A ‘just-in-time’ approach to procurement can add value for social housing providers.
Procurement for the social housing sector can be a long and costly process
Procurement for the social housing sector can be a long and costly process. Social landlords must comply with the 2014 EU Procurement Directives, which are enacted through the Public Contracts Regulations 2015 (in England and Wales) and the Public Contracts (Scotland) Regulations 2012, when project values are over specified thresholds.
In England and Wales, these are £164,176 for supply and services, and £4,104,394 for works. In Scotland, regulations expected to become active this month set thresholds of £50,000 for supply and services, and £2m for works. Social housing construction and refurbishment projects will often exceed these thresholds.
In order to ensure fair and open competition, landlords must enter into a lengthy tender process for compliant procurement, which can sometimes take as long as the project itself. The length of the process is dependent on meeting regulatory requirements, such as mandatory timescales for the submission of tender documentation following the publication of the contract notice. Then there is the time it takes to administer the tender submissions, which is influenced by the number submitted and the quality of the documentation.
It is also necessary to consider the availability of resources in the procuring organisation to manage and complete the process. This depends on the ability and experience of staff to deal with procurement and their knowledge of the products and services being tendered for. Unfortunately, the majority of social housing providers do not have access to such a luxury in-house.
The ‘just-in-time’ approach
All of this can frustrate the understandable desire of landlords to turn around projects quickly in order to ensure the communities they serve receive the best service possible.
Contrast this to the ‘just-in-time’ approach to manufacturing made famous by the Japanese car company Toyota in the 1970s. The original concept relied on a high quality workforce delivering and assembling manufacturing parts as and when required. Fast forward to today and transfer this to a social housing context, and our clients are looking for many of the same benefits - a technical solution to their planned maintenance delivered by experts in a fast and efficient manner, while taking advantages of economies of scale.
The need to be able to procure quickly and efficiently without compromising on quality is where LHC, a not-for-profit purchasing consortium, adds significant value. For 50 years, we have been procuring refurbishment and construction products and services for public sector bodies, saving time and money. Our frameworks are on target to deliver £260m worth of works in 2015/16, an increase of 250% over the last five years.
The use of framework providers such as LHC is intended to complement procurement departments within larger organisations, where bringing specialists into a project via a framework can speed up procurement by offering additional technical expertise and regulatory assistance. For smaller organisations, frameworks can provide the resource they do not have.
Where urgent works are required, frameworks come into their own, providing immediate access to companies that have already been assessed and can perform the task to the required level.