Northumberland County Council

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Northumberland County Council

Northumberland and LM3

Barry Mitchell

LM3 Project Manager


Why look at the local economic impact of public spending

What happens to all the money we spend on goods and services?

How does our procurement behaviour relate to our corporate strategy? Are we promoting regeneration through our public spending activity?


The Leaky Bucketmoney enters the local economy…

Tourism

Welfare benefits

Business investors

Export earnings (spending on businesses from non-local people and businesses)

Regeneration funding

Q: How does money alreadycome into my area?


The Leaky Bucket…and money leaks out

Energy and waste

Taxes

Spending on non-local servicesand products (care, food, etc)

External contractorsand consultants

Q: How do we currently spend our budget?


The multiplier effectA pound can be more than a pound

Every time money is re-spent in your local economy, it is like new income for the person who receives it. The more money is re-spent, the higher the multiplier effect.

The areas in blue in the images on the right represent how much money would be generated in your local economy if people spent 80% (top) versus 20% (bottom) locally, over and over.

£10.00

£2.00

£0.40 £0.08£0

£2

£4

£6

£8

£10

£12

1 2 3 4

£10.00

£8.00

£6.40

£5.12

£0

£2

£4

£6

£8

£10

£12

1 2 3 4


LM3 (Local Multiplier 3)a DIY economic indicator

Enables you to measure the impact of your initiative orwork on the local economy

Adapted from the Keynesian multiplier

You measure three rounds - how money enters, how it is spent, and how it is re-spent

Clear, simple, transparent, and replicable


How LM3 works in practiceTwo construction contracts

NNDC compared two contracts. The LM3s are on the right. Note that the smaller contract in fact generated more money for the local economy!

This example shows the importance of economic linkages. It’s not just where you spend your money, but what happens to your money after that.

Contract 1 Contract 2Round 1 72,000£ 120,000£ Round 2 57,600£ 20,400£ Round 3 24,980£ 6,760£ Total 154,580£ 147,160£

LM3 2.15 1.23

North Norfolk District Council


LM3 Project

LM3 project in Northumberland• Partnership - Procurement and Regeneration

- NEF, NSP and ONE

• Supporting Key Objectives and Innovative

• Measure and improve its local economic impact

• Key initial Milestone targets - LM3 Benchmarking completion - Proactive Food Tender activity


LM3 Project strategy

• Strategy and Project plan developed and

agreed by end January 04

• Definition of local a critical criteria

• Survey form and letter prepared and tested


Implementation of Strategy

Survey Completion

• 372 Survey requests issued February 04

• Reminder requests issued April 04

• Results consolidated June 04


Implementation of Strategy

LM3 Benchmark Completion

• Completed Supplier Surveys result in 31% return

• Benchmark LM3 Calculation 2.19 - Comprised In Area 2.76 - Comprised Out of Area 1.36

• Overall Benchmark classed as positive


Model evaluation highlights

• £1 of income spend from government generates

• £2.19 in total and £1.19 additionally for the local economy

- £1.04 from In Area suppliers - £0.15 from Out of Area Suppliers


Local and Non Local Spend

• In Area suppliers spend 76 % locally

- predominantly labour cost and local suppliers

• Out of Area suppliers spend 36 % locally


Food Tender initiatives

• Seminar with Suppliers

• Encourage networking

• Liaise with Agencies

• Personal contact


Food Tender initiative

• Additional Communication to EU notice

- Newspaper advertisements

- Shown on NCC web site in tenders invited

- How to do business guide published on NCC website

- Example business questionnaire published on NCC website

- Links from above to SBS,EU and Business Link websites



Repackaging the Tender

• Facility to tender by smaller lots - Food contract opening into 7 categories

- 4 of 7 food categories opened into 4 Areas

• Quality weighting on evaluation criteria - 60% / 40% in favour of quality against price



• Option to tender as manufacturer or wholesaler

• Required to assist in pursuing a sustainable food strategy

- Quality criteria including sustainability

- Ability to supply locally grown or organic


Tender Results

Food Tender statistics

• 42 Expressions of interest - 22 local food suppliers

• 16 Tenders received - 7 local food suppliers


Tender Results

Food Contract Award 2004

• 4 Categories to Local Suppliers Meat, Bread, Fruit and Vegetables and Milk

• 3 Categories to non-local Suppliers

Frozen, Groceries, Crisps nuts and snacks


Continuing Work on Food

•Formalise an approved Food Supplier list process

- agree abridged application process but with necessary compliances

- coordination between customer and suppliers


Continuing Work on Food

•Pursue PDO/PGI EU Accreditation

- liaise with Trading Standards on inspection

- liaise with DEFRA on processes - work with producers to complete

applications


Continuing Work

•Ongoing key initiatives - proactively encourage local SME’s

- meet the buyer sessions - liaison with Business Link - contact with umbrella organisations - repackaging relevant tenders - increase awareness of local

suppliers


Continuing Work

Enhancing Policy statements

• Best Value and Community strategy

updated

• Strategic statement enhanced

• Finance Plan


Other LM3 Evaluations

• Working with the Private Sector

- work completed with 2 local multi-national companies using LM3 to establish annual worth to local community

• Working with Social Enterprises

- work carried with ADAPT on benchmark and community worth and planned work with The Alnwick Garden Trust to commence shortly

• Working with other Local Authorities

- work completed with 1 District Council to establish indicative

benchmark


Other LM3 applications

• Involvement on Buildings and Property tenders

- innovatative community benefit clause in

OJEU notice - liaison with Business Link - encouraging awareness with local suppliers - 16 out of 18 PQQ’s local - All contracts awarded to 3 local builders


Community benefit clause

Under this procurement exercise the Contractor is required to actively participate in the economic and social regeneration of the locality and surrounding the place of delivery for the provision of the service. Accordingly, contract performance conditions may relate in particular to social and environment considerations.



• Involvement on Grass cutting tenders - liaison with Business Link - encouraging awareness with local suppliers - 22 out of 24 EOI local - All contracts awarded to 4 local suppliers

• Involvement on Fresh Sandwich tenders

- liaison with Business Link - encouraging awareness with local suppliers - 20 out of 21 EOI local - Contract awarded to 1 local supplier



• Identify potential on pending tenders

- liaise with relevant operational dept

- ensure optimum tender packaging

and awareness by local SME’s


Northumberland LM3

• Quoted as best practice

- Presentation at DEFRA suppliers conference

- Presentation at Government Office NELL - Case studies within National SME

Concordat - Case study within SBS publication

- Case study within OGC publication


LM3 Project Expansion


LM3 Monitoring clause

• A new requirement introduced for

tender applications to include both a current and projected local spend analysis if the tender is successful



• Tenderers should note that completion of Schedule H is for Northumberland County Council’s monitoring purposes only and does not form part of the evaluation criteria for this tender. Your answers to this schedule will not be used to determine the award of this tender.



• LM3 Monitoring

1.29 One of Northumberland County Council’s strategic objectives is to measure the effect of our expenditure and to increase the amount of money which the Council spends in the local economy


LM3 Evaluation criteria

Continual review to include by end of 2006 within tender process

• Evaluation criteria to include LM3 assessment as part of whole-life cost


Potential Benefits

10% Increase in local spend from non local

• Supported by our Strategic Statement and Finance Action Plan

- utilising LM3 model highlights

• Benefit to local economy of £34m per annum

• Achieves £9.5m per annum efficiency gain


Northumberland LM3

THANK

YOU

Documents

Northumberland County Council