Going public

19 September, 2008
The public sector, from schools to the health service, offers huge opportunities to independent bakers. There are challenges, of course, but are they more imagined than real? Paul Gander investigates
Page 34 
Even a tiny slice of the government's estimated £2bn spend on food and catering in the public sector provides a mouth- watering prospect for bakery and ingredients suppliers.
Alongside food safety, hygiene and healthy nutrition, one of the objectives of Defra's Public Sector Food Procurement Initiative (PSFPI) is to "increase tenders from small and local producers". And in among the other aims, that current buzz-word "sustainability" is bracketed together with "efficiency" on more than one occasion.The PSFPI itself is nothing new, yet it was given fresh impetus by an announcement in the Chancellor's last Budget. This stated that the Department for Business, Enterprise and Regulatory Reform (DBERR) aims to increase the proportion of public contracts going to small and medium-sized businesses (SMEs) - defined as com-panies with fewer than 250 employees - to 30% by 2010. Currently, says Matt Goodman, policy representative at the Forum for Private Business (FPB), that share is around 18%.At the same time, examples of best practice have developed, demonstrating the long-term viability of such relationships. One such example is the Cornwall Food Programme (CFP), run by Cornwall NHS Hospital Trusts. Roy Heath is sustainable food development manager at Cornwall Healthcare Estates and Support Services. He claims: "The CFP all started with a sandwich. A patient asked why it had travelled 200 miles to get to him."Sandwiches, a range of morning goods and - of course - pasties are now delivered around the county by WC Rowe, based in Falmouth. As Heath puts it: "Pasties are a very emotive subject down here."But the bread contract remains with national supplier Hovis's Mother's Pride site, delivered by Dairy Crest. The current requirement is for around 70 white and 50 brown loaves a day, says Heath. "This decision was not based on cost," he maintains. "We tried to use a more rustic type of bread and the patients didn't like it." So patient power may have triggered the CFP in the first place, but it has also helped to define its limits.Importantly, Heath points out that local proximity, in itself, cannot be cited legally as a criterion for choosing a given supplier. That said, "freshness" and (naturally) "sustainability" can be taken into consideration. As he says: "Not everything that is local is sustainable, and not everything that is sustainable is local." Evidently, when it comes to the bread contract, "fresh" and "local" are not synonyms, either.The NHS in London has also done its bit for local sourcing. Mike Duckett is catering manager at the Royal Brompton & Harefield Hospital Trust (RBHT) in London. Over the past four years or so, he has worked on the Hospital Food Project with an organisation called Sustain. Here, the emphasis was on healthy food. "The public perception has been that hospital food is dire," he says. "We wanted to help change that, and also increase local procurement."Now, RBHT sources around a quarter of its food and ingredients from London and the south east. Flour from a supplier in Wandsworth is used to bake pies and sweet goods in-house, while bread is sourced from local London baker Beckers.The move to more local sourcing at RBHT and some other London NHS trusts is not an isolated occurrence, says Duckett. "For the last two or three years, local sourcing has been on the agenda for everyone. Apart from anything else, there is the NHS sustainability policy, which trusts have to adhere to in order to gain their 'star' ratings."Health service contracts are administered nationally by NHS Supply Chain, run by DHL Exel. Business manager for food and catering facilities Keith Hinchcliffe says: "Tenders are constructed that score bidders against both financial and non-financial criteria. There is now a greater emphasis on sustainability under the non-financial criteria. Tenders are constructed to give us the most economically advantageous bid, which is not necessarily the lowest price."Health is not the only public sector area to be pursuing more local sourcing. Nottingham baker Dawsons is supplying around 30 north Lincolnshire schools with bread. MD Robert Dawson says that this slice of the local education sector accounts for around 7% of sales.== Local authority supply ==There are other routes into the public sector. Procurement for the Prison Service, for instance, operates on a regional basis. But there may be greater opportunities for exploring openings in your neighbourhood through local authorities.Greenhalgh's Craft Bakery in Lancashire supplies Wigan, Bolton and Tameside Metropolitan Borough Councils with anything from complete buffets to particular ingredients. Production director David Smart emphasises that his contacts among the in-house catering managers are "very professional" and "prompt payers".The bakery also delivers to three Merseyside hospitals, but to date, this has only included products on sale to the general public and hospital staff. Smart estimates that this accounts for less than 10% of Greenhalgh's wholesale turnover. But he adds: "It's good business, and certainly worth doing." The company says it would be interested in extending its supply to products for patients.Some suppliers complain that ignorance about food and nutrition is more widespread among public sector managers than, for instance, in retail. And as the Cornwall NHS bread contract demonstrates, consumer preferences in the public sector (or perceptions of those preferences) will not always favour innovation.Dawsons in Nottingham points out that the Polish influence - in terms of new consumers and in-house expertise - means that rye-based and sourdough breads are now the bakery's biggest-selling lines. But attempts to sell these variants to the schools it supplies have come to nothing. "This would have been a great opportunity to introduce children to better breads," says Dawson.He is equally unflattering about public-sector pricing. "It is as price-sensitive as the private sector, if not more so," he says. "Managers are too cautious, as they are aware they are dealing with public funds."Greenhalgh's highlights the same trend. It has private schools among its customers but none in the public sector. "The state school sector is very cost-conscious, and it hasn't really been worth our while to bid for contracts," says Smart.At the same time, Hinchcliffe explains: "Sustainable procurement, as well as being concerned with environmental impacts, is also about supporting local economies and paying a fair price, so that local suppliers are there in years to come. So while price is a key concern, local suppliers are not being asked to cut back their margins." Nonetheless, he says, suppliers are asked to demonstrate efficiency and continuous improvement. Duckett, at London's RBHT, says talking to suppliers in a "down-to-earth" way about pricing can yield mutually beneficial results. "Ask a local baker to supply 20 brown and 20 white loaves for the next 52 weeks, and he'll be up all night giving you a good price," he says.The message seems to be that selective supply to parts of the public sector can be 'sustainable' for all concerned.----=== Knocking on doors, clicking on portals ===Which opens more public-sector doors - personal contacts or anonymous, official websites? Both can be important but, ultimately, it is the latter that will take you where you want to go.Tenders with a value of £97,000 or over will be advertised in the Official Journal of the EU (OJEU) and its TED online variant. That figure represents the total value of the contract, not necessarily its value over one year.The supply2.gov website is offering SMEs online access. Suppliers pay £70 a year for access to lower-value, regional tenders.UK government tenders: [http://www.supply2.gov.uk]Tenders Electronic Europe - supplement of the Official Journal of the EU (OJEU): http://ted.europa.euOffice of Government Commerce: [http://www.ogc.gov.uk]NHS: [http://www.supplychain.nhs.uk]HM Prison Service: http://procurement.hmprisonservice.gov.uk----=== Public sector food service procurement is worth £2bn and provides over 1 billion meals a year ===l Education, healthcare and services account for 6% of foodservice sales, but 29% of meals served outside the homel Around half the public spending on food goes on school meals* Approaches to procurement are split between in-house and outsourced providers, and vary widely in scale - from schools managing budgets of under £10,000 to the forces' contract with Purple Food Services, which is worth £300m over five yearsSource: Cabinet Office Strategy Unit, March 2008



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