Agenda item

To inform the Committee of the outcome of the informal review of procurement and contract management at the Council ensuring it is functioning as it should and is fit for purpose.

 

The report to the Committee detailed the outcome of the informal review of procurement and contract management at the Council ensuring it was functioning as it should and was fit for purpose.

 

The Members heard from Lisa Hastings, Deputy Chief Executive – Assistant Director for Governance and lead officer for the topic presenting the report. The report outlined that Informal meetings of this Committee were held on 17 October and 7 December 2022, where the Members received a range of information around the subject of Council Procurement and Contract Management, most of which was contained within the report to this meeting.  Senior Officers across the Council, involved in the subject area and the specific contracts referred to within the scope supported the first informal meeting in October.

 

Members also heard that Full Council at its meeting on 12^th July 2022 agreed (Minute 29) the Committee’s Work Programme for the 2022-23 Municipal Year, for the Resources and Services Overview and Scrutiny Committee, that included:

 

Council procurement and Contract Management – using potential exemplars from:

 

• “The housing maintenance contract awarded to Rapid, its delivery of work and the management of it.
• The management of the previous cremator maintenance contract, the need to stop the use of those cremators and the process for securing replacement cremators given the sensitivity around this service and the budgetary implications for the Council while these cremators are out of action.
• The Leisure Centre Investment – specifications, securing contractors and delivery of those works and maintenance of the equipment at the Centres”.

 

It was reported to the Committee that the Procurement Team consisted of 2 FTE posts, both vacant (that was increased through the restructure in 2022 by 3 additional posts, all remained vacant – see below).  The budget for those service consisted of salaries and £22,670 for computer software.  At its meeting on 17^th September 2021, Cabinet considered in Section 2 of its Financial Performance Update 2021/22 a small number of in-year budget adjustments to the Portfolio Holder’s report, one of which reflected a proposed service level agreement being entered into with Essex County Council (ECC) to enable the Council to ‘buy in’ procurement services from them.

 

The report outlined that following the last vacancy, discussions commenced with ECC in terms of a shared service / collaborative approach as a way of providing a more comprehensive procurement service to the Councils internal departments.  This approach would involve the Council purchasing a range of procurement services from ECC on a proposed ‘hourly rate’ basis via a service level agreement.  Appendix B to the Cabinet Report set out a proposed adjustment, which would see budgets transferred from direct employee costs to ‘contract’ payments to ECC.   That approach would also support the accelerated delivery programme where the Council would have access to specialist / expert advice along with additional procurement capacity e.g. supporting the procurement of replacement cremators.  That arrangement would be kept under wider review as it may form part of a longer-term solution, where the Council could continue to have access to such advice as part of the future delivery of projects and activities along with ‘usual’ operational requirements expected of a procurement function / service.

 

The Committee heard that paragraph 2.3 of the Council’s Procurement Procedure Rules set out in Part 5 of the Council’s Constitution required alternative delivery options for whole or part of services to be achieved in accordance with the Council’s Procurement Strategy.  The Strategy expressly referred to ‘Our Partners in Procurement’ and that the Council sought to work with a number of partners to maximise any procurement opportunities and provide best practice.  That included other public bodies and shared services.  Because the in-house procurement service had 100% vacancies, there were no employment issues to address and the Public Contract Regulations 2015 permit public sector shared service and collaboration arrangements within certain criteria, which were observed in any Service Level Agreement arrangement.  The Council’s Procurement Procedure Rules were observed in any bids or tender exercises managed by ECC on behalf of TDC.

 

Subsequently, Cabinet agreed in September 2021 that:

 

“(2) That, in respect of the Council’s Financial Performance for 2021/22, Cabinet:

 

(c) agrees an exemption to the Council’s procurement rules in order to enable a Service Level Agreement to be entered into with Essex County Council to enable the Council to ‘buy in’ various procurement services from them to support its day-to-day operational activities and the delivery of one-off projects, as necessary; and

 

(d) authorises the Assistant Director (Finance and IT) and the Deputy Chief Executive to agree the terms of the Service Level Agreement, in consultation with the Portfolio Holder for Corporate Finance and Governance”.

 

It was reported to the Committee that following consultation with the Portfolio Holder for Corporate Finance and Governance, a Partnership Agreement was completed in August 2022; the services however commenced in October 2021 and would continue until October 2023 for an annual payment of £60,000.  The agreement can be renewed annually for up to 5 years.

 

Both Councils had obligations and responsibilities.  Schedule 1 to the Agreement had set out the Key Procurement Activities, split into three areas:

 

• Category Planning
• Market Management
• Sourcing

 

Procurement 2022 Deliverables had been identified within the Partnership Agreement.

In December 2021 and May 2022, an Introduction to Procurement and the collaboration arrangements were presented to Council Officers as part of its Senior Managers Forum.  The reasons why the Councils were working in partnership were covered:

 

• Increase resilience
• Increase expertise
• Enable collaborative savings
• Market influence
• Reduction of duplication
• Staff retention

 

Potential Category Areas had already been identified:

 

• Vehicles
• Facilities Management (inc. cleaning and security)
• Corporate spend for e.g. stationary

 

The Presentation Slides included a summary of the Procurement Process covering:

 

·         Basics

-       The Regulations

-       Value for Money

-       Processes for different values of TOTAL spend

 

·         Low Value Procurement - £10K to £50K

·         Request for Quote Process - £10K to £50K

·         Tender process - £50K +

 

Members heard that it was important to highlight that there were various elements to the overall procurement process, with responsibilities being spilt across the Council, some functions were devolved into services, with others being undertaken centrally by the procurement team:

 

-       Project approval and budget allocation - services

-       Specification – services

-       Market analysis - central

-       Identify suitable contract/framework – centrally with consideration by services

-       Prepare procurement documentation – central in consultation with services

-       Publication – central

-       Collate tenders for evaluation – central

-       Evaluation – services with central support if required

-       Due diligence - centrally together with services

-       Contract awards to suppliers – centrally together with services

 

PART 5 CONSTITUTION - PROCUREMENT PROCEDURE RULES

 

The report before the Committee explained that the Council’s Procurement Procedure Rules stated the following:

 

“Before undertaking any procurement, Departments should satisfy themselves that:

• The works, goods or services are required and a need can be demonstrated
• There are no reasonable alternatives e.g. sharing or utilising spare capacity/inventories elsewhere within the Council
• Where relevant, they have considered the requirements of the Public Services (Social Value) Act 2012 and have recorded/evidenced the outcomes against the associated requirements:-

-       how what is proposed to be procured might improve the economic, social and

environmental well-being of the relevant area

-       how, in conducting the process of procurement, it might act with a view to securing that improvement.

 

Use of Local Suppliers:  All Procurement should be in line with the Council’s Procurement Strategy, which includes the recognition of the use of local suppliers and providing a fair basis for them to compete for the provision of goods, works or services required by the Council”.

 

CONTRACT MANAGEMENT

 

The Members of the Committee heard that contracts management was undertaken by the services and Key Personal and Contract Administrators and were named within the contract documentation and were added onto their individual and existing roles.  In some projects, contract management was commissioned as part of the project. The Council had produced a standard TDC Contract for Services, which covered the terms and conditions for suppliers to adhere to when entering into a contract with the Council for values above £25,000.  That must be used unless an exemption was sought.  JCT and NEC suite of contracts were also used for construction works and engineering projects with widely recognised and accepted clauses within the industry, with differing options to be selected.  Understanding the structure of those documents and arrangements was essential for contract management. Contract management required a commercial understanding, appropriate skills and capacity to be undertaken with maximum potential.  Presently services were conducting contract management alongside their usual service delivery requirements, which could be extremely time consuming. 

 

Within the agreed Scope, the Committee had requested certain information and are detailed below:

 

1.      Confirmation of procurement and contract management requirements:

 

“These are contained within the following documents: Council’s Procurement Strategy and under Part 5 of the Constitution Procurement Rules of Procedure, which set out the policy and rules, the Council has adopted to be followed”.

 

2.      The procurement project pipeline:

 

“Is an evolving piece of work and relies on the input of services to ensure that it is a useful exercise, in terms of allocating procurement resource and identifying budgets.  The exercise will also benefit service areas in managing the process and subsequent contract management”.

After a brief discussion the Committee RESOLVED to give consideration and endorse those actions already identified as improvements and deliverables for the procurement and contract management framework, monitoring progress through a future work programme for the Committee.

The Committee also RECOMMENDED to CABINET that:

a)  the Council’s Contract Register is brought up to date as soon as possible, with services across the Council providing the necessary data on contracts held within their respective areas; and

b)  a Social Value Policy for Procurement Purposes be produced for consultation with the Resources and Services Overview and Scrutiny Committee at a future meeting.