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

The following case studies provide practical examples of how Pamplona 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

Pamplona is based in Northern Spain and came to the Making Spend Matter Transfer Network with the objective to learning and advancing the way in which they undertake procurement. Pamplona recognised at the outset that the good practice and spend analysis is a tool that enables the Municipality and other anchor institutions to understand more about their procurement spend and particularly where that spend goes geographically, sectorally, and in business type terms.

However, Pamplona recognised that spend analysis was far more than just a simple spreadsheet. Instead, the evidence that spend analysis provided was a means of influencing and adapting the way in which procurement was undertaken and a means of influencing wider strategy. Indeed, Pamplona made an important early link between spend analysis, procurement, and the Municipality's Strategic Plan. In particular, they recognised the impact procurement spend could have on the economy, on social welfare and in addressing environmental challenges. Pamplona identified that spend analysis enables the Municipality to make better decisions and support wider strategy.

Adapting the methodology

Pamplona made some changes to the good practice to adapt it to local circumstances and contexts:

First, they undertook a different geographical approach to Preston, by exploring spend at city, metropolitan, regional, and country levels;
Second, they added a further business type to the analysis, in that they not only explored levels of procurement spend with SMEs, but also with Social Economy organisations;
Third, whilst utilising the Making Spend Matter tool and guide as the basis of their analysis, they used Power BI as an alternative way of collating the data and undertaking the analysis, as this was more locally appropriate;
Fourth, they also undertook analysis that was not restricted to spend with the top 300 suppliers; instead, they also explored minor contracts.

The spend analysis findings

The spend analysis undertaken by Pamplona over a four-year period of their own Municipality spend identified the following:

That 55% of spend was with businesses based in the Pamplona Metropolitan Area, with 38% being outside of the Navarra region. This figure is decreasing over the four years of analysis undertaken;
That 50% of spend in 2018 was with SMEs. This is an increase from 40% in 2019;
That spend is dominated by four key sectors - transport, water and waste, construction, and other services, which collectively make up 45% of all spend.
That 7% of spend is with Social Economy organisations;
That spend on minor contracts is almost exclusively with SMEs

As part of Making Spend Matter, the Municipality of Pamplona also transferred the spend analysis methodology to two key anchor institutions, namely the Public University of Navarra, and the Regional Government of Navarra, with the collective analysis covering over 500 Million Euros of spend.

The result was fully satisfactory, as all the entities were aligned with the project's objectives and methodologies, and the first commitments of anchor institutions to overcome their own spend analysis were also made. I can't imagine a best way to start my duty as ULG Coordinator!
Santiago Lesmes, URBACT Local [stakeholder] Group (ULG) Coordinator (2019/2020)

Interpreting the findings

Pamplona adopted a very data-based and evidence-focused approach to their interpretation and identified recommendations relating to the wider procurement process as to how this could lead to greater influence in delivering the objectives of the Strategic Plan:

First, the data identified that the 18 biggest contracts accounted for 50% of all procurement spend so it is unlikely that SMEs will have the capacity to deliver such contracts. Therefore, Pamplona is focusing upon ensuring that these contracts and the suppliers are encouraged to deliver greater social and environmental benefits.
Second, the analysis has identified that there is an opportunity to influence spend in the sectors of construction and other services. By this we mean there is scope to develop the capacity and capability of SMEs in particular to bid for contract opportunities and also for sub-contracting opportunities, with larger organisations, particularly in relation to construction projects.
Third, and linked to both previous points, the data identified that the biggest contracts do not match the size of local companies. Pamplona is therefore looking to use its Guide for Social Responsibility (see case study on Social Criteria) to influence the behaviour of the largest contractors.

Re-using the transfer

Pamplona will continue to undertake spend analysis into the future and will additionally seek to transfer the methodological approach to other anchor institutions in the Navarra Region, and across other Municipalities in Spain. Pamplona is also being increasingly asked to demonstrate on a European level its approach to procurement, particularly around social responsibility.

Advanced Spend Analysis (social criteria) case study

The City of Pamplona lies in the Navarra region of Northern Spain. The city itself has a population of around 200,000; with the Metropolitan Area of Pamplona a population of 350,000; and the region a population of 640,000. In economic terms, Pamplona has a strong but focused economy. There are two core sectors of the economy in the form of tourism and finance, which both account for around 36% of economic output. There are a total of 6,125 registered businesses in Pamplona. Pamplona is home to one key private sector anchor institution in the form of Volkswagen, which employs some 4200 people at its branch. GDP in Pamplona is 29,000 Euros per head.

In social terms, the unemployment rate in Pamplona is 10%, which whilst still high is lower than in recent years and lower than the Spanish average. 120,000 people in Pamplona are economically active, which means around 12,000 people are currently active but not in employment. The population of Pamplona has quite high skills levels, meaning a potential imbalance between skills levels and the type of employment on offer through the tourism industry.

The key anchor institutions in Pamplona are the municipality itself, the Regional Government of Navarra, various publicly owned entities, the Universidad Publica de Navarra (Public University of Navarra), and the Corporacion Publica Empresarial de Navarra (CPEN).

Why focus on social criteria?

Whilst the City of Pamplona had already implemented the use of environmental criteria in some of its procurements between 2008 and 2018, thanks to an internal guide on the subject produced in 2005 and a regional law formalising their use in 2008, incorporating social criteria into procurements was still a new concept.

In 2018 there was a new regional procurement law that makes social criteria a mandatory 10% of selection criteria which changed the goalposts and meant the City and its anchor institutions needed to understand better how to include social criteria going forward.

Barriers / challenges

Pamplona City Council, however, has faced a number of barriers and challenges in realising their goals:

The lack of a dedicated team or unit specialized in public procurement. The tasks in public procurement processes are spread into a variety of professional profiles. Every one of the 12 different departments manage its own procurement processes;
The lack of knowledge of the staff making the tendering documents (technical and administrative specifications) about social and environmental issues and how they can be addressed properly;
The lack of a framework or strategy around procurement and the outcomes that Pamplona City Council wants to achieve;
In some cases, public servants are reluctant and unwilling to change the way they procure. Some public servants still think that price must be the only selection criteria as it makes procurement an easier process.

Actions taken / changes made

The City of Pamplona has taken a number of actions.

It has undertaken an exercise to understand their current practices and potential for increased use of socially responsible public procurement which showed that this use:

Encourages responsible consumption by the public authority staff;
Increases staff awareness of procurement effects in Pamplona's communities;
Can be a tool to progress towards strategic objectives through public procurement;
Is an opportunity to think about procurement impacts;
Must be included in all the designing process of procurement (inc. strategy)

It has used the learning and political momentum provided by Making Spend Matter, Pamplona adapted Social and Environmental Criteria to their own context.

In 2019 the City produced an instruction and guide about strategic and socially responsible public procurement. The guidance includes support for procurement staff on objectives and principles of SPP in Pamplona, internal rules for how to conduct SPP and how to include social and environmental criteria throughout the entire procurement process.

The guide also provides the staff in Pamplona with examples of social and environmental criteria, backed up with legal text, in order to show what is possible, and reduce perceptions of risk. Indicators of social and environmental criteria, and an evaluation and monitoring system with verification suggestions also further provide procurers in Pamplona with the tools to make SPP happen.

What worked well

The guide about strategic and socially responsible public procurement is really ready to use and gives specific examples of social criteria, and how to assess and evaluate them;
From 2018 it is mandatory by law to include social or environmental criteria (before it was optional). This ensures that employees of public institutions make the effort to introduce social criteria in procurement processes;
Once the guide was approved it was explained through training workshops to the employees of the different municipal departments. This helped to raise awareness of this internally.

What worked less well

Despite these efforts, organisational culture around procurement has changed very slightly;
Too strong political leadership around socially responsible procurement can put progress at risk if a political change happens;
Monitoring of impact is still the unfinished business of socially responsible procurement.

Lessons learned

The work on the guidance and embedding sustainable public procurement more strategically in Pamplona has led to the following reflections and lessons learned:

Organisational and cultural change is a key part of integrating social criteria into procurement;
The market learns and adapts slowly to social demands, so informing them early is very important;
It is easier for big companies with dedicated procurement departments to bid for tenders with social criteria, so the challenge is balancing demands while giving SMEs opportunities to bid;
It is very important to integrate the tender design process for sustainable elements with as many stakeholders as possible and as early as possible;
Difficulties lie in finding the link between what the city of Pamplona wants to achieve, what to ask for and how to evaluate it (example: how can more job opportunities for people with disabilities be provided in one contract, what documents does the city need to ask to the providers to prove it, and how will the city measure the number of job positions, hours, % of disability...);
While Pamplona has set the strategy, policy and guidance in place, the challenge now is to provide the staff and suppliers with capacity to implement this tender to tender