Agenda item

To receive a background presentation from the link officer and consider and agree the draft scope and project plan

A background presentation was received for the Scrutiny Review of Procurement and Tendering Processes from the review’s link officer, Assistant Director for Procurement and Governance, which included:

• The UK public sector spent £434billion on procurement in 2024/25, which had a considerable impact on the UK’s economy both at a national and a local level. Stockton Borough Council spent £237million through procurement and contracts. Unlike in the private sector, procurement in the public sector was regulated due to being public money and therefore transparency was needed on how it was spent. Legislation such as the Procurement Act 2023 and the previous Public Contract Regulations 2015 detailed how procurement should take place e.g. advertising contract opportunities, the process of procuring, and how the market was informed who the contract was awarded to.  There should be an equality of opportunity for businesses to apply for contracts and they should be treated fairly and equally when they do apply.
• The Councils contract procedure rules set out the way it undertook procurement and these were included in the constitution. They were proportionate to the level of expenditure, with processes for low cost items being relatively simple and more robust processes for contracts, good or services that were higher value.
• Any expenditure of £500,000 or above had to be agreed by Cabinet, and an annual procurement report was presented to Cabinet identifying contracts for the following year that were valued over that amount for approval. Ad hoc reports were also taken to Cabinet throughout the year for approval when new contracts were identified. The only other Member involvement in procurement was oversight via Audit Committee and through scrutiny reviews.
• Xentrall processed 29,000 invoices in 2024/25 which demonstrated the scale and breadth of goods, services and works that was procured. These were categorised by master-category and sub-category to enable understanding and analysis for value for money. A breakdown of the procurement spend in 2024/25 showed that the majority was spent on Health and Social Care (over £130million). This category included contracts related to residential care and domiciliary care amongst other services. Buildings were the second highest spend with £40million, and this included extensions to schools, cost of running admin buildings, insurance, building costs of running libraries, and building costs associated with schools and community centres the Council provided services to.
• Stockton-on-Tees joint-contracted for some services sub-regionally with other Tees Valley local authorities and were also members of the North East Procurement Organisation (NEPO) which arranged contracts regionally and bulk buy on the Councils behalf.  The Council also sometimes utilised national contracts set up by central government and the NHS. NEPO also undertook other policy and practice work such as setting up standard terms and conditions of contracts which made the process of bidding for contracts from different councils easier for businesses.
• Approximately 61% of external spend was on Small and Medium Enterprises (SME). There was also significant Voluntary, Community, and Social Enterprises (VCSE) expenditure.
• There was a Social Value Policy which applied for most, but not all contracts, to ensure that when the Council contracted a business, the business also committed to deliver some social value to the communities within the borough. This ranged from providing work experience for school leavers, taking on apprenticeships, or providing benefits such as donating laptops to community organisations. A Social Value Officer was employed to take a lead on attaining a return on contracts with a social value element.
• There was an ongoing phase 2 Transformation review of the procurement of non-social care goods and services.
• All contracts were included on the Contract Register, which held data on the start and end dates of each contract, the approximate value, the department it related to and the contact officer. The number of contracts changed from week to week due to the different start and end dates, and at the time of the meeting there were 550 contracts on the register. The Contract Register was published for transparency and to assist businesses considering bidding for contracts.

The Committee discussed whether there was sufficient challenge regarding whether the Council was getting value for money through some of its expenditure when different departments were procuring. It was noted that the review would examine the process of making the commissioning decision to contract a service, and when and how the options were explored.

NEPO was discussed, with members questioning the checks and balances in place to ensure the local authorities were getting best value for money. It was explained that NEPO had a considerable gateway and consultation process with local authorities when deciding on whether to procure regionally or locally. Robust contract management was needed to ensure that costs did not rise, both when procuring regionally via NEPO and locally, as well as an understanding of the market and how contracts would operate to make informed decisions when outsourcing.

Consideration was given to the draft scope and project plan for the review. The aim of the review would be to ensure procurement processes deliver value for money, were competitive, and transparent. The key lines of enquiry focussed on the legislation, the Council’s contract procedures, arrangements, and structures, how best value duty was met and procurement arrangements with other local authorities and North East Procurement Organisation.

AGREED that the information be noted and draft scope and project plan of the review be approved.