Your Councillors


Audit, Governance and Standards Committee

18 September 2017

Is the final decision on the recommendations in this report to be made at this meeting?

Yes

 

Contract Management

 

Final Decision-Maker

Audit, Governance and Standards Committee

Lead Head of Service

Georgia Hawkes – Head of Commissioning and Business Improvement

Lead Officer and Report Author

Georgia Hawkes – Head of Commissioning and Business Improvement

Classification

Public

Wards affected

None

 

 

This report makes the following recommendations to this Committee:

1.   Audit, Governance and Standards Committee notes progress in implementing good practice in contract management.

 

 

This report relates to the following corporate priorities:

·         Keeping Maidstone Borough an attractive place for all

·         Securing a successful economy for Maidstone Borough

 

The report relates to both of the corporate priorities as good contract management ensures that outsourced services deliver the Council’s objectives effectively and efficiently.  Many of the Council’s highest value contracts contribute to one or both priorities e.g. waste collection, Leisure Centre management, parking enforcement etc.

 

 

Timetable

Meeting

Date

Audit, Governance and Standards Committee

18 September 2017



Contract Management

 

 

1.        PURPOSE OF REPORT AND EXECUTIVE SUMMARY

 

1.1     Recent audit reviews of major contracts have indicated some inconsistency in the standard of contract management across different contracts and services.  This report sets out the Council’s current contract management arrangements and steps that are being taken to raise the overall standard of contract management.

 

 

2.        INTRODUCTION AND BACKGROUND

 

2.1     Most of the Council’s 10 largest major contracts and outsourced services have been audited in the past 6 years.  Details are shown in the table below.

 

 

No.

Contract

Company

Team

Contract

Value

Start Date

End Date

Audit Plan

Assurance

1

Waste Collection Services

Biffa Municipal Ltd

Waste Management

£8,610,235

01.08.13

21.10.23

2014/15

SOUND

2

Leisure Centre Management

Serco International

Leisure

£6,450,000

15.02.09

14.02.24

2014/15

SOUND

3

Management of Cobtree Golf Course

Mytime Active

Leisure

£4,030,555

09.01.17

08.01.37

2010/11

SUBSTANTIAL

4

Management of the Hazlitt Theatre

Parkwood Leisure Ltd

Leisure

£3,543,677

01.10.13

30.09.23

2016/17

WEAK

5

Park & Ride

Arriva Southern Counties Ltd

Parking Services

£3,030,476

29.03.14

31.05.18

2016/17

WEAK

6

Parking Enforcement

APCOA Parking Ltd

Parking Services

£2,675,586

01.06.11

31.05.18

2012/13

SUBSTANTIAL

7

Insurance

Zurich Insurance Company

Finance

£2,045,891

01.04.16

31.03.21

2011/12

HIGH

8

CCTV Monitoring

Medway Council

Community Safety

£1,680,231

01.12.11

31.03.18

2013/14

SUBSTANTIAL

9

Gas & Electricity

Laser

Property Services

£1,000,000

30.09.16

29.09.20

Not on audit plan

N/A

10

Electrical Maintenance

OpenView Security Solutions Ltd

Property Services

£844,199

01.07.15

30.06.20

Not on audit plan

N/A

 

 

2.2     The assurance ratings mean the following:

·         Strong (or High) - Controls within the service are well designed and operating as intended, exposing the service to no uncontrolled risk.

·         Sound (or Substantial) - Controls within the service are generally well designed and operated but there are some opportunities for improvement, particularly with regard to efficiency or to address less significant uncontrolled operational risks.

·         Weak - Controls within the service have deficiencies in their design and/or operation that leave it exposed to uncontrolled operational risk and/or failure to achieve key service aims.

·         Poor – Controls within the service are deficient to the extent that the service is exposed to actual failure or significant risk and these failures and risks are likely to affect the Council as a whole.

 

2.3     The majority of the contracts have received positive audits, with the exceptions being management of the Hazlitt theatre and Park & Ride, which both received a Weak level of assurance.  Improvement action plans are in place to address the audit recommendations for both services.  However, both areas have had staffing issues which have delayed implementation and embedding of some of the actions, so it has not yet been possible to re-visit the audit ratings.

 

2.4     Neither the Laser gas and electric nor the electrical maintenance contracts have been audited.  The Internal Audit team deems the Laser contract low risk as it is essentially a buying consortium to obtain competitive energy prices. Therefore, there are no plans to audit this in the future.  However, the team will consider whether the electrical maintenance contract should be included in a future audit programme. 

 

2.5     The type of monitoring required and monitoring arrangements for each contract are shown in the table below.

 

Contract

Type of monitoring required

Monitoring arrangements

 

Contract Performance

Statutory compliance

Property / Facilities

 

Waste Collection Services

ü   

ü   

 

Monthly health and safety meeting, daily crew checks, weekly reviews of performance, vehicle record checks and quarterly mid-Kent monitoring meeting

Leisure Centre Management

ü   

ü   

ü   

Monthly operational meetings, performance reports, quarterly strategic performance meetings, bi-annual health and safety inspections, ad hoc visits, checking of relevant safety certificates, annual partnership meetings

Management of Cobtree Golf Course

ü   

ü   

ü   

Monthly operational meetings, performance reports, quarterly strategic performance meetings, bi-annual health and safety inspections, ad hoc visits, checking of relevant safety certificates, annual partnership meetings

Management of the Hazlitt Theatre

ü   

ü   

ü   

Monthly operational meetings, performance reports, quarterly strategic performance meetings, bi-annual health and safety inspections, ad hoc visits, checking of relevant safety certificates, annual partnership meetings

Park & Ride

ü   

ü   

 

Daily reports, visits to supplier’s premises, monthly service review meetings, user surveys, mystery shopping,

Parking Enforcement

ü   

ü   

 

Daily reports, weekly service review meetings, monthly performance reports, annual reports, annual reviews, random on-street checks, daily liaison with supplier

Insurance

 

 

 

Liaison with the supplier over cover and claims

CCTV Monitoring

ü   

ü   

 

Quarterly partnership board meetings, operational group meetings, monthly incident reports, camera fault reports

Gas & Electricity

ü   

 

 

Comparison of quotes from Laser against the market, check bills against actual consumption

Electrical Maintenance

ü   

ü   

 

Monthly performance reviews, checks against requests for payment before contractor raises invoices

 

 

2.6     It should be noted that the monitoring arrangements for Maidstone Leisure Centre, Kent Life, Hazlitt and Cobtree Golf Course are currently being reinforced following the departure of the former Contract Monitoring Officer in the Parks and Leisure team and the commencement of a new contract for Cobtree Golf Course.  Also, the current Park and Ride and Parking Enforcement contracts will come to an end in 2018, so contract monitoring arrangements may change slightly under any new contracts.

 

2.7     In addition to the monitoring arrangements shown above, contract performance is monitored by Committees through performance reports e.g. usage figures for the Leisure Centre and percentage of tickets sold at the Hazlitt Theatre. Further monitoring also takes place monthly and quarterly through financial reports and quarterly meetings between the Director of Finance and Business Improvement and each Head of Service.

 

2.8     The Council also undertakes high value construction projects, which involve a one off spend with a contractor.  For example, phases 1 and 2 of the town centre public realm improvements cost approximately £3.6M in total.  These projects were well managed and delivered high quality products through use of these key contract management and project management arrangements:

·         Use of a NEC contract – this included a specific and specialised Project Manager role to manage the contract for the capital works

·         Appointment of a highly skilled and experienced Project Manager

·         The NEC contract allowed for the use of early warning notices from the contractor that warned that something might go wrong that could result in a compensation event: a payment from the Council to the contractor.  The early warning notices then allowed for discussions to be had at the time so there were no protracted negotiations about cost at the end of the contract

·         Good use of PRINCE2 and the Council’s Project Management Toolkit

·         A Project Board made up of key internal stakeholders to which the Project Manager reported.  The Board met monthly and made key decisions and authorised changes.  Due to the Board being in place, the project had the right leadership and governance and significant decisions were made at the right level, including a significant design change required to keep the project on budget

·         A monthly operational project team that included Kent County Council, the design team and representatives from teams involved across the Council e.g. Finance, Property Services and Communication

·         Documentation and good records of meetings and decisions

 

2.9     The successful delivery of these projects shows how important is it to pick the right sort of contract for the different types of capital works we carry out.  Contract type is always considered carefully with all of our construction projects.

 

2.10 It has been recognised that contract management should be improved across the Council and the following actions have been taken:

·         Creation of the position of Head of Commissioning and Business Improvement, with a portfolio that covers all elements of commissioning, including procurement and contract management

·         Replacing the former Contract Monitoring Officer role with a higher grade Contracts and Compliance Officer – Leisure and Culture, and moving the management of this role from the former Parks and Leisure team to the Head of Commissioning and Business Improvement.  This post monitors the major outsourced leisure and culture contracts: Maidstone Leisure Centre, Hazlitt Theatre, Kent Life and Cobtree Golf Course.  The post is currently being covered by a temporary agency officer whilst we complete the recruitment to the substantive role

·         A contract monitoring expert has undertaken an audit of the leisure and culture contracts and put in place much more robust monitoring arrangements for statutory compliance and contractual performance.  This has really helped to raise standards in supplier delivery for some of these contracts

 

2.11 Further improvements to raise the standard of contract management are planned for 2017/18.  For example:

·         A refreshed Commissioning and Procurement Strategy that encompasses contract management

·         Clearer guidelines on good contract management to be utilised across the council

·         Provision of contract management training for key officers

 

2.12 The integration of procurement and contract management for a number of key contracts under the Head of Commissioning and Business Improvement will ensure that effective contract management is built into commissioning arrangements from the outset.  Whenever a service is commissioned, consideration will be given to the capacity of the host service to monitor performance, hold service providers to account, and to get the best possible value from the contract.  In this way, good contract management will be embedded into our commissioning arrangements.

 

 

 

3.        PREFERRED OPTION AND REASONS FOR RECOMMENDATIONS

 

3.1     The Committee should note the current contract management arrangements for the Council’s largest contracts, the changes that have made and the further improvements planned to improve contract management across the Council. 

 

 

4.       CONSULTATION RESULTS AND PREVIOUS COMMITTEE FEEDBACK

 

4.1     Audit, Governance and Standards Committee has previously requested an update on contract management across the Council. 

 

 

5.       CROSS-CUTTING ISSUES AND IMPLICATIONS

 

 

Issue

Implications

Sign-off

Impact on Corporate Priorities

Good contract management helps the Council deliver its corporate priorities, especially through its major contracts to deliver outsourced services.

Georgia Hawkes

31/08/17

Risk Management

Without effective contact management, the Council is at risk of not meeting its statutory responsibilities or failing to provide services of a sufficiently high quality.  The improvements detailed in the report help to mitigate this risk.

Georgia Hawkes

31/08/17

Financial

Ineffective contract management can lead to the Council incurring unnecessary additional costs.

Finance Team

07/09/17

Staffing

The staffing structure has already been revised to improve all aspects of commissioning, including contract management.

Georgia Hawkes

31/08/17

Legal

MKLS can assist commissioning officers by securing the necessary terms at the procurement and negotiation stages at the start of the contract to ensure good contract management throughout its term.

Team Leader (Contracts and Commissioning) MKLS

Equality Impact Needs Assessment

An EqIA is not required.  However, equalities will be required to be a consideration of all contracts, ensuring all contracts managed are compliant with the Council’s values, in line with the Public Sector Equality Duty and as set out in the council’s Equalities Policy and objectives 2017-21.

Anna Collier

07/09/17

Environmental/Sustainable Development

No implications

Georgia Hawkes

31/08/17

Community Safety

No implications

Georgia Hawkes

31/08/17

Human Rights Act

No implications

Georgia Hawkes

31/08/17

Procurement

No procurement required.  The changes to staff structure will improve the links between all the aspects of commissioning, including procurement and contract management.

Georgia Hawkes

31/08/17

 

 

Asset Management

Good contract management helps to ensure that the Council’s assets that are managed by other organisations, like the Hazlitt Theatre, are maintained correctly.

Georgia Hawkes

31/08/17

 

 

 

6.        BACKGROUND PAPERS

 

None.

 

 

Our A-Z

If you cannot find what you are looking for in our search facility, you can use our A-Z index to find the service you require.

A

B

C

D

E

F

G

H

I

J

K

L

M

N

O

P

Q

R

S

T

U

V

W

X

Y

Z