The Chairman welcomed Uche Olufemi, Contracts and Compliance Officer for leisure and culture contracts, to the meeting.
Mrs Georgia Hawkes, Head of Commissioning and Business Improvement, introduced her report setting out details of progress on the planned improvements to contract management across the Council following an Internal Audit review completed in November 2018.
Mrs Hawkes advised the Committee that:
· Reports on contract management arrangements and planned improvements had been submitted to the Committee in September 2017 and November 2018. In the most recent report Members were informed that the highest value contracts were being well managed, but an Internal Audit report on contract management had returned a Weak level of assurance rating and concluded that whilst there was good practice in the management of leisure and culture contracts, improvements were required corporately.
· Since that time, positive progress had been made; for example, standard contract documents had been created by Mid-Kent Legal Services and put onto the Intranet for all Officers to use. Quarterly spend analysis was being undertaken by the Procurement Team to ensure contracts were in place where they should be and procurement was being carried out in line with the requirements of the Council’s Constitution. It was recognised that good contract management was essential to the delivery of the Council’s objectives so a risk and management actions for contract management had been drafted for inclusion in the Council’s corporate risk register.
· In addition, temporary staffing arrangements had been put in place to ensure that staff resources were available to deliver the actions required to address the findings of the Internal Audit report and improve contract management across the Council.
· The Contracts and Compliance Officer for leisure and culture contracts had taken on additional responsibilities for three months from March 2019 to deliver improvements in the corporate control of contract management. An additional temporary staff resource was being recruited to ensure that the monitoring and management of leisure and culture contracts was not detrimentally affected.
· From 1 April 2019, the full substantive role of the Procurement and Contracts Manager would be covered on a temporary basis until 31 December 2019. This arrangement would allow further exploration of potential closer working opportunities with other Councils whilst ensuring that there was additional resource and oversight given to contract management arrangements at management level.
· Looking at the longer term, consideration was being given to whether a permanent role covering the corporate elements of contract management, including ensuring good practice in the management of delivery of contracts as well as oversight of the use of contract documents, was required.
· Improvements which were planned for implementation within the next three months included:
Introduction of corporate contract management guidance;
Delivery of training on good contract management and the new guidelines;
Introduction of improved processes for better central procurement and contract document oversight and control;
Review of all existing key contracts to confirm that exit plans are a requirement and are in place; and
Introduction of a central digital repository for completed and signed contract documents.
In response to questions, the Officers explained that:
· In terms of risk management, a risk had been drafted for inclusion in the Council’s corporate risk register together with actions to mitigate against any contracts not being delivered as they should i.e. to ensure good contact management. It was an overall risk so it did not reference specific contracts, but there were actions to ensure that key contracts were delivered as they should be. Consideration had been given to including a level of detail regarding individual significant risks, but the view had been taken that good management practice is necessary across all of the key contracts and measures need to be in place to ensure that none go wrong. Internal Audit reports had confirmed that the Council’s key contracts were being well managed.
· There was an additional cost to recruiting an additional temporary staff resource to support the Contracts and Compliance Officer for leisure and culture contracts whilst that post holder takes on additional corporate responsibilities, and a budget had been identified for this.
· There were checks in the system to address the risks associated with placing orders for third party service or product procurement and the payment of invoices. Placing orders was subject to limits prescribed on the Council’s Agresso accounting system so it would not be possible to place an order without the proper authorisations and there were further checks when invoices were received and payments made. The whole process was also subject to internal audit.
· In terms of contractual linkage to payments, the Council had contract guidelines which prescribed the contracts that should be in place at different levels. Depending upon the value of the contract, quotations had to be obtained or a tendering process undertaken. A contract had to be in place for purchases in accordance with the Council’s Contract Procedure Rules. Robust processes were in place to make sure that payments were not made unless a proper contract was in place. The Procurement and Contracts Team was involved in the procurement of all high value outsourced contracts.
· The Contract Manager or whoever had client responsibility would be the person who signed-off invoices subject to authorisation limits and there would have been processes in place before sign-off whereby the contract had been awarded in accordance with the Contract Procedure Rules.
· In terms of whether sufficient controls were in place to prevent someone putting in place a contract and signing-off invoices against it, the organisation was of sufficient size to achieve separation of responsibility. The Procurement Team oversee the process of awarding all material contracts.
The Committee noted the progress made in improving contract management across the Council, and the planned actions, and asked for a further update in six months’ time.
RESOLVED: That the progress made in improving contract management across the Council, and the planned actions, be noted, and that provision be made in the Committee Work Programme for a further update in six months’ time.