Agenda item

[To be introduced by the Cabinet Member for  Resources and Culture . Report of the Assistant Director for Corporate Governance. Cabinet will be asked to approve the extension of the existing contract for the provision of internal audit services.

The Cabinet Member for Resources and Culture introduced the report which

sought approval for an extension of the Council’s contract with the London

Borough of Croydon, through their Audit Services Framework Agreement, to

provide the internal Audit service for the Council for an estimated value of

£510k.

RESOLVED

1. That approval be granted for an extension from 1 April 2016 to 31 March 2018 of the Council’s existing contract with the London Borough of Croydon to provide, by means of their Audit Services Framework Agreement, audit resources to deliver the Internal Audit service for the Council for an estimated value of £510k.

Reasons for decision

A one year contract extension from 1 April 2015 to 31 March 2016 was approved under delegated authority in December 2014; a one year extension was agreed in order to assess the continuing effectiveness of the contract. New management arrangements have been put in place by Mazars to deliver the service and the contract has satisfied the statutory and performance criteria required; therefore it is recommended that the option to extend for the remaining 2 year period available under the Croydon framework contract is taken up.

An extension of the contract for 12 months was approved in December 2014 by the Assistant Director of Corporate Governance. However, given the value of the extension now proposed for the remaining two years of the framework, approval for the extension is required at Cabinet level in accordance with CSO 10.02.2.

The framework contract with Croydon Council represents good value for money for Haringey in terms of service provision and costs; and therefore the extension to the existing contract is recommended.

Alternative options considered

Option 1 – Full Open Tender

The potential contract values involved for this length of contract would require a full re-tender following European procurement legislation unless an acceptable alternative procurement route is used e.g. an appropriate framework agreement. Haringey alone undertaking a tendering procedure under EU rules is not recommended, as recent assessments of the current market confirmed that taking an independent procurement route in this way would be resource-intensive and unlikely to achieve better results in terms of value for money than the other options available.

Option 2 – Alternative Framework contract

There is another framework agreement established by a London authority in 2014/15 for the provision of internal audit services and other local authorities are included in the list of organisations eligible to use the framework. The framework is delivered by another private sector contractor, but the daily rates quoted are substantially higher than those currently paid by the Council under the London Borough of Croydon framework contract.

Option 3 – In-house Provision/Shared Service with another authority

Haringey Council has no in-house internal audit resources. The experience of other London councils has proved that it is highly unlikely that an in-house resource could be recruited and retained to deliver the Council’s internal audit service. All London boroughs have outsourced their internal audit service to some extent and none are looking to bring this service fully back in-house due to the ongoing costs of recruitment, retention and training. Some London authorities have adopted a ‘shared service’ model for the provision of their audit services, joining audit resources to provide greater resilience for their in-house service. However this has always, to date, been in conjunction with a private sector provider to supplement the in-house resources. Haringey does not have any in-house internal audit resources, so this option has not been considered to date.

It is proposed to review these options above during the two year extension as different service delivery models and options evolve. It may be more economically advantageous in the future to consider a different approach, but at the present time, this would not represent good value for money for the Council.