Interview: ‘We create a surplus that goes back into frontline services’ – ESPO lifts the lid on winning IT-procurement formula
The procurement leader of one the UK’s largest public buying organisations tells Sam Trendall about the important role organisations like his play in the government IT landscape
The six councils that co-own ESPO cumulatively provide services to about four million citizens
Founded in 1981, ESPO – or Eastern Shires Purchasing Organisation – has been helping public sector customers buy the goods and services they need for 36 years.
The public buying organisation (PBO) was set up by Leicestershire County Council, and now features five other local authorities as co-owners: Lincolnshire County Council; Cambridgeshire County Council, Norfolk County Council; Warwickshire County Council; and Peterborough City Council. Between them, the authorities govern about four million people.
The procurement body that they jointly own boasts a catalogue of 27,000 products that customers can purchase, many of which are stocked at ESPO’s 120,000 sq ft warehouse in Leicester. A total of almost £1.5bn was spent through ESPO-created frameworks in the 2015/16 year, the organisation claims.
PublicTechnology caught up with procurement service manager Richard Skelton to find out more about the role ESPO plays in the public sector’s procurement and use of technology, and how the PBO model might evolve from here.
Tell us about the role that ESPO plays in the procurement and deployment of IT in the public sector
We are owned by six authorities, but we are run as a business. Our mission in life is to put together procurement solutions for customers, predominantly among local authorities. It allows them to focus on doing what they do best. We cover our costs and then create a surplus, which goes back to our owners – and they plough it back into frontline services. We have done this since the early 80s – it is a business model that has stood the test of time. We are one of the largest PBOs, and are predominantly local authority and education focused.
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Why do you believe the model works?
One of the main things, particularly in the ICT field, is that we collaborate with other organisations. The requirements in local government and central government can be very similar, and we work with other public buying organisations – such as YPO [Yorkshire Purchasing Organisation] and NEPO [North East Procurement Organisation] – on frameworks such as Technology Products, and we also collaborate with the Crown Commercial Service. We aggregate all our demand and we go out to the market together, and get a solution which gets the very best terms.
What are the benefits for your customers in the public sector?
Customers buy PCs in different ways; the MoD might buy several hundred thousand at a time, whereas a primary school does not need very many. We offer an Amazon-type solution where they can just buy [a handful of PCs] through a screen, whereas the MoD might want to run their own bidding process. They are buying thousands at a time, whereas local government buys them in ones and twos. We are trying to offer the best of both worlds.
Presumably the model works best for generic products that can be quite tightly specced?
That’s right – we cannot do it for all cases, perhaps where there are more intricate requirements. Things like PCs or multi-function printers are good examples, as are certain software requirements. But we also have other markets where the requirements are quite different – for example consultancy, where we have our own framework with YPO.
I’m surprised that something as seemingly high-end as consultancy is a good fit for the PBO model…
It absolutely is – that framework covers ICT consulting services and solutions, and back-office solutions. For a primary school that might not otherwise know where to go, it is a great thing that they can go to our framework and pick a consultant that has the technical requirements and resources they need, and knowledge of the sort of back-office solutions they need. That is where we can help.
We are always looking for new sectors – the more frameworks we can lead, the more good we can do
Is promoting SME involvement in the public sector supplier landscape as important to you as it is in Whitehall?
Absolutely – that is very much on our agenda. We are a signatory to the Small Business Charter, and it is one of our internal KPIs. In the last quarter, 82.9% of our awards were to SMEs – that broke down into 15.1% microbusinesses, 49.2% small, and 35.7% medium. The quarter before that 80.5% of awards were to SMEs. For one recent requirement, we used an open tender process, and got 250 responses back. It creates a massive amount of work, but we are happy to do it, as it enabled us to have an SME-friendly process.
How will ESPO develop from here?
We are always looking for new sectors, and we are growing. We currently have over 150 frameworks. But the more frameworks we can lead, the more good we can do in the public sector by achieving good terms for our customers, and by making the procurement process as easy to use as possible. We are currently going through some engagement with CCS and YPO, and we are looking at a new ERP [enterprise resource planning] framework. We have the Corporate Software Solutions framework, and the Local Authority Software Applications framework. But we are looking now at a new framework for enterprise solutions. Moving away from ICT, we are looking at things like HR, DBS [disclosure and barring service] checks, and learning, development, and training services.
Are the frameworks you build dictated by what the public sector is asking for?
Very much so. In terms of procurement of new products or business, if we can solve somebody’s problem for them – we are onto a winner. Sometimes we will be talking to someone in a local authority, and they will talk to us about their problems. If we are spending a lot of time talking about training, for example, we will start thinking: ‘If they have that problem, others probably will too.’ And, rather than one authority having to procure, with all the associated costs, we can work with them to create something that we can turn into a framework solution.
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