Report summarising procurement activity for 2019/20 and detailing the annual report from Welland Procurement
The Cabinet Member for Finance and Resources introduced the report, which was the first annual report to be provided by Welland Procurement for review by this Committee.
The Head of Finance explained that a decision had been taken to withdraw from Procurement Lincolnshire in March 2019 of which the Council had been a member since 2008. Appendix A to the report was the Welland Procurement Annual Report 2019/20, while Appendix B was its activity report. The Annual Report document showed a saving of £75,891 for the 2019/20 financial year. Additional benefits provided by the service included ensuring legal compliance of procurements and best value. This supported the improvement of the procurement practice across the Council.
The Chairman introduced Amy Myers, the Head of Procurement for Welland Procurement, who made a presentation to the Committee, which covered:
· The services provided by Welland Procurement
· The Councils that were supported by Welland Procurement
· How Welland Procurement supported the Council
· How Welland Procurement provided updates to the Council
· The benefits of being a member of Welland Procurement
· The support provided to the Council by Welland Procurement in 2019/20
· Training that had been delivered to officers of South Kesteven District Council
· Customer satisfaction and performance
· Plans for 2020/21
· Resources provided by Welland Procurement
Members were advised that the satisfaction survey would be amended for next year as it did not identify which council was responding.
Committee Members were provided an opportunity to ask questions. Key points raised included:
· The relationship between the resource provided by Welland Procurement and the Council’s Procurement Lead
· Whether inhouse resources represented better value than the use of the shared service
· The value of current procurement arrangements in comparison to the previous arrangements
· Whether the feedback survey presented by Welland Procurement constituted a representative sample of customers’ views
· Clarity around the calculation of initial and whole life savings
Members were told that temporary staffing resource was to fulfil compliance obligations and was not provided by Welland Procurement. It was acknowledged that feedback from the satisfaction survey was too narrow with methodology changes planned and with project completion figures impacted by project cancellation. It was acknowledged that the presentation of the projected savings was confusing particularly when projects straddled beyond a year.
It was noted that it was not unusual for procurements to fall across more than one financial year. The proportion of completed procurements (4 out of 14) was consistent with other partners.
The Head of Finance to provide the cost of membership of Procurement Lincolnshire
Members were advised that the role of the Council’s Procurement Officer was designed to complement the work of Welland Procurement by identifying contracts from which significant savings could be achieved whilst driving forward good procurement practice.
Concerns were raised over whether contract arrangements were in place for disabled adaptations, and whether extensions to contracts were used. The Head of Finance confirmed that contracts would often go out to tender for a defined period with opportunities to extend included.
The Head of Finance to confirm whether the contract for disabled adaptations had been extended beyond March 2020
The Head of Finance informed Members that the cost of Welland Procurement was £41,000 per annum with £12,000 spent so far this year. Fees were paid through Melton Borough Council as they hosted the partnership.
A Member requested the inclusion of additional information within the appendices. He suggested it would be helpful to include the length of the contract. Members also asked for clarity around the calculation of the ‘whole life saving’ associated with a contract. As an example, the table at the bottom of the Annual Report on page 10 stated a saving of £75,891 in year one however the whole life saving was shown as only £60,230. Most of the savings for 2019/2020 related to a one-month consultancy project; this was therefore reflected only in year one with no whole life saving.
Head of Finance to circulate a detailed spreadsheet demonstrating procurement savings yearly.
In response to questions over the structure and operation of Welland Procurement, Amy Myers reported running costs of £300,000. Costs were split across the partners and depended on the level of service provided. The service was also subsidised by Melton Borough Council. It was also confirmed that:
· One training session per year was included though any additional training would be chargeable.
· Due to the variation in the level of involvement and scale of procurement it was difficult to assess service provision level per council. The spend figures per council were available and could be provided to the Head of Finance.
· Future survey runs could be improved to avoid any unreliability of figures caused by a low-level of feedback.
· A procurement overhead of around 7% to 8% was also paid by other councils with the majority not having an internal resource, with the provision from Welland Procurement or inhouse commissioning teams considered sufficient.
· Two councils would be leaving the scheme as a result of the formation of unitary authorities in Northamptonshire with an alternative procurement arrangements already in place.
Members were informed that procurement challenges were rare with one known case. The Council had responsibility to respond should a complaint be raised. Welland Procurement only provided a legal response should any complaint progress to court.
There was an expectation to see more detail in the Annual Report with reasons to use services. This was not covered with Members requesting that future versions of the Annual Report provide additional detail to demonstrate continued reasons for use of Welland Procurement by the Council.
The Chairman questioned the Head of Finance over the use of internal resource while other councils had none in place and the Committee was advised that this was due to the Council’s savings target. This was an additional service to identify areas where there were no contracts in place or to enable additional savings by merging multiple contracts across the departments into a single, corporate contract. This had identified savings of £300,000 last year and £350,000 this year.
A Member referred to a recent audit of procurement, which had received partial assurance. There was concern that services were not following corporate procurement procedures and creating a risk that procurement activity was not legally compliant. Issues around internal procurement were acknowledged by the Head of Finance who emphasised the support provided by Welland Procurement and the Internal Procurement Officer to ensure that the Council was compliant. The Cabinet Member for Finance and Resources added that he believed that internal audit would notice making improvements in procurement practices was a priority.
The Chairman thanked the Head of Procurement from Welland Procurement for her presentation. The Committee’s thanks were also extended to the Head of Finance.