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ITEM EX16

EXECUTIVE – 15 MARCH 2005

SOCIAL & HEALTH CARE CONTRACTS

Report by Director for Social & Health Care

1. The Social & Health Care (S&HC) Directorate has purchased increasing amounts of service from the independent sector since 1993, to the point where some 80% of adult care services are now provided externally - at a gross value of £130m per annum.
2. The pace of service development and change has been rapid, in order to meet the needs of service users and key performance targets. Procurement and contracting staffing levels and systems have not developed at the same rate, with the result that a range of services has been purchased in various ways. A ‘Procurement Review’ was completed by S&HC in October 2004, in consultation with corporate Legal Services and the Procurement Unit. This identified a number of issues that require measures to be taken, which have been activated.
3. The review also highlighted that a significant number of contracts were expiring at the end of March 2005 and during 2005/6, and that full tendering procedures were not appropriate to certain areas of S&HC service where alternative approaches to procurement would secure value for money and effective provision. The following apply to various S&HC services and militate against a full tendering regime:

• Geographical constraints on choice of service providers and lack of suppliers in the relevant area
• Lack of competition (ie suppliers), where financial returns are low and staffing is difficult, with limited private demand (e.g. Day Centres in rural areas).
• Service users’ involvement in choice of service provider. Choice (within reason) applies to various services
• Special expertise/understanding of local community/users and the need to maintain stability of provision – i.e. where an existing service provider has particular experience/knowledge of the relevant community or users needs and is making a demonstrable contribution
• Added value brought to service provision by existing provider – e.g. through use of volunteers which is fundamental to much provision by voluntary organisations or through access to grant monies which are not directly available to the Council. This can broaden the scope of available services and reduce cost pressures on S&HC budgets.
• Service provision inextricably linked to residential lettings to service users so that it is not feasible to change service provider but retain lettings.

4. Following the Procurement Review, an Action Plan is being implemented in each service area to ensure that as many contracts as possible are compliant with Contract Procedure Rules (CPRs) within the shortest timescale reasonably practicable. This entails S&HC service areas in collaboration with Legal Services and the Procurement Unit establishing:

• Those contracts which require renewal prior to 31 March 2006 and whether full open competition is appropriate or feasible
• Those contracts which are not fully committed to writing or which have expired and which are "rolling on" and whether full open competition is appropriate
• Contracts which are ‘open ended’ but which need to be subject to benchmarking or open competition to ensure Best Value
• Where full open competition is appropriate a programme for achieving this
• Proposals for developing more competition in under-supplied markets
• Mechanisms for demonstrating transparency and equality of treatment in the market

5. The S&HC practice of annually renewing contracts has led naturally to concurrent renewals every year-end and hence to a potential tendering bulge of activity if the CPRs were be applied in full now without consideration of the scale of the challenge and the lack of resources available to undertake such an exercise. The capability to spread this activity over a longer period and to set contract terms which do not all coincide is seen as a pragmatic way to address balancing the tendering requirement with the available resources given that the service delivery needs to continue to be managed on a daily basis.
6. In view of the volume of contracts that require renewal during 2004/5 and 2005/6, or which have not yet been formalised in a written agreement, and the capacity of Contracts Unit and Provider staff to manage a high volume of tenders, a number of exemptions from the full tendering provisions of the CPRs will be required during the year to April 2006 to allow essential services to be maintained. A timetable for this work has been prepared.

Amendments to CPRs

7. During a recent review of the CPRs conducted by the Solicitor to the Council, it was agreed that some amplification and clarification of CPRs was required to facilitate effective procurement for S&HC services, taking into account that certain social care ‘markets’ operate in a different way to mainstream commercial sectors as described at Paragraph 3 above. All these amendments are subject to the overriding requirement to achieve Best Value, openness and transparency. Key changes to CPRs which have been introduced from January 2005 include:

• expanded provision for Register of Exemptions;
• updating of exemption from full tendering for S&HC contracts where open competition is not appropriate, subjcet to introduction of ‘S&HC Contract Management Procedures’ to define how contracts should be let if open competition is impractical;
• amplification/clarification of rules relating to proprietary, specialist or single-source suppliers which can be used on negotiated (non-tendered) terms.

8. Following the requirements of the National and County Council Procurement Strategies to improve procurement procedures, a ‘S&HC Procurement Panel’ has been established, chaired by one of the Executive Portfolio Holders for Social & Health Care. The Terms of Reference are attached as Annex 1 (download as .doc file). This Panel will oversee the development of procurement in S&HC, and will set the strategic direction for large or complex contracts in accordance with the procurement strategy developed by the Council’s Strategic Procurement Board.
9. A draft of this Executive report was approved by the S&HC Procurement Panel.

Age Concern (Oxfordshire) Contract Exemption

10. As a specific request for exemption S&HC currently has 8 Contracts with Age Concern (Oxfordshire) to an aggregate value of £909k per annum. These are due to expire on 31 March 2005, and cover a range of day and support services to older people. It is not appropriate for these contracts to be let under full open competition, and an Exemption report Annex 2 (download as .doc file) was considered by the S&HC Procurement Panel. Exemption was approved by the Panel subject to ratification by the Executive.

Interim Exemptions from CPR

11. A series of exemptions from the full requirements of the CPRs will be required by S&HC to maintain continuity of service over the coming year to cover the following.

• Until the S&HC Contract Management Procedures as provided for in the revised CPRs are in place, the issue of exemptions from full tendering for contracts which are coming to an end at 31 March 2005 or during 2005/6 where full open competition is impractical. These may need to include short-term contract term extensions to allow continuation of current contracts while the conditions and terms of new contracts are finalised.
• Formal completion of written agreements as an interim measure so that written agreements are in place pending, where appropriate, full tendering being undertaken.

12. Until the Contract Management Procedures are in place, it is proposed that any further exemptions from full requirements of CPRs required by S&HC prior to 31 March 2006 should be authorised by the Chief Executive. Exemption Reports will include a full Financial, Procurement and Legal Appraisal and where appropriate be on the model of the Age Concern report attached as Annex 2 (download as .doc file). CPR 3.2 allows the Chief Executive acting under delegated powers to issue exemptions. The issue of any exemptions and progress on the Action Plan referred to in Paragraph 4 will be reported to the S&HC Procurement Panel.

RECOMMENDATIONS

The Executive is RECOMMENDED to:

1. note the establishment of the Social & Health Care Procurement Panel as described in the report and Annex 1 (download as .doc file);
2. in realtion to the eight Age Concern contracts specified in Annex 2 (download as .doc file):

1. approve the exemption from tendering for those contracts in accordance with Contract Procedure Rule 3.2;
2. authorise the letting of a nine month interim contract with Age Concern to 31st December 2005, pending discussions in relation to a future contract and service specifications; and
3. authorise the letting of single consolidated contract with Age Concern for the provision of the full range of services currently delivered by them, allowing scope for further service development to take effect on expiry of the interim contracts referred to in (1) above;

3. authorise the Chief Executive to approve any further exemptions from the provisions of the Contract Procedure Rules which may be required prior to 31 March 2006 in order to maintain Social & Health Care services, subject to the production of legal, financial and procurement appraisals and to progress reports on the contracts compliance action plan being made to the Social & Health Care Procurement Panel.

CHARLES WADDICOR
Director for Social & Health Care

Background Papers: Nil

Contact Officers:
Nick Welch, Head of Service Planning and Partnership, tel 01865 815714
Martin Bradshaw, Operations Manager, Contracts, tel 01865 854485

March 2005

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