BSO Service Offering 2016/17

CONTENTS

Page
Executive Summary / 3
Directorate: Operations – PALs / 4
Directorate: Operations – FPS / 14
Directorate: Operations – HSC Pension Service / 16
Directorate: Operations –
Counter Fraud and Probity Services / 19
Directorate: Customer Care & Performance – ITS / 26
Directorate: Customer Care & Performance –
Office of Research and Ethics NI / 44
Directorate: Customer Care & Performance –
Customer Relations and Service Improvement / 46
Directorate: Customer Care & Performance –
Equality and Human Rights / 48
Directorate of Legal Services / 51
Directorate of Finance / 54
Directorate: Finance - Internal Audit / 56
Directorate of Human Resources and
Corporate Services / 58
HSC Leadership Centre / 61
HSC Clinical Education Centre / 63
BSTP - Shared Services / 66
Annex 1 / 73

Executive Summary

The purpose of this document is to articulate the BSO’s Service Offering for 2016/17. The fundamental basis upon which this Offering has been constructed is a continued focus on providing our HSC clients with a value for money, best in class service which is underpinned by an improvement in overall efficiency of at least 3%.

The Service Offering is broken down by Directorate / Service Area and sets out in some detail the various services offered, the levels of resources committed within each and the measures planned to generate efficiency savings in 2016/17 by cash releasing savings, increases in productivity and generation of additional income.

A summary of planned 2016/17 efficiencies by Directorate / Service Area is included at Annex 1, but in overall terms BSO is committed to delivering a blended efficiency of 4.0% to its customers in its Service Offering for 2016/17. This is comprised of 3.2% in the form of cash efficiencies and 0.8% in the form of weighted average productivity improvements.

Directorate: Operations, Procurement and Logistics Service

  1. Overview of Service Offering

BSO Procurement and Logistics Service is the Centre of Procurement Expertise in respect of goods and services for Health and Social Care organisations in N.I. It offers procurement and logistics services to all HSC organisations in the form of sourcing of goods and services through competitive tender processes, tactical day to day ordering of goods and services not covered by contract through its operational procurement service and central warehousing and distribution of approximately 4000 stock lines to 46,000 customer locations. In addition it also offers non-core services to some individual organisations including community equipment services (warehousing, distribution and recycling), local stores management and electronic materials management scanning and put-away.

Total spend managed by BSO PaLS is approximately £650m (based on 2014/15 figures).

In an effort to support its clients BSO PaLS is targeting reducing budgets by 2.5%, in the context of the 2015/16 budget this translates to a figure of £290,000 on a budget of £11.6m. This reduction will be delivered based on cash releasing of 1.5% and productivity of 1% reflected as follows:

Cost Reduction / (£)
1.5% / 174,000
1% / 116,000
Total 2.5% / 288,500

BSO PaLS fees have not been reviewed since 2003/04 and have grown only by pay and prices since then with the exception of some recurrent funding provided by HSCB following completion of the CSR 2004/2007 projects to support the new areas of work delivered in those projects. Since 2003/04 there has been considerable and significant growth in BSO PaLS services both in terms of activity and the range of services offered. This growth has been absorbed within available resources it therefore follows that a financial position that reduces the funding available will have an impact on service delivery.

1.1Pressures

In addition BSO PaLS faces a number of pressures in 2016/17 which will impact on resource requirements and service delivery throughout 2015/16 in particular:

  • Introduction in September 2015 of the new ETendersNI online tendering system has not been without its difficulties and a number of the efficiencies of the previous Bravo eSourcingNI portal have been lost. This system is a “free good” to CoPEs and it is a requirement of the public procurement policy that we utilise it.
  • The decision by DHSSPS to list HSC organisations as “Schedule 1 Bodies” within the new Public Contract Regulations 2015 which has the effect of reducing the threshold above which tenders must be conducted in accordance with the regulations has been further impacted by a reduction in those thresholds as a result of the strength of the £sterling against the Euro. This threshold is now £106k.
  • Embedding new service offerings on Service and Maintenance Contracts for HSC Trusts and the development of a new Social Care Procurement Service will stretch management resources further in giving oversight to an increased range of complex procurements and engaging with a new set of stakeholders as part of the management arrangements.
  • Agreement of revised SLA arrangements withNIFRS incorporating a more extensive service level agreement will place additional pressure on PaLS management resources in providing oversight of a range of above threshold contracts, regular engagement with a new set of stakeholders and whilst improving current service arrangements.

The issues above will have an immediate and ongoing impact and this is important within the context for the PaLS 2016/17 Service Offering to HSC customers.

  1. Staffing

On average during the 2015/16 year BSO PaLS has had a funded staffing level of 327.17 WTEs with a staff in post of circa 301 WTEs. Vacant posts where possible were covered with either temporarily contracted or temporary agency staff; others are in the recruitment process. Within the procurement function it is not feasible to recruit short-term cover for specialist Sourcing posts from agencies therefore those posts remain vacant until recruited. These staffing resources include staff engaged in core and non-core services and staff funded directly by DHSSPS in Compliance, Social Care and Emergency Planning

At the Regional Procurement Board held in January 2016 it was agreed that PaLS would mainstream its “deep dive analysis” service. This is reflected in section 5.2.4 “Additional Services to be Funded”.

3.Budget

The PaLS Department had an operating budget for 2015/16 of £11.6m*:

Pay / £9.4m
Non Pay / £2.2m
Total / £11.6m

*excluding NIFRS and S&MT

  1. Service Growth

Service Growth must be considered in the context of the time elapsed since the last review of management fees which occurred in 2003/04. The table below shows growth over the intervening period and provides context for any cash releasing actions and their impacts.

4.1Logistics:

The activity position since 2003/04 has increased by 23.6% and by 6% since the establishment of BSO (marked by the vertical line).

4.2Procurement - Sourcing

The sourcing function has seen significant sizeable increases in the level of spend managed through BSO PaLS contracts. In parallel the complexity of those contracts has increased impacting on the skill-mix of staff involved in their oversight, letting and management. Changes in regulations and audit requirements around monitoring contract spend and dealing with subsequent material changes to contracts have added further complications and workload at all levels within sourcing and across the BSO PaLS procurement management team.

NB: The area of the graph contained within the shaded box represents the work carried out during PaLS Recovery Programme.

The graph above shows not only growth in number of contracts awarded each year but also and most significantly growth in the number of invitations to tender issued, which is the term used to cover openly advertised procurements, reflecting the growing complexity in the work being undertaken. The over the period since BSO’s inception the number of Invitations to Tender (ITT) issued annually has increasedby 110% and the number of contracts awarded by 47%.

4.3Procurement – Operations

The activity carried out by the procurement operations teams has grown steadily since 2010/11 after introduction of the Unitas e-requisitioning system and then eProc in the FPL system this growth sits at 9%. The graph below shows the growth in operational procurement activity requiring manual intervention since 08/09 however since the introduction of the FPL systems, indicated by the vertical line, overall growth sits at 22.2% between 12/13 and 15/16.

  1. 2016-17 Service Offering

For 2016-17 the service offering is to contain cash releasing reductions of 1.5% equivalent to £173.1k and further productivity equivalent to 1% giving an overall service offering equivalent to £290,000.In seeking to support our clients with this offering we are mindful that an adverse impact on service delivery is possible and PaLS will work through the year to minimise that impact.

The spread of the PaLS budget is as follows:

Logistics / 55%
Procurement / 39%
Other (Social Care / Compliance / Management) / 6%

The following actions below are identified and accompanied by any associated actions required to support their delivery, an impact analysis and any reduced activity delivery.

5.1 Logistics – Core Service

The logistics core service represents the purchase, storage, picking and delivery of goods to 43,000 locations across HSC. The warehouse throughput in 2015/16 is projected to be circa £44.5m supplied via a projected 1.49m[1] picks.

Proposed Productivity Action: In the Logistics service offering for 2015/16 PaLS committed to delivering 1.42m picks the projection for 15/16 is showing that PaLS logistics team will deliver over 1.47m picks during 15/16 which is above the agreed target. For the service offering for 16/17 PaLS logistics team will increase activity from the 15/16 baseline by 30,000 picks to 1.45m picks giving a productivity increase of 2.1% on warehouse picking activity. Providing a productivity gain against 15/16’s agreed levels of activity of approximately 30,000 lines i.e. a cap on activity of 1.45m picks for 16/17 rather than 1.42m.

Offering:

15-16 offering / 16-17 Offering / %age increase / Cash Equivalence (£k) / Overall PaLS %age increase
Picks / 1,420,000 / 1,450,000 / 2.1% / 133 / 1.15

Impact: A cap on activity will be introduced based on the projected level of each customer organisation in 2015/16 up to a collective maximum of 1.45m picks. Any activity above the cap will be charged at a per line rate based on marginal costs.

Associated impact 1: In the 15/16 Service Offering we identified a potential requirement to charge for emergency orders for warehouse goods. Whilst no charge was made during the 15/16 year we will retain the position that a charge will be made if necessary. The same charge identified in the 15/16 offering will apply with a rate of £125 during the working day and £205outside working hours. This action will encourage customers to order on time and deter the use of emergency orders in the run up to public and bank holidays.

Associated impact 2: In line with the service offering 15/16 PaLS will continue to accept no liability for minor discrepancies between goods picked and goods delivered.

It is anticipated that these steps may have a negative impact on customer perceptions of BSO PaLS customer service.

Proposed Cash Releasing Action:

In order to deliver cash releasing on PaLS costs of 1.5% the Logistics function will deliver cash releasing of £80,000. This will be achieved through a reduction in rates budgets and fuel oil budgets, please note this latter budget will be affected by any significant shift in the global oil price.

Cash Release Budget Area / £k
Rates / Fuels / 80

5.1.1Logistics Summary Table

Proposed Action / Action Impact / Cash Release / (£k) / % of Logistics Budget
Cash Releasing:
Reduction in Rates and Fuel Oils budgets / £80k / 80 / 1.3
Productivity (no additional charge):
Increase in agreed picking volumes (1.42m to 1.47m) / 30,000 picks / - / 2.1
Total / 80 / 3.4

This provides a blended service offering equivalent to 3.4% on the logistics budget.

5.2Procurement Services

Procurement services are delivered in two distinctly separate functions and for the purposes of this service offering any cash releasing savings are considered based upon the impacts on those services. The total budget for Procurement is approximately £4.6mand has a cash release target of £94k or 2%.

5.2.1Procurement Sourcing:

This function undertakes competitive tendering processes in order to secure best value for money for approximately 90% of expenditure managed by BSO PaLS. The service ensures that processes are conducted in accordance with the Public Contracts Regulations and supports delivery of value for money. This is the key service associated with BSO PaLS accreditation as a Centre of Procurement Expertise. In conducting its business BSO PaLS supports its clients in maintaining proper controls over expenditure, compliance with procurement regulations and good governance.

Reduction in the resources available to sourcing activity within PaLS has a direct impact on the renewal of existing contracts, taking forward new contracts, the currency of the online catalogue, clearance of invoices and the number of STAs required.

During the 15/16 year it is projected that PaLS will initiate 258 tenders i.e. 258 competitions above £30k having anticipated delivery of 285 in the 15/16 Service Offering. There were however, difficulties in the recruitment of the service and maintenance contracts team and other recruitment challenges. BSO PaLS will again commit to delivery of 285 invitations to tender during 16/17.

Associated Action 1: In accordance with the targets within the DHSSPS Strategic Procurement Action Plan customers will agree to operate on the basis of “tender once” and act collaboratively with PaLS when approaching the market. Where a customer insists on a bespoke arrangement and refuses to collaborate with other HSC organisations or to avail of pre-existing framework agreements then PaLS may levy a charge. Fees will be based on the prevailing per diem rate contained within the PaLS Ad-Hoc Procurement Service Provider Framework.

There will be no cash release or productivity gain from this area as it will seek to expand current contract coverage to increase the effectiveness of the FPL online catalogue and assure timely renewal and compliance for the range of contracts to be undertaken.

5.2.2Procurement Operations:

This function undertakes the day to day tactical purchasing of items not covered by contracts awarded by BSO PaLS sourcing teams or the ordering of goods or services where items covered by contract are not included within the online catalogue e.g. services or one-off purchases of equipment which have been tendered. Staff working in Procurement Operations also act as a point of contact for customers at an operational level providing an advice and guidance service to those customers for whom they provide procurement services. In 2015/16 the projected number of non-catalogue transactions undertaken by Procurement Operations is 239541which is an increase of 7.6% since 11/12 pre system implementation.

Currently PaLS are meeting SLA targets on a “global” basis however when reviewed on a PaLS site by site basis some sites are experiencing significant increases in activity in quarter 3 and quarter 4 of the financial year which is causing some to struggle to meet processing targets.

In order to deliver the cash releasing requirements for procurement PaLS will reduce the number of Whole Time Equivalents within operations by approximately 3 to 4. However in the current activity climate this will result in sustained and unacceptable delays in processing therefore this will require time to deliver and will be achieved by bringing sites to an individual common average which may require displacement and/or redeployment of staff. To achieve this a project will be required during 16/17 therefore it is proposed that for the 16/17 year the target of £94k will be met through internal management of budgets with a view to the WTEs being removed prior to 2017/18.

Cash Release Budget Area / £k
Procurement Operations / 94

5.2.3 Additional Services Within Current Fee Base

BSO PaLS has agreed the introduction of a new EProc service to provide support to requisitioners within organisations in order to increase their use of the online catalogue, reduce levels of non-catalogue activity and increase the level of goods and services being ordered through the Purchase Order Processing (POP) system to increase control and visibility of the goods and services being procured. The service is being introduced at no cost to BSO PaLS clients. The total cost of the service to be provided is £72k.

5.2.4Additional Services to be funded – Deep Dive Analysis

It is recognised that the work carried out by PaLS on Deep Dive Analysis has identified savings opportunities for Trusts generally in excess of £350k with between 50% and 60% of that readily achievable. The Regional Procurement Board has agreed “Demand Management” as one of its key strategic initiatives for 16/17 to 18/19 with one of the strands being the mainstreaming of deep dive analysis into PaLS services. In line with the agreed initiatives PaLS proposes to offer a “Procurement Analysis Service”. This service will be delivered based on an agreed programme of work each year with each large organisation revisited on a regular basis to ensure continuous improvement is achieved. The service cost will be £57.3k per annum and it was agreed at the Regional Procurement Boardthat this cost would be met by HSC Organisations.

5.2.5Procurement Summary Table

Proposed Action / Action Impact / Cash Release / (£k) / % of Procurement Budget
Cash Releasing:
Reduction in resources within Procurement Operations / £94k / 94 / 2.1
Productivity (no additional charge):
Implementation of Eproc Support Service / Service Development / - / 1.6
Total / 94 / 3.7

This provides a blended service offering equivalent to 3.7% on the procurement budget

6.Additional Income Generation

In its service offering for 15/16 HSC accepted a charge for General Capital Expenditure of 0.5% of the value of the expenditure and that this charge would be levied on requests submitted to PaLS during quarter 4. This was proposed to encourage early ordering and help facilitate better co-ordination of capital expenditure whilst ensuring that goods can be procured following due process where possible. BSO PaLS has not imposed this charge during 15/16 but will keep this under review for 16/17.

7.Areas likely to be the subject of hard charging

The only area within PaLS subject to regular hard charging is Capital Projects. The non-recurrent income anticipated for this and associated projects’ is shown in the table:

Project / Anticipated Non-Recurrent Income (£k)
Omagh Hospital / 45
Cancer Centre, Altnagelvin / 64.25
Ward Block, Ulster Hospital / 25.6
Total / £134.85

Following on from the changes to both Logistics and Procurement there may be requirements for hard charging as a result of the introduction of caps to activity.It is not possible to predict any charging necessary at this stage and charges will only be issued where they can be applied and where costs incurred cannot be absorbed within existing budgets.

8.Assurance to Customers

8.1Governance:

  • Internal Audit – Internal auditors provided a satisfactory assurance on PaLS during 15/16
  • PaLS retained both its ISO accreditation and its SHS Due Diligence Audit accreditation during 2015/16.
  • During the year 15/16 approximately 97.25% of contracts were tracking for renewal on time with no tenders stood down as a result of legal challenge.

8.2Customer Survey 2015/16: