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Soft Market Testing for the Procurement of Support Services Case Study
Having applied soft market testing to seek out a partner capable of delivering improved support services at a reduced cost, North Somerset Council now expects to save £1.5 million over two years.
‘We’re not a failing authority, we’re in a good place, but we keep searching for new ways of doing things, and this is an example of that. We’re in the lower quartile of councils for spending and are a top performing unitary authority, so we do very well with very little. Therefore, our criteria was we’re good, we’re three star, if you can’t do it quicker, better and cheaper than ourselves, we’ve got nothing to talk about.’ Nick Cobley, Strategic Financial Analyst, North Somerset Council.
North Somerset Council carried out an Internal Support Services Review to map its existing resources and practices and consider opportunities for improving efficiency and delivering savings. The aim was to give the organisation the capacity and flexibility to continue to meet customer and government requirements.
The review found that no service was failing, but recognised the increasing demands faced by North Somerset. The council needed to make savings of at least 10% over three years and the review identified four possible routes - three were internal (reorganisation, demand management and Business Process Improvement), and the fourth was to compare and test internal ideas with what could be offered by the market.
The council adopted a ‘soft’ market testing approach and a market assessment team of third tier managers was created to assess the market’s ability to deliver support services ‘quicker, cheaper, better’ than the council working alone could achieve.
This soft market testing took place between November 2008 and June 2009 and involved various stages:
• The market was assessed to identify the main players and different market approaches.
• A consultation document was written which explained the council’s work, its plans for improvement and the obstacles it envisaged. It asked for responses, setting out ideas, from six companies, selected to represent different market approaches.
• Three companies were invited to present their ideas to a mixed audience of elected members, senior managers including the chief executive, third tier managers and union representatives.
• The market assessment team visited the three remaining companies to see their activities and meet their clients.
• After extensive informal discussion of the results of the soft market test within the council, a proposal was taken to the Executive in June 2009. It asked whether the council should progress down this route and the answer was a unanimous ‘yes’.
The council used the process to align its support service requirements with the assessed strengths of the market, resulting in a focus on transactional functions and ICT.
It was, therefore, agreed that the council should approach the market with Revenues and Benefits, Finance (Transactional), ICT, HR (Transactional), Payroll and ‘Soft’ Facilities Management. These areas account for around 250 members of staff and a gross spend of over £10 million, nearly 90% of which is on staff.
In addition, the council saw an opportunity through the market test process to extend the scope of the procurement to enhance its capacity and capability for business improvement and procurement advice and projects.
An Official Journal of the European Union (OJEU) notice was published in September 2009 and the council is committed to keeping the process as lean as possible. It expects outline solutions from the market in January 2010 and to be in a position to award contracts towards the end of summer 2010, with contractors starting in the autumn.
Involvement of SW Councils
Throughout the process there has been informal information sharing through SW Councils and with the Western Improvement Partnership.
North Somerset Council has a clear vision - affordable council tax and quality services. It has set out three clear objectives and has told the market it wants services to be:
• Quicker –projects and services need to be delivered at a faster pace.
• Better – services should be maintained and improved, and customer satisfaction improved.
• Cheaper – significant savings need to be made of at least 15% - £1.5 million - over the first two years.
Adopting a soft market testing approach has enabled North Somerset to assess its options informally before committing to the private sector route. This has resulted in a focused and controlled procurement.
The information gathering and assessment has enabled clear decisions to be made up front and has smoothly moved the council into a position to contract with the market – shortening timescales and considerably reducing costs.
Critical Success Factors and Lessons Learned
North Somerset Council was able to carry out its soft market testing in six months thanks to clear governance and having Corporate Management Team involvement for effective decision making. The backing of political and managerial leadership is essential for a project involving such fundamental change.
Communicating effectively with staff is also essential. Outsourcing services is a sensitive issue and inevitably results in staff concerns. A key challenge is to mitigate the impact, including stating how it will pro-actively bring further quality and sustained employment to the area.
The council has a significant communication strategy to provide appropriate staff support, has a staff consultation group, and is working closely with unions.
Several authorities have considered looking at the market to understand its ability to deliver support services more effectively and efficiently. However, the complexities involved can act as a difficult hurdle to overcome. The example of North Somerset showcases how one authority has successfully approached the process via soft market testing.
Programme Manager - Business Transformation Support
Telephone: 01823 425228
Strategic Financial Analyst
North Somerset Council
Telephone: 01934 426256