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ITEM CC7

COUNTY COUNCIL - 18 JUNE 2002

ADDITIONS TO THE COUNCIL’S CONSTITUTION

Report by Assistant Chief Executive

1. The Council in April 2002 reviewed the Constitution and agreed additions and amendments to it. In doing so they approved the Financial Procedure Rules in Section BB on an interim basis subject to further consideration by the Member and Officer Working Group on Organisation and Democracy (the GOOD Group). They also noted that the Working Group needed to consider further Section CC - Contract Procedure Rules before it could be approved by the Council. The GOOD Group met on 24 May and considered these issues together with proposals for defining the term "key decisions". They also considered amendments to the Media Protocol to clarify the position of the Scrutiny Committees. The amended Protocol will be included in the next edition of ‘Going Public’. The outcome of their other considerations is set out below.

Section BB – Financial Procedure Rules

2. The Working Group propose the following adjustments to the interim Financial Procedure Rules:-

• paragraph 10 – add the words "as set out in paragraphs 15 to 17 of these Rules";
• paragraph 45 – change the reference to "assets" to "land and property etc" and add "in addition to any guidance issued by the Director of Environmental Services for the disposal of land and property etc" at the end;
• paragraph 46 – add the words "in accordance with the procedures set out in paragraph (9)A(i) of the schedule to Section L.";

3. In relation to the last point, the Working Group were also informed that the Director of Environmental Services was drafting guidelines for the disposal of land, buildings etc. The Group recommend that the Financial Procedure Rules as a whole should be reviewed as part of the annual review of the Constitution.

Section CC – Contract Procedure Rules

4. Proposals for Contract Procedure Rules are attached at Annex 1. The key points arising from these are:-

• A requirement on Strategic Directors to:

• establish a scheme of delegation identifying those officers in their Directorates who are authorised to act within the Contract Procedure Rules and within what financial limits;
• ensure that relevant staff are trained in the Contract Procedure Rules.
• The introduction of tighter financial control mechanisms which ensure the involvement of the Section 151 Officer (the Director for Business Support/County Treasurer) or officers in his Directorate.
• More specific and clearer controls on the contract and tendering process to ensure higher levels of probity. These include:

• the need for officers to give specific authorisation to commit expenditure on contracts;
• requirements to invite quotations for all contracts worth £25,000 to £75,000; to invite tenders for contracts above £75,000 and to comply with the European Commission requirements for contracts above the relevant European Commission limits;
• revised requirements in relation to the receipt, opening, acceptance, award and signing or sealing of contracts;
• new requirements on the keeping of records, the incurring of additional expenditure and on the consequences of non-compliance with the Rules.
  
  
• A new approach to the acceptance of tenders which is based on the tender which offers the Council best value through a combination of both quality and price, rather than the contract which just offers the lowest price.
• New provisions to allow for the developments in Partnering and Framework Contracts. These must be properly tendered and evaluated in the first instance but once in place, allow individual contracts to be negotiated with the selected partner or call off from the framework contract without having to re-tender each individual piece of work.

5. Apart from certain specific cases where the Rules do not apply eg: to contracts of employment and contracts by schools with delegated budgets, exemptions from the Contract Procedure Rules will only be permitted in two circumstances:

• with the consent of the Executive, the relevant Committee of the Council or the Chief Executive acting under delegated powers with the advice of the Solicitor to the Council and the Section 151 Officer, or
• in the case of emergency where, if the work is not undertaken immediately, there is a significant risk of danger to life or damage to property, or a major impact on the Council or its services.

6. The Rules also allow for certain exemptions from the tendering requirements to allow for Framework or Partnering arrangements; for the extension of works to existing contracts or in unusual circumstances, eg goods purchased at public auction or from monopoly or proprietary suppliers.
7. The Group emphasised the importance of effective procurement practice; the financial and other benefits which this could deliver for the Council; and the need to ensure that the necessary procurement skills were available within the Council. The Group were advised that the review of procurement practice was under way, that the development of the new Management Information System would provide a basis for monitoring procurement activity and that guidance on procurement practice is being drafted for a Procurement Manual to back up the new Contract Procedure Rules. Although the Rules themselves are essentially a framework to ensure a consistent and lawful procurement process, the other initiatives will enable that process to be used more effectively.
8. The Group recommend the adoption of the Rules subject to the following changes, which have been incorporated in the document at Annex 1:-

• paragraph 8.2 – change the word "developing" to "achieving";
• paragraph 11.4 – amend to make it clear that post tender negotiations of whatever value will follow the procedure set out in the EU Procurement Directives.

9. Key decisions are those Executive decisions which under the Local Authorities (Access to Information) Regulations 2000 have to be taken in public. The Regulations define a key decision as an executive decision which is likely:-

1. "to result in the local authority incurring expenditure which is, or the making of savings which are, significant having regard to the local authority's budget for the service or function to which the decision relates;" or
2. "to be significant in terms of its effects on communities living or working in an area comprising two or more electoral divisions in the County."
   
   
10. The Government had originally intended to provide guidance on the definition of a key decision and in particular to define the meaning of "significant" in both parts of the definition. However they have now declined to do so and it is a matter for each council to agree its own definition within the framework of the Regulations.
11. Set out at Annex 2 are proposals to define the definition of key decisions for this Council. If agreed this will form part of the Council’s Constitution. In broad terms the definition proposes that:-

• "significant" in terms of expenditure should be defined as 25% of an annual revenue budget for a relevant service block or £0.5m whichever is the less and in the case of capital expenditure £1m;
• "significant" in terms of effects on communities in two or more electoral divisions should be defined as an increase or reduction in a service or facility by more than 25% or the introduction, removal or alteration of a service, facility or other provision which affects 25% or more of the people living and/or working in two or more electoral divisions.

12. Council should be aware that the Labour Group representatives dissented from the thresholds of £0.5m and £1m for revenue and capital expenditure. They would have preferred lower figures of £0.25m and £0.5m

RECOMMENDATIONS

13. The Council is RECOMMENDED to agree:-

1. the amendment of the Financial Procedure Rules set out in paragraph 2 of the report;
2. the Contract Procedure Rules at Annex 1;
3. that the Financial and Contract Procedure Rules should be reviewed as part of the annual review of the Constitution;
4. the definition of key decisions set out in Annex 2.

CHRIS IMPEY
Assistant Chief Executive

Background papers: Nil

Contact Officer: Chris Impey Tel: (01865) 815307

John Barker Tel: (01865) 815444

June 2002

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