Southampton City Council Schools Procurement Briefing July 2013 John Spiers Head of Property, Procurement and Contract Management

Agenda Schools Thematic Review: Procurement Overview EU Procurement Regulations Overview CPR’s

Schools Thematic Review: Procurement Audit FINDINGS 1. Inappropriate process in place to identify, record and manage contracts and service level agreements for goods and services purchased – no contracts register, lack of terms and conditions, specifications, monitoring processes. 2. Non-compliance with the Council’s Contract Procedure Rules and Public Contract Regulations – clusters of schools disaggregating spend, purchasing without complying with the CPRs (purchase orders not raised for goods under £10k, failure to advertise quotations). 3. Failure to achieve value for money due to ineffective procurement. 4. Failing to declare business and outside interests and register of gifts and hospitality. 5. Health and Safety Data capture.

Main findings Although purchase orders in all of the schools visited are raised for goods, they were routinely not raised for services provided. This included leases for photocopiers, franking machines, and contracts for building works. The value of these items are often in excess of £10,000 per annum. Four of the seven schools visited do not maintain a contracts register as stipulated in the Contract Procedure Rules (CPRs) for contracts under £100,000. Of the three schools that do maintain a register two were found not to contain sufficient details to allow for effective management and monitoring of contracts.

Main findings con’t Several contract and service level agreement (SLA) specifications do not define sufficiently the service to be provided in terms of its nature, quality standards, information, monitoring requirements and contract review procedures. In most instances when procuring a service schools do not discuss their own individual requirements for inclusion in a contract/service level agreement with a supplier. Schools accept a supplier’s contract/SLA without any discussion of inclusion of additional requirements specific to the school.

Main findings con’t None of the schools visited were aware that when procuring goods and services as part of a cluster the total value of the contract should be considered. It should not be disaggregated into value per school. Additionally the value of the contract is for the agreed length of supply of services (up to 4 years) and should not be disaggregated into an annual value.

Main finding con’t Schools spend a substantial amount of their budgets on photocopier leases. Total costs over a six year rental period ranged from £5,200 to £95,000 dependent on the number and type of copiers. Only two of the schools visited obtained quotes from County Supplies for the rental of photocopiers. None of the schools visited sought quotes from the Council's framework agreements. Schools are not obliged to use suppliers from a framework agreement, however a quote can be obtained from a supplier and compared to other quotes the school obtains.

Main findings con’t Only one school visited had an up-to-date register of business and outside interests. Registers were found to be incomplete and did not include all governors, and staff with financial and budgetary responsibilities. In some instances full declarations of business and outside interests have not been declared, for example a company director of a building firm and a councillor. None of the schools visited were aware that the declaration should include both business and outside interests.

Final finding Health and Safety (Capita) maintain a data base which records legal and statutory maintenance and testing required in buildings throughout the council, including schools. Schools were requested in September 2011 to complete a spreadsheet and provide evidence that the required health and safety tests are being conducted in their school and any issues identified have been addressed. Three schools visited who have opted out of the Terms SLA have not returned the required information to Health and Safety, assurance can not therefore be fully given to the council that legal and statutory testing is being conducted by appropriately qualified persons and that any issues identified have been addressed within the school.

EU Procurement Regulations EU Treaty Principles  No discrimination on the grounds of nationality.  Equal treatment of all potential bidders and suppliers.  Fair competition.  Proportionality.  Transparency  Requirement of tenders must be relevant to the subject matter of the contract.

General Principles All contracts must comply with the principles of the EC Treaty in general and the principle of non-discrimination in particular. All contracts should meet the Government’s requirement for value for money. In the case of Local Government the achievement of Best Value is enshrined in the Local Government Act 1999 as a legal requirement. Contracts shall be subject to a degree of advertising sufficient to enable the services market to be opened up to competition, to ensure an impartial procurement award procedure, and to ensure value for money.

EU Procurement Part A and B services Remedies Directive Transparency agenda (Contracts Finder)

CPR & EU Processes EU Thresholds  Goods/Services circa £174k;  Works circa £4,348k; and  Aggregated Expenditure. EU Procurement Routes  Open;  Restricted;  Competitive Dialogue; and  Negotiated.

CPR’S The Council’s rules for buying for the Council and are part of the Council’s Constitution. Every contract made by or on behalf of the Council including its Executive and Cabinet Members shall comply with:  these Rules;  the Council's Financial Regulations;  all relevant statutory provisions including in particular the Local Government Act 1988 Part II, Local Government Act 1999, Local Government Act 2000, the Public Contracts Regulations 2006 and the Local Government (Contracts) Act 1997;  European Union treaties and European Council Directives;  the rules on State Aid;  any direction by the Council, the Executive Cabinet Member or Committee having appropriate delegated authority.

CPR’s con’t The Rules have three main purposes:  To comply with the obligations that govern the spending of public money such as the EU Procurement Directives as implemented into UK law by the Public Contracts Regulations 2006;  To obtain Best Value in the way we spend money, so that we may in turn offer better and more cost effective services to the public; and  To protect people who follow the Rules.

CPR’s con’t The Code of Conduct requires that you must follow these Rules when buying for the Council. If you do not follow the Rules and/or fail to enter into a contract on behalf of the Council in accordance with them you will have breached the Code of Conduct and this could be a disciplinary offence. You must follow the guidance provided in the Procurement Guide even where an exemption to these Rules has been granted (see Section 19 of these Rules).

CPR & EU Processes SCC Contract Procedure Rules  Purchase thru’ Existing Frameworks  High Value Transactions over £100k  Intermediate Value Transactions £10-99k  Low Value Transactions – up to £10k

Useful links services/property_and_procurement/procurement/policies_ and_procecures.aspx southampton/ southampton/ 20-%20Financial%20Procedure%20Rules_tcm pdf 20-%20Financial%20Procedure%20Rules_tcm pdf children/schools-guidance/schools-procurement.aspx

Any questions?