- Meeting of Resources and Governance Scrutiny Committee, Tuesday, 6th October, 2020 10.00 am (Item 41.)
Report of the Deputy Chief Executive and City Treasurer attached
This report outlines the steps normally taken by the Council to mitigate the risk of supplier failure for major capital projects and larger revenue contracts and the additional measures that have been in operation due to the increased pressure on suppliers as a result of the Covid-19 pandemic.
The Committee considered a report of the Deputy Chief Executive and City Treasurer, which outlined the steps normally taken by the Council to mitigate the risk of supplier failure for major capital projects and larger revenue contracts and the additional measures that had been in operation due to the increased pressure on suppliers as a result of the Covid-19 pandemic.
Key point and themes in the report included:-
· Following the Dawnus incident, a review was carried out into the approach to Due Diligence for significant contracts which concluded that a range of indicators should be used with key suppliers on an ongoing basis and not just at the point of award of a contract;
· The Integrated Commissioning and Procurement Unit had developed a system of categorisation for contracts based on how critical they were and how they were performing;
· This system helped to provide an initial guide as to which contracts might require more intensive financial scrutiny linked to risk rather than just value;
· Having identified any critical contracts a range of tools were now in use to inform those involved in management of contracts about the financial stability and any specific risks relating to a key supplier;
· In response to the Covid-19 outbreak, the Integrated Commissioning and Procurement Unit had subscribed to an application “Company Watch” which, as well as providing information on a suppliers’ financial position, provided an additional “Covid Scenario Forecast H-Score” which provided an additional rating on how susceptible a supplier might be to issues created as a result of the pandemic; and
· The Council had recently established a Due Diligence Working Group with representation from Audit, Finance, Development and Shared Services that was reviewing current Due Diligence arrangements in respect of suppliers, various partners and other organisations that were commercially involved with the Council.
Some of the key points that arose from the Committee’s discussions were:-
· Could the PPN arrangements that were currently under review by the Cabinet Office, if not extended, be used as a baseline of good practice;
· Could assurance be given that projects could be adjusted in ways that social value was being delivered due to the impact of COVID; and
· Assurance was sought that top tier contractors were paying promptly to other suppliers further down the supply chain.
The Head of Integrated Commissioning and Procurement advised that the indication from the Cabinet Office was that they were not prepared to continue with supporting local authorities with any spend for supporting suppliers. Officers were working with service units across the Council to consider what arrangements needed to be put in place where this support could either be wound down or continued. In relation to Social Value, it was explained that this was monitored on a contract by contract basis and ongoing discussions were taking place with contractors around how social value could be derived under current COVID restrictions. He also advised that the prompt payment of suppliers could be an issue which was difficult to address but was something that was looked at to try and ensure it did not lead to supplier difficulties.
The Committee notes the report.