Archived decisions

    13. Conclusions

      13.1 What advice including legal and procurement advice was sought and

        obtained by IT Services leading up to and during the letting of these consultancy contracts, was such advice followed and if not, why not.

      13.2 The report has explained how advice was sought and obtained from

        both the Legal Practice and from County Supplies, in relation to the Programme Manager role. The advice given was included in the E-Government and Corporate IT Manager's report to the Board Chairman of 16th January 2006, namely that the appointment should be made via the Manpower contract. This was confirmed in the email from the Head of Corporate and Legal Services of 24th February 2006. This advice was not followed, due to communication failures between the Board Chairman and E-Government and Corporate IT Manager, as explained in the report.

      13.3 Advice was also given in the email from the Head of Corporate and

        Legal Services of 24th February 2006 that a competitive process should be followed via the S-Cat procedure, for the Project Team roles. This advice was not followed, due to communication failures between the Board Chairman and E-Government and Corporate IT Manager, as explained in the report.

      13.4 Why normal procurement procedures (including EU and Contracts

      Standing Orders) appear not to have been followed.

      13.5 This is as explained in paragraphs 13.2 - 3 above.

      13.6 Does this apparent failure to follow appropriate procurement

        procedures result from any defects in the Council's current practices and procedures, and if so, what improvements are required to be made.

      13.7 We do not consider there to be any defect in Contract Standing Orders.

        The issue in this case was that the procedures were not followed. In a case such as this, where there is "matrix management" of a senior manager by the Chief Officer of another department, clarity should be given at the outset of the project as to who has Chief Officer responsibility for ensuring compliance with Standing Orders.

      13.8 Are there any cultural or attitudinal issues that need to be addressed.

      13.9 The communication from the Board Chairman of 2nd December 2005

        gave an impression (which the Board Chairman explained was unintended) that the taking of advice from corporate advisers was to be discouraged. The Board Chairman's communication of 28th February 2006 was then similarly interpreted as meaning (which again the Board Chairman explained was unintended) that taking further legal advice was not necessary. It is important that those giving leadership to a corporate project remain mindful of the need to give a clear and consistent message that corporate advisers have an important role to play in protecting the Council's interests and that, if in doubt, advice should be taken.

      13.10 Are there any apparent failures in the control mechanisms that exist in

        the current procurement regime, and if so, what are they and what recommendations are made for improvement

      13.11 As stated in Paragraph 13.7, we do not consider there to be any

        defect in Contract Standing Orders. Interpretation and application of EU Procurement Regulations and Standing Orders can give rise to some complexities, which may cause difficulty where those dealing with them are inexperienced in such matters. Consideration should be given to all procurement (or possibly that of a value beyond a given financial threshold aligned with EU Procurement Regulations and Standing Orders) being handled centrally, by specialists suitably trained and experienced. This would give greater comfort in ensuring that processes will be consistently and properly applied, best value consistently obtained, and reduction of risk from non-compliance. Further, in a world of "shared services" this may also present a business opportunity through provision of a service that other local authorities and public bodies may wish to buy into.

      13.12 If responsibility for procurement remains with departments, and is not

        handled centrally, consideration should be given to extending the role of County Supplies, which currently monitors procurement practice for value for money purposes, so that they assume responsibility to monitor, promote best practice and report on areas of non-compliance.

      13.13 What simply was the root cause of this apparent failure to comply with

      Contracts Standing Orders and EU Procurement Rules

      13.14 See 13.2 - 3 above.

      13.15 An assessment of value for money achieved under these contracts be

      given.

      13.16 As explained in Section 12, comparative evidence confirms that the

        daily rates for consultants in this case are reasonable for the level and quality of staff, using this method of supply. However, a full tendering exercise that led to a direct contract between the County Council and a consultant would have avoided the payment of agency commission, usually around 15 - 20% of the daily rates. Further, the total value of the work carried out by the Programme Manager from April 2006 and the consultants in the project Team from February 2006, was £939,898. An aggregated contract for services of this size, when subject to competitive tender, may well have resulted in more competitive rates being obtained.

      13.17 Does any action, inaction or failure on the part of any staff justify

      disciplinary proceedings.

      13.18 The County Council's Disciplinary Policy states that if an employee's

        conduct or work performance is considered unsatisfactory, the Disciplinary Policy should be applied. Misconduct is summarised as "unacceptable work performance" and examples of the type of conduct which are unacceptable, and which could lead to disciplinary action, specifically include failure to comply with Standing Orders, departmental work rules and reasonable requirements, policies and procedures. Disciplinary action for misconduct would normally lead to the issue of a first or final written warning.

      13.19 Gross misconduct is defined as "an act or acts which are a

        fundamental breach of the employee's obligations to the employer and sufficiently serious to destroy the relationship between the employer and the employee.   Each case has to be considered in the light of all its circumstances including the nature of the job and the details of the misconduct." Examples of misconduct that may be classified as gross include fraud, corruption and deliberate falsification of records. Disciplinary action for gross misconduct would normally lead to dismissal.

      13.20 There is no evidence that any individual officer acted wilfully in

        ignoring legal advice or procedures, to achieve any personal gain. We do not consider there to be "gross misconduct" on the part of any one officer. However, the various failures to comply with Standing Orders do meet the criteria for misconduct. Furthermore, having regard to the number of failures to comply, the amount of public money being expended, and the importance of the project to the Council's interests and reputation, these failures cannot be said to be mere minor infringements. In accordance with the County Council's Disciplinary Policy, the initiation of disciplinary action is in order, in respect of those officers who contributed to this misconduct occurring. This is the E-Government and Corporate IT Manager, the Board Chairman, and the Head of IT Services.

      13.21 With regard to the E-Government and Corporate IT Manager, he had

        taken advice from HR, and legal services, and Supplies, and had advocated a competitive process for engaging a Programme Manager. These plans changed at the direction of the Board Chairman, and the E-Government and Corporate IT Manager then developed a revised plan which followed the lead he had been given. He felt, quite reasonably, that he could not go against the direction of the Chief Officer. He believed that his subsequent actions, in engaging to the Project Team roles, were implementation of a strategy that had the blessing of the Board Chairman.

      13.22 However, as a senior manager and Programme Director, he was

        principally responsible for a number of key actions and decisions that directly contributed to the failure to comply with procurement processes, as follows:

        13.22.1 the procurement of services on the basis of successive short

            term contracts, when these should have been aggregated to assess the total value, for the purposes of determining whether EU Procurement Regulations applied;

        13.22.2 failure to conduct tendering processes where required;

        13.22.3 signing contracts for services of a value in excess of £75,000 which he was not authorised to do:

        13.22.4 in the report to the Board Chairman of 16th January 2006, failing to present the full picture with regard to the basis on which Consultant A had been originally engaged;

        13.22.5 following receipt of Co Supplies' advice dated 14th February 2006, failing to advise the Board Chairman that the proposed long term engagement of Consultant A was no longer to be via the Manpower contract and therefore not in accordance with the legal advice the Board Chairman had received.

13.23 In respect of the Board Chairman, he sought the advice of the Head of

        Corporate and Legal Services on the long term engagement of Consultant A, and indicated that if there was any doubt about the matter he would report it to members for consideration and approval, before proceeding. As far as he was concerned, he had approved a course of action (engagement of the Programme Manager via the Manpower contract) which complied with legal advice.

13.24 In respect of the Project Team roles, he agreed a management

        framework whereby the E-Government and Corporate IT Manager had management responsibility for the Programme Manager in relation to, amongst other matters, the recruitment of staff for, and procurement of, the Contact Centre. While this framework did not specifically refer to the engagement of consultants in accordance with Standing Orders and EU Procurement Regulations, it may be argued that compliance with such processes was implicit.

      13.25 However, he was, ultimately, CMT Sponsor for the project, and

        Chairman of what was referred to in the report to Cabinet of 19th December 2005 as "the Executive Board responsible for delivering the programme". Together with the Head of IT Services, he failed to ensure that arrangements for the delivery of the project were sufficiently organised, and roles clearly assigned, so that Standing Orders were followed in the procurement of consultants being undertaken for the project by IT Services. There were no reports to the Contact Centre Board on the arrangements for engaging consultants, nor was any reference made to this in the risk reports received by the Board. Further, the Board Chairman's emails to the E-Government and Corporate IT Manager of 2 December 2005 and 28 February 2006 failed to give a clear steer that the taking of advice from appropriate corporate advisers was to be encouraged, when the obtaining of such advice would probably have averted a number of the failures to comply which then followed.

      13.26 The Head of IT Services was not directly involved in the

        arrangements to engage any of the consultants, and proceeded on the basis that, on such matters, and consistent with the principles of "matrix management", the E-Government and Corporate IT Manager was reporting to, and taking a lead from, the Board Chairman.

      13.27 However, the Head of IT Services is a member of the Contact Centre

        Board, receives all papers for Board meetings, was aware that responsibility for financial management of the project sat with IT Services, and that consultancy services for the project were being procured through IT Services. He has acknowledged that, in future projects subject to "matrix management", he would want to have a greater role. Together with the Board Chairman, he failed to ensure that arrangements for the delivery of the project were sufficiently organised, and roles clearly assigned, so that Standing Orders were followed in the procurement being undertaken for the project by IT Services.

      13.28 Clear advice should be given by management that any repetition of the deficiencies in the current project would be unacceptable.

      13.29 With regard to the Contracts Officer, the position is different. Her involvement was confined to giving advice on one aspect of the project. The failure to clearly state in the 14th February 2006 email that the proposal received from Commerce Partners should not be considered as it was not compliant with Standing Orders or EU Procurement Regulations, did not, in the end, significantly influence the outcome. This is because the E-Government and Corporate IT Manager acknowledged that this is something he should have made clear to the Board Chairman (and indeed, he felt he had done so in a telephone conversation). The Contracts Officer had no responsibility for the making of strategic decisions on the management of the project or for decisions on the recruitment of the Programme Manager, and had no involvement at all in the recruitment to the Project Team roles. We have no doubt that the importance of clearly recording in written advice, the fact that a contracting proposal is contrary to Standing Orders and EU Procurement Regulations, has been taken as a learning point from this case. Formal disciplinary action is not justified.

      13.30 Consideration of any personal or business relationships between those employees involved in the letting of these contracts and the contractors themselves.

      13.31 The incremental engagement of consultants brought about a position where the six external consultants assigned to roles in connection with the project were all from the one agency. There is evidence to support the fact that candidates from more than the one agency were interviewed for the roles assigned to Consultants A, B, E, F and G, and that Consultant D was assessed alongside candidates from other agencies in the process leading to the appointment of Consultant B. In the case of Consultants A, B and E, there is also some evidence from these processes that the successful candidates were chosen on the basis of objective criteria relevant to the job, as set out in the relevant role profile. Consultant A was involved in interviewing the candidates for the Project Team roles, although decisions on which candidate to appoint were made by the E-Government and Corporate IT Manager. While it was considered important to have the benefit of Consultant A's experience in the evaluation of candidates, this did give rise to an apparent conflict of interest, where the candidates under consideration were from the same agency as him. There is no evidence that any favouritism was shown to candidates from the one agency involved, or that any contractor or employee involved in the process benefited in any personal capacity from any such award. However, as full tendering procedures were not followed, the degree of evidence that would normally have been available from such a tender process, to demonstrate fairness and propriety in the award of contracts, is not available.

      13.32 The practice of a consultant being involved in the selection of staff or other consultants, including consultants from their own agency, should be reconsidered. The role and influence of contractors/consultants in future decision making should be limited to an advisory one only, with clear arrangements in place to ensure that proper accountability exists and potential conflicts of interest are avoided.

      13.33 A random review be undertaken of other recently let contracts to assess whether all procurement rules have been complied with.

      13.34 As explained in Section 11 above, a random sample of transactions has been reviewed. In the majority of cases, the contracts had been awarded in accordance with existing framework agreements. In the remaining cases, at no point did the aggregated value exceed the threshold of the EU Procurement Regulations. However, in some cases, documentation was insufficient to demonstrate compliance with Standing Orders.

      13.35 An indication be given as to the timescale for the Monitoring Officer and Section 151 Officer to bring any such similar reports to the attention of the Cabinet, should similar circumstances arise in the future.

      13.36 In cases of similar significance to this, a report should be brought no later than three months from the date of becoming aware of the relevant circumstances, provided that action is taken as quickly as possible to remedy any defects that exist.