Appendix C
FINDINGS ARISING FROM A REVIEW OF SPECIFIC PROCESSES IN THE
PROPERTY SERVICES DEPARTMENT
Introduction
This audit was undertaken at the request of the Deputy Chief Executive and was in
addition to the approved audit plan for 2010/11. The review focused on specific
elements of the Council’s procurement arrangements within Property Services as
directed by the Deputy Chief Executive.
Summary of Findings
We noted that current written procedures for procuring works, goods and services up
to £5k and between £5k and £10k are not consistently applied. There is also no
requirement to obtain any quotes for works less that £1k, which does affect the
Council being able to justify value for money considerations, particularly in light of the
current economic climate.
We undertook an overview of the Council’s tendering arrangements, undertaking a
walkthrough of one contract that was relevant to our terms of reference and found
controls to be robust. There is a risk however, that receipt of quotes below the formal
tender threshold could be manipulated to favour a particular supplier, since they can
be invited and received by the same officer. As such, a favoured supplier could be
tipped off of earlier quotes received, which would not be obviously apparent, and with
correct procedure seemingly having been applied.
We were also advised that one particular contractor was preferred as they were
commonly known to be the cheapest option. This was not an in-depth procurement
audit, focusing primarily on a targeted review of the procurement guidance, but we
did note that the Council should be taking into account quality and ability to deliver
regarding the contractor’s work and this message is not prevalent in the guidance.
Furthermore, the Property Programme and Project Manager informed us that he is
working to update the Council’s approved list of suppliers, including post contract
feedback on the quality of the contractors the Council has engaged, to ensure that
any concerns about quality are considered before deciding who should / should not
be included on the approved list in future.
As a result of our work, we put forward 2 recommendations both of which were
accepted by management and were as follows:
Recommendation 1 (Medium Priority)
In order to demonstrate that value for money considerations are consistently applied
and to make the process more transparent, the Council should review its
procurement guidance, including its Contract Procedure Rules, Procurement Toolkit
and the Quotation Value Path flowchart, for the requesting of quotes for works up to
£10k. This should include:
• Ensuring that at least two quotes are obtained for purchases between £500
and £1,000; the £500 being aligned to the threshold which the new
Government has set for local authorities to formally publish details of all such
payments.
•
Ensuring that all quotes are received in writing, with written approval where
this is not deemed possible.
•
Ensuring there is consistency across all written guidance over the numbers of
quotes and their method of receipt.
See also recommendation 2 on receipt of quotations.
Recommendation 2 (Medium Priority)
The Council should lower the threshold for undertaking a formal tender and quotation
process, which presently only require formal tenders and quotes to be opened by an
independent officer above £50k.
The new limit should be established at a rate which appropriately balances the
potential risk and cost of inappropriate behaviour against the bureaucracy and costs
involved in such a process.
The new procedures should include an exemption that where alternative tendering
procedures are used, these should be approved by the Service Director.
Where works are expected to fall below the new threshold established for
independent tenders and quotes, the process used should be evaluated by the
relevant budget holder, who should obtain assurance the process used is both
appropriate and generated the most economically advantageous position for the
Council.