Contents
Report 8 of the 20 Jun 03 meeting of the Co-ordination and Policing Committee and reviews the Authority’s Contract Regulations and Scheme of Delegation and proposes amendments for member’s consideration. The final draft will need formal approval by full Authority.
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Review of the Authority’s contracts regulations and scheme of delegation
Report: 8
Date: 20 June 2003
By: Treasurer and Commissioner
Summary
This report reviews the Authority’s Contract Regulations and Scheme of Delegation and proposes amendments for member’s consideration. The final draft will need formal approval by full Authority.
A. Recommendations
That
- the Finance Committee considers the proposed amendments to the draft Contract Regulations and the Scheme of Delegation and passes any comments on these to the Co-ordination and Policing Committee and full Authority;
- the Co-ordination and Policing Committee recommends these new Contract Regulations and Scheme of Delegation to the full Authority, subject to any amendments proposed as a result of the two committees’ deliberations;
- Full Authority agrees that these Contract Regulations and Scheme of Delegation be applicable for all new actions from 27 June measured from MPS start points, subject to any changes made at the meeting or agreed with the Management Board; and
- the Treasurer be authorised to make any consequential amendments to Financial Regulations to bring them in line with Contract Regulations.
B. Supporting information
Introduction
1. The Authority is required by s135 of the Local Government Act 1972 to make standing orders with respect to “the making by them or on their behalf of contracts for the supply of goods or materials for the execution of work”. Such standing orders are required to include provision for securing competition and for regulating the manner in which tenders are invited.
2. Contract Regulations which sit within a hierarchy of standing orders provide the framework of control for procurement practices within the Authority. They are used as the basis from which detailed guidance documents are prepared and they steer the systems and procedures that are established at MPS Business Group level.
3. The existing Contract Regulations and Scheme of Delegation have been in place from the Authority’s inception in July 2000. A programme of review has approved revised Financial Regulations (from July 2002) and a further review of Standing Orders has now been agreed (29 May 2003 full Authority). A Working Group comprising the Director of Procurement and Director of Property Services (MPS), the Deputy Clerk and Deputy Treasurer, Head of Secretariat, Deputy Chief Internal Auditor and Equalities Policy Development Officer (MPA) have prepared the attached draft revised regulations for consideration as follows:
- Appendix 1: Contract Regulations
- Appendix 2: Scheme of Delegation of Powers for the Officers
(These two appendices have been sent separately to members to reduce printing costs. They are available on the MPA website as part of the committee reports)
4. Full Authority approval is required to these revised regulations and scheme of delegation. The MPS Management Board will be considering the draft scheme and regulations and they are subject to any further amendments agreed with the Board. Any final amendments will be reported to the full Authority.
Contract regulations
Contract Regulations - Principles
5. In considering the appropriateness of the regulations three principles were agreed:
- The regulations should provide the Authority with the key for unlocking the full potential offered by the implementation of procurement initiatives. The review has been undertaken with the objective of ensuring that the regulations incorporate and actively encourage best practice and considered risk taking. Controls should be commensurate with the levels of risk involved;
- to implement the regulations efficiently it is vital that they are written in plain English so they are clearly understood by those expected to implement and comply with them; and
- provided that control arrangements within the MPS satisfy the Authority, the Commissioner and his staff should manage the tendering and contracting process, except where the Authority has decided that it must be advised of particular contracts in advance of agreement because of their size or sensitivity.
Contract Regulations - Main Changes
6. There are a number of changes proposed. The tables below identify these but it will be helpful to comment on some of the more important issues:
- Member Involvement. To assist in securing sound corporate governance arrangements, contract regulations should require members to have some involvement in the procurement process
relating to contracts. The extent of this involvement is a matter of judgement. It is suggested that for reasons of probity and good practice members are not expected to take an active part in
everyday procurement decisions, but to participate at the strategic level and in the design of large and complex procurements. The level of involvement should not create a heavy burden on the work of
members and should be commensurate with the objective of scrutinising processes and adding to the controls on what are perceived to be major projects. The absolute minimum proposed is that members:
- Approve business plans and the awarding of all high valued contracts exceeding £5 million in value or with special significance.
- OJEC Notices. The submission a regular programme of forthcoming contract action to this Committee and approval to OJEC notices is incorporated.
- Tender Action Thresholds. The appropriate threshold above which formal tenders are required, rather than quotations, and above which the level of perceived risk justifies the extra administrative costs involved has been raised. The Working Group considers the threshold should be raised to £40,000 (was previously £25,000).
- Resource Allocation Committee. The role of MPS Resource Allocation Committee in instigating and agreeing contract action for contracts below £5 million is formalised.
- Award Criteria. The regulations have been clarified and adopted best practice by ensuring that best value is sought from our contracts and that they take into account whole-life costs such as maintenance and replacement costs and ‘soft’ quality issues, as well as price, when awarding contracts.
- Equalities. Explicit recognition of equalities issues is now addressed by the inclusion of an equalities statement as part of the regulations.
- Property. The complexity of property procurement has been addressed with a separate section within the regulations. This area is still under development and detailed practice will be reflected in the underlying supporting Code of Practice.
- Post Contract Monitoring. This important aspect is now addressed more fully.
- Urgent Action. The limit on emergency procurement action has been raised from the £40,000 ceiling.
It is not possible to identify all minor drafting changes. For comparative purposes, a copy of the existing regulations has been placed in the Members Room. The regulations are now organised into three sections and detailed comments are included in the tables below.
7. Section 1 sets out the scope of the regulations:
| Contract Regulations | Change | Comment |
|---|---|---|
| Contents page | Reordering of flow of regulations to follow contracting process | Easier for staff to follow and understand |
| Contents Page | Contact Points added | Members of the Working Party added as advice contact point |
| Introduction (page 5) | Introduction of the ‘Authorised Representative’’ concept | Recognising the explicit nature of the delegation of the Commissioner’s powers through his staff, particularly the Directors of Procurement, Property and HR. |
| Reg 1.5 | Separation between ‘Business Groups’ and ‘Authorised Representative’ | To ensure clear separation of duties; in particular emphasises the corporate procurement and property function |
| Reg 2.2 | Approval of exceptions can be made by the Authorised Representative | To enable efficient management of the procurement process. The Clerk will still be informed if there are failures of the contract requirements (Reg 2.3). |
| Reg 3.1 and 3.2 | Simplified regulation for members and employees ethics and interests | Can now rely on the Anti-fraud and Corruption Policy and associated Codes referred to within this document. The Code has been circulated as an appendix. |
8. Section 2 outlines the regulations involved in conducting a purchase and disposal. This is an important section and there are a number of changes. It is useful to explain some of these in more detail:
| Contract Regulations | Change | Comment |
|---|---|---|
| Reg 4.2 | New Equalities and Diversity Statement | Approved by EODB. Circulated as an appendix |
| Reg 4.3 | New Environmental regulation | Profile of environmental considerations raised. |
| Reg 4.4 | Health and Safety | New requirement |
| Reg 4.8 | Approval of the Authority needed above £5 million (was 0.6% of net expenditure [approx £6.2million] | Maintains member involvement and assists in corporate governance. |
| Reg 4.9 | New reg to outline the steps that must be taken prior to commencement of contract action | To assist in clarity and ensure efficient and effective procurement |
| Reg 4.10 | New reg for Pre-tender market research and consultation | To assist in clarity and ensure efficient and effective procurement |
| Reg 5.1 | Expanded requirements for Invitation to Tender | Clearer stipulations, including non acceptance of faxed/e mailed tenders unless agreed by Director of Procurement. |
| Regs 5.1, 5.2 and 5.3 | Clarification on different actions in respect of the Invitation to Tender or Quotation | To aid clarity |
| Reg 5.4 | New item specifying adequate time for tenderer to prepare tender. | Standard setting to aid effectiveness. Four weeks minimum. |
| Reg 5.9 | New item requiring Commissioner to prepare a programme of OJEC notices | Will aid efficiency |
| Reg 6.2 | Introduction of minimum number of tenderers | To aid clarity. |
| Reg 6.2 | Change in thresholds for tenders and quotations, and explicit delegation levels | New upper limit on tendering of £40,000 (was £25,000) and upper limit for Authority action now £5 million. |
| Reg 7.2 | New limit for emergency powers especially emergency property works for Director of Property Services | To enable efficient management of the estate. No upper financial ceiling, but limited to available budget provision. |
| Reg 8.3 | Application of regulations to Framework Arrangements | Missing from previous regulations |
| Reg 10.5 | Reason for rejection of tenders rewritten | Clearer presentation |
| Regs 11.1 11.6 | Redrafted award criteria and evaluation of tenders. | Major change. Concept of ‘whole life cycle costs’ introduced and best value for money concept. For many contracts, the criterion can simply be ‘lowest price’. However, for more major or complex projects, standing orders provide for the ‘most economically advantageous tender’ submitted to be accepted without the need for additional approvals or reporting over and above that which would have been required for a lowest price submission. |
| Reg 11.7 | New reg on appointment of consultants | For completeness |
| Reg 11.9 | New reg on bonds and parent company guarantees | For completeness |
| Reg 12.1/2/3 | Award of contract where greater than 10% more than estimated Total value or greater than 25% lower than estimated Total Value | New, to be reported to Clerk to enable scrutiny and possible committee report for member scrutiny. |
| Reg 12.4 | Non-acceptance of lowest bidder. | Addition. Required by Home Office Code of Financial Management. |
| Reg 13.1 | Content of contract | Particularly showing the additional requirements for contracts greater than £40,000 |
| Reg 15 | Post Contract Monitoring and Evaluation | New requirement setting out the importance of monitoring performance and compliance with the specification and contract and monitoring of cost. |
| Reg 18 | Common seal of the Authority | New item, clarifying the position on sealing contracts. |
| Reg 19 | Construction Contracts | New reg outlining the requirement to prepare a Code of Practice for the efficient management of construction contracts. |
| Reg 20 | Facilities Management | New reg formalising approach to Facilities Management contracts |
| Annexe | Sets out key stages in contract approval | New item to assist clarity in understanding procurement process. |
9. Section 3 – Land and property
This section has been substantially expanded. It is hoped that this will ensure that the Authority’s requirements are better understood and allow the maximum delegation of functions to the Commissioner’s Authorised Representative. This should ensure the opportunity to obtain best value/consideration.
| Contract Regulations | Change | Comment |
|---|---|---|
| Reg 19.1 | Requirement for disposal or purchase to be linked to approved business case as well as the Estates Strategy | New Estates Strategy not yet completed – allows flexibility |
| Reg 19.6 | Threshold for reporting of bids to Authority now £2 million | Amendment |
| Reg 19.7 | Property Disposal - Ability for the Commissioner’s Authorised Representative to negotiate after approval by Committee, subject to caveats | To aid effective operation of the property function – subject to exceptions being reported back to Committee |
| Reg 19.9 | Delegated powers given for approval of Licences | Caveated - As long as no change to underlying obligations of the Authority |
| Reg 19.10 | Commissioner’s Authorised Representative can enter into short term leases (no greater than 5 years) | Subject to Treasurer’s approval (capital finance implications) and budget/approved business case |
Procurement Strategy and Procurement Code of Practice
10. Contract Regulations provide the link between the documented procurement strategy and the development of detailed codes of practice, training and the establishment of operational procedures. It is intended that following member approval of the Contract Regulations that the MPS will bring forward a report to the September meeting of Finance Committee on procurement strategy and report to the November meeting on policies and procedures.
11. Training
The Authority has supported the continuation of a corporate procurement unit providing a corporate approach and maintaining a degree of independence from business units. The procurement unit will identify, review and co-ordinate procurement activities across business groups, and will commission and maintain training programmes. It is likely that the procurement strategy will identify training needs and it is proposed that if members wish, there could be a separate training programme arranged after the summer recess.
Communication strategy
12. It intended to communicate the new contract regulations and delegations as follows:
- By intranet
- By training sessions
- By publication of appropriate guidance and notices
Scheme of delegation
Scheme of delegation – main changes
13. The Scheme of Delegation of Powers to the Officers is the high level document which, in the Authority’s regulatory framework, sits above the Contract Regulations and the Financial Regulations. It sets out both general and specific delegations which the Authority has given to chief officers – the Commissioner, Clerk and Treasurer – to act on its behalf. It should be read in conjunction with Financial and Contract Regulations, which contain more detailed delegations to and requirements on officers.
14. Although the format and some wording have been changed from the existing scheme, actual changes of content are shown in italics in the attached scheme, appendix 2. The main changes reflect proposed changes to the Contract Regulations, so do not need to be referred to again here. Most other changes bring in existing delegations etc which are not reflected in the current scheme, such as:
- The protocol on compensation cases (para 7.7)
- Delegations to the Clerk / Treasurer in respect of some aspects of the Scheme of Members’ Expenses and approval of member attendance at conferences etc (paras 4.6/4.7)
- The revised Standing Order on the exercise of urgency powers agreed by the Authority in May as part of the review of procedural Standing Orders
- Amending the virement provision in the scheme to mirror the provision in the Financial Regulations, which were last revised in summer 2002.
15. New provisions in the scheme include:
- Specific authorisation for the Deputy Clerk and the Deputy Treasurer to act in the absence of the Clerk and Treasurer (para 1.4)
- Authorising the Clerk and Treasurer to agree minor restructurings of the establishment of the Secretariat and Internal Audit respectively (para 4.11) and to approve annual performance related pay awards (para 4.12)
Authorising the Clerk to agree changes to scheduled Authority or committee meetings in consultation with the relevant Chair.
C. Equality and diversity implications
Promoting equality through contracts/procurement
1. The contract regulations have been considered in the light of the latest guidance on promoting race equality through contracts and in particular, account has been taken of the latest consultation draft of a practical guide and tool kit for local authorities issued on 13 March by the CRE. The Equal Opportunity and Diversity Board at its meeting on 1 May 2003 approved an equalities and diversity statement for inclusion in the Contract Regulations.
2. The Board requested that the Commissioner report back on cost implications arising from the approach set out in the statement. The statement is attached at appendix B to the Contract Regulations.
D. Financial implications
None other than specific changes to amounts of financial delegation referred to above.
E. Background papers
None
F. Contact details
Report author: Ken Hunt, Deputy Treasurer, on behalf of the Working Party, MPA.
For more information contact:
MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18
Supporting material
- Appendix 1 and 2 [PDF]
Contract Regulations and Scheme of Delegation of Powers for the Officers
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