Agenda item

Proposed Amendments of the Council's Contract Procedure Rules and Financial Procedure Rules

To introduce a new updated version of the Contract Procedure Rules and an amendment to the Financial Procedure Rules (report of the Assistant Director - Finance and Deputy S151 Officer, and the Interim Assistant Director – Governance (Monitoring Officer) enclosed).

Minutes:

Consideration was given to the report of the Assistant Director for Finance and Deputy S151 Officer, and the Interim Assistant Director for Governance and Monitoring Officer, to introduce a new updated version of the Contract Procedure Rules and an amendment to the Financial Procedure Rules.

 

The Head of Procurement and Contracts introduced the report by referring to the amendments which applied to South Holland District Council, and outlined in Appendix 1A as follows: 

 

  • the single change to the exemption clauses were outlined at point 3.3.9 of the report. The proposed change allowed for a reasonable exemption to assist with the development of housing, where this was considered appropriate; and
  • revised thresholds were outlined at point 9 of the report.

 

The Head of Procurement and Contracts presented the following case study which demonstrated how the exemption stated at point 3.3.9 of Appendix 1A could be utilised:

 

“The Council could pursue the purchase of housing through a ‘package deal’ which would incorporate planning consent, land purchase and build. Initially, a third party obtained the planning consent, secured the legal interest in the land, and secured a work contractor to build for a fixed price. On the date that planning consent was granted, the Council would enter into a simultaneous agreement to purchase the land and enter into a Joint Contracts Tribunal (JCT) contract with the works contractor at an agreed price. Should a package deal be pursued, the benefits to the Council included:

  • engagement in the project from an early stage; and
  • the undertaking of a quality and value-for-money assessment prior to involvement.

The inclusion of the exemption clause enabled different housing delivery routes to be pursued/explored by the Council. If the authority were to pursue a package deal, formal approval for each specific scheme would always be required from either the Executive or the Council”.

 

Members considered the report and made the following comments:

 

  • Members asked how Cabinet members obtained specialist knowledge when making such decisions.
    • The Assistant Director – Finance stated that the exemption resulted from legal advice which had been sought for a new type of housing delivery option.  External advisers provided technical advice where this was not available within the skillset of officers.

 

  • Members queried the process that would be followed for the purchasing of properties should the proposed exemption not have been brought forward as an amendment.
    • The Head of Procurement and Contracts stated that the purchase of a housing package would not be possible, and the Council would need to source land in the traditional way, or procure completed properties direct from developers. The exemption enabled Council involvement from commencement of a scheme and therefore control over the quality of the build.
    • The Assistant Director – Finance stated that whereas previously a builder may have approached the council directly, the exemption enabled a builder to work with a partner, such as a Housing Association, to put forward a package deal to the Council.

 

  • Members asked whether the Council had considered utilising framework agreements, such as those provided by SCAPE.
    • The Head of Procurement and Contracts confirmed that the options to use frameworks had not changed and would be utilised where this was the best option.

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  • Members welcomed the changes which offered new delivery opportunities. Nonetheless, it was requested that external advice be taken with projects to mitigate against issues that national companies had faced.

 

  • Members asked for clarification of point 4.2.2 of the report regarding the disposal of land - did this apply solely to land, or to both land and property?
    • The Head of Procurement and Contracts confirmed this applied to both land and property

 

  • Members referred to point 5.2 which listed records to be kept for tendered contracts of between £40,0000 and £85,000 in value and asked why records were not kept for all values. Additionally, point 5.3 stated that records kept for contracts up to £40,000 ‘should be proportionate to the value of the contract’ however it was not clear how proportionality was assessed, and the approach was subjective.
    • The Head of Procurement and Contracts stated that the vagueness relating to point 5.3 would be removed.

 

  • Members asked who would approve, and therefore be accountable for, a Capital Programme spend of £209,000.00
    • The Assistant Director – Finance responded:
      • that approval would depend on the nature of the programme. Spend that related to several projects over various schemes of work, would be approved on a case-by-case basis;
      • a decision could be made by a Portfolio Holder or an officer with delegated powers;
      • any ‘Key Decision’ spend would be subject to the governance process; and
      • whilst the Procurement and Contracts team assisted with the procurement process, the responsibility of the design and project management of the scheme would remain with the client officer.
    • The Head of Procurement and Contracts stated that spend on a single project would involve an assessment of the case with the client officer which included:
      • whether the use of a framework was applicable;
      • which local contractors could potentially be utilised; and
      • whether a tender process was necessary.

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  • Members referred to the £40,001 to £85,000 threshold stated at point 9 of the report and requested the addition that at least three quotations be received.
    • The Assistant Director – Finance stated that:
      • a minimum requirement had not been stipulated since a failure to achieve a stated number of quotations would delay progression of the project;
      • the Procurement Team applied an extra layer of scrutiny to ensure that appropriate quotations were received; and
      • the value-for-money assessment was wider than cost alone and also considered: quality; employment opportunities such as apprentices; and social values.
  • Members considered the response but were not comfortable with the absence of a minimum quotation requirement and requested that at least two quotations be required. An exception could be considered where a single/limited supplier(s) existed, in which case the exemption process could be followed.
    • The Assistant Director - Finance and Head of Procurement and Contracts would consider the practicalities and feasibilities of the request. The request would also be raised when the item was scrutinised by Governance and Audit committees across the partnership.

 

  • Members referred to the e-Tendering process as noted at point 5.2, and asked, for the benefit of all, whether responses to individual queries were circulated to all interested parties.
    • The Head of Procurement and Contracts confirmed that this was the case and full transparency was applied.

 

  • Members asked whether the tender form included a declaration of a close relationship with a Councillor/officer.
    • The Head of Procurement and Contracts would ensure that this was included for transparency.

 

  • Members asked whether the policy change needed to be scrutinised by the Policy Development Panel?
    • The Assistant Director – Finance responded that Contract Procedure Rules were part of the constitution and therefore the report process of Governance and Audit, Cabinet and Council had been followed. This process would be checked with the Monitoring Officer.

 

  • Members queried whether the exemption stated at point 3.3.3 could lead to unscrutinised extension of contracts/a monopoly situation.
    • The Head of Procurement and Contracts stated that various levels of scrutiny were employed to ensure that this would not occur.

 

  • Members referred to Appendix 2 which outlined the proposed amended delegations to officers in relation to contracts, and asked for clarification of the changes.
    • The Head of Procurement and Contracts responded that the sole change for South Holland District Council related to the inclusion of split limits for the signing of contracts under seal. This was already stated in the Constitution and had been included in the procedure rules for transparency.

 

  • Members thanked officers for the report and pre-briefing presentation which had facilitated their understanding of the proposed changes. It was requested that future proposed changes to existing procedures be highlighted within any report coming forward to committees for consideration.

 

AGREED:

 

a)    That following consideration of the draft revised Contract Procedure Rules at Appendix 1 to the report, the draft proposals be noted;

 

b)    That the suggestion that the Monitoring Officer be authorised to make the necessary changes to update the Council’s Constitution, accordingly, including delegation to amend where inconsistencies arise, noting that the CPR will take primacy, be noted by the Governance and Audit Committee;

 

c)     That the recommendation for Council to approve the revised financial procedure rule for Banking arrangement and cheques as detailed in Paragraph 1.12 of the report be noted by the Governance and Audit Committee; and

 

d)    That the comments of the Governance and Audit Committee which related to points 5.3 and 9 of Appendix 1A, be noted.

Supporting documents: