1 PURPOSE
1.
For Council to:
a)
Accept the report of Mark Heath into Undercliff Drive.
b)
Appoint an Investigatory and Disciplinary Committee
with the terms of reference as set out in paragraph 8.5
c)
Appoint members to that Committee
2 OUTCOMES
This report
both presents the Mark Heath report on Undercliff Drive to the Council and
proposes a way forward to reach a resolution of all the outstanding matters of
concern. In this way, the Council should at long last be able to draw a line
under a very damaging situation.
3 REASONS FOR LATENESS AND URGENCY
3.1 Local Authorities are required by the
Access to Information regime to publish the agenda for meetings and supporting
reports 5 clear days before the meeting to which they relate. There may however
be occasions when this is not possible provided there are real reasons for
lateness and for urgency. In this case the report was made public on Monday 19th
February (that is only two days before the meeting) although an item appeared
on the previously circulated Council Agenda.
3.2 Officers received the final draft of the
Mark Heath report (the Heath report) on 14th February 2007. They had
however been aware of what it was likely to say before this. The serious nature
of the findings meant that the Head of Paid Service and the current Monitoring
Officer had to consider the need to report formally to council under the Local
Government and Housing Act 1989. Again any such report has to be circulated to
all members of the Council as soon as possible.
3.4 It was evident from drafts of the Heath
report that urgent actions needed to be put in train. In order to do this both
the Head of Paid Service and the Interim Director of Legal and Democratic
Services needed to obtain further external legal advice, which was only
available in draft on 12th February 2007. This advice underpins much
of the content of this report.
4 CONFIDENTIAL/EXEMPT ITEMS
4.1 There
is much in this report and in the Heath report which might, in normal
circumstances have been included in an exempt report. This particularly
includes legal advice received by the Council and some limited information
relating to individual officers. In view of the importance of this issue,
officers have placed the report in the public domain following consultation
with the leader of the Council. It is of course open to Full Council to resolve
to go into private session and place the papers in the exempt part of the
agenda.
4.2 Council
will appreciate that in any discussion and comment on this issue, care needs to
be taken not to breach the employment rights of individual members of staff;
not to prejudice any possible subsequent disciplinary proceedings; nor
prejudice the Council’s commercial position. Members will need to have careful
regard to this in any comments made during the debate at Council whether held
in public or private session.
5 STATUS OF REPORT
5.1 This is a formal report of the Head of Paid Service and the current Monitoring Officer under ss 4 and 5 Local Government and Housing Act 1989. That Act places a personal obligation on both officers to prepare reports to the authority in certain circumstances. In the case of the Head of Paid Service this where he considers it appropriate to do so in respect of any proposals of his with respect to (amongst other things) the appointment and proper management of the authority's staff. For the Monitoring Officer, this obligation arises ‘ if at any time it appears to him that any proposal, decision or omission.. has given rise to ….a contravention, by the relevant authority….. or any person on behalf of the authority of any enactment or rule of law’. In preparing any such report the Monitoring Officer is under a duty to consult with the Head of Paid Service and with the Chief Finance Officer; and as soon as practicable after such a report has been prepared by him or his deputy, to arrange for a copy of it to be sent to each member of the authority.
5.2 Members will appreciate that
the Deputy Chief Executive and Monitoring Officer is on a career break. During his absence the Chief Executive has
appointed the Head of Law to act as the Monitoring Officer, (reporting to the
Interim Director of Legal and Democratic Services) in view of the fact that the
constitution reserves the position of Monitoring Officer to the ‘Chief Legal
Officer’.
6 THE HEATH REPORT
6.1 There have been concerns
within the Authority for some time about the Council’s procurement of
consultancy services in relation to Undercliff Drive, Ventor. The Chief
Executive therefore asked for an independent legal review. This was undertaken
by the Monitoring Officer for Southampton City Council (Mark Heath). The terms
of reference for that review were to look at:
1.
the way in which
consultancy services were commissioned in respect of the scheme, including
whether their procurement contravened European law, UK law or the Council’s
internal procedures and the risk of the Council being challenged on the issue
by European or UK Courts, aggrieved contractors or the Council’s stakeholders;
2.
whether the
current situation with regard to the procurement is safe in legal terms and if
not, what action needs to be taken, including removing any risks of challenge
whilst if possible enabling the scheme to continue to timetable;
3.
whether the
Council’s current procedures and practices are sufficiently robust to prevent
similar failures;
4.
the learning
and development opportunities that stem from the review, including actions
required to prevent such failures in future; and
5.
what (if any)
potential action should be taken in respect of officers or members of the
Council who were involved in the procurement.
6.2 Mark Heath has now completed
his report and a copy is attached. Mr Heath’s findings are that in undertaking
the consultancy procurement the Council acted either in ignorance or disregard
of procurement rules and regulations and the Council’s constitution and that
the appointment of High Point Rendel was unlawful. This created a degree of
risk of successful legal challenge against the Council, although the passage of
time has effectively reduced that risk.
6.3 In 2005 the Council received legal advice
that the procurement was unlawful and how the Council might best remedy the
situation. It appears from Mark Heath’s report that little or nothing was done
in response to this advice.
6.4 The Heath Report is uncompromising in its
view that the Council has acted unlawfully in letting a contract and procuring
consultancy advice running in excess of £1.5 million. Of greater concern still is that the situation
appears to have been known to the Council for more than two years, following
receipt of an advice from Addleshaw Goddard solicitors in January 2005 (the
Addleshaw Advice). This advice appears
as an appendix to the Heath report.
7 NEXT STEPS
7.1 Having received the Heath
Report it is vital that the Council acts and is seen to act urgently to address
the issues raised by the report. To that end, the Council has already appointed
external lawyers to remedy the procurement position.
7.2 The Council must also ensure that it has
systems and a culture in place which means that this sort of situation does not
occur again. A part of this is to fully understand who knew what and when, and why
they acted the way they did. Some
employees and members have since left the Council but one recommendation of
this report is for the Council to form a committee to examine these issues and
report back to the Council, and the Cabinet with recommendations as to how the
Council can effectively learn from these events.
7.3 The Council needs to
ensure that its procurement processes generally are both robust and that
officers and members abide by them. The Council received the report of the QP
Group on Procurement Compliance Assessment (albeit belatedly) in October 2006.
The Council needs to ensure that the recommendations from that report together
with any recommendations coming out of these investigations are taken forward.
7.4 The Council also needs to address
the potential employment issues arising from the report. The Heath report states that
the most senior officers in 2001 are no longer employed by the Council and, at
very senior level, there is no-one who can be held responsible for the original
decisions. However the Council needs to
examine who did take those decisions, who knew the decisions were being taken,
why they failed to comply with the Council’s procedures, and whether there is
any appropriate action that should be taken in relation to anyone currently
employed by the Council in respect of the 2001 decisions.
7.5 It is also important to establish whether any currently
serving officers should be held responsible for the apparent lack of action to
remedy the position at least after the Addleshaw Goddard advice of January
20005. It is not clear from the Heath report exactly who received the Addleshaw
Advice, though his report records that no re-tendering appears to have taken
place to date, nor has any statutory report to Council been made. It is
essential that the Council establishes who received the Addleshaw advice, and
what was done about it, if anything.
This will require a further investigation.
7.6 There are potentially three currently serving Chief Officers
who may have a responsibility in respect of the situation after 2005. Both the
Chief Finance Officer and the then Monitoring Officer, held a personal
statutory duty to have in place proper systems and controls to ensure that the
council complied with its legal obligations and to report to the Council and/or
the Cabinet once the failure came to their attention. To have apparently failed to do so or to have failed to take any
apparent action to rectify the serious maladministration highlighted within
that report is potentially a case of gross negligence, dereliction of duty and
gross misconduct.
7.7 In the case of the Director of Regeneration and Development,
it is equally important to understand what he knew and when, what the reporting
arrangements were within his directorate, and what supervisory and financial
controls he had over the expenditure and the project in question. He too was
under a duty to ensure compliance with procedures and to make sure the Council
obtained best value. His apparent failure to do so is also potentially a
dereliction of duty, gross negligence and/or gross misconduct.
7.8 Pending that investigation, the Head of
Paid Service has suspended the Director
of Regeneration and Development, the Deputy Chief Executive and the Chief
Financial Officer. The purpose
of the suspension is to protect the integrity of the investigation that must
now take place. Secondly, given the very serious allegations that they face, it
is to protect the Council and to enable it to discharge its functions. Council
will appreciate that it is not appropriate for any more detail to be reported
or discussed in public at this stage.
8 DECISION
MAKING PROCESS
8.1 The
employment of officers, and the terms and conditions of employment, including
disciplinary procedures is reserved to the Council or a committee of the
Council by virtue of the Local Authorities (Responsibility for Functions)
Regulations 2000 (as amended). The
Council has delegated its functions to the Regulatory Committee and, specifically
to the Human Resources Sub-Committee. This sub-committee also exercises the
Council’s functions in relation to officers employed on JNC Conditions of
service (the Chief Executive, some Chief Officers)
8.2 The
Local Authorities (Standing Orders) Regulations 2001 (the “Regulations”) impose
further restrictions and procedural requirements on the appointment and
dismissal of senior officers, including the requirement to appoint a Designated
Independent Person (“DIP”) to investigate and report on any issues which
involve the Council’s Head of Paid Service, Chief Financial Officer and
Monitoring Officer (the ‘Statutory Officers’). This includes any suspension of
more than two months duration.
8.3 Regulations
made under the Employment Act 2002 impose on all employers the obligation to
have procedures to resolve both grievances and other disputes through a
statutory process involving an investigation stage, a hearing stage and an
appeal stage. General employment law requires that there is a separation of the
functions of investigation, dismissal and appeal, and that there should be
appropriate arrangements in place for grievances to be heard and determined
separately.
8.4 It
is also of course important that the procurement aspect is investigated and
rectified. In view of the extent of the investigation required – not only on
the employment aspect but also in order to regularize the procurement – it is
recommended that the Council establish a specialist Committee to deal with all
the aspects of Undercliff Drive rather
than having different aspects dealt with by different Council bodies. In terms
of any procurement recommendations, these will need to be made to the Cabinet
as procurement is an Executive function. This Committee would deal with
rectifying past errors. Ongoing decisions in respect of the work at Undercliff
Drive would continue to be dealt with by Cabinet and officers.
8.5 It
is therefore recommended that an Investigatory and Disciplinary Committee is
now established with the following Terms of Reference:
·
To review and
scrutinise the circumstances leading up to the letting of the contracts for
works at Undercliff Drive.
·
To consider
any personal responsibility of officers, members or contractors that has led to
the position identified in the Heath Report and to discharge the functions of
the “Investigating Committee/Investigating Panel” as set out in the JNC
Conditions of Service.
·
To consider
any allegations made against Officers (or their predecessors) and decide if
further investigation is required;
·
To carryout a
preliminary investigation and determine if a question of discipline exists
which requires investigation by a Designated Independent Person, where
required, in accordance with the Standing Orders Regulations.
·
Subject to
the Regulations and to the extent not already delegated to an officer of the
Council, to suspend any relevant Officers or to hear any grievance or
representation from an officer in that position.
·
To hear
evidence and representations from the Statutory Officers in order to decide if
a case exists.
·
To appoint a
designated independent person, further to statutory provisions and relevant
national agreements.
·
To receive
any reports from the DIP and, subject to the Regulations, implement any
recommendations arising from such a report.
·
To appoint sub-committees
to hear any specific issue, allegations or representation set out in these
terms of reference.
·
To approve
any terms for settlement of any claims or disputes arising as between the
Council and its senior officers.
·
To authorise
expenditure on external advice and assistance in completing the committee’s
work.
·
To advise the
Cabinet on any procurement issues which are within the Cabinet’s terms of
reference, to include any advice on any tendering, contract award or
specification and any future action to be taken with respect to either the
consultancy contract or any other contract relating to the works for Undercliff
drive where these are relevant to the Heath report.
·
To have
oversight of the ongoing actions, decisions and progress with regards to the
Undercliff Drive Project, making recommendations to other Council decision
makers where appropriate
8.6 The Committee will need to be politically
proportionate in its membership. It is recommended that the Committee consists
of 7 members (5 from the Conservative Group, 1 from the Liberal Democrats and 1
from the Independent Group . It may be necessary in future to establish an
appeals Committee to hear any appeals from disciplinary proceedings where these
would normally be reserved to members.
9 LEGAL
IMPLICATIONS
9.1 This report was drafted by the Interim Director of Legal and
Democratic Services on behalf of the Head of Paid Service and the Monitoring
Officer and there are no additional legal comments.
10. FINANCIAL IMPLICATIONS
10.1 The Council has already spent considerable
sums of money on the Undercliff project. The investigations set out in this
report into both procurement and employment issues will be carried out by
external advisers. It is not possible to estimate exactly how much this is
likely to cost at this stage but is likely to be at least £100,000. Any such
cost will be contained within existing budgets.
11 RISK MANAGEMENT
11.1 The present situation in relation to the procurement
of consultancy services for Undercliff Drive has presented the Council with
significant risk which until now has not been managed appropriately or at all.
The procurement was unlawful although the passage of time has meant that the
risk of litigation is now small.
11.2 There is a continuing ongoing risk to the
Council’s reputation whilst this situation is not dealt with. The proposals set
out in this report are intended to finally bring this to an end and therefore
to mitigate those risks.
11.3 Evidently, an ongoing investigation into
both the procurement and the employment aspects may reveal further areas of
concern and therefore on the face of it present the Council with more risk.
However, the ongoing risk of failing to deal with the situation is greater.
|
RECOMMENDATIONS
That
Council: a)Accepts
the report of Mark Heath into Undercliff Drive. b)Appoints
an Investigatory and Disciplinary Committee with the terms of reference as
set out in paragraph 8.5 c)Agrees
that the membership of that Committee will be 7and appoints members to that
Committee |
BACKGROUND
PAPERS
There
are no papers material to the preparation of this report which the Council is
required to disclose.
APPENDICES
Appendix - Mark Heath report
Contact
Point : Alison Lowton, Interim
Director of Legal and Democratic Services
County Hall
Newport
Isle of Wight PO30 1UD
(01983)825234
|
JOE
DUCKWORTH Head
of Paid Service |
PAT
SZATTER Monitoring
Officer |