Bean counters tell Cambridgeshire County Council: You broke the law
- Credit: BDO
A ‘value for money’ report into Cambridgeshire County Council for the year ending March 31, 2018, has finally been concluded and is scathing of unlawful procurement practices.
The report by BDO, external auditors, will go to the audit and accounts committee on November 25.
“Our review identified a number of weaknesses,” says BDO.
“We are therefore unable to conclude that proper arrangements were in place to support working with partners and other third parties in 2017/18.”
BDO says legal advice showed “there has been a failure to comply with EU procurement law in respect of two of the contracts we reviewed which left the council open to legal challenge.”
Firstly, BDO considered procurement of services from V4 Ltd, a company chaired by Adam Jacobs, for four years until 2010 the procurement project director at Peterborough City Council.
Other founding directors included other former Peterborough council officers.
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Consultancy services from V4 Services Ltd in July 2016 amounted to £92,857.
V4 Services figured in a November 2018 audit committee at Shire Hall.
Internal audit identified “a lack of central oversight of consultancy expenditure”.
The committee was told chief executive Gillian Beasley brought in V4 once appointed in 2015 to run both Cambridgeshire and Peterborough.
She spoke of the need “to respond to the financial and other challenges” facing Cambridgeshire.
Rapid action was needed, she said and given “the level of urgency” V4, with whom she was familiar at Peterborough, were introduced to Shire Hall.
They began work in December 2016 “under an exemption” but their review showed more areas in need of attention.
Opting for a quick remedy meant “the expenditure on V4 exceeded the council’s permitted exemption thresholds”.
Former deputy chief executive and chief finance officer Chris Malyon apologised at the meeting “unreservedly for this breach”.
He accepted that officers had been “poor” in the commissioning arrangements in this particular case, “whilst not apologising for the improved outcomes that had been achieved”.
BDO also considered expenditure incurred in respect of winter gritting awarded to Econ that began in November 2015.
The contract was worth £807,990 per annum for seven years.
Both, say BDO, were “made in breach of procurement law”.
BDO says the council:
1: Failed to record contracts properly
2: Failed to comply with EU procurement law
3: Failed to seek approval from the monitoring officer where contracts exceeded the four-year limit specified in the contract procedure rules.
4: Failed to retain and maintain an “appropriate” level of documentation
BDO wondered if the Local Audit and Accountability Act 2014, had been broken.
They argue a complaint could have been made but “such challenge has not happened here”.
On the Econ contract they argued that since it only has a year to run it would be “a disproportionate audit response”.
However, that alone doesn’t exonerate the council.
BDO says that in 2015/16 the council asked four potential suppliers to consider applying for the gritting contract.
"We understand that these suppliers were approached directly by the council with no formal tender process followed, in breach of the council’s contract procedure pules,” says BDO.
Two suppliers were unable to provide quotes.
Econ won the contract with a rival supplier quoting £909,177 per annum.
“The figures quoted by both suppliers indicate that the total value of the seven-year contract would be between £5.668 million and £6.364 million,” says BDO.
On May 21, 2015, officers wrote to Econ to notify the company that it would be offered the contract.
"This tender process did not follow the council’s own contract procedure rules,” says BDO.
It broke EU procurement law and it also broke the council’s own rules requiring any contract exceeding four years to be agreed by the monitoring officer.
“The council recognises these are serious failings,” says Tom Kelly, director of resources.
The council has been told it must:
1: Provide mandatory training for all officers with responsibility for procurement.
2: Ensure committee approval is sought for all contracts above a certain value, and agree any exemptions
3: Retain all records
4: Carry out spot checks
Failure to tighten up procurement could “expose the council to legal action and reputational damage”.
Former county councillor Mike Mason and Andrew Rowson – a long term scrutineer of local authority finances – have put in multiple objections to council accounts.
Mr Mason said: “Over the last two and a half years, and without good reason, the auditor (BDO) and its successor (EY) have failed to address two formal objections submitted by local taxpayers on the subject.”