Making Spend Matter Toolkit - Schaerbeek basic and advanced spend analysis case studies

The following case studies provide practical examples of how Schaerbeek carried out the following two processes to understand, explore and adapt the Making Spend Matter Good Practice into their city:

Core transfer (basic spend analysis)
Optional transfer (advanced spend analysis, developing a strategic approach to public procurement, SME engagement and using social and environmental criteria)

Basic spend analysis case study

Schaerbeek forms part of the Brussels Capital Region in Belgium, with Making Spend Matter being the Municipality's first foray into an URBACT Network.

Schaerbeek viewed the spend analysis methodology as something that would enable them to understand their procurement spend in more detail and raise the level of importance of the procurement process both politically and also with officers within the Municipality. They were attracted to the Preston good practice because of its long-term nature and its ability to demonstrate evidence and achieve concrete results.

Schaerbeek have however viewed spend analysis as being just one part of their approach to becoming a 'responsible consumer'. Spend analysis is just one of a suite of things which Schaerbeek needs to do to become more strategic in procurement - they view it as a key component part of being more focused upon sustainability in procurement, and in supporting SMEs and local employment.

The objectives of undertaking spend analysis in Schaerbeek were two-fold:

First, they wanted to understand in more depth their current procurement spend, and also to project their future spend;
Second, they wanted to know more about the businesses and organisations currently providing them with goods and services, and particularly their economic sector, size, and location, in order to enable market development.

Schaerbeek looked to directly integrate the good practice methodology and analysed procurement spend for 2017 and 2018 (this was an election year in Schaerbeek). However, they made three key adaptations:

Adapting the methodology

First, they adapted the geographical approach to the analysis. Rather than analysing specific geographical boundaries, they deployed distance between the supplier and the Town Hall in Schaerbeek as the indicator, with 'local' spend defined as being within 50km;
Second, the definition of SMEs in Belgium differs from the European definition. They therefore defined a SME as being an organisation with less than 50 employees;
Third, they recognised that whilst Preston had also undertaken analysis with other anchor institutions, that this was not feasible in Schaerbeek, as these institutions tend to operate at a Brussels Capital Region level and partnerships with organisations like the Police and universities need to be more mature.

The spend analysis findings

Schaerbeek undertook analysis of their procurement spend for both 2017 and 2018, with the total amount analysed being around 40 Million Euros in each year. In terms of spend directly within Schaerbeek, the analysis identified this as being 4% in 2017 and 11% in 2018 - this reflects the relatively narrow boundaries of Schaerbeek and the nature of the Schaerbeek economy predominantly being residential. In terms of the Brussels Capital Region, this figure was 52% in 2017 and 62% in 2018 (these results include the amount spent in Schaerbeek as one of the 19 municipalities of the Region).

Schaerbeek also analysed their procurement spend by business type and sector, with a particular emphasis on construction spend. In 2017, 24% of spend was with SMEs (see definition above), with this increasing to 28% in 2018. Spend with the construction sector dominates Schaerbeek's procurement spending and local spending with around 60% of all spend being with the construction sector in each of 2017 and 2018. In 2018, spend with Schaerbeek construction companies made up 72% of all spend with Schaerbeek-based companies.

Interpreting the findings

The Municipality of Schaerbeek undertook detailed interpretation of their spend analysis findings to seek to explain their figures and in particular the difference between 2017 and 2018.

They recognised that part of the increase in Schaerbeek spend resulted from one specific tender for an urban renovation project, thus highlighting 1) the importance of construction and urban renovation in the municipality's expenditure; 2) a relevant example of money spent with local businesses for a project that will directly benefit the citizens.

Schaerbeek recognised that the higher levels of spend in the Brussels Capital Region highlighted the region's economic importance and the presence there of a number of multinational headquarters. They also recognised that increases in SME spend were largely with organisations in the wholesale and retail sector, and of vehicle maintenance.

Schaerbeek recognised that given the relatively low level of spend with Schaerbeek based businesses and the nature of the Schaerbeek economy, there is room for improvement in this particular area of sustainability, although the economy within the municipal boundaries is tightly linked to and influenced by the regional economy. However, Schaerbeek did recognise that there was significant scope to develop a framework of reference by developing a Strategic Procurement Plan, which will focus upon how to encourage suppliers to deliver local economic, social, and environmental benefit through the process of procurement.

Schaerbeek's team decided to structure its work for the Making Spend Matter project around four working groups, each with different activities and goals. This approach has really helped us strengthening the link between URBACT activities and other ongoing projects in the municipality. This gives us hope that the efforts deployed for the "making spend matter" objectives will also benefit the general work of our colleagues and of the municipality in general. For example, the Municipality is working on methods to best implement the standards related to the UN Sustainable Development Goals and we are very aware that public spending can be a great leverage in that direction.
Valentina Morselli, Schaerbeek URBACT Local Coordinator

Re-using the transfer

In terms of the future, Schaerbeek is planning further adaptations and activities around spend analysis.

First, they will continue to undertake spend analysis, but will change the data they will analyse. Rather than looking at actual spend based upon invoices as advocated by the Preston good practice, they will explore data around the value of awarded contracts.

Second, they will focus more on advanced spend analysis and identify spend that can be influenced. By this they mean, for example: taking the time for extensive market assessment; sharing relevant resources and good practices to increase sustainability; identifying opportunities for increased environmental sustainability when new legislation is passed or new technology is available; strengthening positive social practices like separation of smaller lots or working with social economy organisations.

Advanced spend analysis (strategic procurement plan) case study

The Municipality of Schaerbeek is one of 19 municipalities which make up the Brussels Capital Region of Belgium. The Municipality is based in the North East of the Capital Region and is strategically well located, close to the city's Northern railway station.

Schaerbeek is the second largest of the municipalities in terms of population in the Brussels Capital Region and has a population of around 133,000. It is a dense area, with 16,000 residents per square kilometre.

The Belgian system of local government is relatively complex. The Constitution defines both subordinate and autonomous power for municipalities, in that on a day-to-day basis the Municipality of Schaerbeek acts as a representative of decisions taken at other authority levels (such as federal or regional level) and in autonomy for the benefits of its residents.

In economic terms, there are various clusters of economic activity across the Municipality. In 2017 there were over 8,600 registered VAT payers operating in Schaerbeek (including self-employed entrepreneurs), with the highest proportions being in the sectors of general commerce and construction.

In social terms, Schaerbeek is very diverse, and foreign nationals represent 36,5% of the population. Differences among neighbourhoods in Schaerbeek are perceptible: as an example, the median income for 2016 varies between less than 17,000 Euros and more than 23,000 Euros depending on the neighbourhood. Before Covid-19, the level of unemployment was slowly but steadily decreasing but this progress was negatively affected by the crisis. In July 2018 11,753 people were registered as jobseekers, and 11,091 jobseekers in August 2020, that being around 13% of the total of the Brussels Capital-Region.

The above socio-economic challenges are tackled with different policies aiming at increasing the residents' wellbeing, both at the municipal and regional level. As an example, important investments are being made in the part of Schaerbeek's territory designated as an Urban Regeneration Zone, seeking to improve resident's quality of life and stimulate new economic development dynamics.

Why focus on strategic procurement plans?

A strategic procurement plan provides a long-term view of where the Municipality would like to be in relation to procurement. It would enable the setting of priorities and milestones for all those involved in the procurement process, create ownership and enable integration with other organisational strategic plans. It would also clearly demonstrate the wider role procurement plays in responding to the socio-economic

challenges highlighted above and the investments within the Urban Regeneration Zone.

Barriers / challenges

The Municipality, however, has faced a number of barriers and challenges in realising their goals:

Capacity / resources - Covid-19 impacted significantly on timescales as the Municipality's focus turned to combatting the pandemic;
Integrating the time for strategic planning in busy daily schedules of the different actors / stakeholders within the Municipality, so that they could be actively engaged in the process;
Collecting, sharing and proactively use data on the Municipality's expenses via public procurement, as the responsibility is shared across different teams using different software solutions;
During the 2.5 years, some URBACT team members left the Municipality, others got new responsibilities, new members arrived, thus bringing the need to adapt the team's goals and schedule;
The wish was to co-create the strategic plan with commissioners of tenders and colleagues who have expertise in public procurement, strategic and operational objectives. The restrictive measures taken in response to the pandemic limited the possibility for interaction and had an impact on the project's schedule.

Actions taken

The Municipality of Schaerbeek has undertaken a number of actions to progress the development of a Strategic Procurement Plan. It has:

Used the Basic Spend Analysis to provide the quantitative information so that they understand how much is spent with suppliers, who they are, and what the practices are;
Undertaken a gap analysis to provide more in depth understanding both quantitative and qualitative about the object of both current and likely future tenders, goods and services and types of procedures used, in order to define priorities going forward;
Started to identify what the priorities may be through the lenses of sustainability (economic, social and environmental), linkages with other strategic plans, the impact of actions compared with the effort needed to include sustainability, and visibility for the citizens / public (i.e. their understanding of what the Municipality is trying to achieve with sustainability);
Agreed the component structure of the strategic procurement plan - legislation, context, governance, strategic and operational objectives, action plan and monitoring;
Organized an internal online consultation (25 participants) to allow commissioners of tenders and colleagues who have expertise in public procurement to give their input on the content of the strategic plan;
Keep the Aldermen, Mayor, and Financial Director updated on the evolution of the project, and to receive feedback on the plan's proposal.

What worked well

Having monthly meetings with the URBACT team to share tasks and agree on objectives;
Having the support of external experts (from URBACT or through public procurement) to define the objectives, structure, and methodology of the strategic plan;
Highlighting the value of the previous experiences and lessons learned, as the Municipality already had experience on implementing social and environmental clauses in its procurement;
Working on common definitions;
Being a team composed of members of different departments strengthened the cooperation and mutual understanding;
Linking the public procurement strategic plan to other completed / in progress strategic plans (on sustainability, on climate, on diversity...) to work on coherence of objectives and actions;
Getting inspiration from the other cities of the Making Spend Network (tools, approach, motivation).

What worked less well

Working on common tools to record and analyse data: there is a strong will to go in that direction, but it requires a wider approach (not limited to procurement) and more efficient technology;
One of the initial goals was to link the procurement strategic plan to the work done on property management, that would allow to foresee and streamline necessary investments and procurement for goods and services; the work on property management plan is complex and it depends on the work of colleagues that are not directly involved in the URBACT ULG, so the team decided at the end of 2019 to focus on recurring tenders to identify priorities and where the municipality can have more leverage to implement changes to strengthen sustainability;
The separation of political competencies among different levels of power makes it complicated for the Municipality to involve other institutions in the work on public procurement; this was particularly relevant when working on strengthening the relation with SMEs and the will to build a business database;
Limited time and resources: schedules are busy, and the pandemic put a hard toll as public procurement was highly affected;
The interaction outside the municipality: the economic constraints related to the pandemic are both a motivation to work on having a positive impact on local economy and a barrier as the firms have other priorities;
Digital meetings are less motivating than in-person interactions, especially when it comes to co-construction and brainstorming;

Lessons learned

Working on sustainability in public procurement contributes to the goal of approaching expenses wisely for the benefit of all citizens of current and future generations, making the Municipality a responsible consumer;
Always start with reliable and clear data;
Agree on common definitions of concepts and objectives;
Build on previous experience and knowledge;
Define how changes can benefit the daily work of colleagues;
Do not be afraid to define long-term goals as some changes require time and dedication;
Ask the experts and be open to inspiration;
Be open to learning new skills and adapt in how to manage online meetings, keep motivation through remote work and improve digital skills in general.