Agenda item

Report of the Chairman of the Constitution Working Group

The Chairman of the Constitution Working Group introduced the report and reminded members that at its meeting on 14 December 2015 the Council approved an updated set of contract rules which was common to all 2020 vision partner councils. He explained that the contract rules included the requirement for a bond or a parent company guarantee for contracts over £1million. He said however that in practice the need for a bond or guarantee can be negated by holding back retention sums and making staged payments i.e. only for actual work that has been undertaken. Also, the requirement can be difficult and costly to obtain and it was not always necessary to obtain a bond in order to protect the council. As such it was now proposed that there was a revision to the Contract Rules to provide a practical and workable solution to the awarding of high value contracts which provides flexibility in the use of bonds/guarantees. This revision would allow the section 151 Officer, in consultation with the council’s Solicitor, to decide that a bond/guarantee was not appropriate in the circumstances of a particular contract.

The Chairman of the Constitution Working Group said that one sensitive issue which had been raised by Audit Committee was on not having a bond in place and he suggested that Audit Committee kept a watching brief on how the variant was used and not misused so there was no additional risk. He highlighted that by not having to have a bond in place did make it easier for smaller local companies to bid for a project rather than rely on larger companies.

In response to a question the Head of Legal clarified that the existing contract rules covered contracts of £1 million or less; the specific issue under discussion was contracts of more than £1 million to ensure that discretion sat with the Section 151 officer as to whether a bond was required for a particular contract.

A member commented that staged payments would not compensate for the additional cost when a contract encountered difficulties. In response the Chair of the Constitution Working group said it was all about risk which would have to be managed and the S151 and Borough Solicitor would have to look at each circumstance individually. Large projects would be project managed and be assessed by the project board. Gateway reviews also were submitted to Overview and Scrutiny Committee and the decisions which were taken with large contracts would be published. Where it was felt that the variant was not used appropriately this would be reported to Audit Committee.

When asked whether this proposal corresponded with the latest best practice the Director Resources said that the use of the variant was a judgement by the S151 Officer due to the nature of the activity and the size of the contract.

The Cabinet Member Housing welcomed the proposals and said it would give more flexibility to officers and he gave the example of CBH who were entering into contracts on behalf of the council as often it was difficult to attract smaller and medium sized companies.

RESOLVED THAT (Voting-32 for;1 against; 1 abstention)

Contract rule 19.1 be amended as per paragraph 1.5.