Spend analysis guide

How do you go about it?

There is no one size fits all solution, but working with the Centre for Local Economic Strategies CLES we have broken the process up into a number of steps:

• 1. Meet with top management in each anchor individually and make the case for delivering wider benefits for place and its communities through public procurement
• Key points include:
• Additional - benefit out of monies they are spending already
• It is lawful - consistent with Social Value Act and EU procurement
• It is based on a realistic sized local market (i.e. not "hyper-local")
• It is not about paying a premium for going local. It is about better engaging with your supplier base to increase their capacity and encourage fair competition.
• It is in the anchor's interest to help improve the conditions in their catchment area.
• 2. Offer initial assistance with set up - in our case via CLES working as independent contractor alongside your staff 
• 3. Get anchor institution to identify details of top 300 contracts by scale, including details of where contractor is based. (This provides a proxy for total organisational performance and focuses attention on the largest sums of money)
• 4. Analyse spend by sector (SIC codes), by types of businesses and geographical area. This will provide an evidence base of procurement spend that can help inform your procurement strategy.  It can also provide useful additional information - for example, the extent to which suppliers are based within or are employing workers from within more deprived areas.
• 5. Compare local percentage rates against national benchmark average (provided by CLES/Federation of Small Businesses survey).
• 6. The evidence may also help you identify gaps in the market where there could be scope to encourage SMEs to bid for contracts in their sector.
• 7. Consider what steps you may be able to take to change your current pattern of spend. This might include things like breaking contracts up into smaller sets, engaging more with potential local suppliers, changing your way of advertising contracts, and more.
• 8. Monitor the pattern of spend on an annual basis. This will allow you to track if or how patterns of spend are changing and consider whether further changes in working practice may be necessary.
• 9. Share your experience. This means both establishing a local procurement officers group to share information and provide mutual support, and also publishing evidenced information on the results of your work - because it is important to make sure that other people understand that this is a results-orientated process which is delivering demonstrable positive results.