Leeds Federated Housing Association has saved more than 10% of its procurement budget by buying goods and services through the Procurement For All consortium.
The Yorkshire housing association, which is a founding member of PFA, has around 4,000 properties in Leeds, Wakefield and North Yorkshire.
In 2015, Leeds Federated bought about £1.9 million on goods and services through PFA, including windows and doors, heating installations, kitchens and bathrooms and warden call services.
Gail Monnickendam, deputy chief executive of Leeds Federated, says that buying through PFA, a procurement consortium for 21 social housing providers which uses its collective buying power to cut procurement costs, has three main benefits: continuity of service and good service, value for money and convenience.
“We have a close relationship with PFA and because we have a board seat we know the staff well,” Monnickendam says. “We know how the company works and we know what’s coming up on the procurement timetable. A lot of procurement comes down to whether you have confidence in the procurement framework provider and whether it has a wide enough range of high-quality suppliers you think you may need.”
There are financial benefits too. In 2015, Leeds Federated reduced its procurement costs by about 12% or £850,000, by using PFA.
“The fee we pay PFA for their service and membership of the consortium is good value for the millions of pounds worth of goods we procure through them compared to what we’d pay for procurement services elsewhere,” Monnickendam says. “It’s a value for money procurement.” In 2015, Leeds Federated reduced its procurement costs by about 12% or £850,000, by using PFA.
Using PFA for most of its procurement is easier than using different procurement frameworks or consultants for buying different goods and services, Monnickendam adds.
Before Leeds Federated joined PFA, it used different consultancy firms to help it manage its buying and comply with complex European Union legislation on procurement. Managing different suppliers can increase administrative and procurement costs.
In February 2015, European Union procurement law for the public sector changed. Contracts worth as little as £25,000 now have be opened up to competition by being advertised on the Government’s Contracts Finder website. It has been described as the biggest change to procurement law for 10 years.
“The administrative burden of complying with EU procurement legislation is a nightmare,” Monnickendam says. “If housing associations are looking to purchase a service or commodity above the EU procurement limit then you have to know what to do. You need someone internally who knows EU procurement rules inside out, or you use one of the many procurement consultants on the market, or you use one of the other purchasing consortia or get involved as a member yourself.”
The changes to EU procurement rules come as UK housing associations are under growing financial pressure after the government told them to cut rent for social housing tenants by 1% a year until 2019. These changes will reduce housing associations’ income and may mean they build fewer homes, according to some experts.
Reducing back-office costs for tasks such as procurement can alleviate financial pressure and free up funds for building more houses or improving the quality of existing housing stock.
“There’s more pressure on absolutely everything in the housing sector,” Monnickendam says. “No stone is being left unturned in looking at areas where we can get better efficiencies."