School Budgets: Key procurement pitfalls to avoid this year

With the new academic year in full swing, most schools will be reviewing operations from the previous year as they compile their financial statements, while also planning for the year(s) ahead.

Indeed, with some apparent headspace forming following the challenges of the last 18 months, many Pelican clients are seeing this as an ideal time to review current procedures and implement new strategies to ensure ongoing success.

Here our education expert, Jerry Meldrum, discusses some areas schools may wish to review to improve student and support services while also ensuring key areas of compliance and risk are addressed.

Develop a procurement strategy

This time of year is a particularly good time to look at procurement because of the awareness of previous year’s costs that financial statements bring.

Identify your ongoing strategy, looking at which cost areas need review, and where improvements can be made.

Here are some key things to look out for:

1. Contract Register – Identify which contracts need to be renewed through the course of the year and compile your strategy for renewal to ensure it aligns with your operational priorities. Also review all your existing contracts to ensure that they still fulfil your requirements – and seek to re-negotiate if required.
   
2. Income vs. Expenditure – Which departments are in deficit that could break even or create a surplus, why are they in deficit? Are the costs too high, or does the front-end service need to be improved?
   
3. Benchmark, Benchmark, Benchmark – The market’s pricing changes constantly and schools should be able to report with confidence that they are paying a fair rate for the current market and achieving best value for money.
   
4. The Devil is in the Detail – if your analysis combines budget areas into one category, split this out and analyse. Then review on an individual supplier level and, if you can, at an individual product level – from this you’ll gain a far better understanding of what’s being spent and build a strategy to improve it.

Identifying areas of risk and building contingencies

As part of any operational review, schools will compile a risk register and they should take into account risks in their supply chain and services, too. 

Use the data afforded by financial statements to identify areas of risk and check on legislation changes, to ensure compliance.

Some areas that are particularly relevant currently are:

1. Natasha’s Law – from the 1^st of October 2021, all food outlets must comply with Natasha’s Law which pertains to allergen labelling on pre-packaged food items – whether made onsite or elsewhere. Recent supply chain issues have made this significantly more difficult yet the responsibility is with the school to adhere, so contingency should be built for this.
   
2. Health and Safety – Check purchasing arrangements for things like chemicals. Are correct COSHH standards being followed? Has training been provided to all users on safe usage and is there a risk to your communities through incorrect product usage?
   
3. Sustainability – Do your purchasing practices support your aims for sustainability, with products that reduce your impact on the environment and traceable sources of supply that demonstrate high standards?
   
4. Purchasing compliance – if you are state-funded, re-check that your spending does not go above public procurement thresholds. As MATs and schools have grown, this issue is cropping up more and more with trustees and the ESFA growing more aware. Commodity categories are most at risk as this is where, traditionally, individual schools have purchased independently.
   
5. Inflation – Inflation is currently rising, and we are experiencing supply chain issues, alongside the usual market pressures seen most years. Seek to mitigate these price rises where possible and create measures to effectively monitor price increases. During contract reviews, check what protections there are against inflationary pressures. 

While not an exhaustive list, this all still may seem like a lot to do with your current resources. Don’t forget the Pelican team as we are here to provide support to help you mitigate risk and ensure successful procurement practice – do contact us at hello@pelicanprocurement.co.uk for guidance and we’ll be happy to offer any advice.