PAPER B3
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SCRUTINY COMMITTEE - 22
AUGUST 2006 PROCUREMENT
OF STRATEGIC TRANSFORMATIONAL PARTNER AND SHORT TERM PROCUREMENT PROJECTS –
CALL-IN REPORT OF THE DIRECTOR
OF POLICY, PERFORMANCE AND PARTNERSHIPS AND DEPUTY CHIEF EXECUTIVE |
REASON FOR CONSIDERATION
1.
To further inform debate in relation to the
“Call-in” of the delegated decision proposed by the Cabinet Member for the
Economy, the Customer, Communications, Leisure and Tourism.
2.
To propose a scope for a further line of enquiry,
should the Scrutiny Committee wish to pursue further issues.
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ACTION REQUIRED BY THE
COMMITTEE 1.
To receive the additional information set
out in this report. 2.
To determine whether or not to add a line
of enquiry into the further development of the Strategic Transformational
Partner to the Committee’s work programme. |
BACKGROUND
3.
The Aim High Change Management Plan approved by
Full Council in October 2005 established the intention to develop a Strategic
Partnership as a key plank of the Change Management Programme. Preparatory work to commission an adviser to
assist the Council through scoping and producing a business case for the
proposal was reported to the Cabinet on 11 October 2005.
4.
The Cabinet received, at a meeting on 17 January,
the prompt of the first phase of the work undertaken by PA Consultants, who
were appointed to provide support during the developmental phase.
5.
The Cabinet determined, on 17 January 2006, to
commission the development of an outline business case for the development of a
Strategic Partnership due for completion by 31 March 2006.
6.
The outline business case was received on 13 April
2006, appendices following on 24 April.
7.
At the meeting of the Scrutiny Committee on 20
April the Committee were informed that the report had not been approved for
publication as the appendices were still awaited.
8.
It should be emphasised that the only issues still
being debated with the consultants on 20 April related to the presentation and
discussion of the methodology and not to the assumptions which underpin the
report nor to the recommendations made.
9.
Receipt of the outline business case coincided with
the appointment of a new Chief Executive.
In the period between his appointment on 13 April and taking up his
duties on 5 June, Joe Duckworth met with the PA Consulting team in order to
discuss their recommendations. Decision
making in relation to the next phase of the project, and the acceptability and
robustness of the outline business case, were put on hold until the Chief
Executive had appraised himself not only of the outline business case but also
had started his induction and familiarisation process into his new
responsibilities and into the Authority.
10.
Reports to Cabinet members for delegated decision
are reported first to the Directors Group for quality assurance purposes. Many, but not all, reports for delegated
decision are also cleared through the Aim High Strategy Group (where members of
the Cabinet and the Directors Group meet to ensure corporate ownership and sign
off of important issues). The outline
business case was reported through this cycle and, subsequently, the proposal
for further work, dated 26 June 2006 was also debated in each of the two
forums, prior to the report to the Cabinet member being published.
11.
At no stage was any significant delay due to PA
Consulting, nor to any questions being raised about the quality of their work.
12.
Members of the Committee signed a call-in notice on
11 August. Applying the letter of the
Constitution, as the Cabinet member had not taken the decision, the call-in
period had not commenced and the call-in may be considered to be
premature. However, in discussion with
the Cabinet member and the Chair of the Scrutiny Committee the prudent way
forward was for the Cabinet member to withhold from taking the decision
allowing the Scrutiny Committee to convene and discuss the issues.
13.
The Committee have not asked for advice as to
whether the proposed decision is unlawful or outside the Council’s policy and
therefore, when the decision is taken there will be no bar to its immediate
implementation.
14.
Members of the Scrutiny Committee may wish to make
recommendations to the Cabinet member or elsewhere within the Local
Authority. Equally, it is open to the
Committee to determine to add a new line of enquiry to the Work Programme of
the Committee.
15.
The pace towards developing a Strategic
Transformational Partnership is picking up.
A specification, proposed procurement route and evaluation framework
will be put to the Cabinet during October and if the timetable is not disrupted
by external factors, the preferred supplier will be recommended to the Cabinet
during January.
16.
Members of the Scrutiny Committee will wish to
consider at what stage, and within what scope, any future enquiry they may wish
to undertake will have greatest potential benefit.
17.
The specification to be presented to the Cabinet in
October is designed to identify the most appropriate external partner. It will not be a detailed output-based
specification but, instead, set out key deliverable outcomes for the
partnership during the first three and twelve months of the lifetime of the
partnership. By this means the partner
with the best skills and expertise to assist in the transformation programme
can be identified.
18.
The first phase of the development of the
partnership will be, over a period of eight or twelve weeks, to agree a
detailed business case, including a Business Change Plan, a Benefits
Realisation Plan and a Customer Service Plan.
The contractual structure will allow for either partner to serve notice
at the end of the mobilisation and planning phase.
19.
This approach represents a change from the approach
being considered earlier in the developmental phase. Initially PA Consulting had proposed they undertake, with the
Council, the detailed planning exercise and that this form part of the
specification for the Strategic Transformational Partner.
20.
There are benefits of the new approach. Firstly, consultancy fees paid upfront to PA
Consulting will be considerably less.
The decision being recommended to Cllr Hunter-Henderson commits a budget
of £58,600 to the next phase of the development. Development of a detailed specification and full business case
would have incurred costs in the region of three to four times that figure.
21.
A further advantage of the revised approach is that
the selected partner can spend the period they are assisting and leading on
development to the outline business case and delivery plans getting to know the
context in which they will be operating, forming key working relationships and
finalising the extent to which risk and reward can be shared.
22.
Finally, there is much less risk that extensive
analysis by PA, as part of the business case and specification preparation will
be re-used and duplicated as the incoming strategic partner wishes to test the
methodology used and outcomes delivered as part of their due diligence and
business planning processes.
(i)
Inadequate consultation with the public has been
raised as an issue. The decision being
proposed – to accept the outline business case as the basis of developing a
specification and procurement method does not require, and would not benefit
from, public consultation. The
judgement being exercised in relation to the outline business case is
substantially an internal and technical one.
(ii)
Public consultation on related issues
continues. A telephone survey to
ascertain public perceptions of the Council and the services it provides is
currently underway. This replaces a
planned cycle of the Citizens Panel and is being conducted by QA, the
consultation experts who have been commissioned to undertake a rolling
programme of public consultation. The
outcome of the telephone survey will be relevant to finalising the specification
and, particularly, to finalising the priorities within the Transformational
Work Programme which will form part of the full business case. Members of the Scrutiny Committee can be
reassured that the Transformational Partnership, as it is developed and
implemented, will be taking into account the outcome of relevant consultation
and by that means delivering the needs of individuals and of communities.
(iii)
Absence of evidence for the decision has also been
cited as a reason for the call-in. The
attached chronology puts the decision to be taken in context. The outline business case was developed
through an extensive process, which is set out in the body of the business
case. The decision proposed in the
light of that outline business case is both significant, but also a relatively
modest step in a developmental process.
The decision to develop a specification, procurement method, evaluation
framework and timetable will commit to expenditure of a significant sum of
public funds. It will, however, incur
little risk and is a necessary step if a suitable Transformational Partner is
to be identified and the business case for the partnership (and most
significantly the programme of work for the partnership) is to be identified
and commenced.
(iv)
Concern has been expressed about delays experienced
by the submission of the outline business case by PA Consulting. A brief account of the circumstances has
already been given to the Committee at a meeting on 20 April and is
further discussed above. The total
delay amounted to rather less than three weeks out of a total project (if PA
continued to advise to its conclusion) in excess of fifteen months. Delays of at least similar magnitude have
been brought about by the need to ensure key players internally have been involved
in quality assuring the work undertaken by PA Consulting and members of the
Committee can be reassured that delays have not prejudiced the overall
timetable of the project nor should they be taken as undermining the
credibility of PA Consulting, nor of the working relationship between the
Council and the consultancy firm.
23.
Members of the Scrutiny
Committee can be reassured that the outline business case has been through
normal quality assurance processes and can be relied on to commission the next
phase of the development of the Strategic Transformation Partnership.
24.
The introduction of an
additional element of activity in the form of procurement pilot projects should
be uncontroversial. There is limited
risk in pursuing these demonstrated projects as maximum exposure is to £32,000
in consultancy fees, the expected return on this investment. The assumption of return is based on a
diagnostic exercise undertaken by PA Consulting. That diagnostic forms a key plank of the background material used
by the Policy Commission in scoping and commencing its developmental work in
relation to corporate and cross-agency procurement. That diagnostic tool has a background paper to the proposed
Cabinet member delegated decision and as part of the background papers to the
scoping document for the Policy Commission.
25.
The two elements of the
work proposed by PA Consulting could stand alone. There is no un-severable link between the procurement activity
and the further development of the Strategic Transformational Partnership. The decision to proceed in tandem with the
two exercises allows the Council to pilot the sort of partnership working,
involving some shared risk, skills transfer and the planned realisation of
efficiencies which will be the lifeblood of the Strategic Transformational
Partnership. The savings realised from
the procurement activity will not be ring-fenced within the Strategic
Transformational Partnership project but will be realised as a corporate
resource which can be spent according to corporate priorities. This also represents a development of this
Authority’s ability to undertake projects on a corporate basis and realise the
benefits corporately.
26.
The chronology attached to this report shows where
documents have, or have not, been placed in the public domain. By this means members of the Committee can
be reassured
that all relevant material is in the public domain. Particular reassurance can be taken from the plan to bring the
specification, procurement method and valuation framework to a Cabinet meeting
before the business opportunity is advertised to prospective tenderers. Equally, the outcome of the tendering
process will be reported to the Cabinet at its conclusion, in January 2007.
27.
Finally, the full business case will be published
into the public domain, by means of being approved by the Cabinet in April
2007. This will provide interested
parties, including the Scrutiny Committee, with the opportunity to challenge
the assumptions and planned outputs contained within it and to form a view as
to the robustness of the work set out and the likelihood of its successful
delivery.
APPENDICES ATTACHED
Chronology
Contact Point :John
Lawson, Director of Policy, Performance and
Partnerships and Deputy Chief Executive, ' 3203,
e-mail [email protected].
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Action |
Public Domain? |
Date |
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Publish
Invitation to Tender |
Yes
- OJEU advertisement |
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Response
and Evaluation |
No
– commercially confidential |
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Decision
to appoint PA for feasibility phase |
Yes
– Cabinet papers and debate |
11
October 2005 |
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Receipt
of feasibility study and commission of outline business case |
Yes
– Cabinet papers and debate |
17
January 2006 |
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Scrutiny
Committee update on delivery of outline business case |
Yes
– Scrutiny Committee papers and debate |
20
April 2006 |
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Scrutiny
Committee decision not to pursue scoped enquiry |
Yes
– Scrutiny Committee papers and debate |
22
June 2006 |
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Receipt
of outline business case and decision to procure development of specification |
Yes
– Publication of report to Cabinet member |
28
July 2006 |
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Proposal
and determination to conduct procurement pilot projects |
Yes
– Report to Cabinet member |
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