Agenda item

The CPO (Chief Procurement Officer) attended the Audit Committee to present an update on outstanding audit recommendations which were primarily reliant on the implementation of the new e-procurement system.

This report intends to cover the information requested.

Ms Jeanine Long, THF Change Consultant and Mr Barry Phelps, Chief Procurement Officer, introduced the report:

The meeting heard:

·      There were some concerns with the project at the moment. There was a review which was currently underway. This was anticipated to be completed by the end of the coming week and then further details could be provided in terms of the progress of the report once the review was completed.

·      In relation to the training, the intention was to have a “train the trainer” model. The internal administration would be trained and then focus would be placed on “super users”. These were the key contract managers, procurement officers internally before moving out to general users and suppliers externally. The intention at the moment was to not have an external resource to do the training.

·      Part of the project cost was the training and this was included. The training would be delivered by Council officers, not external organisations.

·      In relation to if the budget was contained for the additional extensions, this would have to be referred to Digital Services because it came under their budget. The Committee could be updated in relation to this. 

·      Digital Services had overall responsibility for the project. This was why the report was drafted from Digital Services. Some concerns had been raised which was why the review was underway. Appropriate action was being taken and the concerns were being addressed through the review. Once the review had been undertaken, then there would be a better understanding as to whether the concerns could be addressed.

·      There were some risks, but the risks were predominantly around the functionality and whether the functionality requested would be delivered and around the time scales outset in the original requirement. Most of these were covered within the report.

·      This was an important project for the organisation. Procurement and contracts was a big area in spending and it was important to support the review that was underway to ensure that the right process and the right project management was in place. At the next meeting, the Committee would have a more general discussion around procurement and compliance around contract management.

·      The chosen supplier was already in place with other councils. The Council had explored trying to work with other authorities in terms of some procurement platforms more regionally. This had been challenging because different boroughs were at different points and had different digital strategies. This was not just the procurement platform, but also finance systems, HR systems and other systems. If further opportunities arose, then they would be explored.

·      Testing of the system would be done before it went live.

·      On page 39 of the agenda papers, there were some key gateways listed and these were key points to evidence the testing the data migration and the usabilities in place.

·      The costings or budget allocations would be looked into, but as far as the subject matter expertise of using the system, especially the ‘train the trainer’ model would be part of the internal resources. Internal digital resources would be used for interfacing to the SAP and the finance systems. The supplier was not customised just for Haringey. It used the functionality that multiple that multiple councils were using.

·      In relation to functionality for the working system, disaster recovery and business continuity was also part of that system that needed to be in place. As for delivering the project, an audit of the project was underway as well as a review of the project to mitigate that.

·      Page 34 of the agenda papers showed a high-level timeline, the top half of this was the technical delivery. There were three key stage gates functionality being delivered. The yellow stars represented milestones of functionality being delivered. This included data migration, configuration, testing and the ‘go live’ of that module. By the end of October 2024, all three modules would be available with a solution in place. The timeline and the gateways represented the three key milestones including if the supplier met the functionality and met requirements. This was why the Council was constantly rechecking those gateways to make sure that each of those modules as a whole, by the end of October, would be fully functional for the Council’s needs.

·      Part of the reason that the review being undertaken was because there were serious concerns regarding the timetable. This was what the review was looking at. Once the review had been undertaken, it would be possible to take stock of actually where things were in terms of delivering the functionality expected at various points in time. An update would be provided once the review had been completed. The review would be completed by the end of the coming week.

·      The new software was replacing two old pieces of software. The numbers outlined on page 40 of the agenda papers specifically related to shutting down the licence cost for the two pieces of software, replacing it with the supplier and what the savings would be.

·      The contract was fixed. There was only some CPI uplift in relation to some of the licences. If the Council required developments or additional modules over and above what had been specified, then there would be additional cost, but that would be subject to the relevant gateways being put in place by Digital Services. Apart from this, it was a fixed price contract. There were fixed rates and there were fixed licence costs associated. The Council had not put forward any client changes, but this was subject to the review and the assessment of the functionality that was being developed to ensure that it met requirements. The Council was trying to retain the standard functionality as much as possible with the relevant controls and workflows, but not all of the functionality had been examined yet, so it was not yet possible to identify if any additional amendments to the system that needed to be made. It was anticipated that there was no additional cost being incurred other than potentially extending the existing licences for the current systems if there was a delay in relation to the project.

·      The purpose of the review was to be able to assess the functionality to ensure that it was aligned to what the Council went to market with and what the Council was expecting to be delivered. In terms of the cost and the budget, the focus had been more around the functionality and it was going to be delivered as opposed to if there was a risk in terms of additional costs being drawn in. This would all be factored into the review.

·      The table that was on page 35 of the agenda papers reflected the change management activities as far as communications training. The activities had started since May 2024 and were planned to go through the life cycle of the project. The timeline that was outlined on page 34 of the agenda papers, section 6.4.9, reflected the Council’s reassessed timeline starting in June and the review was underway to validate that the timeline was still achievable. The table had a lot of activities that were not yet started represented the gateways of the activities that needed to happen. Data needed to be put into the system so that users could be trained. All aspects of data had been loaded except one part and this was why some areas were reflected as ‘not yet started’.

·      The Council had expected the data to have been loaded, but there were some delays in the configuration and retrieving of the data from the previous system.

·      In relation to having adequate staff in place, Mr Phelps’ team would lead on the training. Staff would be trained in the system and the new procurement processes. Most of the activity in terms of procurement would be centralised into Mr Phelps’ department. This narrowed down some of the intense training within the system. There was broader corporate training that was required for contract managers and for those procuring below £25,000. This would consist of online training material and sessions. The Council had the resources from what it understood, but until the level of training that was required across the whole of the Council had been assessed, then any resource issue could become apparent.

·      There would be enhanced controls throughout the system which would help minimise fraud. There was more transparency and more controls put in place in the new system.

·      In relation to scope, analytics was a key part of the requirements because data could be used much more effectively to inform procurement strategies and understand markets. There were two phases to this. The first provided enhanced reporting capability and using tools to assist in understanding the data. Conversations had been held with Digital Services regarding going beyond this and potentially using AI to provide further insight into data. However, the first step was to get the system in place and then look to see if there was any added value for additional process.

·      The review was focused on making sure that the functionality was meeting the requirements requested that were originally part of the tender and the contract. Based on that outcome, a report could be made to the Committee of whether it was fit for purpose. This was regarding the quality and the scope of what the system was able to do.

·      The review appeared to be happening at the right time to do it because monitoring and conducting due diligence had been made regarding managing risks and issues. Risks were the possibility of something happening versus the issues actively happening. Based on the risks and issues identified, the review had been initiated and allowed for a more neutral perspective on making sure that the project was still going to be meeting requirements.

·      Based on the most recent project delivery assessment, the RAG Rating (red, amber, green rating) could be provided to the Committee. The audit performed by Mazars had been completed, but the report had not yet been submitted.

·      The Committee would be informed when the project was initially signed off and funding was afforded and what the monetary benefits would have been.

·      In relation to getting access to the system, it could be seen as a working model. The first module had been submitted recently. This would identify any functionality issues. There were contract signing delays so the timeline overall was compressed. The project was still somewhat in its early stages, but the risks and issues were being monitored weekly and mitigated. It was important to be transparent.

·      There were two reviews. There was one review which looked at the overall governance, which was undertaken by external auditors. There was then a separate review which was being led by the project and senior members in digital services, which was looking at the functionality, the timelines and the project itself.

·      Checks would be made to see if there was a break clause, but the contract was very clear in terms of what the Council were looking for from a deliverable perspective and the provider was expected to adhere to the requirements in the contract. This was part of the Digital Services review that was being undertaken. The Council could change the contract, but compliance, transparency, visibility the collaboration of all of the different systems currently in place was the baseline of the contract itself.

·      Different issues could potentially affect the contract but that would depend upon what issues were identified, but there were clear milestones and deliverables within the contract and if they were not adhered to, then checks would be made to see if there was a breach of contract. It was important to wait and see what the review would find.

·      At the next Committee, a joint report by by Digital Services and Procurement that covered a range of issues with a single update would be submitted.

The Legal advisor to the Committee that stated that if there were concerns about whether the supplier was able to deliver the specification, then it was possible that this was a failure that went to the heart of the contract and may amount to a repudiatory breach of the contract. If so, it may entitle the Council to treat the contract as terminated and the Council may then be able to exit the contract and sue the supplier for damages in order to put the Council in the position that it would have been in but for the breach of contract.

The meeting requested that the new Director of Finance considered some the issues outlined particularly regarding the cost and if it was contained in the budget.

The Chair felt that there would be a slight delay with the implementation with the project and it was important to note that there were two systems in operation. The licence arrangement may need to be examined before it expired. The two systems in addition to the new system would also have to be examined as ultimately all arrangements would have costs attached to it.

RESOLVED:

1.      That the Committee note the progress to date and the mitigating actions against risks and issues.

2.      To note that at the proper time the internal audit by Mazars  would be presented to the Committee and the recommendations followed in respect of the operating model for procurement for the authority.

3.      That the Committee note the concerns relating to the project and will receive a paper at its next meeting setting the outcome of the review by Digital Services.