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Agenda item no:___

Policy Overview Committee 29 July 2010

Cabinet 13 September 2010

Report of the Use of Consultants Review Scrutiny Study Group

USE OF CONSULTANTS REVIEW

Wards affected: ALL Report Author: Peter Bennett

Telephone: 01706 925617

The purpose of this report is to provide Members of Policy Overview Committee with the findings of the working group investigating the use of consultants by Council services and partners.

1. It is recommended that: 1.1 The Cabinet be requested to support the report’s recommendations, as follows: 1.2 (a) The Head of Finance Services be requested to make revisions to

consultancy spending codes to provide greater transparency regarding consultancy providers, sources of funding, funding that obliges the Council to use external consultants, payments to external agencies to provide staff, and easier identification of services’ responsible for procuring and spending money on consultants. Coding details are more fully defined in section 12.

(b) The Head of Finance Services be requested to help services promote

consultancy opportunities to both the Council’s services and with companies owned by the Council, plus partners (i.e. RBH, Link4Life and the Impact Partnership).

(c) The Head of Finance Services be requested to arrange for services

engaging consultants to be reminded of their contract monitoring responsibilities to prevent consultants gaining employment rights, and,

Heads of Services notify the Cabinet Member for Finance & Corporate Management of any instances when consultants gain employment rights with the Council.

(d) The Cabinet Member for Environment & Leisure to request the Managing

Director of the Link4Life Leisure Trust to present proposals to use consultants, including details of consideration of alternative options, to the Board. This will enable Members to influence consultancy spending by the Trust:

REPORT FOR DECISION

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(e) The Cabinet Member for Development to request the Managing Director of RBH to present proposals to use consultants, including details of consideration of alternative options, to the Board. This will enable Members to influence consultancy spending by RBH:

(f) The Heads of Finance Services and Legal & Democratic Services be

requested to complete the development of more robust contracts and project specifications for the use of consultants by the Council. Furthermore:

(i) For contracts and specifications to be periodically revised to take account of risks encountered in engaging consultants;

(ii) For updated contracts and specifications to be circulated as exemplars of good practice to Link4Life, RBH and the Impact Partnership.

(g) The Head of Finance Services be requested to internally promote the

Corporate Procurement Team’s services, particularly regarding the advantages that The Chest portal provides in advertising consultancy opportunities, sourcing suitable consultants, and providing contact details regarding other local authorities’ use of consultants.

(h) The Head of Finance Services to put procedures in place to enable officers of the Council and its partners to work alongside and collaborate with consultants whenever possible. This system should be used to help ensure desired outputs and outcomes are achieved by using consultants, provide more effective communications between services and consultants, make services more aware of consultant’s skills and help develop or trigger the development of officers’ skills. If possible such arrangements should be specified in contracts / work specifications.

(i) Members be given the opportunity to re-open the review, or request

additional review work after the Efficiency Programme reviews have been completed and their recommendations implemented.

1.3 The Head of Finance Services be requested to submit an update on progress made in implementing the review’s recommendations to be presented to Policy Overview Committee in six months.

2. Reasons for recommendations: 2.1 The recommendations made by Members as a result of this study are based on

information and evidence generated during the review and resulting challenges to existing practices and procedures. One of the key documents influenced by Members during the review was the Corporate Procurement Policy & Procedure, Use of Consultants which was being developed by the Corporate Procuremenrt Team during the review . It is believed the recommendations will have positive effects regarding consultancy spending, decisions and processes regarding the procurement, management, and monitoring of consultants and the output / outcomes and VFM of their work.

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3. Alternatives considered/proposed: 3.1 None considered. 4. Consultation undertaken/proposed: 4.1 In order for Working Group Members to gain an understanding of the

approaches taken by services in procuring and using consultants a questionnaire was circulated to services and witnesses, usually at Head of Service (or equivalent level) level requested to attend Review Group Meetings from Strategic Housing Services, Regeneration Services, Planning & Regulation Services and the Impact Partnership. Witnesses were chosen because of their services high consultancy spending or as they provided a partner service.

5. Implications: (a) Equality Standards:

Not applicable.

(b) Property & Accommodation/Information Technology:

The recommendations in this report may have indirect effects on the procurement of consultants currently used for projects such as town centre redevelopment, Housing Market Renewal, Building Schools for the Future, the development of Link4Life’s leisure and recreation properties / facilities, plus IT projects.

(c) Legal Requirements:

The review considers the Council’s Contract Procedure Rules. (d) Environmental Implications:

Not applicable. (e) Township Implications:

Not applicable. (f) Aiming High / Pride of Place:

One of the main documents considered and influenced in its development by the Review Group was the Corporate Procurement Policy & Procedure, Use of Consultants. This will be instrumental in ensuring options other than using consultants are considered by services, and that Members are better able to scrutinise decisions to use consultants. This, plus the other recommendations from the review will be helpful regarding Stepping Up’s challenges and specifically providing better value for our services, and savings resulting from efficiency savings and government spending cuts in the next few years.

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(g) Personnel Implications:

Not applicable. (h) Financial Implications:

The review has obvious implications regarding the scrutiny of consultancy spending.

6. Background

The review was requested by Policy Overview Committee in June 2009 as part of the 2009/10 Overview & Scrutiny Work Programme. The study group comprised of: Cllrs. P. Rush (Chair), M. T. Fitzsimons, A. J. Godson and T. Linden.

6.1 Scope of the Review

6.1.1 The scope of the review was agreed at the first review meeting. The objectives of the review were:

6.1.2 To examine and make Members aware of:

Ø The extent to which consultants are used by services, and at the request of Members, the Council’s partners;

Ø The methods by which consultants are selected / procured;

Ø The reason why consultants are used;

Ø The cost of using consultants;

Ø The benefits consultants bring to the Council;

Ø The VFM of consultants’ work;

Ø The quality of consultants’ work.

6.1.3 To make recommendations to reduce the cost of consultants, improve the

procurement process, and increase the quality and VFM of consultancy work. 6.2 Methodology 6.2.1 Evidence for the review was collected from several sources:

Ø Finance Services and the Corporate Procurement Team provided a summary of consultancy spending by services and partners including RBH, Impact and Link4Life.

Ø The Corporate Procurement Team were in the process of drafting the document Corporate Procurement Policy & Procedure – Use of Consultants during the review. Various drafts of this document were discussed at the scrutiny review meetings.

Ø A questionnaire was circulated and returned by services which requested information of why services used consultants, projects that consultants were used for, procurement processes and contract monitoring of consultants. A

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summary of the results from the questionnaire were presented to the scrutiny review group.

Ø Witnesses (usually Heads of Services) were also called to attend scrutiny review meetings from high consultancy spending services including Strategic Housing, Regeneration, Planning & Regulation and the Impact Partnership. Witnesses were provided with a series of questions approved by Members and requested to provide information at the group meetings.

Ø A summary of the recommendations from similar scrutiny reviews of the use of consultants by other councils was also presented to the scrutiny review group.

7. Corporate procedures for procuring consultants and managing contracts 7.1 During the review the Corporate Procurement Team were in the process of

developing the document Corporate Procurement Policy & Procedure – Use of Consultants. This document adheres to the Contract Procedure Rules that for part of the Council’s Constitution but also provides detail and clarity for officers regarding:

Ø A definition of the term consultant;

Ø When consultants might be required;

Ø Expenditure on consultants within the Council;

Ø The decision making process regarding the engagement of consultants;

Ø The Corporate Procurement Team’s involvement in procuring consultants;

Ø Monitoring of consultant’s contracts.

7.2 As the review progressed latest draft versions of the Corporate Procurement

Policy & Procedure – Use of Consultants were circulated to the Scrutiny Review Group and discussed at review meetings with officers from the Corporate Procurement Team. Members therefore had the opportunity to influence the development of the policy and procedures. Several recommendations contained in this report have resulted from these discussions.

7.3 The final version of the Corporate Procurement Policy & Procedure – Use of

Consultants was approved by Cabinet in early 2010. Sections of the Contract Procedure Rules (section 23) regarding the employment of consultants and agency staff has also been revised.

8. Definition of a consultant

8.1 In undertaking the review Members requested that the definition of a consultant presented in version 0.3 of the Corporate Procurement Policy & Procedure - Use of Consultants be used for the review, which states:

Definition of the term ‘Consultant’

‘By consultant we mean external professionals brought into the Council who provide advice and undertake work in a particular area of expertise. This does not include agency staff employed to cover routine work for staff absence or vacancies.

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The service engaging with the consultants determines that this particular resource is needed to meet demands and objectives that couldn’t be met through the use of internal staff. In particular it can be:

Ø Agency / external staff employed to undertake any investigations or feasibility studies.

Ø Agency / external staff employed under a specific contract to undertake a specific and agreed work assignment.’’

9. Consultancy spending and funding Spending on consultants may be related to revenue or capital spending. Capital

spending is used develop or improve fixed assets such as land and buildings. Both revenue and capital spending on consultants may also be aided by grant or non-grant aided funding.

9.1 Revenue and Capital Spending Categories 9.1.1 Consultancy spending for 2008/09 for Council services excluding grant-funded

spending for all categories was provided by Finance Services as follows:

Council’s annual consultancy spending excluding grant-funded spending

Consultancy fees charged to Revenue

3511 – Revenue consultancy £683,970

Consultancy fees charged to Capital - External professional fees

6410 – Consultants’ fees £1,144,226

6402 – Architects’ Fees £32,712

6404 – Engineers’ fees £32,519

6405 – Legal services £154,085

Total £1,363.542

Impact’s fees to the Council

6401 – Impact fees -Architects £2,067,849

6403 – Impact Fees – Engineers £946,716

Total £3,014,565

Consultancy fees charged to Capital - Internal professional fees

6450 – Legal services internal £243,622

6451 – Recharges of salaries £299,419

Total £543,041

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Notes:

Raw data extracted from financial systems for spending code 3511 for both grant-aided and non-grant aided consultancy spending for 2007/08 and 2008/09 was approximately £1,460,000 and £2,050,000 respectively.

9.1.2 Witnesses from the property and highways sections of the Impact Partnership

stated that consultants had not been used by the partnership. Impact’s philosophy was that any required expertise not available within the partnership should be brought in from the wider group. This could include staff from other council partnerships working for Impact on short timescales projects. Agency staff were also used for projects to supplement existing staffing resources, e.g. for trades work.

9.1.3 Spending by Link4Life and RBH, as separate companies owned by the Council

is not included in the above table. RBH’s spending was £19,732 and £39,019 in 2007/08 and 2008/09 respectively. Link4Life’s spending was £3,100 for the period 2008-10, which excludes capital spending which the Council have responsibility for.

9.2 Spending by individual services

9.2.1 From an analysis of consultancy fees charged to revenue for 2008/09 and 2009/10 (up to November 2009) which included grant and non-grant aided funding and amounted to approximately £1,300,000 per annum, the highest spending services were Regeneration (30.2% of revenue spending), Strategic Housing (20.0%), Planning & Regulation (13.1%), People Management (9.5%) and the Schools Service (7.7%).

9.2.2 For all categories of capital spending the highest spending services were the

Schools Service (30.7% of spending), Business Partnerships (17.7%), Highways & Engineering (16.4%), and Regeneration (15.5%).

9.2.3 The apparent amounts of money spent by services on consultants can be

misleading, particularly for high spending services. This is because some services simply ‘pass’ money to other services to pay for projects requiring consultants. An example of this is the Regeneration Service that transfers money to the Strategic Housing Service to pay for consultants for Heywood New Deal for Communities projects.

9.3 Funding of consultants’ work 9.3.1 A large proportion of consultancy spending is grant aided. Examples of this

include the Building Schools for the Future initiative and funding by means of the Housing & Planning Delivery Grant. Similarly, the Regeneration Services’ HMR projects are paid for by the European Development Fund.

9.3.2 An analysis was undertaken using invoice values for RMBC’s spending for

2008/09 to disclose the extent of grant aided, non-grant aided and ‘mixed’ funding, i.e. both grant and non-grant aided funding. Findings were as follows:

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2008/09 – Source of project funding

Revenue Projects

Capital Projects

Legal Projects

Total

Grant aided funding

52.4% 53.7% 56.6% 53.5%

Mixed funding

11.3% 24.1% 1.6% 17.7%

Non-grant aided funding

36.3% 22.2% 41.8% 28.8%

Totals 100% 100% 100% 100%

9.4 Spending on individual projects 9.4.1 To gain an indication of the spending per individual consultancy project an

analysis of invoices for 2008/09 was used. This provided details of invoice values per consultancy provider on a quarterly basis, and is summarised in the table below:

2008/09 - Minimum, maximum and average payments per consultancy organisation

Revenue Projects Capital Projects Legal Projects

Minimum payment

£8 £10 £50

Maximum payment

£157,544 £232,676 £81,697

Mean average payment

£8,247 £22,367 £5,973

9.4.2 As the above figures are based on invoice values they may give a distorted

indication of project costs. This is because high-value contracts are generally paid for on a staged basis with payments being made in several quarters. This may therefore divide and reduce the project values shown above.

10. Consultancy categories and examples of projects

10.1 Examples of the types of projects consultants are used for and the reasons for using consultants were gathered from both witnesses appearing before the Study Group and also from responses to questionnaires.

10.2 The categories of consultant use shown below have been extracted from the

Corporate Procurement Policy & Procedure – Use of Consultants document. Examples of projects are as gathered from witnesses and questionnaire responses:

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a) Management and business consultants – In the main (but not exclusively), consultants falling into this category receive payment which is ultimately charged to the Council’s Revenue account.

Ø Research consultancy – Including market research or service

specific research or analytical review. The transfer of knowledge from the consultant to the client in order to deal with a specific issue or problem at a particular point in time. Recent examples include:

§ Research and advice to market the borough;

§ Research regarding existing arts conference facilities and activities;

§ Research and data analysis for the POPPS project;

§ Research related to migrant studywork;

§ A review of the main prescribing service for the Drug & Alcohol Action Team (DAAT) in the Regeneration Service;

§ A review of the young persons substance misuse service by the DAAT including recommendations to improve the future service delivery;

§ Contract development: The Quality Housing Network were used to develop the Supported Living Contract for tenancy based group homes for people with Learning Disabilities. Housing includes a mix of council and independent homes;

§ Studywork related to physical development, e.g. Heywood SUN study.

Ø Process consultancy – The transfer of skills rather than

knowledge. The consultant tries to pass on an approach, methods and values so that the organisation itself can diagnose and resolve its own problems. Recent examples include:

§ People Management employed a training consultant to develop and deliver a programme for managers to enable them to support staff following release of pay & grading proposals.

Ø Development consultancy – Helps organisations to develop

solutions to problems by using the organisation’s own employees. He/she works from the idea that most of the knowledge and skills needed to solve management problems exist within the organisation. Recent examples include:

§ The Drug & Alcohol Action Team used a consultant as a critical friend to help them to deliver their core work programme and to bring some independent critical friend advice to their work;

§ Several services used guest speakers at events to present new ways forward or ideas for delivering services;

§ The Learning Disabilities service paid to access a national database of researched information plus a pricing tool to develop service charging for high cost residential placements in private homes.

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Ø Resource consultancy – The purchase of one-off and non-routine services and is usually combined with all the above (Financial Consultants, Legal Consultants, etc.). Recent examples include:

§ Legal advice related to a complaint investigation regarding Adult Care Services;

§ Pay and grading support, i.e. expertise in instances when the Council needed to be represented by external lawyers / barristers with specialist expertise of equal pay issues;

§ Specialist health & safety advice provided to the Learners & Young People’s Service;

§ Advice regarding pilot schemes for the transfer of assets (e.g. transfer of Hare Hill House to Moorend Development Trust);

§ Advice and support regarding the procurement of a new finance IT system;

§ Advice and support regarding the procurement of social care community alarms IT systems;

§ Advice and expertise provided to Finance Services regarding Financial Reporting Standards;

§ A barrister to present the Council’s case regarding the proposed Crook Hill Wind Farm. Other experts were also used in this exercise, e.g. a landscape consultant;

§ Expert, impartial advice regarding the evaluation of housing land in the borough for development of the Local Development Framework (LDF);

§ Expert, impartial advice regarding employment land requirements for the borough. This was also required for the development of the LDF.

§ Expertise regarding archaeology and ecology. These are shared units provided via AGMA used by the Planning & Regulation Service;

§ Clinical supervision for children purchased from the PCT by the Learners & Young People’s Service.

§ Expertise regarding specialisms such as archaeology and ecology are paid for by the Planning & regulation Service. AGMA provide a pool of experts with costs shared by member authorities.

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b) Technical / design consultants – In the main, consultants falling into this category receive payment which is ultimately charged to the Council’s Capital account and / or may be funded from external sources, e.g. Northwest Regional Development Agency, European Regional Development Fund, etc.

Ø Strategic planning or design consultancy – Provides a strategic

consultancy service relating to regeneration, planning, modernisation or Area Development. Recent examples include:

§ Rochdale Development Agency’s work regarding town centre redevelopment;

§ The Heywood New Deal for Communities projects;

§ Heywood SUN masterplanning;

§ Housing Market Renewal related work.

Ø Architectural / asset management / building works consultancy – Normally associated with construction contracts, asset management work or engineering work, providing ‘scheme specific’ technical or architectural consultancy or scheme design services linked to a specific building or technical project. Used to supplement the Council’s in-house technical construction / asset management skills. Recent examples include:

§ Improvements to Link4Life’s facilities;

§ Work regarding canal basin improvements;

§ Technical inspections including housing stock improvements arranged by Strategic Housing;

§ Housing stock condition survey;

§ Land acquisition and site investigations.

11. Payments to partners to provide staff 11.1 During the examination of consultancy projects an example of the Council’s

services paying partners to provide staff / consultants on behalf of the Council was also found. The Strategic Housing Service pay Age Concern to provide a member of staff who works in the Age Concern office taking referrals for Home Improvement Agency and Fire Risk Assessments.

11.2 Members requested further information regarding the extent to which similar

payments occur across all services.

12. Financial coding of consultancy spending

12.1 Spending incorrectly coded as consultancy spending

12.1.1 A number of transactions found on corporate financial systems were also incorrectly coded by services as consultancy spending. Examples included warranty and licence payments for IT systems and a freepost application.

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12.1.1 The low invoice values shown in the summary in section 9.4 of this report, i.e. £8, £10 and £50 respectively for revenue, capital and legal consultancy spending may also indicate that some costs associated with consultants or their project work are being incorrectly coded as consultancy spending.

12.2 Spending coding improvements

12.2.1 The codes used to categorise consultancy spending are simplistic and narrow. If consultancy spending is to be periodically reviewed and spending monitored and controlled then a review of coding should be considered.

12.2.2 Revised coding could enable the identification of category of provider, e.g.

private or public sector, partner organization, AGMA pool or joint working, etc. This would be particularly helpful in identifying trends of future spending towards less expensive provision options such as the use of shared expertise with AGMA, partners and other councils.

12.2.3 Revised coding to cover easier identification of sources of consultancy funding,

e.g. grant or non-grant aided, instances when the the Council is obliged to use consultants, e.g. BSF, would also be useful.

12.2.3 Any future analysis of consultancy spending would also benefit from easy

identification of services responsible for procuring and managing consultants rather than being attributed to the service that originally has the budget to fund a project. .This would help overcome misleading spending amounts by services, e.g. the Regeneration Service transferring funds from its budget to Strategic Housing Services to pay for projects requiring consultants, e.g. as Heywood New Deal.

12.2.4 During the presentation of information on consultancy spending Members stated

their requirements to be made more aware of factors such as sources of funding (grant or non-grant aided), services that were responsible for procuring consultants, payments to partners to provide staff (see section 11), and housekeeping costs that may be recorded and reported as consultancy spending.

12.2.5 To reflect Members’ requests and to allow improved monitoring of consultancy

spending by means of revised codes Members agreed the following recommendation.

Financial Services should consider revisions to consultancy spending codes to better identify and reflect:

Ø Provider categories to identify the purchase of expertise from: public / private organisations, partner organisations, AGMA pool or joint working, secondment from other councils, plus purchase of previously researched information.

Ø Sources of funding for consultancy, i.e. grant aided, non grant aided and mixed (grant and non-grant aided) spending.

Ø Spending whereby the provision of funding obliges the Council to use external expertise, e.g. BSF.

Ø Payments to partner organisations to provide staff on the Council’s behalf. An example of this was by Strategic Housing Service who pay

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Age Concern to provide a member of staff who take referrals for Home Improvement and Fire Risk Assessments.

Ø Spending on costs associated with using consultants, e.g. housekeeping costs such as room hire for public meetings, plus refreshments, etc.

Ø Spending on agency staff to supplement existing resources, e.g. trades people.

Ø Easy identification of services responsible for procuring and managing

consultants rather than services whose budgets consultancy spending is extracted from.

13. Reasons for using consultants 13.1 From witness presentations and questionnaire responses the main reasons for

using consultants were:

Ø Because required expertise is not available in-house;

Ø Because capacity is not available in-house;

Ø To act as an external critical friend;

Ø To aid a service review / service development;

Ø To provide independent, impartial advice;

Ø To provide credibility to the project being done, e.g. if the Council is providing evidence for a major development work, the evidence has more credibility in the eyes of the public if provided by a well known consultancy firm.

13.2 An analysis of Revenue spending showed that 87.4% was used for specialist consultancy, 1.1% for management consultancy, 5.5 % to provide cover for vacant posts and 6.0% to pay for training and development consultants.

13.3 For Capital spending almost all of the spending was for specialist consultancy,

with less than 1% being used to pay for training and development consultants.

14. Length of consultancy / project time

14.1 This varied widely with many examples of revenue related projects being provided where project time varied from 4 hours to 20 days.

14.2 Consultancy time spent on capital projects was longer and also varied widely.

For example, research into the existing Arts Conference facilities and activities in the borough lasted 2 months, whilst projects regarding Town Centre redevelopment, and Private Finance Initiatives lasted 2 to 3 years. In most cases consultancy for longer projects was provided in peaks and troughs and only several weeks consultancy input was required each year.

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15. The procurement process

15.1 The Council 15.1.1 The Council already has Contract Procedure Rules in place for the execution of

work and supply of goods ands services. These are supplemented by the recently developed Procurement Policy & Procedure – Use of Consultants. As mentioned previously in this report these were in the process of development by Corporate Procurement Team during the review and the Scrutiny Group given the opportunity to influence their development.

15.1.2 The general process used to procure consultants includes guidance, advice and

involvement of the Corporate Procurement Team. This process includes requests for consultants being forwarded to the Corporate Procurement Team and use the North West Improvement and Efficiency Partnership’s The Chest online system to help services seek out suppliers and obtain quotes for contracts up to a value of £50,000, or use of the tendering process for contracts estimated to be over £50,000.

15.2 Link4Life 15.2.1 Link4Life’s procurement processes are in-line with those of the Council.

Corporate Procurement Team are therefore instrumental in helping Link4Life in specifying projects, sourcing providers, and the tendering processes.

15.3 RBH

15.3.1 RBH have a Procurement Manager who is responsible for maintaining RBH’s

contract database and the dissemination of procurement intelligence, best practice, and the development of new procurement processes.

15.3.2 RBH has its own financial and Contract Procedure and Rules plus a

Procurement Strategy 2009-13 and a RBH Procurement Toolkit for Budget Managers. In a similar manner to the Corporate Procurement Team, RBH uses The Chest to aid procurement, and is annually reviewing contractors and suppliers.

15.3.3 Quotations and raising purchase orders can be carried out by departmental staff,

while tenders and more complex procurement are done by senior staff working with the Procurement Manager.

15.3.4 RBH procurement systems are soundly integrated with those of the Council. 15.4 Impact Partnership 15.4.1 As outlined previously, Impact bring in staff from the Mouchel group to provide

expertise not available within the partnership. This could include staff from other council partnerships working for Impact on short timescales projects. Agency staff were also used for projects to supplement existing staffing resources.

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16. Justifying the need for consultants and gaining officer and Member approval

16.1 Current Contract Procedure Rules 16.1.1 Sections 23 of the revised Contract Procedure Rules that were introduced on

April 1, 2010 state:

Employment of Consultants or Temporary Staff

Consultants 23.1 The employment of consultants falls within the definition of a contract for

services and must comply with the contract procedure rules. Service Directors must follow the procedure for approval by contacting the Corporate Procurement Team and referring to the eProcurement Intranet page.

Services must wait for the approval of two Executive Directors before entering into any consultancy contracts.

Temporary Staff 23.2 The Council participates in a Greater Manchester conglomerate for the

procurement of agency staffing. This ensures we access temporary staff at competitive rates of pay. Services using agency staff must do so through the contractor’s website. Please refer to corporate procurement for further guidance or follow the link from the eProcurement Intranet page.

16.2 Developing the business case 16.2.1 Witnesses stated that consultants were only used in instances when required

expertise was not available in-house. Stage 2 of the Council’s Corporate Procurement Policy & Procedure – Use of Consultants requires services to develop a business case prior to using consultants. This requires the Head of Service to complete a proforma which includes details of the business reason for requiring consultant’s service. The policy & procedure provides services with a flowcharted guidance regarding the development of the business case, including consideration of alternatives to using consultants including use of:

Ø Temporary staff;

Ø Expertise already available in the Council;

Ø Staff secondment opportunities;

Ø Collaboration with AGMA;

Ø Collaboration with other councils to share project costs;

Ø Learning from other councils who have completed similar projects;

Ø Using other councils’ documents or results.

16.2.2 Although this process provides a good options appraisal it relies on contracting

services being fully aware of the experience or expertise of staff across all services, including those of partner organisations. To aid this process it may

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therefore be necessary for the Corporate Procurement Team to promote consultancy opportunities internally.

16.2.3 On several occasions during the review Members questioned whether the use of

consultants was needs’ led and were keen that alternative options were considered, including the use of expertise and skills between services and with partner organisations.

16.2.4 To provide the Council’s services, owned companies and Impact Partnership

with awareness of consultancy opportunities, and enable such requirements to be fully or partially met in-house using existing skills, expertise and knowledge of staff Members agreed the following recommendation:

The Head of Finance Services be requested to help services promote consultancy opportunities to both the Council’s services and with companies owned by the Council, plus partners (i.e. RBH, Link4Life and the Impact Partnership). Possibilities for this could include a description of project requirements, deliverables, duration of employment and project start date to be published on the Intranet.

16.2.5 Members also raised concerns regarding paragraphs in Appendix 1 of the Corporate Procurement Policy & Procedure - Use of Consultants report which state that contracted consultants can acquire employment rights if they are able to demonstrate the Council has treated them as a member of staff. Members were particularly concerned regarding the cost implications to the Council if consultants gained such rights.

16.2.6 Members requested Portfolio Holders be made aware of any instances when

this happens. The Corporate Procurement Manager stated this problem could be overcome by improved contract monitoring.

16.2.7 The procurement policy and procedure states that services should avoid

consultants ‘being allowed to make management or project decisions, operating as would a member of staff, i.e. on site, with dedicated office / desk, e-mail address etc. On no account should the consultant discharge any duty or responsibility normally assigned to an employee, e.g. be allowed to sign / approve payment / invoices, etc.’

16.2.8 To prevent consultants gain employment right Members agreed the following

recommendation:

The Head of Finance Services be requested to arrange for services engaging consultants to be reminded of their contract monitoring responsibilities to prevent consultants gaining employment rights, and,

Heads of Services notify the Cabinet Member for Finance & Corporate Management of any instances when consultants gain employment rights with the Council.

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16.3 Gaining senior officer and Members’ approval 16.3.1 Stages 3 and 4 of the Corporate Procurement Policy & Procedure - Use of

Consultants requires Heads of Service to complete business case pro-formas regarding their proposals to use consultants and for the Corporate Procurement Team to seek approval for the preferred route forward. Members requested the process should include:

Ø The business case for procuring consultants being presented to two officers of the Executive Leadership Team for approval.

Ø Approval to proceed with the procurement of consultants being signed off by the relevant service’s Cabinet Member / Portfolio Holder.

16.3.2 Members’ comments were taken into account by the Corporate Procurement

Team in developing the Corporate Procurement Policy & Procedure - Use of Consultants. The new procedure requires a request for consultants pro-forma to be signed off by appropriate Portfolio Holders before being sent to Corporate Procurement for review.

16.3.3 Section 23.1 of the revised Contract Procedure Rules also states that services

must wait for the approval of two Executive Directors before entering into any consultancy contracts.

16.4 Influencing Link4Life’s decisions to use consultants 16.4.1 Members also requested the ability to influence decisions to use consultants by

the Link4Life Leisure Trust. The following recommendation was therefore agreed:

The Cabinet Member for Environment & Leisure to request the Managing Director of the Link4Life Leisure Trust to present proposals to use consultants, including details of consideration of alternative options, to the Board. This will enable Members to influence consultancy spending by the Trust:

Although this would not provide Cabinet Member with the opportunity to directly influence decisions to use consultants, it would enable elected Members on the Board to influence planned use of consultants.

16.5 Influencing RBH’s decisions to use consultants 16.5.1 Members also requested the ability to influence decisions to use consultants by

RBH.

16.5.2 RBH’s Financial Contract Procedure & Rules state that the Managing Director must provide the Board on a quarterly basis with details of all contracts awarded including the name of the supplier, and amount of the tender from both the successful and unsuccessful suppliers, and the reason why the successful supplier was chosen. Analysis of all contracts exceeding £25,000 which are completed, detailing project performance, supplier performance and overall costs compared to budget is provided. The Board includes four Council Members.

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16.5.3 The following recommendation was therefore agreed:

The Cabinet Member for Development to request the Managing Director of RBH to present proposals to use consultants, including details of consideration of alternative options, to the Board. This will enable Members to influence consultancy spending by RBH:

Although this would not provide Cabinet Members with the opportunity to directly influence decisions to use consultants, it would enable elected Members on the Board to influence planned use of consultants.

17. The procurement process 17.1 Specifying a project 17.1.1 Prior to recruiting consultants services appeared to be adequately specifying

consultants’ responsibilities, regarding:

Ø The scope of projects;

Ø Expected working relationships with RMBC staff, except in the case of low cost short-timescale ‘projects’, e.g. one day, one-off events;

Ø The production and presentation of progress reports during consultants’ work. In some instances though this was not relevant, e.g. short timescale reviews, or in cases where consultants are providing advice, e.g. regarding financial processes.

Ø Required milestones / deadlines for consultants’ work, except for short timescale projects.

Ø Expected outcomes for consultant’s work. 17.1.2 Additional information used by services to define/ specify projects included:

Ø Project briefs;

Ø Expected work by stage;

Ø Details of separate accounting for any work outside the original scope;

Ø Detailed specifications and signed contractual agreements;

Ø Regular meeting to check progress and amend specifications as necessary. 17.1.3 However, nearly a half of respondents thought specifications for both revenue

and capital projects could be improved. Problems included:

Ø Scope ‘creep’ – the scope of projects broadening to include wider service aspects not envisaged in defining the original project;

Ø Difficulties encountered by services in fully specifying project requirements when they were seeking expertise they did not have previous or required experience of;

Ø The need to specify more rigid timescales, e.g. regarding complaints investigation when corporate timescales must be adhered to.

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17.1.4 During the review the Corporate Procurement Team were working with Legal & Democratic Services to develop more robust contracts with the Council. The Chest system also allows contract monitoring. The Corporate Procurement Team aimed at making contracts and work specification more transparent so consultants are clearer of their responsibilities and expected outputs.

17.1.5 To develop more robust contracts for engaging consultants:

The Corporate Procurement Team and Legal & Democratic Services should complete the development of more robust contracts and project specifications for the use of consultants by the Council. Contracts and specifications should be periodically revised to take account of risks encountered in engaging consultants. Updated contracts and specifications should be circulated as exemplars of good practice to Link4Life, RBH and the Impact Partnership.

17.2 Promoting and advertising consultancy opportunities 17.2.1 Council services stated their involvement with the Corporate Procurement Team

in procuring consultants, but stated they were not fully aware of the processes used by Corporate Procurement and whether the Chest on-line system was used to advertise and promote consultancy opportunities with the Council.

17.2.2 About half of services stated they used means other than Chest to promote /

advertise consultancy opportunities and source consultants. These included continued use of retained consultants, advertising projects, advice from other services regarding suitable consultants. For some projects, e.g. BSF, lists of approved framework consultants are used.

17.2.3 Most services considered that contract opportunities could not have been

promoted in a better way. However, Adult Care stated that a list of suitable consultants (which would have been available from Chest) would have been useful.

17.2.4 The Corporate Procurement Policy & Procedure – Use of Consultants now

requires all requests to use consultants to be submitted to the Corporate Procurement Team, thereby allowing the Chest on-line system used to promote / advertise consultancy requirements.

17.3 Services pro-actively in seeking consultants 17.3.1 No Council services had contacted councils registered as issuing consultancy

contracts on Chest to find out further information about the quality and suitability of specific potential consultants.

17.3.2 Contrary to the above, most services admitted to contacting customers of

consultants to find out further information about specific potential consultants. This process enabled services to check whether consultants had a good reputation or appropriate experience. One service stated such a process was ‘like checking a reference’.

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17.3.3 Sections 17.2 and 17.3 regarding promoting and advertising consultancy contracts and selecting and evaluating consultants indicate a lack of awareness by services of The Chest and its potential uses.

17.3.4 To promote the services of the Corporate Procurement Team in procuring

consultants the following recommendation was therefore made by Members:

The Head of Finance Services be requested to internally promote the Corporate Procurement Team’s services, particularly regarding the advantages that The Chest portal provides in advertising consultancy opportunities, sourcing suitable consultants, and providing contact details regarding other local authorities’ use of consultants.

17.4 Obtaining quotes, tendering, shortlisting, and evaluating potential

consultants

17.4.1 The Council’s services appeared to be following corporate procurement rules regarding a minimum of three quotes being sought prior to selection of consultants. From a small sample of services it was found that interest in contracts varied with the number of consultancy firms expressing an interest in contracts varied from 2 to 10, with about 6 being an average. Of these an average of about 3 organisations tended to bid for contracts.

17.4.2 The new Corporate Procurement Policy & Procedure – Use of Consultants

includes a schedule of requirements regarding proposed consultancy spend and actions that must be taken to procure consultants. This generally requires 3 written quotes to be sought from suppliers via The Chest, with a formal tender process including use of The Chest being followed for contracts over £5,000 and contract opportunities advertised in the Official Journal of the European Journal (OJEU) if contracts exceed the OJEU contract value threshold.

17.4.3 The efforts used to procure consultants tended to be proportionate to the value

and complexity of contracts. Consultants’ tenders were evaluated by means of written evaluations with selected firms being shortlisted and invited for a panel interview. This was generally followed by a second selection interview.

17.4.4 As an example, for contracts regarding the Local Development Framework’s

development the Planning & Regulation Service assessed the suitability of each consultancy firm by interviewing individual consultants who were proposed as part of the consultancy firm’s team. Firms were also required to provide schedules of each consultant’s hours and hourly costs. By this means an in-depth evaluation of each firm’s strengths and weaknesses and individual expert’s potential input into a project could be made.

17.4.5 A more pragmatic approach seemed to be followed by services for small scale

low value projects, particularly in instances when specific consultants were sought for their known skills and expertise.

17.4.6 For some consultancy projects the short-list of suitable consultants is partly or

fully met by a third party. This often occurs for grant-aided projects, e.g. central government provide a list of approved advisers / consultants for BSF. Similarly, the Planning & Regulation Service contributes to the financing of a pool of consultants that provide specialist knowledge regarding ecology, archaeology,

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etc. for AGMA members In this case the procurement of staff as consultants is done via the AGMA Planning Group.

17.4.7 Council services used internal experts relevant to the project to evaluate tenders

/ consultants, e.g. ICT for the procurement of a new finance system, Link4Life regarding a research project into Arts Conference facilities. These tended to be used for higher cost projects and not in instances where specific and known consultants were being procured for short projects.

17.4.8 The involvement of both internal and external experts in procuring consultants

seemed proportionate to the project size, level of skill / expertise sought and risks associated with procuring consultants.

18. Monitoring the quality, VFM and progress of consultant’s work 18.1 Monitoring consultants’ work 18.1.1 All services stated they used regular review meetings with consultants, progress

reports from consultants or periodic progress meetings to monitor the progress of consultant’s work and required outputs.

18.2 Quality of consultants’ work 18.2.1 The quality of consultants’ work was rated as ‘good’ or ‘very good’ by

respondents, with approximately half of respondents stating instances of very good performance.

18.2.3 However witnesses from services also provided examples of consultants not

being paid final payments, e.g. Strategic Housing had not completed payments for Heywood SUN. Several witnesses also stated that the consultancy market was self regulating, with poor consultants quickly going out of business through lack of business.

18.3 Challenges to consultants’ work 18.3.1 Several services mentioned challenges being made to contracts or consultant’s

work. The Schools Service challenged BSF fees and negotiated reductions regarding charges for legal advisers.

18.4 Achievement of specified output / outcomes, quality and VFM on

completion of contract work 18.4.1 Required output and outcomes specified in tenders were delivered in nearly all

examples quoted by respondents. 18.4.2 Nearly all witnesses and questionnaire respondents stated the quality of

consultants work was ‘good’ with some stating ‘very good’ performance. Nearly all respondents stated consultants provided good or very good VFM and quality of output.

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18.4.3 Although most respondents considered that consultants’ work was monitored and managed appropriately to ensure VFM, quality and required output / outcomes one respondent mentioned an instance of poor quality of training provision despite checking consultants’ references and course outline during procurement.

18.4.4 One respondent also stated that VFM provided by consultants is difficult to

assess, stating that it is always more cost effective to provide in-house provision but quality, expertise and experience must often be sought externally.

18.4.5 Another respondent stated that the effectiveness of consultants’ work would

have been greater if the service had spent more time working alongside consultants to support them by providing them with more information.

18.4.6 From these remarks it would be good practice for officers to collaborate with and

work alongside consultants. This would:

Ø Allow early identification of whether consultants would fully achieve required output and outcomes of contracts, and enable appropriate and timely action to be taken by contract managers;

Ø Provide more effective communications and collaboration between consultants and the Council. This would help enhance the quality, VFM, output, outcome, and pace of consultants work, e.g. by improved provision of data, reports and other information required by consultants;

Ø Make services more aware of skills and expertise used by consultants’ that could be provided internally in the future;

Ø Develop officers’ knowledge, abilities and skills, or lead to staff development initiatives, thereby allowing possible future ‘consultancy’ provision in-house.

18.4.7 To improve collaboration between consultants and in-house staff, help ensure

desired outputs and outcomes are provided by consultants, and develop staff skills the following recommendation was agreed by Members:

The Head of Finance Services to put procedures in place to enable officers of the Council and its partners to work alongside and collaborate with consultants whenever possible. This system should be used to help ensure desired outputs and outcomes are achieved by using consultants, provide more effective communications between services and consultants, make services more aware of consultant’s skills and help develop or trigger the development of officers’ skills. If possible such arrangements should be specified in contracts / work specifications.

19 Future review work 19.1 The Review Group also requested that because of the Council’s current

Efficiency Programme reviews and changes these may have on the Council’s services and organisational structures, they be given the opportunity to re-open the review at a future date. The following recommendation was therefore agreed:

Members be given the opportunity to re-open the review, or request additional review work after the Efficiency Programme reviews have been completed and their recommendations implemented.

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20. Conclusion 20.1 Members were impressed with the Corporate Procurement Team’s recently

introduced procedures for procuring consultants, but considered there were weaknesses and the need to improve several aspects regarding the procurement and management of consultants. These vary from Members being given greater influence on consultancy spending decisions, to promoting consultancy opportunities more widely internally, to improving the use of coding to record spending. It is considered by the Review Group that the recommendations in this report will help to overcome these weaknesses.

For further information about this report please contact Peter Bennett, Policy & Performance Officer, Improvement Team, Performance and Development Service, 6th Floor, Telegraph House, Rochdale. OL16 1JA. Tel: 01706 925617.