Agenda item

The Director of Finance submits a report to the Governance and Audit Committee which presents the Procurement Annual Report.

The Committee is recommended to note the report.

The Director of Finance submits a report to the Governance and Audit Committee which presents the Procurement Annual Report.

The Head of Procurement, Andrew Button, presented the report and highlighted:

·         Significant upcoming regulatory changes, particularly the introduction of the new healthcare provider, which represents a substantial shift in national legislation. Initially scheduled for implementation in October, the rollout has been delayed due to the upcoming election and is now expected on 24 February 2025. This regulation consolidates several legislative frameworks and places a stronger emphasis on transparency in procurement processes. A separate briefing on these changes will be provided in due course.

·         An increase in the number of procurement waivers. Additional due diligence measures have been implemented to enhance scrutiny, including the introduction of extra governance mechanisms. Since November, the Strategic Board has been tasked with reviewing and approving business needs linked to waivers to ensure appropriate oversight. Internal Audit is also investigating the increasing use of waivers as a recognised risk.

In response to Member questions it was noted that:

·         Future procurement activities would be governed by transitional arrangements under existing contracts and that the new healthcare legislation will specifically impact future contracts. It was clarified that any waiver authority on large contracts is not currently influencing contract outcomes or council savings. However, forthcoming guidance will focus on demonstrating best value for money, especially in response to evolving technologies.

·         Concerns were raised about the rising values of contracts, particularly in children's care home placements, with contracts reportedly doubling over 1-2 years. Members inquired about safeguards for large contracts and the procedures in place to manage them effectively. The Director of Finance noted that although the financials are the role of the Scrutiny Committees, Governance and Audit and Internal Audit are involved with the processes.

·         Members raised that waivers within the City Development and Neighbourhoods division had doubled, with many attributed to urgent needs. In response to a question whether this was down to poor departmental planning, the Procurement Manager clarified that while some waivers are unavoidable due to urgent housing needs, rigorous checks and balances are in place. A multi-step review process precedes final approval, including Strategic Board oversight, to mitigate risks and prevent misuse.

·         Members further inquired about fraud prevention measures and how waiver requests are scrutinised. It was confirmed that documentation requirements and internal audit reviews are integral to the approval process, the Director responsible for waivers must provide comprehensive documentation, which is further reviewed by Internal Audit.

·         The Committee requested clarification on how procurement costs are managed in scenarios such as natural disasters. The Head of Procurement acknowledged that legislative changes set to take effect in February would address such considerations. In response to a proposal to develop a flowchart outlining the waiver approval process, it was noted that Internal Audit is currently developing a new process aligned with the upcoming procurement legislation to provide greater assurance to auditors and stakeholders.

·         Concerns were raised about the potential anti-competitive impact of frequent waivers, potentially deterring new suppliers from engaging with the Council. The Procurement Manager confirmed that preference is given to competitive procurement for contracts exceeding £30,000. Long-term expenditure patterns are assessed to ensure proper procurement processes are followed. It was also noted that the new Procurement Act aims to simplify access for small and medium-sized enterprises (SMEs) and improve transparency.

·         Members discussed the need for clearer guidance for councillors on appropriate procurement routes. The Procurement Manager agreed to provide updated guidance in the new year once the implementation dates for the new regulations are confirmed. This will include information on the central digital platform for enhanced visibility of procurement pipelines and upcoming projects.

RESOLVED

The Committee noted the contents of the report and made comments to the Director of Finance