Agenda item

(1)       The Chairman thanked Ms Buckland for attending and those around the table introduced themselves.

 

(2)       Ms Buckland summarised the key points in her written paper, which she had prepared in response to themes sent by the Research Officer, and had been published with the Committee’s agenda.  The paper summarised the key points which the County Council might face and would need to address around its commissioning and procurement, seen from her professional point of view as an internal auditor. She explained that she had been involved in the new commissioning and procurement processes in the Adult Social Care and Education, Learning and Skills directorates and in her role on the Accommodation Solutions Group, giving audit support and advice in the role of a ‘critical friend’.

 

            Barriers for new providers – key points are, in traditional procurement, the need to evaluate information which supports tenders (financial papers and evidence of previous quality for new providers), and the challenges around achieving this. A change in public procurement requirements could simplify the credentials which those tendering for a contract need to produce – e.g. the introduction of a self-declaration stage - and only bidders who pass this stage successfully will be asked to submit documentary evidence.  This extra stage allows the County Council to acquire sufficient information to avoid risk while reducing the barriers to tendering processes.  If the County Council were to move to a less risk-averse approach, it would need to back this up with a robust performance monitoring and commissioning mechanism.  New and small providers bidding for a contract may lack the experience of preparing tender documents, while large and established providers have more practise and expertise at doing this.  The County Council could work with new or smaller and inexperienced companies to give them support with the preparation process. This could be a role for Members.  Ms Buckland emphasised that this support would be unrelated to any specific tender processes, so would not give those bidders any unfair advantage over other bidders. The County Council needs to engage across the Kent community about training.

 

            Provider performance – the establishment of new Strategic Sourcing and Procurementteams has had an improvement in setting performance requirements and measures. Performance monitoring and length of contract are interdependent.Shorter contracts have the advantage of a clear exit point, but limited time to help providers develop, and, for new providers, to demonstrate evidence. This also allows limited time for monitoring of performance in terms of outcomes, yet does not carry the risk of the County Council being tied-in over a long period to a provider who may not be performing well. Longer contracts may give time to generate and develop relationships and allow scope for longer-term monitoring – and will need robust mechanisms to support that monitoring - but have a longer lock-in period and associated risk if a contractor’s performance is not of the required standard. Therefore, if taking this route, we need clear exit strategies. More Framework contracts and Dynamic Purchasing Systems give flexibility on whom we use, and we can add and take off providers.  This allows the County Council to spread the risk across several providers. There needs to be focus on both outcomes and outputs, as relevant.  When monitoring and reporting outcomes, it is important to be clear about what is being measured, and to set realistic and achievable targets.  For example, when measuring performance in a smoking cessation campaign, a long-term aim would be a reduction in the number of deaths from smoking-related diseases (which would be very difficult to identify within a contract period of three years, for example), while a target which could realistically be measured within a three-year contract would be a number of people having successfully ceased smoking and managed to remain smoke-free for six months or twelve months, for example.

 

            Responsibilities in the Social Value Act – the County Council will need to identify 1) the Social Value requirements of its services and define what it is trying to achieve by contracting, 2) whether or not commissioning a certain service is the best way of achieving that aim, and 3) how/what it intends to build into its contracting process to take account of its responsibilities under the Social Value Act and the need to evaluate its effectiveness in meeting these responsibilities.  The County Council will need to reconcile its new responsibilities, the requirements of procurement legislation and the need to seek best value for public money. The new Public Procurement Directivewill help with this. There is a need for flexibility around Social Value – it is about the value of spend of £1 – and what else the County Council may get for that sum.

 

(3)       Ms Buckland then responded to questions from the Select Committee, as follows:-

 

If there were a provider wishing to tender which you suspected of having poor financial practice, but who was otherwise good, do you have scope to address any doubts or problems before proceeding with their tender?

 

(4)    Yes, we have scope to build into any contract that we give them a requirement that they agree to financial monitoring, which would give the County Council some protection against a provider’s poor financial management. The County Council also has the opportunity to work with a provider who is in difficulty, with the aim of helping them deliver their contractual obligations. However, for example, if the County Council were contracting with a provider who also ran private care homes, the County Council would have no automatic right of entry to a private care home to check on conditions or practice, but could set up a system of checks through the terms and conditions of contracts, including a right to audit, to see if any problems present at the home were down to financial or operational issues.    

 

What capacity does the Internal Audit team have to monitor performance on contracts? There are many contracts but a finite number of Internal Audit staff. If performance on a contract were poor, what would be Internal Audit’s role in addressing this? 

 

(5)    Internal Audit does not have a role in monitoring individual contracts; we have an auditing role and can comment on the contracting process and give assurance on performance management and whether or not processes are in place and how well they work.  The Directorate colleagues who commission the contract will have the role of monitoring it.  For example, in the case of a care home provider, the monitoring role would be taken by Mark Lobban, Director of Strategic Commissioning for Adult Social Care, and if we find weaknesses in the process through the audit we would pass these back to Mark, who can take them up with the provider.  We can look at a sample of contracts to assess the process.

 

It seems that it’s hard to define the requirements of the Social Value Act in contracts in a way in which the public will understand it.

 

Can you give more information on a role that elected Members could have in this process?

 

(6)    Members are well placed to interact and engage with the voluntary sector and other organisations. This engagement would not conflict with the contract process as Members can be impartial.

 

If the County Council were to enter a long-term contract, how easy is it, and what mechanism is there to change requirements part-way through, to meet new Council or public requirements?

 

(7)  There is a risk in changing objectives part-way through a long-term contract. We would need to work collaboratively to address any issue.

 

(8)    Part of a change in thinking around contracts is a move towards regional or framework contracts and dynamic purchasing systems which allow smaller providers to take part.  These mechanisms are very good at allowing ‘call off’ to several smaller providers.  It’s about providing elements of service. The County Council could look at services or at geographical areas.  As small providers may not manage a whole service, the County Council could look at smaller lots.

 

When the County Council contracts with EU companies and sets out terms and conditions, it includes stipulations around health and safety, but EU Health and Safety laws do not take account of UK Health and Safety laws. How can the County Council ensure that an EU company will comply with these?

 

(9)   The County Council would build it into the contract conditions and the monitoring process. The same rules would apply to any company with which it contracted, and, as the contractor, they would need to comply with the County Council’s conditions.  Older contracts would need to be adjusted to take account of changes in health and safety laws.  Robust monitoring is key, and the only way to pull out of a contract would be to have evidence, via monitoring, of a provider’s poor performance. 

 

In terms of robust monitoring and performance management, does the County Council have the capacity to react if poor results are shown up via monitoring?

 

(10)   That is difficult to answer as it is difficult to judge capacity. For example, when looking at re-letting residential care contracts, each home would ideally be visited once a year by the Commissioning Team. However, there are large numbers of homes to visit, and this could mean more than 500 visits, and there is a risk that a visit will not be able to go into sufficient detail at every home to be really useful. Hence, capacity is something which needs to be considered as the County Council moves towards being a commissioning authority and monitoring becomes more important. It is important to be clear about what is being monitored, when and how.  I believe that care homes should have face-to-face visits.

 

Do external auditors get involved in what you do?

 

(11)  External auditors do not get involved in the detailed work around procurement and commissioning.  Their role is to audit the County Council’s accounts and assess financial resilience.

 

The human relationship between the commissioner and the provider is vitally important to working well together. How can this link be incorporated into the commissioning and procurement system so human relationships can contribute to the process? 

 

(12)   The commissioner/provider relationship is important to make things work well. I agree that good working relationships can minimise the risk of getting to the stage at which a contracting relationship has broken down and independent intervention and mediation is needed.  I don’t know how this element could be built into a contract, unless, instead of calling something just a ‘contract’, we start describing a contract document as ‘an agreement to work together to deliver services...’ or something similar, and have a mechanism by which feedback can be channelled both ways between parties.

 

This would need a culture change and a change of mindset.  Could Members be mediators, if these are needed?

 

(13)   A group of Members could take an objective view, which could be useful, but Members would need training to take on this role.  As the County Council moves towards becoming a commissioning authority it will need people with contract management skills.

 

So could there be a group of lay Members with some technical support which could have a role to play?

 

(14)   Yes. A group of Members with legal advice and support could have an advisory capacity, but there also needs to be a process by which an issue can be escalated if the Member advisory group is unable to deal with it.

 

I think the role of Internal Audit as a ‘critical friend’ is good.  The County Council seeks to encourage more small and medium-sized enterprises (SMEs) to take part in its tendering processes but this brings with it a greater risk (financially, and to the reputation of the County Council), even with the monitoring systems you have described.  Perhaps a role for the Member Group which has been suggested would be to try to offset this risk. It could be useful to have an objective Member group with, for example, audit/procurement/legal advice as relevant. This group could possibly have a role in oversight of social value.

 

How much value will the or shouldthe County Council put on the requirements of the Social Value Act, and how does this fit with Bold Steps? As Members, we all care about our local communities, so is there another role for Members, to do with Social Value?

 

(15)    In my view, the Member group feeds into the process and has value, but needs to be clear how it fits into the process and who makes the ‘final call’. The key question is ‘does this achieve what we want for Kent?’ Members have a scrutiny function to see what the County Council achieves for the people of Kent.

 

Could a Member group have input into the specification stage of the process?

 

(16)   Yes, Member input on the Social Value element could be built into that stage.  Members’ input will depend on what role they choose to have, on which contracts (dependent on size), and what proportion of contracts the group wants to examine (it is unlikely that it will have capacity to look at all contracts) and how it will select which contracts it will look at. Bold Steps alone does not include sufficient detail to guide this role.

 

Could the Member group have a role as mediators?

 

(17)   No, Members would have a ‘critical friend’ role, looking at how Social Value can be added, to meet the needs of the people of Kent.

 

There are two areas of responsibility when letting contracts; for delivery of the service, which the County Council passes to the contractor as part of the contract, and the overall accountability for the services, which the Council retains.

 

(18)   This depends on the relationship between the host organisation and the key contractor.  The host organisation will make the usual checks, including asking for three years’ accounts, before a potential contractor gets through the initial filter process and is interviewed.  The host and the contractor would need to agree a joint monitoring mechanism to be used and build this into the contract.  Good working relationships between the host and the contractor are important, especially in areas such as social care, as this benefits both parties.  If it is agreed between the two that they will evaluate performance jointly, as part of the contract agreement, there could be a role for Members.  (19)   There is a need to change the present culture, as currently there is a need to develop better monitoring and scrutiny of a contract once it is set up,and this practice needs to be established. While the culture is changing, people will need guidance and support to achieve sensible contract management.

 

Can you suggest any ways in which the County Council can improve its commissioning and procurement practice?

 

(20)   The County Council needs to understand clearly that, when it contracts with an external body, it still retains overall accountability for the service being contracted.  It can’t transfer risk to the contractor, and must ensure that it does not become complacent.  There is a potential lack of understanding in the County Council about contract monitoring and the need for training and guidance. For example, for a new contract/provider, if performance data is based only on complete years, there may not be sufficient data to monitor performance until 18 months into the contract (as year one would set a baseline, year two would monitor year three anticipate re-tendering) and by the time two years’ data is available to monitor it is too late to find out that a three-year contract is not progressing well. Hence, it is very important to understand outputs and measures. If performance measures are set which cannot be assessed, then intelligent monitoring will not be possible. Performance measures and set outcomes need to be meaningful and measure the quality of performance. 

 

Could performance be monitored from day one of a contract?

 

(21)  Performance needs to be measurable in a meaningful way, and target setting needs to be intelligent. If the County Council cannot measure performance, it cannot hold the contractor accountable. If the County Council seeks to be less risk-averse, it will need to work with providers more flexibly. The County Council needs to consider who should monitor, and if monitoring can be done differently. 

 

What you have told us shows that Internal Audit is a very powerful tool. Has attending the Select Committee today stirred you to think differently about how you work?

 

(22)   Yes, it has been a very interesting conversation, and has made me think about what we do and how we do it.

 

(23)   The Chairman thanked Ms Buckland for attending and added that any further thoughts she wished to add could be sent direct to the Research Officers.