Agenda item

To note the updates on the action items from the 2020/2021 internal audits shown in Appendix 1.

The Head of Procurement gave an update on the three audit reports about procurement that were assigned limited assurance from the internal audit for 2020/21. The following was outlined:

-       There was limited progress that had been made on the audit reports. This was primarily because of a dependency on the current procurement system, which would be updated and improved with the new procurement system that was due to be introduced;

-       The new procurement system would cover the following areas:

o   Procurement activity;

o   Contract management and performance; and

o   Payments.

-       The implementation of the new procurement system was delayed. The council were in the process of tendering for this system, which would be in-line with audit recommendations. The council were unable to implement recommendations due to either significant cost or the inability of the current procurement system to meet the recommendations suggested.

In response to questions the Head of Procurement and Head of Audit & Risk Management gave the following responses:

-       Regarding the process of credit checking for contracts, he assured the committee that the Procurement Team did credit checks routinely for all procurements above £160,000. Contracts below £160,000 were managed within the services, the Procurement Team did not have direct oversight of how these procurements were followed;

-       The Procurement Team were looking at bringing in a revised operating model that would bring in a lower value spend giving greater oversight on smaller sized contracts;

-       The assumption that the new procurement system would not be implemented until the end of 2023 was correct;

-       Audit areas that were assigned with limited assurance would be followed up on to ensure that controls had been established;

-       The gaps in the council’s current procurement technology were created through completing certain processes manually. These would be resolved with the new procurement technology through automating these processes. For example, credit checks were currently carried out manually, with the new system this process could be automated.

-       Implementation of procurement technology had been delayed partially due to difficulties in the procurement of the procurement technology. The Procurement Team were now tendering across the whole of the market;

-       In terms of financial delegation this was handled through the scheme of delegation outlined in the council’s constitution. In terms of ensuring the appropriate level of sign off, approvals were conducted within the council’s current procurement system;

-       The Procurement Team were beginning to engage with co-production. Recently they had engaged with residents around a procurement process, this would be built upon as this mechanism developed in the service;

-       The Head of Procurement did not have the information to hand regarding the number of contracts that had three quotations or the number of contracts that had over a single bidder (Action: Barry Phelps);

-       The service would ensure that the cabinet member responsible for procurement, Councillor Williams, was informed of developments around the procurement of the new procurement system;

-       At appendix 1 in the table titled ‘Arrangements for letting contracts’, a committee member noted that the wording should be active not passive to provide committee members with additional assurance. For example, to use ‘ensure’ rather than ‘consider’ (Action: Barry Phelps);

-       There were a number of local authorities looking at new procurement systems, it was a process that had been discussed with the Heads of Procurement London wide. The service was looking to adopt best practice, integrating elements of the existing system with the new system where possible;

-       For procurements above £160,000 the Head of Procurement had a considerable amount of oversight. For procurements under £160,000, there were still checks and balances, these were limited since it was not possible to have the degree of oversight needed on these procurements. Hopefully, the new system would lower the amount of risk in these lower value procurements;

-       The chair summarised the discussion, stating that serious problems had been highlighted. Cuts in funding in local government had caused issues outlined. However, audits suggested there was more that the council could be doing and that the answers given in the report could be improved upon, as they appeared both vague and dismissive, with an over reliance on technological solutions. He felt that suggestions around more input from councillors and residents would provide additional safeguards in the system, while mitigating unwarranted criticism. It was suggested that an informal group be set up with the Head of Procurement, the Head of Audit & Risk Management, and the CEO to ensure that issues around procurement were resolved in a timely manner (Action: MineshJani);

-       The chair asked the Head of Procurement if it would be useful to have a committee/ sub-committee that were involved in significant procurement contracts over a certain level. The chair underlined that he would rather a group of councillors, than a single councillor decide these contracts. The Head of Procurement felt that it was important to have the parameters of a procurement established before it went out to tender. The Assistant Head of Legal Services relayed that it was important for members to be involved in decision making particularly for key decisions, which were defined as contracts with a value of over £500,000. The terms of reference for the Corporate Committee did not include decision making on procurement. It was noted that councillors could discuss with senior officers particularly contracts that they wished to understand more about; and

-       The committee asked the Head of Procurement to assess the feasibility of setting up internal contracts register by the end of 2022. Additionally, to look into bringing any other actions forward, where possible, before the planned implementation date of the procurement software at the end of 2023 (Action: Barry Phelps).

RESOLVED

To note the updates on the action items from the 2020/2021 internal auditsshown in Appendix 1.