15 March 2012

Task & Finish Group - Contract Monitoring

Central procurement misunderstood the paddling your own canoe rules
Executive summary:

Councillors realise, on close investigation, that procurement is hopeless.
Officers can leave before they get found out.
Officer turnover is high.
Officers get plenty of remuneration so should do the work.
Residents can help by feeding back local opinion.

This report was listed for review on 29 February but due to pressure of business only came up last Thursday 8 March which was quite handy as Mr Mustard was unable to make the earlier date.

Here is the report as originally presented.

Barnet Council Task & Finish Group Contract Monitoring

The T&FG has come to the same conclusion as the bloggers came to a year ago. "...the review has found that a more robust contract monitoring process is required across the council".

What is the plan? It is to split negotiating contracts away from monitoring contracts. Contracts worth £25,000 p.a. or more would be negotiated centrally, below that each directorate would do them but in all cases the monitoring would be done by officers in the directorate who are more closely aware of day to day issues. The report is quite interesting, Mr Mustard recommends that you print it out from scribd as it is easier to read that way.

Here is Mr Mustard's prediction of what will go wrong. A contract will be arranged for £24,000 and then someone in the same or another department will raise another one for £10,000 and central procurement will not notice and different terms and/or prices will result.

Many interesting things were said during the presentation of the report. Cllr Brian Schama was the lead presenter.

He said that:
this was a serious and difficult subject and
there were problems to do with compliance and
he talked about the different skill sets of negotiators and users (the right person could do both in Mr Mustard's humble opinion) and
that Barnet Homes have Performance Advisory Groups of users who collect feedback from other users of the service, (you could call them tenants), and this idea was thought to be worth trying with procurement (Mr Mustard can't see that working; it may work for tenants but they have common needs and experiences) and
that more use should be made of local businesses as suppliers.

Cllr Rayner, who was chair, thought that the report was clear and obvious.

Schama continued by saying that the world is changing and that investment is needed in new equipment and that a Local Authority cannot react fast enough. Well it is true that Barnet can't but given that it is in effect a business turning over nearly £1bn it really shouldn't have problems making investments. If it can't move fast enough then it needs a slimmer and simpler management structure, not just to blindly outsource to a firm like BT or Capita both of whom are much bigger and whom you would expect to be less nimble.

Then the unCommercial Director Craig Cooper got to speak. He couldn't speak for the cabinet member who wasn't there but the points raised had been taken on board (time will tell) and that procurement was shrouded in bureaucracy and he wasn't seeking to defend anyone and he welcomed the points raised (repetition) and that his officers are being supported by the Task & Finish Group and in their use of SAP and other systems. He largely accepts the findings (he didn't of course say which he didn't accept or why) and there are 5 officers in the Corporate Procurement Team (CPT) it is advisory only (5 people telling others how to buy things- what a waste - no-one has listened anyway) and responsibility is with the Directors (i.e. not with me). He then said he had been a Director of a Limited company (i.e. I understand business, but it doesn't show on his linkedin profile so maybe it was a long time ago) and then he said that Barnet had been the second to join the Portal for London (that's all you need when your procurement is in a mess, another way of doing it) and businesses can get involved. There was work to be done on making it easier for small business (to supply the council one assumes) and more work needed on skills and enterprise (if he said whether that was for council employees, suppliers or for himself Mr Mustard did not write it down).
Finally, thank goodness, he said that centralising could be done quickly (this was Craig's smash and grab attempt at getting more power).

Monroe then put a spanner in the works (calmly and politely as usual and anyway one must listen to a Lord especially when he is a properly qualified accountant of so many years standing).

Monroe said that Procurement has played a large role in Audit (Mr Mustard was possibly the only member of the public in the gallery, if there had been more bloggers in attendance there might have been some "hear hearing" at that point)  and he agrees with the conclusion that more robust monitoring was needed. He then said that the people who place the orders disregard the rules, no-one had done anything criminal (maybe they just haven't been caught yet?) but Officers simply do what they think is right.
Are service areas buying in?
Monroe agreed that centralisation will bring economies of scale (unlike Mr Mustard who doesn't) and previously (on the advice of consultants) procurement was de-centralised. Experience in the past was that central control was very weak.
Monroe finished by saying that he was worried about people doing what they want.

Cllr Schama was then off in the same vein. The biggest surprise to him is the lack of compliance. The council write it down very well but don't do it. Compliance has to start at the very top and should form part of appraisals. He is from a business background. The move the central procurement is what has enabled the UK to survive (was he off on a tangent here?) and he thinks the council cannot paddle its own canoe. (If procurement has been off buying canoes Mr Mustard can see why the budget is overspent)

Cllr Geoff Cooke had been waiting patiently for his turn. He wanted the report altering slightly to reflect what had been agreed. There had been long discussions about contract monitoring. He felt that it should be the responsibility of the chief officer in each directorate and the report was duly changed.

Cllr Rowan Turner then stepped in. He has had quite a lot of bad press (yes, mainly on Mrs Angry's blog) but that evening Mr Mustard was impressed. He started by saying that there were lots of people in procurement already who only advise. Then he pointed at para 2.7 and the extra £500,000 of spend that Craig wanted. Why was there an extra cost (good point as if moving procurement from Directorate A to Directorate B you would simply move that much of the budget), would the people in central procurement be able to change, did they have the necessary commercial and legal skills?

Craig was off again. All of his team are CIPS (Chartered Institute of Purchasing and Supply) officers (except that there are various grades, see their website, it is possible to join because you have been doing the job for ages without taking an examination) the only professionally qualified people around (in procurement one supposes - it didn't stop MetPro though did it, or RM Countryside, or Iris Gardening etc) they have been running procurements for teams, not just advising (no councillor picked Craig up that this remark contradicted the earlier one in which he said they were just advising) and to the existing 5 people (7 are listed in the report but 2 have apparently moved on since the start of the task and finish group) another 5 to 10 are needed (at this point Mr Mustard thought that a man earning £132,480p.a. really should come to a meeting with councillors much better prepared - he should have a report showing the number of contracts over £25,000p.a. and their average length and the number that one decent procurement officer can handle and then he could show exactly how many more officers are needed and there won't be waffle about an extra £500k which would cover 5 officers but probably wouldn't cover 10 - not if they are professionals). This was when he said that all contracts over £25,000 would be centralised (why not all the ones over £5,000 being the ones that should have written contracts)  and that more framework agreements need to be put in place (which would cut down the workload- this is all looking a little lazy) and this would cost less than £500k. The first year savings will cover it, he said.

The savings would come from consolidating, from economies of scale and by having less vendors. Craig then said that £40 was the cost to the council of each transaction. What exactly he meant by that statement was not clear.

Craig said that (presumably central) procurement spends £100m p.a. and can easily save more than 1/2% a year. (The question of course comes as to why the Commercial Director, with responsibility for procurement, has not brought this huge potential saving to the attention of councillors before now?)

Cllr Rayner, who was chairing, suggested combining with other councils (oh no that would just lead to more mess).

Rowan Turner was quickly in. Why haven't we combined with other councils before especially as the 5/6 central officers are simply advisory. He questioned the ability of the team (a rare pull on the reins for officers).

Cllr Brian Salinger then spoke. He has been around for a while. He remembers devolved budgets. There are all sorts of ways of doing it. We go round and round. Procurement savings appear in every budget but never arrive (ouch).

Schama was back. He spoke about the two types of procurement. The key ones were One Barnet type contracts. Local authorities are dire at these! You go in, you come out or you are stuck. Remember the ECT recycling contract? To add plastic recycling to the contract Barnet Council had to wait 8 years. How can flexibility be built in?

The second type was what he called the buying of paperclips. There has to be both compliance by officers and flexibility to move quickly when necessary.

Cllr Rayner was getting restless. He suggested the use of the petty cash box. (HM Revenue and Customs will be round to your property empire councillor)

Brian Salinger brought things back to proper business. There is lots of spending in schools he said and lots of systems (an area that the bloggers have not yet focused on).

In response to a question about why the barrier in Netherlands Rd was so long being repaired Craig said that the matter could easily have been dealt with by an emergency DPR but Officers across the council don't understand (procurement). Handled centrally it would have been fine. (natch). Oh dear Craig. Step 1 of the Procurement Action Plan included "arrange training about Contract Procedure Rules with mandatory attendance for all relevant officers" That had a green light at audit committee. Are you saying you didn't do it properly?

Cllr Alan Schneiderman then asked about the external committees of residents that are proposed. Where will these people come from? He looked at the public gallery at this point. He was possibly searching for Mr Reasonable who offered a year ago to help the council free of charge and they have not yet taken up his offer. Alan mentioned that lots of people follow the work of the council (he must have been thinking about bloggers).

Brain Schama said that good people will come forward and this would save time and money. He felt that this would then provide a nice edited summary for officers. (You have got the wrong idea Mr Schama - the committee is not meant as a substitute for officers doings their jobs and no-one will stay long on that basis. Work for nothing to help Craig save his £132,480p.a. skin - no ta).

Monroe got in again near the end. He was worried about the turnover in officers. Once an officer leaves the sanction (for ignoring procurement rules) is Zilch.

Brian Schama then pointed out that 2 out of the 3 officers who had helped the group on this task have left.

On that happy note at 8.55pm, with Alan & Geoff's amendments, the recommendations were sent off to the Cabinet Resources Committee.

Just going back to an earlier item on the agenda Mr Mustard's ears pricked up when he heard Cllr Schama say "There are lots of well paid officers who put budgets together - it is not the job of task and finish groups". Well said councillor.

Yours frugally

Mr Mustard

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