Procurement financial limits - delegation to Resources Sub-committee

Report: 05
Date: 19 March 2009
By: Chief Executive and Treasurer

Summary

At its last meeting, Finance and Resources Committee instructed that further consideration be given to the delegation limits of procurement action to the Resources Sub Committee. This report reviews issues and requests members to consider how they wish to proceed.

A. Recommendations

That

1. Members consider whether they wish to support the delegation of procurement action to the Resources Sub Committee as originally proposed (£30m Total Value threshold); and
2. this approach be reviewed in June as part of the planned overall review of the MPA committee structure by the full Authority.

B. Supporting information

1. The Finance and Resources Committee at its last meeting considered a recommendation from the Resources Sub Committee to agree delegation of procurement activity.

2. In particular, in relation to procurement exercises, it was proposed that the Finance and Resources Sub Committee consider and make recommendations to the Finance and Resources Committee on business cases and the subsequent award of contract following tendering when the total value is greater than £30m, below this figure the Sub Committee would have delegated authority to take decisions (The Commissioner has delegated Authority up to £5m.) The Sub Committee agreed that there would need to be exceptions to the general application of this delegation – contracts that raise questions of principle or financial policy, possess unusual features or involve particular risks or might arouse particular public interest or publicity – these cases would need consideration by the Finance and Resources Committee. A copy of the report to the Resources Sub Committee is attached at Appendix 1.

3. Some members were concerned with the proposal that the Sub Committee be delegated to make procurement decisions up to £30 million Total Value, and felt that it should only make recommendations to the F&RC. Members noted that they did not have time to read reports for committees they did not specifically sit on. In addition they saw the delegation limit as a constitutional issue and felt a need for consistency around sub committees.

4. Care had been taken when identifying a financial limit on delegation to choose one that was not so low that a large number of procurement approvals needed to be undertaken by the main committee, but not so high that important procurements were scrutinised only by the sub committee (with fewer sitting members than the main parent committee) without referral to the main committee. However, it was accepted that in drawing a financial limit for this delegation a matter of judgement had to be used. The proposal for £30m had been supported by an analysis of forthcoming contracts expected to be greater than the Commissioner’s £5m delegated limit over the forthcoming year. Consideration of the routine contract programme had shown that there were a large number of small contracts below the £30m limit and if the delegation was not agreed the F&RC committee would have to consider some further 26 contracts. It was also noted that all members of the parent committee could if they wished attend the sub committee meetings.

5. Safeguards for the F&RC were that all novel or controversial decisions would be referred to the parent committee; all reports would be referred to the Chair before they were submitted to the Sub Committee and that all Sub Committee reports would be circulated to all F&RC members in good time. There would also be a report back to the F&RC following decisions taken by the Sub Committee.

6. The Chief Executive comments that the new proposed way of working for Authority sub committees is to enable detailed discussion and deliberation on detailed/complex issues to be made by the sub committees. This would allow the parent committee to focus on strategic issues. There is no constitutional or legal problem in delegating such decisions to a properly constituted Sub Committee, and that this is the approach the Authority was looking to adopt across the committee structure. It is therefore a matter for the parent committee to decide. .

7. It is therefore proposed that the existing proposal of £30m delegation be further considered by members for approval and that the success of the approach be reviewed in June as part of the planned overall review of the MPA committee structure by full Authority.

C. Race and equality impact

None derived directly from this report.

D. Financial implications

None directly from this report.

E. Background papers

None

F. Contact details

Report author(s): Ken Hunt, MPA

For more information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

Appendix 1

Report presented to the Resources Committee on 16 January 2009 titled: terms of reference

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