Agenda item

To consider a report by the Head of Internal Audit, on Internal Audit’s follow up work of Procurement of Construction Services following its initial report in October 2013 and the Wales Audit Office’s (WAO) report of March 2014 (copy enclosed).

A copy of a report by the Head of Internal Audit (HIA), on the follow up work of Procurement of Construction Services following its initial report in October, 2013 and the Wales Audit Office’s (WAO) report of March 2014, had been circulated with the papers for the meeting.

Internal Audit (IA) had issued a report on Procurement of Construction Services in October, 2013 which had given a ‘low’ assurance rating, with an Action Plan which included 11 areas for improvement. The review concluded “there was considerable scope for improvement.  By developing a strategic approach, there was potential to make Construction Procurement much more efficient through streamlining processes and making them more consistent, with the benefit of removing duplication.”

The WAO report covered school building maintenance work, concluding that “Improvements need to be made to the current procurement arrangements to ensure that the Council can demonstrate that it is achieving value for money.  In addition, the Council was not complying fully with its current contract procedure rules.”  The WAO Recommendation Action Plan had included six areas for improvement.

The follow up Action Plan, Appendix 1, incorporated all actions from both the Internal Audit and WAO Action Plans and showed lack of progress to date in delivering the improvements identified by the relevant services within timescale.  Only 2 of the 17 risks had been addressed in full, with others in progress at various stages.  In particular:-

·                 there was no procurement strategy in place;

·                 framework agreements had been delayed by several months of the agreed implementation date;

·                 e-sourcing roll-out was delayed by a year of the agreed implementation date; and

·                   revised contract procedure rules (CPRs) had not been agreed and would be delayed by a year of the agreed implementation date. This had affected the implementation of several other improvement actions.  The HIA explained that a report pertaining to CPR’s would be presented to the Committee in November.

In response to concerns raised by Councillor J. Butterfield regarding the need to increase the number of accredited contractors on the approved list, the Property Manager (PM) outlined the main function of the framework, and pre-qualification questionnaire, and explained that the expression of interest document had been designed to gauge interest and provide an opportunity to assess the competency of applicants.  He referred to the importance of demonstrating best value and engaging with local contractors, and confirmed that work had been undertaken with the Third Sector Liaison Group and Federation of Small Businesses to promote opportunities for small businesses.

The HFA referred to the composition of the approved list in relation to the availability of work and he highlighted the need to stimulate competition.  The PM confirmed that a report would be presented to Members following completion of the Framework Agreements. 

Mr P. Whitham expressed concern regarding the absence of a procurement strategy and the general lack of progress.  The HIA agreed that a further progress report could be presented to the Committee at its meeting on the 17^th December, 2014.   Mr Whitham referred to the WOA report on school building maintenance and the importance of the concept of aggregation, and he suggested that reference to relationships with contractors incorporates gifts and hospitality.          

In reply to a question from Councillor M.L. Holland, the Acting Strategic Procurement Manager (ASPM) explained that contracts for highway works in Denbighshire and Flintshire, the joint collaborative agreement, were currently being progressed.  Details of the management and performance of the contracts was outlined and benefits arising from the merger of the Denbighshire and Flintshire Procurement Teams were highlighted.

RESOLVED – that the Corporate Governance Committee:-

(a)            receives the report and notes the concerns expressed regarding the lack of progress.

(b)            agrees that the Head of Internal Audit submit a progress report to the December meeting of the Committee, and

(c)            requests that a report be presented to Members following completion of the Framework Agreements.

           (IB, SA and DL to Action)