Agenda item

This report sets out the breaches of Financial Regulations (the Regulations) and four circumstances described in Part G, Paragraph 5 (para 5), that are now recorded within Procurement Decision Records (PDRs) (previously separately recorded as waivers) which have occurred during the 2024/25 financial year.

Circumstances described in Financial Regulations paragraph 5 are:

i.               Accelerated procurement where the Council would suffer significant negative impact if the full operational or strategic procurement approach is applied.

ii.              Unable to invite or obtain 3 bids or competition absent for technical reasons

iii.             Payments in advance for goods, services or works

iv.            Propose not to use an available Corporate Contract

An analysis of breaches and PDRs highlights the following:

Whilst no breaches of Financial Regulations is the preferable position, the relatively low number of breaches again suggests a good level of understanding of the requirements amongst managers and officers in the majority of service directorates and has resulted in general compliance with the Regulations.

Whilst full compliance can never be guaranteed and ‘under-reporting’ of breaches, in particular, is an inherent possibility, arrangements were in place to detect instances of non-compliance.

There were 212 PDRs approved during 2024/25 totalling approximately £200m and of these 28 were circumstances as described in Financial Regulations Part G Paragraph 5 which require reporting to this committee.

An effective and transparent breaches and PDR governance process maximises the chances of the Council achieving value for money and complying with UK Procurement Legislation (Public Contract Regulations 2015 & Procurement Act 2023).

The Head of Audit and Management Assurance (HAMA) presented a report, a copy of which had been circulated to each Member and a copy of which appears as Appendix 'J' to these Minutes in the Minute Book.

The HAMA explained why breaches of Financial Regulations (the Regulations) should be avoided and why Procurement Decision Records (PDRs) should be used. He assured committee members of the full and frank nature of his report. Whilst it was preferable for no breaches of the Regulations to occur, he would find it questionable if no breaches were reported in a council the size of BCP Council. Twelve breaches had been identified during 2024/25. These were set out in section 4 of the report.

The HAMA reported in more detail on the reasons for the breach listed as BR1, where a significant amount of expenditure and agency appointments had not been subject to the required completion of PDRs. He outlined the actions taken to rectify BR1 and the other breaches listed in the report. Only one further similar breach to BR1 (BR11) had since been identified. The Committee was advised that 212 PDRs were approved during 2024/25, of which 28 were for some form of exception where the usual process was not followed for the reasons provided in paragraph 15 and appendix 1 of the report.

The HAMA was asked about officer training on the PDR process, with points raised about the need to ensure this was fit for purpose, well understood and led from a senior level. Members were assured that standard and targeted training was provided and that the general requirements were well known across the Council, as reflected in the relatively low number of breaches identified. It was noted that failure to complete a PDR once a contract had expired was the most common breach. Training aside, it may be that a very small number of errors would always occur considering the sheer volume of procurements across such a large spend base. Failure to comply could also be addressed through disciplinary channels. It was confirmed that there was no suggestion that any of the breaches had resulted in incorrect expenditure, rather it was the internal governance process of not completing the requisite PDR which had not been followed.

Members were updated on the internal Procurement and Contract Management Board which had been set up in 2024 to ensure a greater level of consistency and best practice. One of its roles was to review all breaches to consider whether any changes to procedure were required and/or further training needed. The Chief Financial Officer suggested that he ask the Board to reflect on the discussion points raised by the Committee.

Officers also responded to questions on the use of historic suppliers once a previous contract had ended and on existing and emerging technological solutions in relation to procurement procedures.

RESOLVED that the Audit & Governance Committee notes the breaches of Financial Regulations and relevant Procurement Decisions Records that occurred during 2024/25.

Voting: Agreed with no dissent