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Waverley Borough Council Committee System - Committee Document

Meeting of the Executive held on 06/03/2007
APPENDIX D - WAIVER OF CONTRACT PROCEDURE RULES



Summary & Purpose
The Executive’s approval to waive Contract Procedure Rules is sought to enable the current audit contractors to be retained for a further year.

APPENDIX D
Waverley Borough Council

Executive – 6TH March 2007

Title:
WAIVER OF CONTRACT PROCEDURE RULES
[Wards Affected: N/A]

Summary and purpose:

The Executive’s approval to waive Contract Procedure Rules is sought to enable the current audit contractors to be retained for a further year.

Environmental implications:

There are no direct environmental implications arising from this report.

Social / community implications:

The relationships with the current contractors have developed over time, and are regarded as having moved to a partnership whereby audit assignments and work programmes are discussed and developed through consensus. This has worked well, as the contractors have been able to use their expertise and knowledge gained through working with their other clients to the benefit of Waverley.

E-Government implications:

There are no direct implications for e-government, although one of the contractors provides IT audit services.

Resource and legal implications:

The IT audit contractor was appointed after a joint tendering exercise with Guildford BC, although was awarded individual contracts by Guildford and Waverley. There are no resource implications as costs would be contained within existing budgets.

Introduction

1. The Internal Audit Section has an establishment of 5 full-time posts, of which three are currently filled, whilst the remaining two posts are being held vacant. One of these posts is that of Senior Auditor (IT); the postholder being on secondment to the Managing Director’s Department. The other is one of two Auditor posts, which was vacated in 2004 and was originally held vacant pending the outcome of the Housing Options Appraisal. The salary budgets for these two posts are used to pay the contractors’ fees.
2. Two contractors are currently engaged; Deloitte and Touche Public Sector Internal Audit Ltd (D&T) who provide generalist systems audit resources, and Corporate Governance Risk Management Ltd (CGRM) who provide IT audit resources.
3. CGRM was awarded their contract in 2005, after a joint tendering exercise with Guildford BC. D&T were awarded their contract in the summer of 2006, without competitive tenders being sought, after approval was given by the Executive to waive Contract Procedure Rules (CPRs). This was to allow a prompt resolution to operational problems experienced with the previous contractor (who had also been appointed after a joint tendering exercise with Guildford).
4. The contracts are key in the delivery of internal audit reviews in accordance with the Internal Audit Plan. Failure to achieve the Plan in 2007/08 would attract adverse comment from the District Auditor that could feature in his Annual Audit Letter. It could also have a knock-on effect upon the Council’s CPA rating.

5. The contract expiry dates will have been reached by the summer of 2007, and Waverley will either need to re-tender or to re-appoint the current contractors. Under different circumstances a tendering exercise would represent the optimum course of action. However, given that Waverley is in the midst of its restructuring initiative, your officers consider that it would be better to wait until that is complete and the future direction of services and service provision is known before any re-tendering is undertaken.

6. By waiting until the restructuring is complete, if the future direction is to remain with a partially out-sourced internal audit service then a longer-term contract can be considered which would enable a partnership approach to be sought. This would enable Waverley to benefit from the contractors’ experience and from a more assured level of service. A longer-term contract should also have a beneficial impact upon the tendered fees and would allow the development of integrated working practices and protocols.

7. Both contractors have indicated that they would be prepared to extend their contracts and have also indicated that they would hold to their current fees. An extension of the two contracts, without a tendering exercise, would require a waiver of CPRs, under the provisions of CPR W101. Neither contract contains an extension clause. Therefore the Executive’s approval is necessary to approve an extension.

Conclusion

8. The extension of the two contracts for audit services represents the most pragmatic solution to secure the necessary internal audit resources for 2007/08. It would also allow a more appropriate, longer-term contract to be tendered once the restructuring is complete (if that were to remain one of the means of service delivery).

9. A waiver of CPRs (CPR A108 and all ensuing appropriate CPRs) is necessary to achieve an extension, and therefore the following recommendation is made.

Recommendation

It is recommended that approval be given to waive CPRs, using the powers delegated to the Executive in CPR W101, and award an extension to the contracts with Deloitte & Touche Public Sector Internal Audit Ltd and Corporate Governance Risk Management Ltd to allow for the completion of internal audit reviews as will be contained in the Council’s 2007/08 Internal Audit Plan.

Background Papers (DoF)

There are no background papers (as defined by Section 100D(5) of the Local Government Act 1972) relating to this report.

CONTACT OFFICER:

Name: Mr M Hill Telephone: 01483 523240
E-mail: mhill@waverley.gov.uk

Comms/exec/2006-07/310