You are on page 1of 32

Prepared by Audit Scotland

July 2010

The Audit of Best Value The Best Value toolkits Using the toolkits

2 4 4

Auditors evaluations

Best Value toolkit: Procurement

The Audit of Best Value
Achieving Best Value is about ensuring sound governance, good management, public reporting on performance and a focus on improvement

The duty of Best Value a""lies to all "u#li! #odies in $!otland% t is a statutory duty in lo!al govern&ent' and in the rest of the "u#li! se!tor it is a for&al duty on A!!ounta#le (ffi!ers%

Best Value has already #een a "o)erful for!e for i&"roved "erfor&an!e and a!!ounta#ility in lo!al govern&ent' and it )ill "lay an i&"ortant role in su""orting the Con!ordat and the develo"&ent of $ingle (ut!o&e Agree&ents #et)een the $!ottish *overn&ent' !oun!ils and their "artners' and in strea&lining and !oordinating the s!rutiny of "u#li! servi!es% t also has the "otential to under"in the +ational ,erfor&an!e -ra&e)ork and the .&anage&ent s!ore!ard ele&ents of $!otland ,erfor&s%

(n #ehalf of the Auditor *eneral and the A!!ounts Co&&ission' Audit $!otland has identified a set of "rin!i"les that for& the #asis for a !onsistent a""roa!h to the audit of Best Value a!ross the "u#li! se!tor' although its a""li!ation )ill differ to refle!t fa!tors su!h as the different a!!ounta#ility regi&es and re"orting arrange&ents in "la!e in different se!tors% This )ill ena#le us to a""ly a !onsistent set of e/"e!tations a!ross all the #odies that )e audit' and to refle!t and su""ort the reality of "artnershi" )orking #et)een organisations%

The Best Value toolkits are a key "art of the "ra!ti!al a""li!ation of the BV audit% They "rovide an evaluation fra&e)ork that )ill hel" auditors to rea!h ro#ust 0udge&ents on ho) "u#li! #odies are delivering Best Value. 1o)ever' they !annot generate Best Value 0udge&ents on their o)n% They !over only "art of the "ro!ess% Judge&ents a#out Best Value also involve !onsideration of servi!e standards and "erfor&an!e' out!o&es and ho) effe!tively !ontinuous i&"rove&ent is #eing a!hieved% The fra&e)ork through )hi!h the various ele&ents of the Best Value audit are #rought together to arrive at an overall !on!lusion on the e/tent to )hi!h an organisation is a!hieving Best Value is outlined #elo)2

3 !hibit " #rame$ork for a BV audit of a public body

Source: Audit Scotland

As the diagra& de&onstrates' Audit $!otlands a""roa!h to the audit of Best Value entails #oth !or"orate assess&ent and "erfor&an!e assess&ent ele&ents% The for&er fo!uses on ho) an organisation "lans and !ondu!ts its #usiness and &anages its resour!es )hile the latter looks at the 4uality of those servi!es and the out!o&es for servi!e users%

Audit $!otland is !o&&itted to ensuring that Best Value auditing a!ross the "u#li! se!tor adds value to e/isting arrange&ents' is risk5#ased and #uilds on our e/isting kno)ledge of individual "u#li! #odies' and that of our s!rutiny "artners% $"e!ifi!ally )e ai& to2

n n n n

re"ort on the delivery of out!o&es for "eo"le )ho use servi!es "rote!t ta/"ayers interests #y e/a&ining use of resour!es "ut an in!reasing e&"hasis on self assess&ent #y "u#li! #odies )ith audit su""ort and validation )ork !olla#oratively )ith other s!rutiny #odies to ensure our )ork is aligned and "revent du"li!ation%

The Best Value toolkits

The Best Value toolkits are a series of audit diagnosti!s' )hi!h )ill hel" revie)ers to esta#lish the e/tent to )hi!h "u#li! #odies arrange&ents are designed to a!hieve' and are a!tually delivering' Best Value% They have #een develo"ed to su""ort the !or"orate assess&ent "ro!ess around the five !or"orate assess&ent areas noted in 6/hi#it 1' and the t)o !ross5!utting the&es of e4ualities and sustaina#ility% 1o)ever' as ea!h toolkit also in!or"orates a series of 4uestions on the i&"a!t of the area under revie)' they )ill also "rovide so&e eviden!e to su""ort the assess&ent of servi!e "erfor&an!e and out!o&es%

The Best Value toolkits have #een develo"ed as audit tools in !onsultation )ith s"e!ialist "ra!titioners' and re"resentatives of "u#li! #odies and "rofessional grou"s%

The toolkits take the for& of stru!tured key 4uestions' )ith a &atri/ of "ossi#le levels of "erfor&an!e' ranging fro& #asi! to advan!ed "ra!ti!e% The &atri!es !annot of !ourse !a"ture all of the )ays in )hi!h a "u#li! #ody &ay address the re4uire&ents of Best Value' so there is !learly s!o"e for auditors to e/er!ise #alan!ed 0udge&ent and for "u#li! #odies to res"ond fle/i#ly in de&onstrating ho) the key areas of !hallenge are addressed% ndividual evaluations are &ade a#out the level a "u#li! #ody has attained in ea!h 4uestion or area% 1o)ever' these have not #een )eighted and it is not intended that these #e used to deter&ine an overall s!oring for any toolkit% They are designed to !ontri#ute to sound "rofessional 0udge&ents' not to re"la!e the&%

%sin& the toolkits

The toolkits are designed for a""li!ation #y Audit $!otlands auditors )hen !arrying out Best Value audits of "u#li! #odies% n "ra!ti!e' the toolkits )ill #e a""lied as "art of an audit "ro!ess' )here#y the auditor &akes en4uiries' seeks su""orting infor&ation and for&s !on!lusions #ased on the eviden!e o#tained%

Audit $!otland re!ognises that #odies &ay find the toolkits hel"ful in !arrying out general organisational revie)s or s"e!ifi! servi!e revie)s and are therefore availa#le in the Audit $!otland )e#site

)))%audit5s!otland%gov%uk% t should #e stressed ho)ever that "u#li! #odies using the toolkits do so at
their o)n dis!retion% The toolkits are designed "rin!i"ally as audit tools that are "art of

5 Audit $!otlands overall Best Value audit &ethodology and are not e/"ressly "rodu!ed for self5 assess&ent "ur"oses%

Any organisation using the toolkits to infor& their o)n !or"orate or servi!e5#ased self5evaluation "ro!esses )ill need to !onsider the lo!al !onte/t )hen a""lying the&' and also the indi!ative rather than !on!lusive nature of the findings )hen inter"reting the results% The toolkits )ere designed to eli!it !onte/tual infor&ation and "rovide eviden!e for arriving at "rofessional audit 0udge&ents% They are not intended to #e' and !annot #e' used in a 7ti!k5#o/8 fashion%

The Best Value toolkits are generi! in nature' in that they are not s"e!ifi! to any one ty"e of "u#li! #ody or to any one se!tor and are designed so that they !an #e a""lied to all "u#li! #odies% Auditors )ill re4uire to #e sensitive to the differen!es #et)een organisations #oth in ter&s of different se!tors and varying s!ales of o"eration%

This toolkit for&s "art of a suite of audit "rodu!ts that )ill #e a""lied' over ti&e' to su""ort a stru!tured' eviden!ed #ased' 0udg&ent on an organisations a""roa!h to the use of the resour!es )ith )hi!h it has #een "rovided and its a!hieve&ent of Best Value%

Auditors' e(aluations

The toolkit takes the for& of a series of 4uestions #ased on identified good "ra!ti!e% t then offers four sets of des!ri"tors' these #eing2

)oes not meet basic re*uirements Basic practices Better practices Ad(anced practices

An organisation &ay not yet de&onstrate the #asi! "ra!ti!e level in any "arti!ular !ategory% 9ini&u& a!!e"ta#le standards' )hi!h )ould #e suffi!ient to allo) an organisation to de&onstrate sound "erfor&an!e% As #asi!' )ith so&e ele&ents of good or even #est "ra!ti!e' #ut not on a !onsistent #asis% Consistently de&onstrating good or #est "ra!ti!e and !ontri#uting to innovation%

Best Value toolkit2 ,ro!ure&ent

,ro!ure&ent s there !lear dire!tion fro& the to" )ith !lear su""ort for getting #est value in "ro!ure&ent: s there a !lear' syste&ati!' holisti! and )ell5resear!hed fra&e)ork to guide the organisations "ur!hasing de!isions: 1o) far does "ro!ure&ent strategy su""ort and align )ith the overall organisations strategy and )ith )ider "u#li! se!tor strategies: 1o) develo"ed is the ,ro!ure&ent strategy:

1o) )ell defined are the o#0e!tives ; targets for ,ro!ure&ent: 1o) )ell is ,ro!ure&ent strategy do!u&ented' !o&&uni!ated and understood #y se!tor or individual organisation: Can the organisation de&onstrate a !lear understanding of ho) it !an #est satisfy its !ore su""ly needs: 1o) are lo!al $our!ing $trategies develo"ed ; revie)ed: 1o) &u!h of the overall s"end <Category A' B ; C= is !overed #y signed5off sour!ing strategies: Linked to BP ! To )hat e/tent does the organisation take a!!ount of its sustaina#ility and the !urrent e!ono&i! !li&ate in its "ro!ure&ent a!tivity: To )hat e/tent are

sour!ing strategies for !ategories A' B ; C s"end #ased on relia#le>ro#ust internal infor&ation: Are &e!hanis&s in "la!e to en!ourage ne) su""liers and ensure !lear a!!ess routes:
s the organisation &oving to)ards advan!ed "ro!ure&ent "erfor&an!e in a!!ordan!e )ith the 9!Clelland re"ort ai&
"#c$lelland report paragraph %&'&()* Linked to BP (

s the organisation in!reasing its !olla#orative "ro!ure&ent )ith other "u#li! #odies: Linked to BP + Are there effe!tive !ontra!t &anage&ent "ro!esses in "la!e: 1o) !learly defined are the ,ro!ure&ent "oli!ies ; "ro!edures: To )hat e/tent does the organisation learn fro& its su""ly &arket: Linked to BP , 1o) relia#le is the &ethod for assessing ; &anaging su""lier "erfor&an!e: ?oes the organisation have effi!ient and ro#ust "ro!esses and syste&s to su""ort advan!ed "ro!ure&ent a!tivity: Are suita#le te!hnology5#ased tools in "la!e and used:

Linked to BP % ?oes the organisation use tools su!h as "ro!ure&ent !ards and aggregate> !onsolidated invoi!es' self5#illing and e5invoi!ing:

1o) "roa!tive is the ,ro!ure&ent fun!tion in ter&s of "lanning future resour!es:

?o "ro!ure&ent "ersonnel have their !o&"eten!y levels assessed using the $!ottish ,ro!ure&ent Co&"eten!y -ra&e)ork or a si&ilar !o&"eten!y fra&e)ork: Linked to BP -a.b ?oes the organisation have a sound a""roa!h to assessing and de&onstrating its "ro!ure&ent "erfor&an!e: 1o) )ell defined are the ,ro!ure&ent "erfor&an!e target ; &easures: ?o &anagers get relevant' ti&ely and a!!urate "ro!ure&ent s"end infor&ation: ?oes the organisation have a !lear a""roa!h to assessing>

de&onstrating its "ro!ure&ent "erfor&an!e: ?oes the organisation de&onstrate a fo!us on "erfor&an!e i&"rove&ent year on year: @ill in!lude B, A A ?oes the organisation &anage its su""liers and !ontra!ts effe!tively: ?oes the organisation have "eo"le )ith suffi!ient !a"a#ility to ensure effe!tive "erfor&an!e: ?oes the organisation "rovide !lear leadershi" on "ro!ure&ent: s there a !lear role fo!used on strategi! "ro!ure&ent <#y sour!ing grou"= )hi!h is e&#edded a!ross the organisation and aligned )ith the !entre of e/"ertise:

1o) !lear is the syste& of delegation and authority for "ro!ure&ent:

?oes internal audit "rovide assuran!e that the organisations internal !ontrol syste&s for "ro!ure&ent are ade4uate and effe!tive:

B B ST VA+% T,,+-IT: ASS SS. /T .AT0I1 2 P0,3%0 . /T + A) 0S4IP 5 6,V 0/A/3

". Is there clear direction from the top $ith clear support for &ettin& best (alue in procurement7 "." )oes the or&anisation pro(ide clear leadership on procurement7

Basic practice

Better practice

Ad(anced practice

A defined ,ro!ure&ent role e/ists' though it &ay #e "art of another organisational fun!tion% ,ro!ure&ent is seen as a distin!t fun!tion )ith a ?ire!tor or head of "ro!ure&ent leading at senior level% There are !learly defined roles' res"onsi#ilities and re"orting lines for "ro!ure&ent%

The head of "ro!ure&ent is either at #oard level or is one level #elo)' )ith a #oard &e&#er taking !lear o)nershi" for "ro!ure&ent and !o&&er!ials &atters% <+ote2 CBoardC !an #e #oard>!oun!il>!or"orate &anage&ent tea& or e4uivalent= The head of "ro!ure&ent !an and does a!!ess #oard level &eetings%

Deadershi" of the fun!tion is an integral "art of the head of "ro!ure&entCs roles and the i&"a!t of this is )idely visi#le% The head of "ro!ure&ent 5 is !onsidered "art of a senior C"eer grou"C )ith other #usiness leadersE sits on a""ro"riate key $teering *rou"s' "ro0e!t #oards et!%E "lays a full role in )ider *overn&ent' "rofessional and !olla#orative initiativesE "rovides a!tive "ersonal $trategi! ,ro!ure&ent role e/ists for li&ited areas of strategi! s"end ie !lassified as high value>high risk <u" to 50F= #ut role not !lear' staff are not fully trained and are not a)are of or hel"ing to deliver the organisationCs o#0e!tives% Goles !o&"letely differentiated fro& o"erational #uying a!tivities% $trategi! ,ro!ure&ent role e/ists for &ost areas of strategi! s"end <HB5F=% Gole is !lear a!ross organisation' and staff are trained% Goles !o&"letely differentiated fro& o"erational #uying a!tivities%

1ighly skilled and fully trained $trategi! ,ro!ure&ent "rofessionals are in "la!e and are fully integrated )ithin organisationCs de!ision &aking "ro!ess% They are delivering signifi!ant in!re&ental #enefits a!ross &a0ority of "ur!hasing s"end% ".2 Is there a clear role focused on strate&ic procurement 8by sourcin& &roup9 $hich is embedded across the or&anisation and ali&ned $ith the centre of e!pertise7

".: 4o$ clear is the system of dele&ation and authority for procurement7

The "u#lished s!he&e of ad&inistration sets out high level delegations and authority levels%

6a!h de"art&ent or fun!tion has a !lear syste& of delegation for "ro!ure&ent <ordering and #udgetary=% The organisation has revie)ed all "ro!ure&ent a!tivity and res"onsi#ility% t has for&ally designated all those )ith "ro!ure&ent res"onsi#ility as "ro!ure&ent offi!ers )ith a!!ounta#ility to the 1ead of ,ro!ure&ent% This syste& is su#0e!t to regular internal audit%

?elegated syste&s are e&#edded into T syste&s to ensure !o&"lian!e and a""ro"riate authority for transa!tions% $e"aration of duties is regularly revie)ed and there is a!!ounta#ility to the 1ead of ,ro!ure&ent% These syste&s are su#0e!t to regular internal audit%

I B ST VA+% T,,+-IT: ASS SS. /T .AT0I1 2 P0,3%0 . /T + A) 0S4IP 5 6,V 0/A/3

Basic practice
".; )oes internal audit pro(ide assurance that the or&anisation's internal control systems for procurement are ade*uate and effecti(e7 There is a 4uality assuran!e strategy or fra&e)ork to "rovide assuran!e that #asi! standards of "ro!ure&ent "ra!ti!e are ade4uate and effe!tive% 1o)ever there are ga"s in assuran!e or the strategy has not #een fully i&"le&ented%

Better practice
The internal audit servi!e regularly assesses "ro!ure&ent risks and "erfor&an!e% t re"orts assuran!e that the organisations #asi! standards of governan!e and finan!ial !ontrol for "ro!ure&ent are ade4uate and effe!tive <in line )ith 9!Clelland re"ort se!tion 5=%

Ad(anced practice
The organisationCs audit !o&&ittee has revie)ed "ro!ure&ent risks and "riorities% The !o&&ittee has s"e!ified the degree of assuran!e it re4uires !on!erning the &anage&ent of "ro!ure&ent risk% nternal audit "lans and delivers its )ork in a!!ordan!e )ith this re4uire&ent%

J B ST VA+% T,,+-IT: ASS SS. /T .AT0I1 2 P0,3%0 . /T + A) 0S4IP 5 6,V 0/A/3

Basic practice

Better practice

Ad(anced practice

2.Is there a clear< systematic< holistic and $ell=researched frame$ork to &uide the or&anisation>s purchasin& decisions 2." 4o$ de(eloped is the Procurement strate&y7 ?o!u&ented ,ro!ure&ent strategy #ut not !o&&uni!ated a!ross all in ,ro!ure&ent ; not signed off% -ully do!u&ented strategy !o&&uni!ated a!ross the organisation% The strategy in!ludes )ell5defined o#0e!tives )hi!h de&onstrate its i&"a!t on the #usiness% The strategy in!ludes a risk assess&ent and &anage&ent "lan% -ully do!u&ented' )ell !o&&uni!ated strategy in "la!e% The strategy is out)ard5looking ; fully aligned )ith the se!tor delivery strategy' and )ider "u#li! se!tor strategy% The strategy defines the organisationCs "osition )ith regard to2 Cor"orate $o!ial Ges"onsi#ilityE 64ualitiesE 6thi!al "ro!ure&entE (#0e!tives of ,ro!ure&ent !learly do!u&ented' !o&&uni!ated a!ross the organisation ; )ell understood% Consistent ; non5!onfli!ting )ith other de"art&ents% ,ro!ure&ent is involved in defining all strategi! e/ternal "ro!ure&ent relationshi"s% 2.: 4o$ far does Procurement strate&y support and ali&n $ith the o(erall or&anisation>s strate&y and $ith $ider public sector strate&ies7 ,ro!ure&ent strategy is develo"ed in su""ort of the se!tor or organisation strategy )ith the &ain fo!us on &a/i&ising servi!e ; &ini&ising total !osts% ,ro!ure&ent strategy is #ased on o"ti&ising the a#ility for se!tor to deliver and i&"rove servi!e delivery a!ross the entire value !hain% The ,ro!ure&ent strategy is !o5develo"ed )ith the other ele&ents of )ider servi!e delivery and develo"&ent% ,ro!ure&ent strategy is #ased on o"ti&ising the a#ility for se!tor to deliver and i&"rove servi!e delivery a!ross the entire value !hain% ,ro!ure&ent strategy is !o5develo"ed )ith the other ele&ents of the #usiness strategy' and )ider "u#li! se!tor strategies% $our!ing and su""ly !hain i&"rove&ent "ro0e!ts are fully aligned )ith Business

2.2 4o$ $ell defined are the ob?ecti(es 5 tar&ets for Procurement7

(#0e!tives defined ; understood #ut staff un!lear a#out their integration and i&"a!t to )ider se!tor delivera#les%

(#0e!tives defined' understood ; do!u&ented% $taff !lear as to the i&"a!t of their targets on )ider organisationCs delivera#les%

10 B ST VA+% T,,+-IT: ASS SS. /T .AT0I1 2 P0,3%0 . /T + A) 0S4IP 5 6,V 0/A/3

Basic practice
2.; 4o$ $ell is Procurement strate&y documented< communicated and understood by sector or indi(idual or&anisation7 A "ro!ure&ent strategy e/ists and is u"dated infre4uently% U"dates driven #y the need <for e/a&"le' audit re4uire&ents= to !o&"lete this% +ot all senior &anage&ent understand or sign u" to the strategy%

Better practice
U"dated on a regular #asis% $enior &anage&ent understanding and agree&ent to strategy% ,ro!ure&ent "ersonnel fa&iliar )ith the i&"li!ations of the strategy%

Ad(anced practice
A fully do!u&ented strategy has #een agreed #usiness5)ide and !as!aded to all key areas% Key &essages' a!tions and &easures are highlighted in an e/e!utive su&&ary% All areas are !lear a#out the i&"li!ations of the strategy and the e/"e!ted !hanges%

11 ) 0S4IP 5 6,V 0/A/3

Praktika themelore

Praktika m@ t@ mira

Praktika t@ a(ancuara

:. 3an the or&anisation demonstrate a clear understandin& of ho$ it can best satisfy its core supply needs7 :." 4o$ are local Sourcin& Strate&ies de(eloped 5 re(ie$ed7 $our!ing o"tions are develo"ed ; revie)ed #ut is varia#le in de"th #et)een sour!ing grou"s' ; the transition "ro!ess to ne) su""liers is &anaged !arefully #y the "ro!ure&ent tea&% $o&e ele&ents of the $,? toolkit <or the Centre of 6/"ertise #randed version of the $,? toolkit= are used% :.2. 4o$ much of the o(erall spend 83ate&ory A< B 5 39 is co(ered by si&ned=off sourcin& strate&ies7
Linked to BPI5

There are regular' "lanned and diarised revie)s of sour!ing o"tions )ithin the i&&ediate "ro!ure&ent tea& )ith little intera!tion )ith other de"art&ents ea!h revie) is !ondu!ted inde"endently ; &ethods are a""lied on an individual #asis% The $,? toolkit <or the Centre of 6/"ertise #randed version= is used as a &atter of !ourse%

There are regular' "lanned and diarised revie)s of sour!ing o"tions using a for&al &ethodology% Cross5 fun!tional>geogra"hi!al tea&s are used )here a""ro"riate' )ith a !arefully &anaged transition "ro!ess to ne) su""liers% The $,? toolkit <or the Centre of 6/"ertise #randed version= is used as a &atter of !ourse%

:.: To $hat e!tent does the or&anisation take account of its sustainability and the current economic climate in its procurement acti(ity7 :.; To $hat e!tent are sourcin& strate&ies for cate&ories A< B 5 3 spend based on reliableArobust internal information7

?etailed infor&ation is availa#le' ho)ever it is not used to develo" re!o&&endations that !an #e in!or"orated )ithin the strategy% (nly so&e s"end data is availa#le at !o&&odity grou" level 5 #y su""lier <i%e% fro& a!!ounts "aya#le=% Dittle line ite& <detailed !o&&odity= level info availa#le% 1istori! s"end data is availa#le' at su""lier and sour!ing grou" level% $o&e data is availa#le at line ite& <detailed !o&&odity= level% $o&e fore!ast data is availa#le% nfor&ation infor&s sour!ing strategy% ?etailed and a!!urate infor&ation e/ists on #oth !urrent and future de&and' su""lier and &arket !hangesE !urrent "ro!ess and "erfor&an!eE nfor&ation is easily for&atted and a!!essed% ,ro!ure&ent regarded as key sour!e of infor&ation intelligen!e for su""lier s"end%

12 B ST VA+% T,,+-IT: ASS SS. /T .AT0I1 2 P0,3%0 . /T + A) 0S4IP 5 6,V 0/A/3

Basic practice
:.B Are mechanisms in place to encoura&e ne$ suppliers and ensure clear access routes7 Dittle variation in su""ly #ase% ,otential ne) su""liers are referred to standard do!u&entation or infor&ation% Buyer ,rofile has #een set u" on ,u#li! Contra!ts $!otland "ortal%

Better practice
9eet the Buyer events are #eing held% @e# infor&ation for ne) su""liers )ith genuine "ositive res"onse to 4ueries% $u""liers are sounded out in early dis!ussions or involved in &arket testing% ,rior nfor&ation +oti!es are used to assess &arket interest% ,ositive a!tion !o&"liant )ith "ro!ure&ent la) is taken to in!rease o""ortunities for s&aller and &ediu& siLed enter"rises <$96s= to "rovide diversity and res"onsiveness%

Ad(anced practice
$eeks out V-9 and innovation through o"en su""lier events and attending trade e/hi#itions% There is a !lear "ro!ess for introdu!tion of ne) su""liers% Contra!t a)ards are on ,u#li! Contra!ts $!otland "ortal% Trade fairs are #eing attended #y "ro!ure&ent staff%

:.6 Is the or&anisation mo(in& to$ards ad(anced procurement performance in accordance $ith the .c3lelland report aim 8.c3lelland report para&raph C.D."97

A!tion "lan is in "la!e though "rogress &ay not #e )ell &easured% Benefits and savings are #eing a!hieved' a nu&#er of ongoing organisational !hanges i&"le&ented although not !onsistently tra!ked )ith so&e sli""age%

A!tion "lan and "erfor&an!e &easure&ent &e!hanis&s are in "la!e% Benefits and savings and organisational !hanges are #eing a!hieved a!!ording to the "lan%

?etailed a!tion "lan and "erfor&an!e &easure&ent &e!hanis&s are in "la!e tra!king organisational' #enefit and savings !hanges% A "ro!ess for handling Csli""ageC is in "la!e% The !hanges are re"orted through5out the organisation% $ignifi!ant #enefits and savings > !hanges are #eing a!hieved internally and a!ross )ider "u#li!

13 B ST VA+% T,,+-IT: ASS SS. /T .AT0I1 2 P0,3%0 . /T + A) 0S4IP 5 6,V 0/A/3

Basic practice
:.E Is the or&anisation increasin& its collaborati(e procurement $ith other public bodies7 Linked to BPI4 $our!ing strategies are defined for all &a0or s"end areas' )hi!h re!ognise o""ortunities for 0oint "ro!ure&ent )ork )ith other "u#li! #odies% The organisation has not a!tively follo)ed u" these o""ortunities

Better practice
The organisation is a!tively "ursuing 0oint "ro!ure&ent )ith other "u#li! #odies' to get "ro!ure&ent effi!ien!ies% t has analysed its "ro!ure&ent s"end and !ontra!ts and identified other "u#li! se!tor organisations )ith )hi!h it !an !olla#orate% There are !lear i&"le&entation "lans )ith targeted effi!ien!y savings% The organisation !an sho) innovation in its a""roa!h to 0oint !o&&issioning of "ro!ure&ent of servi!es%

Ad(anced practice
As )ell as a!tively seeking ne) and innovative "artnershi"s' the organisation !an sho) it is in!reasing the nu&#er' s!o"e and share of s"ending on !olla#orative !ontra!ts%

Co&"rehensive "ro!edures in "la!e ; understood% $u#0e!t to regular internal audit% <4%v% 4uestion 3=% Co&"rehensive' do!u&ented' )ell understood "ro!edures )hi!h are i&"le&ented !onsistently throughout the organisation% ,ra!ti!es allo) fle/i#ility to suit lo!al>s"e!ifi! variations% $u#0e!t to rigorous internal>e/ternal audit <4%v% 4uestion 3=% Gevie)ed regularly% ,ro!edures in "la!e #ut not a""lied !onsistently or a!ross all su""ly areas% $u""liers have o""ortunity to feed#a!k on the organisationCs su""ly &anage&ent "erfor&an!e as "art of for&al revie) "ro!ess% nfor&ation gathered is !ollated and a!ted u"on as key o#0e!tive% 1o)ever feed#a!k &ay #e "at!hy% -or&al feed#a!k "ro!ess in addition to revie) of su""lier te!hnologi!al !a"a#ilities ; !ore !o&"eten!ies )hi!h are re!ognised ; utilised )here feasi#le% -eed#a!k infor&ation has reasona#le !overage of &ain s"ending% The organisation utilises su""lier e/"ertise in re5engineering in ,ro!ure&ent "ro!esses as )ell as "rodu!t develo"&ent% Joint kno)ledge sharing o#0e!tives are in "la!e )ith key su""liers% -eed#a!k infor&ation is highly syste&ati! )ith good !overage of s"ending% ,erfor&an!e is assessed ; a!tion taken on a rea!tive #asis% -or&al assess&ent "rogra&s are in "la!e ; used to drive su""lier develo"&ent "rogra&% A !ontinuous su""lier assess&ent "ro!ess is used to identify su""lier develo"&ent o""ortunities ; re4uire&ents and ho) these !an #e &et% 14 B ST VA+% T,,+-IT: ASS SS. /T .AT0I1 2

P0,3%0 . /T + A) 0S4IP 5 6,V 0/A/3

;. )oes the or&anisation mana&e its suppliers and contracts effecti(ely7 ;." Are there effecti(e contract mana&ement processes in place7

Basic practice

Better practice

Ad(anced practice

There is ad ho!' &ainly 4ualitative &easure&ent of !ontra!t Key ,erfor&an!e ndi!ators <K, s= and $ervi!e Devel Agree&ents <$DAs= and &ainly !ondu!ted #y the #usiness%

There is a stru!tured and for&al revie) of !ontra!ts and their K, s' and $DAs )here a""ro"riate% Contra!ts and their K, s>$DAs are 4uantitative and regularly &easured )ith su""lier data and o)n data' )ith a!tion "lanning i&"le&ented%

Contra!t &anage&ent infor&ation is o#tained' analysed and a!tioned #y the organisation as "art of !ontinuous i&"rove&ent% 9e!hanis&s are in "la!e to &otivate su""liers to "erfor&' )hilst !ontinually i&"roving servi!e delivery% Gisk and !hange &anage&ent are undertaken syste&ati!ally and e/it strategies are in "la!e )hi!h !an #e i&"le&ented% ;.2 4o$ clearly defined are the procurement policies 5 procedures7

;.: To $hat e!tent does the or&anisation learn from its supply market7
Linked to BPI3

;.; 4o$ reliable is the method for assessin& 5 mana&in& supplier performance7

15 B ST VA+% T,,+-IT: ASS SS. /T .AT0I1 2 P0,3%0 . /T + A) 0S4IP 5 6,V 0/A/3

Basic practice

Better practice

Ad(anced practice

B. )oes the or&anisation ha(e efficient and robust processes and systems to support ad(anced procurement acti(ity7 B." Are suitable technolo&y=based tools in place and used7 9anage&ent infor&ation is &ainly derived fro& the -inan!e $yste&s A!!ounts ,aya#le <!reditors= &odule% There are lo!al > ho&e5gro)n data#ases )hi!h hold infor&ation on the organisations "ro!ure&ent a!tivity% The organisation uses an e5 "ro!ure&ent solution <either integrated or stand5alone=% nfor&ation fro& this syste& is used "eriodi!ally to analyse s"ending and identify )here i&"rove&ents in "ro!ure&ent "ra!ti!e !an #e &ade% t has redu!ed &anual "ro!esses #ut overall te!hnologi!al solutions are only in li&ited use% The "ro!ure&ent tea& understands )hi!h s"end data is !a"tured #y )hi!h syste& for at least the last year% t !an stru!ture that data #y geogra"hy' #usiness unit and su""lier% There are re"orts that sho) the s"end evolution over ti&e% The syste& also allo)s users to 4ui!kly There is a strategy in "la!e on )hat te!hnology is in "la!e on )hen different ty"es of te!hnology should #e used for s"e!ifi! "ur!hases% The &ini&u& of &anual "ro!esses re&ain% The organisation uses a variety of T tools to a!tively !ontrol and &anage the "ro!ure&ent fun!tion' eg2 Ge4uisitioning and orderingE 6nter"rise resour!e "lanningE Contra!t data#asesE e,ro!ure&ent > e9arket,la!eE e$our!ingE eAu!tions% $u""lier infor&ation is regularly analysed for savings and effi!ien!ies' as )ell as #en!h&arked against "rior year e/"enditure% Auto&ated ordering "ro!ess )ith !o&&it&ent a!!ounting in "la!e% 9anage&ent nfor&ation is used fro& the syste& in daily )ork%

B.2 )oes the or&anisation use tools such as procurement cards and a&&re&ateA consolidated in(oices< self=billin& and e=in(oicin&7

$o&e tools su!h as "ro!ure&ent !ards and aggregate>!onsolidated invoi!es' self5 #illing and e5invoi!ing is used%

A full te!hnology strategy is in "la!e and has #een i&"le&ented and e&#edded in the organisation%

1A B ST VA+% T,,+-IT: ASS SS. /T .AT0I1 2 P0,3%0 . /T + A) 0S4IP 5 6,V 0/A/3

Basic practice

Better practice

Ad(anced practice

6. )oes the or&anisation ha(e people $ith sufficient capability to ensure effecti(e performance7 6." 4o$ proacti(e is the Procurement function in terms of plannin& future resources7 6.2 )o procurement personnel ha(e their competency le(els assessed usin& the Scottish Procurement 3ompetency #rame$ork or a similar competency frame$ork7 Linked to BPI7a&b A !lear ; !o&"rehensive "lan is in "la!e for lo!ation>tea&% Dinked to re!ruit&ent' "ro&otion develo"&ent ; training% There &ay #e key skills> resour!e ga"s #ut there are !lear "lans to address these% A)areness of the "ro!ure&ent !o&"eten!y fra&e)orks or si&ilar fra&e)orks% They are used on an ad5 ho! #asis )ith "ro!ure&ent "ersonnel' to assess so&e "ro!ure&ent related !o&"eten!y levels% ,ro!ure&ent staffing "lan integrated )ith #usiness "lanning "ro!ess% Dinked to re!ruit&ent' "ro&otion develo"&ent ; training% There are no key skills>resour!e ga"s' or any ga"s )ill #e filled )ithin the ne/t three &onths% The "ro!ure&ent !o&"eten!y fra&e)ork <or si&ilar= is used to assess "ro!ure&ent "ersonnel !o&"eten!y levels as "art of the regular "erfor&an!e revie)>&anage&ent "ro!ess and is used to identify future develo"&ent and training re4uire&ents% ,ro!ure&ent staffing "lan also linked to re!ruit&ent' "ro&otion develo"&ent ; training% The "lan is regularly revie)ed against ,ro!ure&ent needs a!ross the servi!e and )ider "u#li! se!tor% The "ro!ure&ent !o&"eten!y fra&e)ork <or si&ilar= is used to identify !o&"eten!y "rofiles for "ro!ure&ent "osts and for assessing "ro!ure&ent "ersonnel !o&"eten!y levels% $kills ga"s are identified for individuals and the "ro!ure&ent organisation using the fra&e)ork' )hi!h infor&s strategi! training and develo"&ent "lans%

1B B ST VA+% T,,+-IT: ASS SS. /T .AT0I1 2 P0,3%0 . /T + A) 0S4IP 5 6,V 0/A/3

E. )oes the or&anisation ha(e a sound approach to assessin& and demonstratin& its procurement performance7 E." 4o$ $ell defined are the Procurement performance tar&et 5 measures7

Basic practice

Better practice

Ad(anced practice

E.2 )o mana&ers &et rele(ant< timely and accurate procurement spend information7 *ood set of "erfor&an!e &easures )ith so&e ga" areas <ie B, ,rofile infor&ation u"dated regularly=% Basi! ,ri!e and delivery &easures in "la!e and &onitored internally% $o&e !onfli!ting &easures )ith other "arts of the #usiness% As "art of standard finan!ial re"orting' &anagers routinely get relevant' ti&ely and a!!urate state&ents of "ro!ure&ent s"end against #udgets% 9anagers re!eive re"orts on varian!es over a s"e!ified a&ount% $trong set of "erfor&an!e &easures )ith s&all ga"s <ie full B, Ge"orting=% -ull life5!y!le &easures are in "la!e #ut not fully &easured% Understood #y staff% @ell !o&&uni!ated% Gegular &onitoring and revie)% $o&e trend &onitoring% $o&e &easures develo"ed inde"endently% $"end infor&ation in!ludes s"end against #udget and varian!e analysis% Areas of high !osts are s!rutinised and revie)ed on a regular #asis% Budget holders re"ort unusual "atterns or varian!es% Clear &easures are in "la!e' develo"ed )ith key stakeholders a!ross the #usiness% ,erfor&an!e &easures )ell defined and agreed and non5!onfli!ting <ie full B, Ge"orting "lus additional !o&"rehensive &easures !overing the servi!e "rovided=% Takes a!!ount of2 Cost' "erfor&an!e' risk and servi!e !ontinuity and se!tor re"utation% 9anage&ent infor&ation in!ludes !o&"arison of s"end against #udget' "erfor&an!e targets and identified areas of high s"end% Adverse varian!es are a!ted visi#le to relevant "arties%

E.: )oes the

or&anisation ha(e a clear approach to

assessin&Ademonstratin& its

procurement performance7

E.; )oes the or&anisation demonstrate a focus on performance impro(ement year on year7 Will include BPI6

,ro!ure&ent re"orts use a nu&#er of indi!ators to de&onstrate "ro!ure&ent "erfor&an!e%

The "ro!ure&ent fun!tion feeds a""ro"riate infor&ation into the !or"orate "erfor&an!e fra&e)ork%

,ro!ure&ent savings are se"arately identified in dis!ussions and re"orts on the organisations overall finan!ial strategy and "erfor&an!e%

The organisations "ro!ure&ent targets seek year on year i&"rove&ent% The auditor should re!ord the targets and re"orted "erfor&an!eM

The organisation re"orts its key "erfor&an!e indi!ators and these indi!ate "erfor&an!e i&"rove&ent% NThe auditor should re!ord the targets that indi!ate "erfor&an!e

The organisation undertakes analysis of B, A a!ross its organisation' )ithin se!tor and #et)een se!tors% The organisation in!ludes "erfor&an!e #en!h&arking infor&ation in its re"orts to &anage&ent%

Best Value toolkit: Procurement

f you re4uire this "u#li!ation in an alternative for&at and>or language' "lease !onta!t us to dis!uss your needs% Oou !an also do)nload this do!u&ent at2 $$$.audit

Audit $!otland' 110 *eorge $treet' 6din#urgh 612 4D1 T2 0I45 14A 1010 62 infoPaudit s!otland%gov%uk $$$.audit scotland.&o(.uk