To report to the Committee on the Review of Procurement undertaken by the Audit Commission.

The Director of Resources presented a report on the Review of Procurement undertaken by the Audit Commission. The Audit Commission had been requested to carry out a specific audit on procurement with an emphasis on the work that had already commenced to review the partnership arrangement with AMEY. The Director of Environment and Culture circulated a Briefing Note at the meeting, a copy of which is attached to the Minutes as appendix 1, relating to the Council’s partnership with AMEY.

Mr T Tobin presented the review by the Audit Commission. He introduced Mr S Weldon, the Audit Commission officer who had dealt with the review. Mr Tobin stated that when the Audit Plan had been considered in 2008, the Chief Executive had requested the work regarding the Council’s negotiations with AMEY so that issues raised by the Audit Commission could be taken into account and this was, in his view, a commendable approach. He emphasised however that the views taken in November/December 2008 were as at that time and since then negotiations had rapidly moved forward. The Chief Executive had requested that the Audit Commission review what had taken place in the negotiations since then and it was found that the issues which had been highlighted had been picked up by the Council’s officers.

A Member commended the involvement of the Audit Commission during the AMEY contract negotiations which, in her view, was a benefit rather than at the completed stage.

Mr Weldon informed the Committee that the Commission had considered the procedures and outcome in the negotiations against a best practice approach throughout the negotiations. Although the negotiations at the early stages in September/October were not fully in keeping with best practice, since then that ethic was being embedded and was ongoing with the officers recognising the high awareness of procurement. With regard to the completed contract, the main findings were that innovative methods were used in negotiations together with the value for money concept. The Council knew what it wanted to achieve. There was a lack of clarity in the early part of the negotiations but with this highlighted, the Council had responded and improved this issue.

The Director of Environment and Culture stated that lessons learned in the previous contract prior to AMEY had been taken forward in the review with AMEY.

The Vice-Chairman asked about the benefit of Members sitting in on procurement  training for officers with Members’ perception being useful.

The Director of Resources disagreed and advised that detailed training in procurement was given in sessions to a maximum of three Council officers with two officers of the Primary Care Trust‘s Integrated Commissioning being trained with individual officers being trained as champions. He suggested that a Member event could be held in relation to Procurement.

With regard to the project management arrangements for procurement, the Director of Resources referred to the use of the Project Team for Procurement across the Council’s services where appropriate and the upward trend was for the Team to be used. He emphasised that since the Crookall report, Procurement issues were being tightened up and that there were ‘low level’ enquiries in respect of procurement matters being made of the Project Team.

In answer to a question from the Vice-Chairman, the Director of Resources advised that three procurement posts were in the central structure and that their expertise was drawn upon by officers in other directorates where appropriate. He had indicated to directorates the model to follow where procurement issues were concerned. He advised that his role was to guide the support for bigger projects and directorates engage the appropriate number of staff to exercise the role.

The Vice-Chairman referred to paragraph 32 of the Commission’s report and, in particular the submission for approval to Members for the selected option was unsatisfactory and asked if the Chief Executive had addressed the issue. The Legal Practice Manager stated that he did not have that answer and that he would give a written answer to Members following the meeting.

The Vice-Chairman proposed the following:

(i)                  The introduction of procurement and contract performance reporting systems, recommendation R2 paragraph 14 of the Audit Commission’s report refers, be extended to the Heads of Service and Directors;

(ii)                The Audit and Corporate Governance Committee work plan be amended to make specific provision for procurement investigation and reports;

(iii)               The Audit and Corporate Governance Committee work plan to include oversight of completion of training needs analysis of in-house procurement expertise throughout Council directorates.

The Chief Internal Auditor advised that the staff review and development process would take into account any training issues and that he would report appropriately to the Committee.

With regard to a registration of tenders on-line, the Director of Resources informed Members that there was currently a review of contracts taking place with legal services. As part of the new Procurement Strategy, tenders over the sum of £5000 would be entered on the portal which would give greater visibility.

A Member questioned the Council’s governance and controls regarding the approved list of contractors employed by AMEY. The Director of Resources informed Members that contracts were awarded to AMEY up to £200,000 and such contracts were awarded by AMEY to a contractor from their contractor list. He advised that the Council had two observer posts for AMEY Board meetings which were held by the Cabinet Member for Resources and the Director of Resources. He emphasised that the need for the Council to demonstrate value for money was a key issue which his property services team had raised regularly. He informed the Committee that his officers were currently in the process of reviewing the value for money aspects with regard to AMEY’s administration of some contracts.

The Director of Environment and Culture informed Members that although AMEY’s accredited contractor list was their responsibility, the Council had included key drivers within the contract with AMEY. In this regard 80% of contracts awarded were directed to local contractors and over 500 people were employed from within the County. In terms of monitoring their work relating to the contracts they award, the Council’s officers had access to AMEY IT systems which would enable any specific concerns by Members to be investigated. The officers did not, however, make spot checks on AMEY contracts.

Mr Weldon stated that it was his understanding with regard to the depth of contract monitoring, that the Council was expected to monitor issues as and when necessary.

The Vice-Chairman made reference to paragraph 40 of the Audit Commission’s report and suggested that a report be submitted to the Committee on the management of risk and the way in which it is used.

The Chief Internal Auditor informed Members that when the audit plan was compiled, AMEY is set out as a risk. Therefore, as part of the plan, audit will look at the transactions carried out by AMEY and that this is carried out on an annual basis.

The Vice-Chairman referred to paragraph 43 of the report and suggested that as cost control was unsatisfactory on the AMEY contract, a report be submitted to the Committee on the current provisions for the control of costs for the future contract.

The Director of Resources informed Members that there had been a further review of property services and ways had been found to take this forward. A report would be submitted to Cabinet setting out where property services should stand in relation to shared services and that this would determine the way the cost control issue would be taken forward.

RESOLVED:   That

(i)                 the review of Procurement report by the Audit Commission be noted;

(ii)               the introduction of procurement and contract performance reporting systems, recommendation R2 paragraph 14 of the Audit Commission’s report refers, be extended to the Heads of Service and Directors;

(iii)             the Audit and Corporate Governance Committee workplan to include oversight of completion of training needs analysis of inhouse procurement expertise throughout Council directorates;

(iv)             a report be submitted to the Committee on the process the Council follows for risk management and the way the risk register is used and updated as a positive aid to management; and

(v)               a report be submitted to the Committee on the provisions currently in place for the control of costs for the future AMEY contract.