British Food Plan

Stakeholder review into balanced scorecard approach for public food procurement

February 2014

Contents

The British Food Plan 1

Balanced Scorecard………………………………………………………………………………..3

Questions to stakeholders…………………………………………………………………………8

What happens next...... 8

Annex A: Criteria for a balanced scorecard for the procurement of food & catering services…………………………………………………………………………………………….11

Annex B: Potential costs and benefits of implementing the balanced scorecard…………37

The British Food Plan

Public sector food and catering accounted for £2.1bn (6.5%) of the food service sector in 2011. This includes the procurement of central government departments, including prisons and the armed forces as well as other bodies like schools and hospitals.

Defra, with Dr Peter Bonfield, is working on a British Food Plan to enable public procurement to support a healthier future people, farmers and food processors, in particular a sustainable and competitive UK food and farming sector. This work includes reaching out to the wider public sector, such as schools, hospitals, colleges, care homes and local authorities, as well as developing a toolkit for procurers that supports a more transparent and consistent approach to procurement as a result.

The British Food Plan is aiming to deliver results by June 2014. Activities are focused on:

·  Developing a toolkit, including a balanced scorecard for use when letting procurement contracts;

·  revising the Government Buying Standards for Food and Catering (the GBS), which will underlie the balanced scorecard, and working to facilitate implementation by central Government Departments. This involves working with Crown Commercial Service (CCS), which puts in place contracts for use across Government and the wider public sector;

·  working with central government procurers and those from schools and hospitals to trial this toolkit; and

·  monitoring procurement patterns, and identifying and sharing good practice.

Why we need your views

This stakeholder review seeks your views on the balanced scorecard, and its use in letting procurement contracts. A list of questions is provided in this document.

Broadly, we are seeking to assess:

·  whether our approach to the balanced scorecard is sound and results in a useful tool that builds upon the GBS;

·  whether the balanced scorecard has been weighted sensibly between cost and non-cost criteria;

·  whether the criteria have been classified appropriately – are the mandatory requirements appropriate and proportional?

·  whether any further criteria should be added to the scorecard; and

·  the costs and benefits of implementing the balanced scorecard compared to the current GBS.

Balanced Scorecard approach

What is a balanced scorecard?

In general, a balanced scorecard describes an evaluation approach where more straightforward criteria, such as cost, are ‘balanced’ against more complex criteria, such as health and wellbeing, resource efficiency and quality of service (see figure 1). By using a balanced scorecard, priority themes such as farm assurance, food waste management, and engagement with SMEs can be built into procurement decisions, alongside well-established criteria, such as animal welfare, nutrition, and energy management.

Why have we created a balanced scorecard?

We reviewed the Government Buying Standards (GBS) for Food and Catering and considered the costs and benefits of potential new criteria. We now propose combining mandatory requirements (essentially the current GBS) with other criteria (award criteria) which will be used to assess letting contracts for public procurement. This would allow some aspects of quality to be weighed against cost, and give suppliers an incentive to be better than the minimum.

Figure 1: The balanced scorecard

Technical specifications and award criteria

Each of the five headings under the balanced scorecard can have mandatory requirements, either technical specifications or contract performance conditions, and award criteria aspects to them. The technical specifications are the factors that must be met to qualify for consideration for the contract. Contract performance conditions must be met to be properly performing the contract once awarded.

Award criteria are to enable procurers to evaluate bids against each other. They give opportunities for suppliers to be rewarded for operating to higher standards.

The table below sets out the definitions we have used in Annex A.

Table 1:

Criteria proposed for technical specifications / These criteria are those that are proposed for use as Technical Specifications. All organisations bidding for contracts will be expected to meet these requirements. They are, in most cases, drawn from the mandatory elements of the existing Government Buying Standard for Food & Catering Services.
Award Criteria / The award criteria are for use in the bid evaluation process. Relevant considerations to their assessment are included. They are largely drawn from areas covered by the Government Buying Standard Best Practice standards.
The proposed award questions relate to these criteria. In most cases they have been framed to specify an outcome, rather than requiring a particular solution. This is to allow for flexibility and innovation by bidders. Procurers may require evaluation guidance to help them rate each response.
The evaluation guidance has not been developed yet. The aim will be to develop this guidance so that diligent tenderers and procurers tend to interpret them in the same way.
Other potential Award Criteria / Other potential award criteria, where listed, are also examples of evidence that might be submitted as part of a response. These criteria are generally those which have been introduced as part of this project, or are those in which we have less confidence.
Contract Management KPIs / In each case a set of specific, measurable contract management KPIs will be suggested. At the time of writing (February 2014) these have not been detailed.

Weighting

Annex B summarises some potential costs and benefits which are likely to arise from the implementation of the balanced scorecard. They are broken down between economic, environmental and social. The purpose of Annex B is to provide insight into the magnitude of the costs and benefits of each of the criteria and sub-criteria, with a view to inform the weightings for the balanced scorecard. Your comments will help us determine the appropriate balance.

How does the balanced scorecard relate to the current GBS?

The balanced scorecard sets out the mandatory criteria that tenders must meet to be considered for contracts using the scorecard. The mandatory criteria in the Government Buying Standard for Food and Catering are also mandatory in the scorecard. They will usually be suitable for technical specifications or in other cases as contract performance conditions. Criteria that are not mandatory in the current GBS are currently categorised as award criteria in the balanced scorecard.

Benefits of the balanced scorecard

·  It sets out clearly the mandatory criteria that tenders must meet to be considered for contracts using the scorecard. These include all the criteria of the Government Buying Standard for Food and Catering.

·  It means bidders can be rewarded for operating to higher standards where it is economic to do so, yet procurers are not forced to adopt measures that would increase costs.

·  Using the balanced scorecard is likely to take procurers to Bronze level under the Catering Mark scheme, and caterers meeting Silver or Gold standard are likely to score well under the Quality of Service criteria. Procurers can therefore achieve recognition for their efforts, and this may result in increased uptake and economies of scale.

·  It can also be readily adapted in future updates, as requirements could be moved into or out of the mandatory section. The scorecard will assist procurers in applying the GBS criteria and help them meet obligations under the Responsibility Deal on Public Health and Public Services (Social Value) Act, as well as meeting the reporting requirements of the Greening Government Commitments.

·  The balanced scorecard aims to make the process transparent and open for the full range of businesses to gain access to government contracts, including SMEs.

Bid evaluation process

The two principles we propose to embed in this respect are: transparency for the suppliers and some discretion for procuring authorities as to weightings to reflect their priorities.

The process to evaluate bids will require procurers to confirm that bidders are able to supply food and catering services that meet the defined technical specifications. Bidders will also be asked to provide evidence against the Award Criteria for each issue.

In order to evaluate bids against the Award Criteria procurers will be provided with a rating scale, or ‘evaluation matrix’. Our aim is to make the rating as objective as it can be, but without being so prescriptive that it constrains innovation, or results in the exclusion of valid means of producing the desired outcomes.

The structure of the evaluation matrix used for a particular issue will depend on the nature of the criteria. If the criteria are in the form of a list of simple, objective factors then performance can be rated using a simple checklist. This form is easy for procurers, but if the checklist is not exhaustive it may exclude alternative means of achieving the same desired outcome. Table 2 is an example of a rating scale could be presented for criteria suited to a checklist.

Table 2: Approach 1, rating scale suited to a checklist

Rating / % Score / Evaluation
Excellent / 100 / 8 to 10 of a list of ten Award Criteria are met
Good / 65 / 5 to 7 of a list of ten Award Criteria are met
Adequate / 30 / 4 to 6 of a list of ten Award Criteria are met
No award / 0 / 0 to 3 of a list of ten Award Criteria are met

Another approach is to provide detailed guidance against each rating level but without setting out an exhaustive list. This may provide a solution that allows contractors to develop their own ideas and supports innovation, but it will also require more effort on the part of the procurer who will have to weigh up what could be very different proposals against each other. The key to this more flexible approach is to ensure that the guidance can be interpreted and applied consistently by all competent procurers and tenderers.

An example of this approach is outlined in table 3, through the evaluation of the management system used to manage a particular issue (e.g. energy, water, waste).

Table 3: Approach 2, detailed guidance against each rating level

Rating / % Score / Evaluation
Excellent / 100 / The applicant has provided detailed and robust evidence of a documented policy and management system. The policy is translated into measureable objectives, which are reviewed regularly. Progress against objectives is monitored, and improvement actions are documented and implemented in a timely manner.
Evidence that the management system has been externally audited is provided. The management system may be certified or registered within an appropriate management systems certification scheme.
Good / 70 / The applicant has provided detailed evidence of a documented policy and management system. The policy is translated into measureable objectives, which are reviewed regularly. Progress against objectives is monitored, and improvement actions are documented and implemented in a timely manner.
Adequate / 40 / The applicant has provided evidence of a documented policy and management system.
No award / 0 / Inadequate evidence of an appropriate management system.

The final version of the balanced scorecard is likely to use a mixture of different approaches, in some cases leaving the scoring open and more open to judgement and in others seeking to provide an exhaustive list of factors in each case, with suggested weightings.

Questions to stakeholders

Supporting documents

The questions refer to the supporting documents, Annexes A and B, which provide more information on the balanced scorecard. Please refer to these when responding. Space has been included in the table under Annex A for stakeholder comments in relation to the following questions.

Questions

What are we trying to create?

1.  Overall, do you agree with the balanced scorecard approach (in essence it is about a clear and transparent range of requirements with clear evaluation criteria to allow procuring authorities to balance some requirements against others e.g. higher production standards against cost)? If yes or no, please give your reasons.

2.  Do you agree with the headline range of considerations? If not, what would you change?

3.  Specific criteria:

a.  Are the criteria included relevant and appropriate? Should we include any additional criteria as mandatory requirements (technical specifications/ contract performance conditions) or as award criteria? Please offer a justification.

b.  Under each heading, criteria are classified as proposed as mandatory or for award. Do you agree/disagree with the current placement of criteria under each heading? Please offer a justification.

c.  In respect of each of the award criteria, what do you think the weightings for those criteria should be (total points across categories = 100) Please refer to Annex B. You should note that the technical specifications are mandatory and do not need to be weighted.

d.  Do you think the wording used to describe the criteria proposed for technical specifications and award is clear?

How will it work?

4.  Costs and Benefits

NOTE: These questions are aimed at public sector procurers. However, procurers may need to obtain this information from their catering contractors.
Contractors and other stakeholders may also be able to provide useful information in this respect and should do so where possible.
We accept that procurers may be unable to provide accurate figures to all the questions below. However, any estimates and explanation you can provide would be appreciated and will inform the development of appropriate weightings.

a.  Production standards:

-  What would you expect to be the additional costs impacts and benefits ( cost savings as well as social, economic and environmental benefits) which would result from complying with the requirements as to UK production standards, outlined in the balanced scorecard, compared to the current Government Buying Standards?

b.  Health and well-being:

-  Is it possible to procure more flexibly and with more seasonal variation (i.e. take advantage of easily available seasonal food, without reducing turnover?) What would the costs and benefits of this be?

-  What do you see as the benefits, in health terms or otherwise, if any, of increasing the amount of fresh food and seasonal food that is purchased? Please refer to any studies you may be aware of.