Nick Petford, Vice-Chancellor of The University of Northampton and Chair of Procurement UK, examines the role of governors in ensuring institutions manage resources effectively.
Efficient procurement is a business critical issue. Universities and specialist colleges in higher education control over £9bn of purchasing power annually. This is a huge spend, second only to our financial responsibilities for the pay budget. But rising expectations from our students and stakeholders coupled with growing demands on the public purse from other sectors mean we need to sharpen up. Showing with evidence how we spend this money efficiently and effectively is now a matter of enlightened self-interest.
In order to achieve a successful procurement model rather than just an adequate procurement model, businesses need to up-skill all their employees. It’s not only those who work in procurement that are important to win over. It is necessary to communicate procurement attitudes to all employees in an organisation to breed better understanding and effective decision-making.
Governors have a crucial role to play in making sure we rise to this challenge. Their role in overseeing procurement should be clear in terms of assurance and effective risk management. Put simply, governors have a responsibility to ensure an institution manages its resources wisely and achieves value for money. Effective procurement is part of that solution.
Procurement is changing
It’s not just about money. Procurement is changing, shaking off its traditional image as a dry technical process and claiming its place as a key strategic asset in helping achieve wider social objectives. Carbon reduction, ethical sourcing and support for local industry, all of which undoubtedly resonate with institutional missions, are some of the desirable outcomes addressed through strategic procurement. Higher education institutions are major contributors to their local economy through direct employment and the goods and services they buy. While procurement practices must be transparent and fair, they can – and should – be designed to encourage local suppliers and social ventures to tender.
At the University of Northampton we are fully embracing the opportunities afforded to us by the revised Social Value Act. The procurement process for the construction of our new £330m town centre campus – one of the UK’s largest higher education construction projects in recent years – has social impact clauses included. Our commitment to supporting Northampton and Northamptonshire is reflected in our tendering processes, which sees us proactively invite local companies to tender for our contracts. We are dedicated to the long term economic plan of our region, where we contribute over £239m annually.
Our £1bn Challenge campaign encourages other UK universities to follow our lead, and spend at least £1bn of their combined annual procurement budget with suppliers that can deliver social impact. Universities can buy direct from social ventures, social enterprises such as mutual or co-operatives, or work with private sector partners to ensure they embed social value into their supply chain. The Challenge encourages institutions to use their stature to improve their local economic, social and environmental wellbeing. Smart, effective procurement processes like these will deliver social impact for the benefit of all.
Good governance is at the heart of the higher education sector in the UK. ‘Getting to grips with Procurement: a guide for governors‘, published by the Leadership Foundation for Higher Education, is available now.
Nick Petford is Vice-Chancellor of the University of Northampton