritise work relating to existing contracts, values, expiry dates with subsequent commitment by brigades to action.  

It is accepted that not all brigades will wish to be active in all areas.

Procurement Classification Matrix

	HIGH

Strategic importance		
Minor operational equipment?
Minor PPE items?
Specialist equipment?	Major PPE items?
Innovative financing eg. PFI?
Appliances and fleet?
Major rescue equipment?
Air support provision?
	
		Office supplies?

General consumables?	Energy and vehicle fuel?
Specialist services – Legal, Occupational Health?

Low	High
	COST

(It should be noted that items or services indicated as best fit in each category are for illustration only at this stage)

Low Cost/Low Strategic Importance

	BV is achieved by reducing overall procurement costs – not necessarily unit cost

	Maximum use of consortia/e-procurement.  It is unlikely that any efforts to create a bespoke ‘fire collaboration’ system would be able to obtain better prices than existing consortia operated by local authorities, OGC or PITO

	Some consortia operate geographical limitations as supply chain efficiencies are obtained by reduced distribution costs.  Therefore, existing local consortia are likely to offer best value

	Market description – low risk, if suppliers fold, others will fill their place

	Procurement decisions should be made at the lowest possible level – devolved budgets and purchasing cards with direct delivery where possible.

High Cost / Low Strategic Importance

	BV is achieved by maximising purchasing power

	Use procurement consortia and national contracts

	Regular market testing is essential

	Best value likely to be achieved through regional or national collaborative arrangements

	Market description – a low risk of supply failure, but a medium financial risk.  Procurement professionals need to constantly scan the market for price and quality variations

	Procurement decisions left to procurement professionals

Low Cost / High Strategic Importance

	BV is achieved by reducing R & D costs through maximum use of joint/collaborative work.  This is likely to be most effectively coordinated at a national level

	Quality and ‘fit for purpose’ issues are key

	Market description, high risk.  There may be limited suppliers within a small market – we should be prepared to pay a fair price for high quality goods or services

	Procurement decision made by ‘intelligent’ client

High Cost / High Strategic Importance

	BV is achieved through creation of longer-term strategic partnerships to ensure quality and sustainability of supply – not just a short-term price fix

	Input from ‘intelligent client’, procurement professionals and suppliers is essential to achieve price, sustainability and quality improvements

	Evaluations are likely to be costly and complex and should be conducted to high professional standards.  To maximise efficiency, these are best co-ordinated at a national level

	Quality and contract issues (including contracts management and innovative financing options) can also lead to significant procurement costs.  The skills and experience necessary for successful procurement are not always readily available as we tend to conduct these procurements as a series of ‘one off’ exercises in different authorities.  To minimise costs, maximise quality and to enable us to become a learning organisation, these exercises are best co-ordinated at a national level

	Market description, high risk.  There is a significant financial risk that if we were to allow a cartel or single source of supply situation to develop in a specific market, long term costs would arise.  For some key service specific products such as vehicles, fire kit and breathing apparatus, there is a significant risk that a badly handled procurement exercise could compromise our ability to deliver a service to the public.  Issues of strategic dependence must therefore be recognised and addressed in our decision making

	Procurement decisions should be subject to the highest level of professional and political scrutiny.

The next Regional Procurement Forum meeting will identify and confirm specific areas to be progressed.

RECOMMENDATIONS

4.	The Committee is RECOMMENDED to:

(a)	agree if and when there is a need to report back to the Committee on further progress;

(b)	identify whether there are any matters in the report which should be drawn to the attention of the Executive Member; and

(c)	ask the Chair of the Community Safety Scrutiny Committee to consult the Deputy Chair on scrutiny committee consideration.

JOHN PARRY
Director for Community Safety & Chief Fire Officer

Background Papers:	Report to Best Value Committee 29 November 2001

Contact Officer:  	John Hurren, Deputy Chief Fire Officer Tel: (01865) 855205

December 2003