The NHS & Good Corporate Citizenship.
Partnerships for Procurement. The NHS Working with Business.
A practical guide for NHS organisations to encourage the provision of goods and services locally, and to consider the environmental and social impact of contract decisions.
E. Hodgson Version 3
Northwest Regional Development Agency
Introduction.
The NHS employs over one million people and purchases goods and services in excess of £15 billion pounds a year. In the northwest alone the NHS employs 192,000 full time equivalent people and spends £2 billion on goods and services. If trusts can source services and supplies locally, then communities around them will benefit and the damaging environmental impact of unnecessary transport reduced. Improved economic prosperity and increased job opportunities in a trust’s more deprived catchment areas would contribute to the general social well-being and mental health of that community, and therefore lessen demands upon the health economy. It makes good health improvement sense to direct as much non- pay spend as possible into the local economy whilst still complying with extant legislation and demonstrating value for money. Local Authorities are encouraged to improve the local economy by supporting local sourcing of goods and services where possible. The Department of Health’s policy document, Shifting the Balance of Power, emphasizes local empowerment to frontline staff in the NHS and to local communities. This policy, as epitomised in the establishment of locally accountable Foundation Hospitals, is for health organisations to recognise more fully their corporate citizenship responsibilities and the fact that they are embedded within their local communities. Strategic Health Authorities are keen to see their constituent health organisations demonstrate progress in this area, and Local Authorities may wish to see similar evidence within Local Strategic Partnerships and at Scrutiny Panel events. It is recognised that trusts have a crowded agenda and that many demands are made upon time and resources. The procedure outlined in this document seeks to ensure
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efficient use of resources, and to make available additional expertise and assistance through partnership arrangements with local Chambers of Commerce.
Summary. The enormous amount of money NHS trusts spend collectively on goods and services behoves each trust to ensure that Best Value is achieved by such spends. Best Value is not judged solely by lowest unit cost, but also by the impact such spend has in terms of efficiency, effectiveness and contribution to achieving the organisation’s objectives as well as those of the wider health economy. Trusts are being encouraged to be good corporate citizens and may wish to take into account several issues when deciding to award a contract. This is helped by a recent ruling by the European Parliament. A “conciliation” has been issued by the European Secretariat on the “directives” or rules of procurement. The directives are based on the principle of awarding the contracts to the most economically advantageous offer. However, the contracting authorities may apply environmental and social criteria in a transparent manner in line with the case law of the Court of Justice. (1) In adopting a procurement policy, the Trust, as a contracting authority, will adhere to the principles of openness, honesty, transparency and integrity. All procurement procedures will adhere to the Trust’s Procurement Strategy and Standing Financial Instructions. The Trust will work within guidelines produced by the Purchasing and Supplies Agency (PASA) or similar procedures approved by the Trust Board. Their aim is to ensure that the market place remains dynamic and buoyant by managing the supplier base effectively. Achieving Best Value for the NHS may involve introducing competition to certain markets, identifying new products and suppliers, monitoring quality, and ensuring continuity of supply. NHS trusts are in a position to help make a marked impact upon local economies and the health and well-being of people within their local communities by spending NHS funds locally. However, each trust is unlikely to have the time and resources to identify and to proactively engage with a myriad of local suppliers. Chambers of Commerce, on the other hand, are well developed organisations based upon a working knowledge of their local industry and commerce. They also have a regional network providing information on a larger geographical area. Increasing local sourcing by NHS trusts can be greatly assisted by the local Chambers of Commerce and Business Links. Chambers can: • •
build up a local opportunities database, assist the small and medium business sector to define strategies,
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promote the formation of industry cluster groups and establish a locally based venture capital fund for application to local ventures based around the sustainable development concept A partnership between a trust, or a confederation of trusts, and its local Chamber of Commerce will, over time, result in many more local providers entering the NHS market. This aim is shared by PASA, which has undertaken several initiatives to encourage such a development.
The Trust’s contribution. The Trust Board is to make a declaration of Good Corporate Citizenship by formally adopting a policy of proactively encouraging the sourcing goods and services locally. The Trust Board is to empower its procurement staff by making any necessary amendment to its tender evaluation criteria and making this clear in the initial product specification.. The paragraph below is an extract from a standard tender document, approved by NHS Purchasing and Supply Agency, which is included in tenders and quotations. The contract(s) will be awarded on the basis of the most economically advantageous offer(s) judged on price, quality of product and service, delivery performance, risk and overall cost effectiveness. These factors are not listed in any particular order of importance. It is proposed to include a new paragraph, in addition to the above, which would signify the Trust’s intention to include local supply and environmental issues as extra considerations. The suggested addition is as follows:Where there is more than one supplier who can fulfil the above obligations, the Trust will apply environmental and social criteria in a transparent manner when making their final award decision. The trust’s procurement staff are to enter into an operational partnership with the local Chamber of Commerce to ensure that the Chamber is able to alert potential local suppliers of goods and services to opportunities to tender.
The Chamber of Commerce’s contribution. The Chamber is to gain a working understanding of NHS procurement procedures and systems so as to best advise and assist potential suppliers to enter the NHS market. The Chamber will disseminate information to potential suppliers and advise and assist them during the tendering process. The Chamber would participate in initiatives from PASA aimed at encouraging the entry of small and medium size enterprises into the NHS market.
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The Chamber would give guidance to their members on how to achieve accreditation if trusts adopted an accreditation or “passport” scheme for potential suppliers. Should a local Chamber be unable to identify a potential local supplier, then the Chamber would use the regional network of Chambers to extend the search area.
Procedures: The trust will: • • • • • •
Identify its “influenceable” spend i.e. the value of contracts that could be supplied locally. In most cases the population catchment area of the trust can be used as a proxy to define “local”. Identify the percentage of the influenceable spend that is currently spent locally. Set a target percentage increase over the next twelve months. Report progress to the Trust Board every four months. Identify the trust’s parent Chamber and enter into discussion with the Chief Executive of the Chamber and agree on how best procedures are to develop to suit local circumstance, bearing in mind the overall aim of encouraging local sourcing. Provide timely information to the Chamber.
Not all local businesses are members of their local Chambers of Commerce. Nothing in the policy should be taken to imply that encouragement to local businesses should be confined to those who are members of their local Chamber. Any other means whereby a trust can encourage local businesses is to be encouraged. The Chambers represent a structured and efficient means of communicating with many local enterprises.
The Chambers will: • • •
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Link with local trusts to gain a working understanding of NHS tendering procedures. Disseminate information to members and provide appropriate advice and support. Establish reciprocal arrangements with sister Chambers within the North West so that if a local chamber is unable to identify potential suppliers, then the information on the tender is speedily passed to neighbouring Chambers. The North West is defined as being: Manchester, Merseyside, Cheshire, Lancashire and Cumbria. Establish or maintain any necessary infrastructure for the efficient operation of the partnerships.
The Northwest Development Agency will:
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Facilitate the adoption of the partnerships in accordance with local circumstances.
Refs: (1) Concluded Conciliations. Newsletter No. 01 – January 2004. Conciliations Secretariat. European Parliament.
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