PAPER D
AUDIT PANEL – 25 NOVEMBER 2003
REPORT OF THE COMPLIANCE AND RISK MANAGER
REASON FOR AUDIT PANEL COMMITTEE CONSIDERATION
Members of the Panel expressed their wish to know more about the Best Value Review of Procurement at their meeting on 25 June 2003. The subject of Procurement is very topical at the present time, and the Panel has correctly identified it as an important issue of which to keep abreast .
ACTION REQUIRED BY THE PANEL
To
consider this report, enquire as to any further elaboration required by the
author– and to suggest any areas that the Panel itself would wish to see
forming part of the review.
BACKGROUND
1. The Council determined when drawing up its programme of Best Value Reviews, that Procurement was sufficiently important as an issue to be included. There were a number of factors which influenced that decision, including :
2. As members know, the Best Value Review process is one which applies the 4 Cs (Challenge, Consultation, Comparison and Competition) to the subject under scrutiny. When looking at discrete services it’s a fairly straightforward approach of dealing with each of these in turn. Procurement, however is not a discrete service area, but rather an activity which is performed across the whole Council, by very disparate groups, dealing with a wide variety of procurement issues – for example , ranging from the requirements to procure a grass cutting service to the procurement of a fire engine , from computer ink cartridges to the building of ten school extensions. It is because of this diversity, members will appreciate that it is not easy to simply apply the 4 Cs. Instead the review has identified a number of issues which, in the view of the Project Team, warrant closer scrutiny with a view to identifying how they might be either developed or improved. As the Review begins to conclude, these areas have now condensed into the following:
3. This list is considered to be comprehensive (although there remains an opportunity yet for it to expand). Many of the issues which members will be aware of , and which would be considered as procurement issues can be included in one of the above headings. By way of illustration, the issues of Partnering, strategic partnerships, Private Finance Initiatives and Project management – all of which are being actively considered by the Council – will be dealt with in the first heading above. How the Council’s spending impacts on the local economy, ‘green’ procurement and how procurement might be used to influence diversity will be dealt with under the final heading above. Members of the Panel are invited to consider some of the issues that they would envisage being covered in the review, and to raise these at the meeting.
4. One of the requirements of the Review’s outcome is to ensure that , whenever appropriate , the above headings are connected together. This means that, for example, when expressing a vision as to what shape e-procurement will take, the management information needs of procurement are considered, so that data is captured during the processing of transactions. Similarly, when examining the potential benefits of different forms of strategic procurements like PFI or partnerships, what is the likely impact on the local economy? This, I believe, will take some ingenuity on the part of the Project team.
5. Furthermore there are other emerging initiatives which have to be taken into consideration, not least the National Procurement Strategy recently issued by the ODPM which expresses significant expectations of local authorities. In addition , there is a great deal of guidance which is now beginning to appear from bodies like the IDeA, the Employers Organisation, the LGA and an organisation called 4Ps, all of which have been working together for some time to raise the standard of local authority procurement.
6. The Review has, I believe, used two innovative ways of meeting the requirements of and ‘consultation’ and ‘challenge’. For the first, we invited many of our suppliers to three half days of discussion and debate about the way the Council undertakes its procurement. There were three different groups- suppliers of goods, providers of services and the construction industry present, along with officers and members representing the Council. The debate was lively but productive, and those from the Council learned a lot about how the industry behaves and how it thinks, and there were some clear messages about what the Council needed to do to get better deals and service. It was also an opportunity for us to explain some of the initiatives that the Council was exploring and to get an ‘industry’ view of some of the implications for them and their businesses.
7. The second issue of ‘challenge’ has effectively been covered by the Council electing to undergo a procurement ‘fitness check’ in July of this year by a specialist team from the IDeA, and some of the Panel may have been involved in the check by being interviewed by the team. The check was completed over a four day period and involved a particularly rigorous scrutiny of the Council’s procurement arrangements. The team has produced a report which has been copied to all members. The outcome of the check indicated that the Council still had much to do in order to improve its procurement performance. From the point of view of the Best Value Review, the visit provided an ideal opportunity to have our arrangements scrutinised by an independent body, and in that sense, it was an invaluable exercise. The Team also had the added advantage of knowing what was just about to emerge as a National Strategy so that its recommendations could cover those requirements too.
8. In conclusion, the Best Value Review of Procurement is now beginning to conclude. It is hoped that its report and improvement plan will be available early in the new year. The report has the potential of helping the Council make significant steps forward in the way it manages its procurement.
RELEVANT PLANS, POLICIES, STRATEGIES AND PERFORMANCE INDICATORS
The
Council’s Procurement Strategy (approved November 2002)
The
Council’s Programme of Best Value Reviews
The
Council’s Best Value Toolkit
CPA
Action Plan
CONSULTATION PROCESS
Reference is made above to the consultation that has taken place with the Council’s suppliers. At the same time, officers and other representatives from most areas of the Council were involved.
FINANCIAL, LEGAL, CRIME AND DISORDER IMPLICATIONS
There are no financial implications arising from the Review per se, although members should recognise that the outcome of the Review could realise substantial financial and other benefits if the Council’s procurement performance improves.
There is a legal requirement of the Council to undertake Best Value Reviews of its services and these must follow a prescribed format (ie the 4 Cs). In due course the Review itself may be inspected to consider in particular, whether it was conducted with sufficient rigour.
APPENDICES ATTACHED
There are no appendices to this report
BACKGROUND PAPERS USED IN THE PREPARATION OF THIS REPORT
None used in the preparation of this report.
Contact Point : Bob Streets, Compliance & Risk Manager, and
Project Leader, Best Value Review of Procurement
( (82)3622, mail to: [email protected]
Compliance & Risk Manager