Shared Services in Public Sector Scotland

24th June 2008

Welcome and Introduction

Ruth Parsons

Director of Public Sector Reform

Purpose of the Day

• Strong Leadership - key to making shared services happen

• Progress with Shared Services -One Year on

• Share views on what we need to drive the agenda forward

• Challenges and Opportunities

• Way Forward

Positive44%

Mixed 52%

Don’t Know1%

Negative3%

Fairly clear51%

Not very clear23%

Very clear15%

Don’t know2%Not clear at all

9%

Based either on your experience or on what you have heard, do you feel that the Shared Services agenda for public services is broadly positive, negative, or a mix of the two?

Thinking about the national policy direction, how clear do you find the new Scottish Government’s position in respect to shared services?

Attitude to Shared Services

•Very little outright opposition to Shared Services Agenda•Similar view across local government, health and other public organisations•Also similar across chief executives, finance and other directors and other senior officers

•In spite of general support, policy guidance is required

-Telephone survey in December 2007 for Serco and Cipfa- 97 top officials in public sector including 25 chief executives and 25 finance directors of Local Government, Health Boards, Universities and other public bodies

Source: Ipsos MORIHolyrood Magazine

Keynote Speech

John Swinney, MSP

Cabinet Secretary for Finance and Sustainable Growth

Shared Services in Public Sector Scotland

• Tea and Coffee in the Foyer

• Breakout rooms are available

• Resume at 11.15

Update of Shared Services in Scotland

Julie Kane

Head of Shared Services Team

Key Areas

• Policy Developments and Communications

• Programmes and projects

• What Next/ Role of the Scottish Government

Policy and Communications

• Efficient Government Programme 2008-2011• Sectoral policy developments:

-Concordat for Local Government

-Single Outcome Agreements for Public Bodies and Local Government

-Better Health Better Care Health and partners

• Shared Services Guidance Framework• Shared Services online Forum-launched with

a discussion on shared services

Programmes and Projects

Procurement

eProcurement Scotland 92 public sector organisations and growing, including local authorities, health, central government and further and higher education

Centre’s of Procurement ExpertiseScotland Excel, Advanced Procurement for University and

Colleges (APUC), Central Government Centre of Procurement Expertise (CGCoPE) and Procurement Scotland, Shared Procurement Consortium for Health

Programmes and Projects

Local Government• Recruitment Portal –phase 1 with 8 Authorities live on

16th June -myjobscotland.gov• Public Information Notices-piloting with 4 authorities

commencing end of June• Customer Relationship Management -12 local

authorities adopted the national CRM solution• Clyde Valley Learning and Development -Equality and

Diversity training delivered resulting in 60% saving • NOSLA -developing a single operating model for

revenues and benefits collection

Programmes and Projects

Cross Sector Joint Working• Tripartite Vehicle Maintenance Services-

savings of £4m per annum - Police, Fire and Ambulance Service

• Orkney Joint Working -13 workstreams of joint working

• Western Isles Integrated Service Delivery - first phase estates management functions

Programmes and Projects

Investment in Technology supporting

Service Delivery and Customer Contact

• Customer First

• eCare

• Police Performance Platform Project

• N3 and Glow

Key programmes to inform the Way Forward

• Local Government – National Approach to Shared Services

• Central Government - Baseline Study of Corporate Functions

• Health - A collective assessment of the role of Special Health Boards to increase the value they can add to both NHS and wider public sector

What Next

• Developing the evidence and what good looks like

• Marketing proven opportunities and sharing progress

• Maximising our investment in Technology• Working with Public Sector partners to help

prove new opportunities and continuous improvement

Workshops

Yellow-Conference Room -3

Green- Conference Room-4

Blue-Conference Room-5

Red-Conference Room-6

White-Conference Room 11 (first floor)

Shared Services in Public Sector Scotland

• Lunch and Networking in Foyer

• Breakout rooms available

• Resume 13.30

Shared Services and the

EU Public Procurement Rules

Scottish Procurement Directorate,

Deputy Director, Policy and Development

Paul McNulty

Role of SPD’s Policy & Development Team

• Post-McClelland Reform Programme• Secretariat for the Procurement Reform Board and

Advisory Group• Advice to Ministers, Executive and wider public sector• Legislation (including EU procurement rules)• Guidelines on procurement policy and practice

In Relation to EU Procurement Rules

• Introduced the Public Procurement (Scotland) Regulations 2006 (SSI 2006, No. 1)

• Responsible for handling European Commission Article 226 infraction cases against Scottish Public Bodies

• Responsible for implementation of EU Directives etc

In Relation to EU Procurement Rules

• Attend the Advisory Committee on Public Contracts in Brussels

• Attend Council Working Groups (e.g. on the Consolidated Directive and new Remedies directive

• Work closely with the Office of Government Commerce (which leads for the UK on EU and other international procurement rules issues)

EU Procurement Rules and Shared Services

• Complex set of issues• Impact of the EU rules depends on the particular

circumstances, types of body involved, the delivery/business model, the type of service and often the precise detail of the relationships between the public partners and any private sector involvement

• Hot topic at a European level (European Parliament Debate in 2006

EU Procurement Rules and Shared Services

• Guidance published on SPD’s website (and by Cabinet Office/OGC)

• SPD doesn’t currently have all the answers• Will update the guidance as our understanding

develops

• In the meantime, implications for each project should be considered carefully

So, how might the EU Procurement Rules Impact on a

Shared Services Project?

• What are the EU rules?– EU Treaty– EU Procurement Directive (2004/18/EC) and the

Scottish Public Regulations which give the Directive effect in Scots Law

– Judgements of the European Court of Justice (ECJ) which interpret the Treaty and Directive.

Hypothetical Shared Service Arrangement

• Lead authority to undertake finance function for 3 other neighbouring authorities?

• To provide the service it will rely on in-house staff and supporting contracts/contractors

• There will need to be agreements between the lead authority (or any Service Delivery Vehicle) and the other authorities

New or Existing Contracts With Private Sector Providers

• Adding new users of a service may not be possible because of changes to the scope and value of existing contracts

• Contracts might not be framed in a way that makes them accessible to other public bodies

• OJEU adverts for new/existing contracts need to define the scope/value and define the bodies which may use them

New or Existing Contracts With Private Sector Providers

• Scope/Value can be defined by a range, but to get best vfm the initial estimates need to be as realistic as possible

• Bodies who may use the contract can be defined in generic form (e.g. Scottish local authorities)

• In relation to contract scope/value there may be some room for flexibility, e.g. Regulation 14(d)(i) and 14(d)(ii) which cover additional services which have become necessary through unforeseen circumstances.

So you need to consider the impact on any existing contracts and take account of the potential impact of shared services when advertising new contracts.

Agreements Between Public Bodies or Service Delivery

Vehicles (SDVs)• Agreements between public bodies or Service Delivery

Vehicles can constitute service contracts under the public procurement rules

• If so, advertising may be required by law• Teckal ECJ case confirms that contracts between public

bodies can be subject to the procurement rules• Agreements which are non contractual are difficult to

define and in the absence of significant case law this remains a grey area

Agreements Between Public Bodies or Service Delivery

Vehicles (SDVs)• Perhaps a definition of a non-contractual agreement

might be:• “an agreement which has as its object the assignation of

roles and responsibilities (including funding) between partners with the objective of achieving mutual objectives and which is not enforceable in law”

• If the agreement is enforceable in law and if it includes requirements (on the body responsible for service delivery) akin to those which would typically be placed on a commercial provider, it is likely to be regarded as a contract for the purposes of the procurement regime

• The devil is always in the detail. So decisions need to be based on careful consideration of the precise detail of the agreement and relationship between the parties.

Agreements Between Crown Bodies

• Because of the principal of indivisibility of the Crown, agreements between Crown bodies are not usually regarded as contractual and as such are not usually subject to the EU procurement rules.

• So agreements between Crown bodies may raise fewer EU procurement issues than agreements between other types of body.

• The Scotland Act provides that Scottish Ministers may choose to contract with UK Ministers, so care is needed when dealing with agreements between Scottish and UK Crown bodies.

• For example, the various Concordats between Scottish and UK Ministers each state explicitly that they are not intended to give rise to any legally binding rights or obligations.

Special and Exclusive Rights

• Regulation 6(2)(l) of the Scottish Public Contracts Regulations provides that services provided by one contracting authority to another are exempt from the requirements for advertising in OJEU where they are provided on the basis of a special or exclusive right in accordance with “any published law, regulation or administrative provision which is compatible with the EC Treaty”

• The position regarding “administrative” provisions conferring rights is unclear and great care should be taken before relying on this clause

“Teckal” ECJ Case (C-107/98)

• A group of Italian local authorities set up an SDV (a consortium “AGAC”) to purchase and supply fuel oil to its “parent” authorities. AGAC, which was a separate legal entity, bought oil and resold it to its parent bodies. The ECJ ruled that the resulting contracts between AGAC and its parent authorities would need to be advertised (by the parent authorities) in accordance with the relevant public contracts directive unless certain key conditions were met– that its parent bodies exercised control over the SDV which was

“similar to that which it exercises over its own departments”; and– that the SDV carries out the essential part (at least 80%) of its

activities for/with its parent bodies• Providing these conditions are met, contracts between

SDVs and their parent authorities do not need to be competed in accordance with the EU procurement rules

Other ECJ Rulings

• A number of subsequent ECJ cases (e.g. “Stadt Halle” and “Carbottermo”) have expanded on the Teckal case and have imposed additional requirements

• If the SDV has any private sector equity stakeholders then it cannot be regarded as meeting the “Teckal” criteria for exemption

• If it is planned to sell the SDV to the private sector then the Teckal exemption may not be available

• The SDV must not behave as if it is active in a commercial market. E.g. it must not market its services or actively compete for new customers/users

• A list of key cases is included in SPD’s shared services guidance note (see the SPD website), http://www.scotland.gov.uk/Resource/Doc/1265/0051647.pdf)

Conclusion

• The EU procurement rules do present some potential barriers.

• Care is required around existing/new contracts to support shared service projects

• Care is required around the form of any agreements between public bodies

• There are ways forward, e.g. non-contractual agreements or establishment of “Teckal” exempt Service Delivery Vehicles

• Guidance available from SPD and Cabinet Office websites.

• SPD will update its guidance as and when the position becomes clearer

ANY QUESTIONS ?

Shared Services in Scottish Government

Paul Gray

Director of Corporate Services

Scottish Government

Shared Services in Local Government

Paul Dowie

Director of Shared Services Improvement Service

Overview

• Overview of local government initiatives• Introduction of National Diagnostic• Moving Forward

National Shared Services Board• Emerged out of Efficient Government Fund: MGF• Initial prospectus:

– Shared services– Shared capacity– Shared models and diagnostics: Business design

• Iconic projects; developmental projects; strategic baselines

The NSSB Portfolio• Shared capacity projects:

– Customer First– Scotland Excel– Recruitment Portal

– Public Notices Portal

• Standardisation: Shared business model projects– National Diagnostic: 32 Councils

• Shared Services projects:– Revenues and Benefits (NOSLA)– Training and Development (Clyde Valley)

– Workforce Planning (COSLA/IS)– Integrated back office (Orkney Islands Council)

Below the Radar• A significant array of local and regional

sharing• PSIF; free personal care; customer

satisfaction (sectoral)• Co-investment and co-location;

accommodation registers; integrated services (cross sectoral)

• Badging and labelling

Culture Change

• Shared services or capacity as an obvious option

• Beyond self sufficiency: Duplication; re-inventing the wheel

• Powerful political narrative:

Localness Partnership

What is the Diagnostic? • The first stage in a larger process to investigate improvements

in resource allocation activities to direct effort into front line

service delivery.

Diagnostic

DesignImplementation

Current

Future

Ways of Interacting with the Customer Face -to - White Mail Telephone E -Mail InternetSMS

Ways of Interacting with the Customer Face - - White Mail Telephone E -Mail InternetSMS

Assess &

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Deliv

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“D

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Initia

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Con

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Initial Customer Contact

Assess & Decide

Service Delivery

Wo

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Ge

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tion

Ma

na

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rvision

e.g. Environment, Economy & Business, Children’s Services, Adult Services, Culture Leisure & Sport etc.

Underpinned by Strategic and Common Services Support

e.g. Finance, HR, Asset Management, ICT, Facilities, Strategy & Policy, Procurement & Commissioning, Quality & Performance etc

Front line operations

Diagnostic Looking at the organisation differently -

Dept X Dept Y Dept Z

Division

225FTE 920FTE

Division

125FTE 370FTE

Division

100FTE 510FTE

Division

27FTE 600FTE

Division

65FTE 210FTE

Division

320FTE 1020FTE

Division

417FTE 92FTE

Dept X Dept Y Dept Z

Division

225FTE 920FTE

Division

225FTE 920FTE

Division

125FTE 370FTE

Division

125FTE 370FTE

Division

100FTE 510FTE

Division

100FTE 510FTE

Division

27FTE 600FTE

Division

27FTE 600FTE

Division

65FTE 210FTE

Division

65FTE 210FTE

Division

320FTE 1020FTE

Division

320FTE 1020FTE

Division

417FTE 92FTE

Division

417FTE 92FTE

Dept X Dept Y Dept Z

Division

225FTE 920FTE

Division

125FTE 370FTE

Division

100FTE 510FTE

Division

27FTE 600FTE

Division

65FTE 210FTE

Division

320FTE 1020FTE

Division

417FTE 92FTE

Management & Supervision 610 FTE

Customer Contact and Assessment 850FTE

Strategy, policy, performance 246FTE

Front line service Delivery 2500FTE

Procurement, commissioning and contract management 240FTE

Professional Support Services 490FTE

Examples ofgeneric

Dept X Dept Y Dept Z

Division

225FTE 920FTE

Division

125FTE 370FTE

Division

100FTE 510FTE

Division

27FTE 600FTE

Division

65FTE 210FTE

Division

320FTE 1020FTE

Division

417FTE 92FTE

Management & Supervision 610 FTE

Customer Contact and Assessment 850FTE

Strategy, policy, performance 246FTE

Front line service Delivery 2500FTE

Procurement, commissioning and contract management 240FTE

Professional Support Services 490FTE

Dept X Dept Y Dept Z

Division

225FTE 920FTE

Division

125FTE 370FTE

Division

100FTE 510FTE

Division

27FTE 600FTE

Division

65FTE 210FTE

Division

320FTE 1020FTE

Division

417FTE 92FTE

Dept X Dept Y Dept Z

Division

225FTE 920FTE

Division

225FTE 920FTE

Division

125FTE 370FTE

Division

125FTE 370FTE

Division

100FTE 510FTE

Division

100FTE 510FTE

Division

27FTE 600FTE

Division

27FTE 600FTE

Division

65FTE 210FTE

Division

65FTE 210FTE

Division

320FTE 1020FTE

Division

320FTE 1020FTE

Division

417FTE 92FTE

Division

417FTE 92FTE

Management & Supervision 600 FTE

Customer Contact 850FTE

Strategy, policy, performance 246FTE

Front line service Delivery 2500FTE

Procurement 240FTE

Professional Support Services 490FTE

Examples ofgenericExamples of

activities

What does the Diagnostic give?

• Common model• Common process• Common evidence• Common opportunities

– Within councils– Between councils– Regional, National

Outcomes / Opportunities

• Baseline across all councils – evidenced, prioritised and linked to strategy.

• Average of 400 service specific opportunities to improve identified and validated.

• 12 national cross cutting opportunities identified so far.

• All opportunities being prioritised to meet local needs.

Outcomes / Opportunities• Multiple project approaches

– councils have evidence of over a 100 projects running

– 90% are unknown at CMT level– 15% have clear business cases with benefits

• Need to streamline change and coordinate activity

• Place customers needs at the heart of our organisations

• A single agenda for efficiency

Next steps

Strategic Direction

DataTrends

ThemesCross - cutting

OpportunityTrends

Source - Diagnostic Programme - data and opportunities

Contribution to vision and strategy

• Focuses decision areas– local cross sectoral vs – regional or national within sector vs – regional or national cross sectoral

• Focuses level of opportunity : processes, systems, architecture,

• Focuses the leadership issue: – Who leads? – Why? – How?

• Focuses the outcome issue

Going forward

• Applying the diagnostic to partnerships and joint working

• Developing confidence: taking and making opportunities…..quick wins - broader horizons

• Focus on collaborative gain – baselines and evidence

• Getting governance right “Endeavour”

Paul DowieDirector of Shared ServicesImprovement ServiceTel: 01506 775558Email: paul.dowie@improvementservice.org.uk

Website: www.improvementservice.org.uk

Shared Services in Public Sector Scotland

• Tea and Coffee available in the Foyer

• Breakout rooms available

• Resume 15:15

The Way Forward

Craig Russell

Deputy Director

Efficient Government Delivery

If you don’t want to fail, then don’t !

• Learn from others’ experiences

• Clarify real purpose

• Make decisions based on real data (as opposed to opinions)

• Communicate to engage at all stages of implementation

• Have a prenuptial agreementSource: SSA Workshop 19 July 07 UKC

(VN/DMW)

What do we want ?

• We need to know what “good” Shared Services looks like-Show me some great examples and I will believe!

• There is still a lot of double-talk-Do what you like (as long as its what we want): is there a tension

between local innovation and central drive ?

-we need to stop pretending that people are free to choose if we want to transform

• Financial cost-savings is not enough of a motivation-clarify other benefits-Aggregating transactions to a back office operation may not deliver the service the customer wants….

Source: Colloquium 18 March 2008

Way Forward

• Efficiency Targets

• Simplifying the Landscape

• Progress with proven models-evidence base for sharing and not duplicating effort

• Consolidating investment in proven models and technology

Views on a National Vision

• Mixed views - from very prescriptive to allow organisations to develop priorities

• Aspire to vision should be based on customer experience• High level vision which builds on the clear direction but

provides flexibility for delivery• Vision not programme• A Vision that promotes sharing not just within sectors but

across sectors• Scottish Government role to share best practice across

the public sector give organisations a whole public sector view

• Central guidance, knowledge pool and common standards - developing on line forum

• Needs more discussion

Opportunities and Challenges

• Create compelling solution• Identify benefits• Learn the lessons from

benchmarking and diagnostics• Share best and worst practice• Share customer facing and back

office• Front office house services where

biggest savings could be made• Improve performance for front line

delivery• Building flexibility to share• Internal sharing –key to getting it

right• Sharing skills and resilience• Drive forward culture change• Improved cross sectoral sharing

• Agreeing at the outset why embarking on the journey

• Ownership- clear strategy• If its imposed it will fail• Demonstrating progress and

proving what good looks like• Buy in and engagement and change

management culture• Realistic approach to building

relationship • Timescales different from political

life cycle• Realistic approach to building

relationship • Financial planning and transaction-

accounting and auditing process a hindrance

Opportunities and Challenges

• Interaction with citizens in particular around public perception

• Citizens at the heart of what we are doing

• Choose between improved services and reduce costs

• Efficiency savings• Effectiveness of services• Building on progress and

technology• Services Orientated

Architecture• Review end to end processes

• Demonstrating Shared Services can be aligned to Single Outcome Agreements

• Protectionism and lack of trust• Lack of resources• Pump priming and funding

issues• Redundancy policy and

reduction in headcount• Staffing TUPE issues• Protection of local jobs• Technology must not drive• Diverse IT Systems• Governance• Realism-timescale and benefits

What does good look like ?• High level of customer satisfaction• High level of efficiency including praise from the public• Understanding our citizens needs and our business and our unit

costs• Maximising the use of assets• Saved money• Moving towards transformational change• Centres of excellence for core functions• Delivery of the Single Outcome Agreements• More joined up streamlined services • Cutting back on process bureaucracy• Sharing best practice• Incremental steps to improvement

Role of the Private Sector• Potentially very wide ranging• Role as a partner• Bring experience of customer satisfaction and the market-Skill set• Good client skills• Flexible-replacing of key personnel quickly• Use them for skills transfer and developing leadership around

culture change• Displacement of jobs• Possible challenge from Trade Unions on the role of the private

sector• Investment• They should be cheaper!• Risk of the private sector in increasing costs• Transferring risk• Why aren’t we considering the role of the Third Sector

Next Steps

• Write up the outcomes and way forward

• Encourage practitioners to participate in the discussion forum

• Take your views to practitioners and suppliers on 23rd September

• Support you in developing new opportunities and marketing existing proven models