NORTH YORKSHIRE COUNCIL

 

AUDIT COMMITTEE

 

9 DECEMBER 2024

 

PROCUREMENT AND CONTRACT MANAGEMENT UPDATE

 

Report from Corporate Director, Resources

 

1.           PURPOSE OF THE REPORT   1.1  The purpose of this report is to provide Members with a comprehensive update on the work of the Procurement and Contract Management Service, highlighting key achievements, recent activity, and the ongoing strategic focus on developing and sustaining resilient and inclusive supply chains.

 

2.           BACKGROUND

 

2.1. North Yorkshire Council manages an annual external expenditure of approximately £800 million, spanning both revenue and capital budgets.  This significant level of third-party spend reflects the scale and diversity of services delivered across the county.  It is the Council’s responsibility to ensure that all external procurement activity delivers optimal value for money, supports strategic objectives, and aligns with the principles of transparency, fairness, and accountability. 

 

2.2. Third-party spend represents the largest area of financial commitment for the Council. As such, procurement and contract management are central to the Council’s transformation programme, enabling service innovation, cost efficiency, and improved outcomes for residents.  The Procurement and Contract Management Service plays a pivotal role in shaping commercial strategies that support the Council’s ambitions for economic growth, social value, and environmental sustainability.

 

2.3. To maintain strategic oversight and ensure effective resource deployment, the Council utilises a Procurement Pipeline (PP).  This provides visibility of upcoming procurement activity and contract extensions across all Directorates. It enables Senior Commercial Managers and service leads to:

·         Anticipate future procurement needs

·         Allocate specialist support and resources

·         Coordinate market engagement and planning

·         Ensure compliance with governance frameworks

 

The PP is a key enabler of proactive procurement planning, helping the Council to deliver timely, compliant, and value-driven procurement outcomes.

 

2.4. This report outlines the key achievements and activities of the Procurement and Contract Management Service over the past year.  It highlights how the service has contributed to the Council’s strategic priorities, supported directorates in delivering complex procurements, and strengthened commercial capability across the organisation.

 

3.           KEY ACHIEVEMENTS AND RECENT ACTIVITY

 

Saving opportunities

 

3.1.    The November 2025 UK Budget has seen a downgrading of the UK economic forecast through to 2029.  As part of the budget and the Fair Funding Review, we will see a continued financial strain on the council, whilst we   continue to see pressures in areas such as adult social care and children’s services due to growth demand.  We continue to face a widening budget gap, reinforcing the need for transformation in the ways we work and deliver services.

 

3.2.    The latest UK inflation rate held steady at 3.8% in September 2025, unchanged from the previous 2 months.  The rate of inflation is still almost double the Bank of England’s target, 2%.  The main pressure came from motor fuel costs.  The Bank of England forecast inflation would peak at 4% in September and then start to fall closer to the target.  The Office for Budget Responsibility (ORB) has outlined the predicted CPI inflation levels through to 2029, predicting that the UK inflation will remain above the Bank of England’s target, 2% until 2029[1]. 

 

3.3.    Within this context, the ability to drive savings through procurement activity is reducing as suppliers experience continuing cost increases and focus has increased on the value and efficiencies we can deliver through effective contract management, including consolidation of contracting activity for the council.  

 

SMEs and the local economy

 

3.4.    The stability and resilience of the Council’s supply chains remain a strategic priority, particularly in relation to small and medium-sized enterprises (SMEs), voluntary, community and social enterprise organisations (VCSEs), and businesses operating within the local economy.

 

3.5.    Following local government reorganisation, all predecessor authorities have transitioned to a unified financial management system. During this process, some supplier records were migrated without accurate categorisation, resulting in data quality issues.  Consequently, the Council is currently unable to report reliably on expenditure with SMEs, VCSEs, or local suppliers.  These issues will be addressed through the implementation of a new financial management system, scheduled to go live in April 2026.

 

3.6. As part of the national consultation on the Procurement Act 2023, the Government is seeking views on a proposed requirement for large contracting authorities - defined as those with annual spend exceeding £100 million - to publish a three-year target for direct expenditure with SMEs and VCSEs, and to report progress against this target annually.  This proposal aligns with existing key performance indicators that have historically supported the Council’s Procurement and Contract Management Strategy. The Council remains committed to monitoring and routinely reporting on its engagement with SMEs and VCSEs, as part of its broader commitment to inclusive, sustainable, and socially responsible procurement.

 

3.7.  An example of the Council’s approach to balancing the requirements of the Procurement Act 2023 with its ambition to source locally is reflected in its food and beverage contracts, which represent an annual spend of approximately £7.8 million - £8.4 million.  A sourcing strategy has been developed with a clear focus on making these contracts accessible and attractive to SMEs and local suppliers.  Recent supplier engagement has demonstrated strong interest and understanding of the Council’s strategic objectives, with clear potential to influence positive change through procurement.  Suppliers contributed ideas aligned to six strategic outcomes, which will help shape future specifications and evaluation criteria.

 

Social Value

 

3.8.    Regional Collaboration on Ethical Procurement – North Yorkshire Council plays an active role in the Yorkshire and Humber Ethical Procurement Sub-Group, a regional network of procurement professionals from local authorities committed to advancing ethical sourcing practices. The group promotes:

·         Fair treatment of suppliers

·         Prevention of modern slavery and exploitation

·         Transparency and accountability in supply chains

·         Integration of social value principles into procurement processes

 

This collaboration fosters consistent ethical standards across the region and facilitates shared learning and best practice.  The group’s current priorities include:

·         Supporting local suppliers and SMEs

·         Advancing net zero carbon objectives

·         Strengthening supply chain resilience

·         Reviewing and improving practices to combat modern slavery.

 

A joint ICT & Ethical Procurement Workshop was held April 2025 and included:

o    Reviewed ICT supplier lists

o    Captured positive case studies

o    Initiated plans for an online ICT market engagement session to inform future social value strategies.

 

The group is Conducting a regional benchmarking exercise to guide future subgroup activities and is developing a set of regional metrics, creating a unified set of social value metrics to enhance impact and consistency across Yorkshire and Humber. 

 

3.9.    Leadership on SME and VCSE Engagement - In addition to our role in the ethical procurement group, North Yorkshire Council leads a regional task and finish group dedicated to improving engagement with Small and Medium Enterprises (SMEs) and Voluntary, Community and Social Enterprises (VCSEs).  The group is working in partnership with:

·         Crown Commercial Service (CCS)

·         Yorkshire Purchasing Organisation (YPO)

·         Go For Growth

·         Local Chambers of Commerce

·         Combined Authorities across Yorkshire and Humber

 

The aim is to design and deliver a series of targeted market engagement sessions which:

·         Help SMEs and VCSEs understand public sector procurement processes

·         Identify and address barriers to entry

·         Promote inclusive access to public contracts

·         Build supplier capability and confidence

 

This initiative aligns with the Council’s commitment to inclusive economic growth.

 

3.10.Supporting Social Value Through VCSE Partnerships - The Procurement and Contract Management Service is working closely with the Stronger Communities team to identify opportunities for supply chain collaboration between commercial suppliers and local VCSEs. This approach aims to:

·         Match supplier capabilities with VCSE delivery models

·         Enhance the social value outcomes of public contracts

·         Strengthen community-based service delivery across North Yorkshire.

 

By facilitating these partnerships, the Council is helping VCSEs play a more active role in delivering public services and contributing to local resilience.

 

3.11.Enabling Local Supplier Access through Constitutional changes - Following a recent review of the Council’s Constitution, additional flexibility has been introduced to support the award of contracts to local suppliers, particularly SMEs and VCSEs. These changes include:

·         Enabling more agile procurement approaches

·         Reducing barriers for smaller organisations

·         Alignment with the National Procurement Policy Statement, which encourages contracting authorities to ensure public contracts are accessible to SMEs and VCSEs

 

These changes reflect North Yorkshire Council’s strategic commitment to inclusive procurement and local economic development.

 

3.12.Moving towards net zero with our fleet – The team has actively supported the councils carbon reduction goals by contributing to the Fleet Transition Strategy.  The strategy identifies cost-effective opportunities to reduce CO2 emissions across the fleet.  Achieving full net zero will require significant investment to replace the ~1,000 vehicles with EV alternatives.  Recently we have concluded a procurement to replace 10-year-old-petrol vehicles with four zero emission EVs for use in Scarborough’s parks and gardens, delivering quieter, low carbon transport solutions.

 

Leadership, Regulatory Reform and Skills Development

 

3.13.The Council continues to play a leading role in procurement and contract management at both regional and national levels.  It holds the position of Chair/Deputy Chair of the YorProcure Strategic Procurement Group, which comprises 25 public sector organisations across Yorkshire and Humber.  Additionally, the Council represents the region on the Local Government Association’s National Advisory Group for Procurement.

 

3.14.The Procurement Act 2023 came into force on 24 February 2025.  While the Council has not encountered any significant issues with implementation, there have been some technical challenges with the e-tendering platform, particularly in publishing notices and accessing supplier information via the Government’s central digital platform.  Workarounds are in place, and these concerns have been formally raised with both the Cabinet Office and the platform provider.  A follow-up audit, led by Veritau, is scheduled for Quarter 4 (January–March 2026) to assess compliance with the new legislation.

 

3.15.In parallel with changes to procurement regulations, the Department of Health introduced the Provider Selection Regime on 1 January 2024.  A post-implementation review is planned to evaluate the Council’s approach and identify opportunities to enhance flexibility and responsiveness to service and end-user needs.

 

3.16.In alignment with the Government’s National Procurement Policy Statement (NPPS), it is essential that individuals responsible for procurement and contract management possess the appropriate level of capability, skills, and expertise to make informed decisions. To evidence this, the NPPS advises that contracting authorities should benchmark their organisational capability and workforce capacity to ensure they have the necessary procurement and contract management competencies to deliver value for money. In response to this requirement, the service has undertaken the Local Government Association’s National Procurement Strategy benchmarking exercise, which provides demonstrable evidence of our current capability and areas for development.

 

3.17.The council was pleased to support the recent Contract Management Pioneer Programme (CMPP) lunchables programme, ran by the LGA and Local Partnerships, which delivered a series of engaging 30-minute lunchtime sessions. These sessions showcased our experience of local government reorganisation, highlighting key lessons learned and the benefits realised.  The programme was well received, attracting a total of 1,449 attendees, with no session falling below 100 participants. Feedback was positive, with an overall value rating of 4.1 out of 5, reflecting the relevance and impact of the content shared.

 

AI and the use of technology

 

3.18.Technology continues to play a pivotal role in enhancing procurement and contract management by streamlining processes, improving operational efficiency, and supporting informed decision-making.  Advancements in Artificial Intelligence (AI) are progressing rapidly.  As a service, we are actively exploring how AI can contribute to more efficient ways of working.  Current initiatives include:

·         Reviewing the AI Playbook developed by the Government Digital Service.

·         Evaluating the Buying AI Responsibly guidance issued by the Local Government Association.

·         Collaborating with the National Advisory Group on a pilot project assessing the application of AI in the development and evaluation of specifications.

 

3.19.  AI presents a significant opportunity to improve efficiency across our supply chains and to enhance the delivery of commissioned services. We are keen to understand its potential impact in supporting the Council’s service provision. Equally important is the need to assess the implications of data access and usage by AI from a contracting perspective. The work outlined above will help address these considerations and inform our approach moving forward.

 

 

 

Local Government Reorganisation

 

3.20.Since April 2023 the council has saved £11.6m linked to procurement and contracting activity by bringing together services and functions and realising efficiencies (£3.0m non-cashable / £8.6m cashable). 

 

3.21.Work continues in relation to streamlining contracts and aggregating spend with suppliers for the same or similar goods/works/services. In some instances, there are opportunities to reduce spend through more proactive contract management, supplier negotiation and improved supplier relationship management.  The service is focused on driving contract management standards across the organisation to ensure suppliers are being held accountable for service delivery in line with contractual requirements. 

 

3.22.Visibility and timeliness of procurement / contracting requirements has improved significantly and is due to the direct work the team has undertaken in relation to training; relationship building and awareness raising.   

 

3.23.Since the last update to the Audit Committee the Procurement and Contract Management Service have completed a Post Implementation Review of the service structure which was implemented on 1 May 2024.  This has resulted in further opportunities to simply the structure, improve our ways of working to ensure operational efficiency and contribute to cashable savings.

 

3.24.The staff turnover within the team is 11.37% which is a reduction compared to the previous Audit Committee report (18.4%) with a stable team in place.  The recent Pulse staff survey demonstrated that the overall satisfaction rate is better than the council average, 74.1% PCMS satisfaction rate vs. 68.1% for council. The PCMS team scored notably better than the council in relation to:

·         My senior manager in my service is visible (100%)

·         As a team we regularly discuss our performance and the service that we deliver (96.3%)

·         I know where to find information to keep myself informed about what is happening in my council (92.6%)

·         I have access to the tools and resources I need to do my job well (96.3%).

 

3.25.The work which the team has undertaken to support LGR has been noted at a national level, resulting in presentations to Crown Commercial Services and Local Partnerships on the approach taken to managing procurement and contracting activity from a consolidation perceptive. 

 

Contract Management support

 

3.26.The centralised contract management support provided by the Procurement and Contract Management Service (PCMS) is a key enabler in delivering a step change in North Yorkshire Council’s approach to contract management.  This dedicated team offers targeted support to contract managers across service areas, with a focus on streamlining processes, ensuring compliance, and enhancing the overall effectiveness of contract delivery.  In parallel, there is a need to foster an organisational culture that recognises the critical role of contract management, and the responsibilities associated with being a contract manager.

 

3.27.To better support service areas, the PCMS offer has been redeveloped and repositioned.  As part of this, a programme of annual contract deep dives will be introduced, initially concentrating on key strategic suppliers.  These assessments will evaluate organisational capability and effectiveness and will inform a tailored training programme aimed at upskilling staff and raising awareness of contract management fundamentals, including the importance of understanding and owning contracts.  The deep dive methodology is aligned with the National Audit Office (NAO) Good Practice Contract Management Framework.  To launch this initiative, the service recently delivered a training session “The Culture & Behaviour of Successful Contract Management”, which was attended by over 200 council colleagues.

 

3.28.PCMS is also working in close partnership with Veritau to align with their audit programme.  Insights and lessons learned from audits will be used to shape future training and support.  Additionally, a joint audit is planned to focus on contract variations and extensions, further strengthening governance and continuous improvement.

 

4.           PROCUREMENT AND CONTRACT MANAGEMENT STRATEGY AND GOVERNANCE FRAMEWORK

 

4.1.    The Procurement and Contract Management Strategy was reviewed in readiness for the period 1 April 2025 – 31 March 2026.  The strategy focuses on:

·                   Sustainability issues and market stability

·                   Supporting SMEs/ VCSE sectors

·                   Supporting North Yorkshire to have a strong economy

·                   Dealing with the carbon agenda and other environmental issues.

 

4.2.    The strategy is monitored through a series of key performance indicators. The Corporate Procurement & Contract Board is accountable for the delivery of the Strategy and monitors the Key Performance Indicators (KPIs) on a quarterly basis.  The latest KPI figures can be found in Appendix 1.        

                

5.           RECOMMENDATIONS

 

5.1.    The Audit Committee are requested to: -

 

a)    Note progress on key achievements and recent activity.

 

b)    Provide comments to further add value to the ongoing work on procurement and contract management, especially in relation to delivering the procurement and contract management strategy.

 

 

Gary Fielding

Corporate Director, Resources

 

Author of Report –

 

Rachel Gibson

Head of Procurement and Contract Management

November 2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix 1 – Procurement and Contract Management Strategy Action Plan KPI Figures

 

Theme group	KPI reference	Measure	2024/25 Targets	Q1 Results	Q2 Results	Cumulative Total (Q1 & Q2)
Policy and Process	2.1	Average days taken to complete above threshold procurements	110 Days	118 Days (8 Projects)	140 Days (1 Projects)	120 days (9 projects)
Policy and Process	2.2	Average days taken to complete below threshold procurements	55 Days	54 Days (3 Projects)	92 Days (2 Projects)	69 days (5 projects)
Policy and Process	2.3	Average days taken to complete Mini Competitions	55 Days	71 Days (8 Projects)	32 Days (5 Projects)	56 days (13 projects)
Contract Management	3.1	% Procurement & Contract Management Team staff that have or are working towards completing the NYC contract management module	100%	100%	100%	100%
Value and Savings	4.1	Annual cashable supply chain savings	N/A	£110,580
Value and Savings	4.2	Annual cashable but no budget supply chain savings	N/A	£1,392,460
People & Skills	6.1	% of procurement staff with or working towards CIPS accreditation	90%	72%	71%	N/A
People & Skills	6.2	% of all Procurement & Contract Management staff with or working towards the Government Commercial Function Foundation Accreditation	90%	100%	94%	N/A
People & Skills	6.3	% of contract management staff with or working towards the Government Commercial Function Practitioner Accreditation	50%	50%	57%	N/A
People & Skills	6.4	% customer satisfaction rated "fully meets expectation" or above	80%	100% (21 of 21)	100% (16 of 16)	100% (37 of 37)
People & Skills	6.5	12 month rolling % staff retention rate	75%	82.92%	88.54%	N/A