Agenda item

The Portfolio Holder for Finance and Enabling presented the Approvals to Spend report for the Executive Committee’s consideration.

 

Members were informed that the report detailed the key implications of the new Procurement Bill, which needed to be enacted by 1^st April 2024.  The Bill introduced a requirement for greater transparency in terms of how Councils undertook their business.  The Bill would reform the UK’s public procurement regime, and aimed to make it quicker, simpler, more transparent and better able to meet the UK’s needs while remaining compliant with international obligations.  The legislation would introduce a new regime that was based on value for money, competition and objective criteria in decision-making.  The legislation required Councils to more effectively open up public procurement to new entrants such as small businesses and social enterprises so that they could compete for and win more public contracts.     

 

The Committee was assured that, whist this might appear daunting, the recent work that the Council had already done to put measures in place meant that the majority of the requirements under the new legislation were already being addressed with a few changes required for transparency purposes.  Measures already in place included:

 

·        The No Compliance No Order procurement regime which had been implemented on the TechOne system on the 1^st April 2023. With this, an order could not be raised unless it was linked to a contract or an identifiable procurement route.

·        All new suppliers had to be approved by the procurement and payments teams. 

·        Monthly spending of over £500 was already published on the Council’s website.

·        The Council had an European Professional Card (EPC) card system for small expenditure.

·        The authority’s contracts register was available to Officers, Members and the public to view.

·        The Procurement team was available for monthly meetings with Heads of Service and this ensured the procurement team had knowledge of what service departments were procuring and that they could check that there was compliance with the No Compliance No Order regime.

·        Procurement training was provided to teams on request.

·        Monthly accounts payable training was being delivered.

·        There was a dedicated Procurement team page on the Council’s website.

 

Part 5 of the Council’s Constitution detailed the Officer Scheme of Delegations.  This scheme outlined the decisions that had been delegated to Officers by the Executive Committee and Council. The Council’s Constitution clarified that key decisions with signficant financial implications for the authority were Executive level decisions with a combined financial spend (either as a single item or for the length of the contract) of £50,000 or more.  This included revenue, capital and Section 106 allocations.

 

There was a legal requirement for the Council to give notice of forthcoming key decisions and the authority did this by publishing items on the Executive Committee’s Work Programme.  Decisions due to be taken by the Executive Committee were actioned through a report presented for consideration at a meeting of the Committee.  Decisions that were delegated to Officers were actioned via an Officer Decision Notice.

 

The Council’s Procurement Pipeline, which was based on the contracts register, provided a forward look of potential contracting opportunities and highlighted when existing contracts were due to expire. The key task of the pipeline was to allow for the proper planning of procurement processes to ensure the Council maximised its contracting opportunities.  The Council, when entering into framework contracts, relied on the governance processes of those frameworks to ensure that objectives such as “social value” were being delivered by prospective suppliers.  However, feedback had been received from local businesses that Council procurement requirements acted as a barrier for them to bid for work directly. Consequently, the Council would investigate ways to encourage local suppliers to be able to bid for Council work directly.  The Council would accelerate this process to ensure that Council funds were invested locally where possible, subject to the procurement process.

 

Members were asked to note that existing data from the contracts register revealed that the £50,000 threshold for key decisions covered many projects, particularly as lots of contracts lasted for multiple years.  The Committee was advised that the majority of Councils had traditionally set the key decision limit at the EU procurement threshold level of £179,000.  Locally, key decision thresholds had been set at £50,000 at Wyre Forest District Council and at £164,176 at Worcester City Council, prior to a change to the authority’s governance structure.  In the West Midlands region, Birmingham City Council had set their Capital expenditure threshold at £1 million and Revenue threshold at £500,000, with the threshold for Chief Officers being £200,000. Solihull Metropolitan Borough Council’s threshold was £500,000 and City of Wolverhampton Council’s threshold was £250,000.  Some Councils did not publicise a threshold.

 

The Committee was informed that, should Members decide to change the threshold for key decisions with signficant financial implications, Members would not be required to make any changes to the Council’s existing Officer Scheme of Delegations.

 

Members subsequently discussed the content of the report and the proposals detailed within the report in detail and in doing so questioned whether it was appropriate for the Council to compare its financial threshold for key decisions to large authorities like Birmingham City Council.  It was acknowledged that Birmingham City Council was the largest authority in the country.  However, Members were advised that many Councils had set their thresholds in previous years close to the EU procurement limit of £179,000 and therefore consideration of a much higher figure than £50,000 for key decisions with significant financial implications for the Council was a valid point for discussion. 

 

During consideration of this item, reference was made to the Budget Scrutiny Working Group’s discussions in respect of this report at a meeting held on 24^th July 2023.  The group had made a number of comments on the content of the report that Members had been keen to highlight for the consideration of the Executive Committee and these comments had been published in a supplementary pack for the meeting.  Members subsequently discussed each of the group’s points in turn:

 

1.          “Increasing thresholds. In principle, given inflation is galloping away there is a need for some increase in key decision financial threshold but increase from £50k to £200K feels high.”

 

Members discussed this comment and on the one hand, some Members suggested that an increase in the threshold from £50,000 to £200,000 was too high.  The suggestion was made that, instead, the threshold could be increased in line with inflation to £60,000, particularly for contracts that would last for a single year.  On the other hand, Members commented that the proposed increase had been discussed in detail with the Council’s Interim Section 151 Officer and the Head of Finance and Customer Services who had provided expert advice.  In addition, the key decision threshold did not appear to have changed since at least 2007, and in this time costs and the pressures on local government had changed, so it was suggested that a review was timely. 

 

2)          “Localism.  Supporting local suppliers is important but the best way to do that is allocate extra points for local factors during an open and transparent procurement process.”

 

The need for the Council to have an open and transparent procurement process in place that complied with legislative requirements was discussed.  Members commented that due process would remain in place.  The Council would simply be giving consideration to bids from local contractors as part of this process and reference could be made to the potential social value as well as the possible benefits in terms of climate emissions associated with local suppliers.  Further detail would be available in respect of the procurement process and the requirements arising from the Procurement Bill later in the year and this issue would be considered as part of that process.

 

3)          “There is a difference on reporting single year and multi year contracts. Perhaps there should be a consideration of a flexible reporting scale for one and multi year contracts. It is suggested that reporting thresholds for ACV be raised to £60K. For multi year contracts up to a threshold of £180K when receiving a change in controls.“

 

Consideration was given to this comment and on the one hand, Members suggested that it would be understandable to set different thresholds for key decisions that had financial implications where the length of a contract varied between a single and multiple years.  It was recognised that lengthier contracts were likely to cost more due to the length of time that they would apply and without a higher threshold in this instance the decision making and reporting process could become burdensome. 

 

However, on the other hand, Members noted that they would continue to learn about contracts valued at between £50,000 and £199,999 as this would be reported in the quarterly financial and performance monitoring reports.  The suggestion was also made that all Council contracts were important, regardless of the length of time for which they applied, and therefore distinguishing between different lengths of contract in applying financial thresholds for key decisions might not add value to the Council.

 

4)          “Any annual contact coming up for extension that is NOT on a procurement framework gets scrutinised by Councillors.”

 

The Committee was asked to note that the quarterly finance and performance reports, as well as being presented for the consideration of the Executive Committee, would also be available for the Budget Scrutiny Working Group to scrutinise.  The Budget Scrutiny Working Group and Overview and Scrutiny Committee could also ask to scrutinise matters at any time and Members commented that they valued the scrutiny process.

 

However, the suggestion was made that scrutiny of Council contracts should be conducted in such a way as to not cause delays to the procurement process.  Officers clarified that information would be included in the quarterly finance and performance monitoring reports which would highlight contracts that were due to expire over the following months and this would ensure that Members were provided with notice on any contracts that could be scrutinised in advance of decisions being taken.

 

Following consideration of the comments made by the Budget Scrutiny Working Group, amendments were proposed by Councillor Joe Baker to the wording of the first recommendation in respect of this item.  The amended recommendation was proposed as detailed below:

 

“On a quarterly basis an “Approval to Spend Report” will be provided to the Executive Committee which sets out the Council’s Procurement Pipeline for approval to be included on the Executive Committee’s Work Programme and an analysis of spending over the past four years. 

 

a)              This report will also identify spending with suppliers over £60,000 for a one-year contract and £200,000 for a contract lasting two or three years to ensure this spending is converted to properly contracted expenditure.”

 

The amendment was proposed by Councillor Baker and seconded by Councillor Bill Hartnett.

 

In proposing the amendment, Councillor Baker expressed concerns that increasing the financial threshold for key decisions from £50,000 to £200,000 was too great an increase.  The proposed thresholds, as detailed in the amendment, would help to address these concerns as well as the Budget Scrutiny Working Group’s concerns.

 

Members discussed the proposed amendment to the first recommendation and in doing so commented that the proposed changes, as originally worded, were based on advice from the Interim Section 151 Officer and concerns were raised about changing the threshold in an amendment without detailed discussions with relevant Officers.  Furthermore, it was noted that the fourth recommendation detailed in the report would require all procurement valued at between £50,000 and £200,000 to be listed in future Approvals to Spend reports and therefore some Members questioned whether this amendment was necessary.

 

On being put to the vote, the amendment was lost.

 

Councillor Baker subsequently proposed the following amendment to the second recommendation in respect of this item:

 

“That the Council investigate and put in place processes that allow local businesses to access Council procurements more easily, following the passage of the Procurement Bill with a fair scoring matrix put in place.”   

 

This amendment was proposed by Councillor Baker and seconded by Councillor Hartnett.

 

In proposing this amendment, Councillor Baker expressed concerns that the Executive Committee was making recommendations to Council on this subject without having first received a detailed analysis of the implications for the Council of the Procurement Bill.  There would be a need to demonstrate that the Council was applying an appropriate and fair procurement system and the proposed fair scoring matrix would help to convey this point.

 

In seconding the amendment, Councillor Hartnett commented that there needed to be a fair scoring system in place.  The proposal was being made in a context where Members had not yet been provided with detail in respect of the Procurement Bill and this approach was considered to be prudent in this context.

 

The proposed amendment to the second recommendation was subsequently discussed.  Questions were raised about the timing of this proposal, given that officers would be reviewing the implications of the Procurement Bill for the Council and reporting to Members on this matter in due course.  In addition, concerns were raised that by specifying the scoring process, the Council might agree to arrangements that might subsequently need to be changed again once the full implications of the Procurement Bill had been clarified.  Members commented that the Council would always comply with procurement rues and would apply a fair system.

 

Following these discussions, Councillor Baker commented that he would propose amending the wording further to the following:

 

1)          That the Council investigate and put in place processes that allow local businesses to access Council procurements more easily, following the passage of the Procurement Bill with a scoring matrix put in place.”   

 

On being put to the vote the amendment was lost.

 

RECOMMENDED that

 

1)          on a quarterly basis an “Approval to Spend Report” will be provided to the Executive Committee which sets out the Council’s Procurement Pipeline for approval to be included on the Executive Committee’s Work Programme plan and an analysis of spending over the past four years

 

a)     this report will also identify spending with suppliers over the £200,000 limit to ensure this spending is converted to properly contracted expenditure;

 

2)          the Council investigate and put in place processes that allow local businesses to access Council procurements more easily, following the passage of the Procurement Bill;

 

3)          the Key Decision threshold be raised to £200,000. 

 

4)          the “Approval to Spend Report” report also provides a list of all procurement between £50,000 and £200,000, which the Executive Committee can request further detail and subject to additional scrutiny where they see fit; and

 

5)          items from the initial pipeline report at the appropriate Key Decision level are added to the Executive Committee’s Work Programme.