1. Health Business Services Improved Procurements Results & Typical Procurement / Purchasing Pitfalls To Be Aware Of

3. HBS organisation structure HBS Structure Director General National Director of HBS Procurement FinanceCRMEstatesERPSHR Deputy Director of HBS

4. Procurement Sourcing & Contracts Logistics & Inventory Management Systems Office of the Head of Procurement HBS Shared Services HBS Structure Procurement organisation structure

5. Health Section 38 Section 39 OGPHSE Health Customers HBS Structure

6. 6 Health Procurement Structure Health Led Categories Medical Care & Pharma Equipment, Laboratory & Diagnostics Medical Professional Services Surgical Interventional Devices & Consumables OGP Led Categories Professional Services Facilities Management and Maintenance Utilities ICT and Office Equipment Marketing, Print and Stationery Travel and HR Services Fleet and Plant Managed Services Other Sector Led Categories Local Government Minor Building Works and Civils Plant Hire Defence Defence and Security Education Veterinary and Agriculture Laboratory Equipment HBS Procurement Health Customers

7. Health Procurement Structure

8. The model is designed to comply with the requirements of the Government decision– “One Voice for Health”. Compliance with national initiatives and contracts is mandatory, not optional. Single integrated approach for health procurement. Sustain the savings already achieved in the Health Sector. HBS Procurement will represent Healthcare customers. Guiding Principles Health Procurement Structure

9. Procurement Structure Head of Procurement Office of the Head of Procurement Sourcing / Contracting LogisticsSystems Health Procurement Structure

10. Procurement Reform The Pricing & Assisted Sourcing System (PASS) is a centralized searchable database designed to inform HSE staff who are authorised to buy goods and services of items on contract. PASS provides details and information relating to products, suppliers on contract as well as the price per item. PASS The Procurement Programme Management System (PPMS) was developed to manage the procurement workload and pipeline. PPMS The Procurement Data Warehouse (PDW) provides procurement with visibility across the supply-chain and the heterogenous systems within HSE. PDW The National Distribution Centre (NDC) was developed to implement part of the Shared Services model to increase efficiency and productivity. NDC

11. HBS Procurement Sourcing / Contracting 11

12. 12 Organisation / Operational Category Councils Acute Services & Medical Devices Community Funded Schemes Disability Medical Professional Services Medical Devices Equipment eHealth Sourcing

13. 13 Health Business Services will sign overarching contracts on behalf of all health agencies. Local sourcing teams:-  Spot Buying  Below Threshold Sourcing  Purchase to Pay Processing  Contract Management  Information Provision to HBS Procurement to support Sourcing / Performance Management For unplanned sourcing projects, a Procurement Service Request (PSR) will be submitted by the Procurement Coordinator to HBS Sourcing & Contracting. Will be incorporated in national / local plans as appropriate. Implementation Ways of Working

14. Head of Health Sourcing MCPELDMPSSIDC MCP - Medical Care & Pharma ELD – Equipment, Laboratory & Diagnostics MPS – Medical Professional Services SIDC – Surgical Interventional Devices & Consumables Sourcing / Contracts Sourcing

15. Sourcing / Contracts Medical Care Pharma (MCP) Community Funded Schemes Medical Devices & Care Products Pharma Equipment Labratory & Diagnostics Medical & Surgical Equipment & Diagnostics Capital Project Equipping Services Medical Professional Services eHealth Health HR and Professional services External Health Services Surgical / Interventional Devices & Consumables (SIDC) PPI Surgical Devices & Implants Surgical Consumables General Theatre Equipment Sourcing

16. As a general principle, the guidance sets out positive measures that buyers will take to promote SME involvement in public sector procurement. Market Analysis - to understand the range of goods and services on offer, market developments and innovation, what commercial models are available, the competitive landscape, and the specific capabilities of SMEs etc. Sub-dividing Contracts into Lots - Lots may be also decided on a geographic basis, a work package basis, an internal organisation structure basis, etc. Consortium Bids - SMEs are encouraged to consider using consortia where they are not of sufficient scale to tender in their own right. “Open” Tendering - Use of open tendering for contracts below €206,000 (exclusive of VAT) in the case of advertised contracts for general goods and services. Positive measures to promote SME involvement Sourcing / Contracts

17. Key Customers Generating Sourcing & Contracts Projects 3 Year Plan Building a Single National Sourcing Plan for Health Health Sourcing Plan Pipeline 40/02 Capital Plan Savings Initiatives 9 CHOs Voluntary Agencies Philanthropic Donations CAWT HSE Corporate / Clinical Directorates 7 Hospital Groups TUSLA / Other Government Departments Logistics NDC

18. HSE Logistics Service 18

19. HSE Logistics & Inventory Management Service New model for Logistics & Inventory Management 19 NDC & Regional Hubs Comprehensive Review resulted in the following recommendations: Consolidation of fragmented stores infrastructure into a National Distribution Centre (NDC) distributing to 9 Hubs Increase level of management of stock at point of use (POU) Implementation of appropriate supply channels – 4000 Customer Delivery Points: 8000 receipts per day: €100m Stock Issues & €300m Non Stock Issues per annum.

20. NDC Landscape Regional Hubs are transhipment locations (no local stock) from which local deliveries will be made. Product from the NDC will be transported to regional hubs on large vehicles in labelled cages. It will be cross-docked (consolidated), with product delivered from local suppliers and then delivered to customers in a single delivery using smaller vehicles. Stock may be delivered to customer location by the NDC if it is more practical / effective in certain circumstances e.g. full loads for customer locations. Implementation within the Dublin region is currently being further developed, in order to maximise the supply chain management strategy and to assist in the minimisation of stock holding arrangements in a number of locations.

21. NDC High Level requisition Flow Process

22. 22 POU Storage Unit 2 Bin Storage system Front (ward staff use stock from this bin first) Back Sample Label Front Side When the front bin is empty the user or L&IM operative turns the label which indicates replenishment is required and then begins to use stock from back bin On a scheduled basis a POU operative will scan the location for cards which have been turned to indicate replenishment required. Each card requiring replen will be scanned and returned to front. Formatted file created for upload into Procurement system. File uploaded and validated on Procurement system Stock picked and shipped Stock put away into Kanban and barcode label turned to front Depending on wireless availability. This may require return to docking station after scanning a number of locations. Sample Label Reverse Side Overview of Point of Use (Kanban ward stock) Process

23. 23 Overview of Point of Use (Kanban ward stock) Process Kanban Benefits There are many advantages to using the kanban system as a way to manage work, including: Flexibility Focus on continuous delivery Reduction of wasted work / wasted time Increased productivity Increased efficiency Team members’ ability to focus

24. It is a shared service which is a key element of: Government policy / public reform programme; HSE Reform Programme – Future Health; Logistics Review 2010 It is supported by a strong business case (€9m net saving p.a) It delivers on LRC and Public Service Agreements (e.g HRA commits to maximising efficiency and greatly increasing productivity (p-11) and flexibility around grade demarcations (p-13)) It is supported by Minister for Health, Director General HSE, CFO HSE, National Director Shared Services and Head of Procurement It releases clinical resources to frontline patient care It resolves long standing deficits regarding ICT / Financial Management It provides a platform for future development (systems and people) It gives local suppliers / SME access to national distribution Key Reasons for Implementing NDC

25. 25 Outline NDC Rollout Plan

26. Procurement Systems Business Intelligence 26

27. Visibility, Control & Efficiency Procurement Systems Extend use of ICT solutions Maximise System to System Processing Integration Maintain High Quality Master Data Develop Self Service Requisition Capacity Maximum use of Business Intelligence Analysis

28. Visibility, Control & Efficiency Procurement Systems Business Intelligence/ PDW/PPMS Procurement Master Data NDC/Finance Stabilisation AIDC Voice/Scanpoint eReq. EDI eInvoicing IFMS/Finance Reform Self Service Requisitioning

29. 29 Data Warehouse / Business Intelligence

30. 30 Budget Manager Expenditure Dashboard (sample)

31. 31 Budget Manager Receipts (GRN) Dashboard (sample)

32. Procurement Directives Remedies Directive Procurement Directives 32

33. Remedies Directive 30 day challenge period from date of alleged breach/decision Regulation 8(4) letter Application to High Court Automatic suspension Serious delay 12 months minimum (on average)

34. Codify existing cases around transparency New procedures around horizontal cooperation Contract implements/establishes co- operation between public bodies Aim of ensuring public services they each have to perform are provided to meet common objective Public interest concerns only Perform on open market less than 20% of activities concerned Innovation partnership for R&D 34 New EU Procurement Directive

35. Innovation Partnership Procuring something not already available on the market 30 days for PQQ Negotiations permitted Tender documents to address IP rights Really for R&D type projects 35 New EU Procurement Directive

36. Use lots (must explain if not) All abnormally low tenders to be investigated Rules around accepting changes to awarded contracts (no material changes) Minimum turnover not to be more than twice contract value 36 New EU Procurement Directive

37. Procurement Results & Procurement Pitfalls 37

38. Procurement Pitfalls Good specifications Be clear on requirements Award Criteria (Judgement,Changes) Follow Procurement guidelines,(don’t change Procedure) Invest in training.

39. Procurement Pitfalls Contract Awarded without competitive process (40/02) ( open to Challenge & C&AG) Extreme urgency due to unforeseen events – (natural disasters ) Single economic operator ( ????? ) Imprecise Tender documentation – mixing up Selection and Award criteria Selection Criteria – Company related Framework Award Criteria – Tender related (MEAT) Criteria must not be too narrow or discriminatory ( Generic )

40. Procurement Pitfalls Award criteria – all criteria and sub-criteria Marks for each element of criteria ( judgement notes) How marks will be allocated (10 = excellent etc.) Tenderer – tender documents to be clear:(Standard) “All tenderers” capable of understanding the document in the same way

41. Improve Procurement Results Improve Procurement planning( 3 yr Plan ) Maximise Procurement resources( collaboration ) Create better visibility of Contracts Reduction of wasted work / wasted time Reduce duplication of effort (HBS/OGP) Establishing effective reporting capabilities ( PDW) Optimize Inventory Levels ( Kanban )

42. HBS Business Relationship Managers Business Relationship Managers (BRM)

43. Compliance 43

44. Fail to prepare- prepare to fail: Have a clear procurement plan What is required What is the budget What are the timelines (to include tender evaluation/transition etc) Establish clear governance structures Establish clear and separate roles for staff Make sure staff are well informed – regularly review Respect best practices in terms of document retention/recording decisions If in doubt, get another view 44 Ensuring Compliance Circular 40/02 - Contracts Awarded Without a Competitive Process Department of Finance Circular 40/02 requires HSE to complete an Annual Report (signed off by the Accounting Officer) in respect of contracts above €25,000 which have been awarded without a competitive process.

45. National Financial Regulations The Financial Regulations are intended to outline the high level framework within which the internal financial control system of the Health Service Executive (HSE) operates. The NFRs ensure that the financial controls in operation within the HSE are consistent with: Irish and EU statutory requirements Achievement of Best Value for Money Department of Health and Children and Government policies and guidelines Presently available best practice appropriately interpreted for the Irish Public Health Service context It is the responsibility of all Budget Holders, managers and staff to ensure that the day-to-day operations and procedures of the organisation comply with the Financial Regulations. Click below to view or download the document.

46. Underpin best practice for purchasing decisions Regulates Approval Tender Receipt Payment Apply to HSE and all bodies >50% funded by HSE Segregation of duties commercial evaluator/manager v budget holder 46 National Financial Regulations

47. 47 National Financial Regulations NFR 1 Summary of Purchase to Pay (PTP)

48. 48 National Financial Regulations NFR 1 Requirements regarding Procurement Planning

49. House of Oireachtas Public Accounts Committee Report on Procurement by the HSE June 2015 http://www.oireachtas.ie/parliament/me dia/Report-on-Procurement-in-HSE.pdf 49 Link to:

50. Link to presentation: http://hsenet.hse.ie/FS54/fs-Presentations.aspx 50

51. Take-Away Messages: 3 Elements of Procurement Systems, Sourcing & Logistics Compliance 3 year plan be proactive less reactive NFR 01 –comply with financial guidelines Reform – One voice for health- collaboration Single systems & better contract visibility, Cooperation - Working together for improved results HBS Procurement

52. African proverb – If you want to go fast, go alone. If you want to go far, go together. 52

53. Thank You For Queries: Procurement.Info@hse.ie