Agenda item

Report of the Chief Procurement Officer

4.1      The Head of Procurement Development, and Della Main, Operations Support Manager, Process and Governance, introduced an Annual Report that reviewed the Council’s contracts as per the requirements of the Committee’s Terms of Reference.

4.2      The committee was informed that 55 contracts over the value of £100,000 and 63 contracts with a value of less than £100,000 commenced in 2015/16 in accordance with the requirements of the Procurement Code. There were 29 extensions and 6 variations of existing contracts. In exceptional circumstances a waiver to the requirements of the Procurement Code may be obtained from the Chief Procurement Officer.  55 waivers were approved during the course of the year. While the committee welcomed the reduction in extensions and waivers from the previous year members considered that the figures were still too high given that many of the Council’s contracts run for a number of years with clear end dates which should provide sufficient time to plan for new procurements.  This was acknowledged and the Committee was advised that the Procurement Team was looking at how it could assist contract managers to better plan for procurements to avoid them having to apply for extensions in future.  Automatic alerts are set up in the system and a forward plan of activity is reviewed so that contract managers are contacted to understand their intentions early enough to develop appropriate sourcing strategies.

4.3      The Committee was informed that the capitalEsourcing contracts register is regarded as the “single source of truth” and forms the basis for reporting on contract information across the Council.

4.4      The committee noted that Compliance regarding completion of mandatory fields had increased overall since 2014/15 from 41% to 94%.  Compliance regarding completion of contract performance data had increased from 30% to 63%.  The Committee referred officers to Table 3 in the report which showed a breakdown of contract performance by Contracting Authority. It expressed concern that only 15% of contracts let by CityWest Homes had been evaluated.  It was clarified that this did not mean that CWH had not monitored the contract performance of 17 out of 20 contracts but that it had not entered the information in capitalEsourcing.  She advised that Procurement Services are working with the Services to ensure that all contracts are evaluated a minimum of once per annum within the platform.

4.5      The committee heard that a Tri-Borough Contracts Management Framework is available, which creates a consistent approach to Contracts Management that will be applied to all external third party relationships.  Members were informed that workshops about the framework had been held in all three boroughs together with six training sessions.  Feedback from attendees had been positive and common issues that had been raised were being followed up.  However, it was suggested that this had not translated to a change in contract manager behaviour.  In response to questions about the governance for each borough the Committee was advised that each borough in the Tri-borough Partnership has their own procurement rules which are vastly different from one another.  However, there is a common high level Procurement Code for Tri-Borough procurements.

4.6      Members were informed about a comprehensive programme of development in place for Procurement Services over the next 12 months and that a structured approach is in place to deliver the projects that will enable the Service to achieve its vision of Procurement Excellence.  Members were advised that the service had received positive feedback regarding its submission to the Chartered Institute of Procurement & Supply (CIPS) for the CIPS Corporate Certification Standard.

4.7      With reference to historical slippage that has occurred in the capital programme, members asked whether there was merit in procuring smaller lots to deliver a major scheme rather than letting an all-encompassing contract.  The Committee was advised that each capital project would need to be assessed on a case-by-case basis.  She suggested that given the scale of some of the capital projects and the management involved the Council could look to see whether there are established frameworks that it could buy into as there is a risk that costs could increase with having to procure lots of small contracts.  She also commented in respect of development that the construction market was highly competitive and attracting bids can be challenging.

4.8      The Committee asked for details of why two of the contracts within Policy, Performance & Communications were assessed as “below expectations”.  Officers suggested that this was possibly because the expectations were unrealistic.  The committee asked who was responsible for undertaking an end-to-end analysis for a contract including its outcomes.  It was explained that contract management, including performance assessment, is devolved across the Council.  The committee asked how procurement services would know if contracts have not been awarded.  While Procurement Services now has the ability to look retrospectively at the overall spend data for the year there was a delay in obtaining this information.  She stated that the Service would like direct access to the data so that it can undertake its own analysis and hoped that this would be available in future.  With regard to measuring corporate outcomes, it was agreed with members that while it was possible to measure and assess whether a contract was delivering value for money and meeting key deliverables, quantifying social value was more difficult.  She advised that the service is piloting a responsible procurement programme and working with the Policy and Strategy Team to develop a set of standards that could be measured.  Pete Carpenter, Assistant City Treasurer, suggested that one possible way of matching contracts to outcomes was to include a link to key performance indicators in quarterly performance reports.  Officers undertook to consider options for providing this information in future reports.

4.9      As contract management is devolved across the Council, the Committee asked about the on-going training available for contract managers to ensure that they are kept up-to-date with on-going changes to the capitaleSourcing.  The committee was informed that this was provided through a number of mechanisms including e-learning tools and drop in sessions. A newsletter is also sent to all users to ensure that they are kept informed on key matters.  Procurement Services also has a dedicated mailbox where contract managers can raise issues and this is monitored daily.  She advised that there had been significant changes to the look and feel of the capitalEsourcing system over the last year which contract managers would have had to familiarise themselves with.

4.10    The Committee asked about the number of dedicated contract managers within the Council.  Members were aware from other reports on the committee’s agenda that the Council’s turnover due to resignations is the highest in London and they were concerned about the retention of experienced contract managers and the ability of the Council to retain knowledge when such people leave.  The committee was informed that there were few dedicated contract managers within the organisation.  In many cases those responsible for monitoring contracts were undertaking the role in addition to other duties as part of meeting service delivery targets.  Given the above-mentioned concerns and the historic slippage that has occurred in the capital programme the committee asked for a note about the Council’s competencies in both contract and project management.  The committee asked for this to include an analysis of who is managing contracts and projects within the Council, whether this is their sole responsibility and how this practice/structure compares with other local authorities and industries. Members also wished to know the level of staff turnover amongst such managers.

4.11    RESOLVED: That the report be noted.

4.12    ACTIONS: Provide a note about the Council’s competencies in both contract and project management.  The committee have asked for this to include an analysis of who is managing contracts and projects within the Council, whether this is their sole responsibility and how this practice/structure compares with other local authorities and industries. Members also wish to know the level of staff turnover amongst such managers.

.          (Action for: Anthony Oliver, Chief Procurement Officer and Ed Watson, Executive Director for Growth, Planning & Housing)