Pickles attacks Barnet Council

In his speech to CIPFA last week, the Communities Secretary Eric Pickles included the following attack on Barnet Council.

The relevant section went as follows:

Take the example of Islington. An independent audit of just 30 of the council's top 500 suppliers found that many invoices had even been paid two or even three times over, and four out of ten suppliers had no formal contract. Spending transparency - and the act of collating date for online publication - helps drive out inefficiency, and exposes waste to the light of day.

I'm not making a political point here, by the way. This isn't about political control. Too often, councillors are left in the dark.

I was shocked by a recent case in Barnet. The council had hired a private security firm, MetPro, which included "keeping an eye" on local bloggers - at a cost of over a million pounds. The contract had been awarded without a tendering exercise, without a written contract, and no proper invoicing. An internal audit showed there "serious deficiencies in current procurement arrangements", and there were no guarantees that against a repeat of such practices.

Irony of ironies - this misuse of public money was uncovered thanks to the determination of local bloggers and activists, including Barnet Eye, Mr Mustard, and Mrs Angry (as she had every right to be.) Exactly the same people MetPro snooped upon.

I've got news for Barnet. Liveblogging from council meetings. Microjournalism. Call it what you like. It's here to stay. In fact this citizen samizdat - local people reporting on their local council's triumphs and shortcomings - is the perfect counterblast to town hall Pravdas.

And it's going further. The next wave of transparency after publishing spending over £500, will be councils publishing contracts and tenders over £500 online as well.

An online list of council contracts will prevent a repeat of the likes of Islington or Barnet, and will spur on greater competition and efficiency.

It doesn't just strengthen the hand of citizens.  It strengthens the hand of ward councillors, letting them know what officials are doing on their behalf.

That's why, looking over the Welsh border, I think Carmathen Council were out of line in having a local blogger arrested for the offence of videoing a public council meeting.

It was immensely short-sighted, too.

Because if councils can show that they can deliver what local people want, and respond to their communities, without relying on instructions, it undermines the centre's need to control. It paves the way for further localism still.

You can read Barnet Council's Audit Committee report on the matter here. But here is the upshot:

Overall message

• The Council has failed to comply with its CPR and Financial Regulations, exposing the Council to significant reputational and financial risks.
• Internal Audit cannot give assurance that this non-compliance is an isolated incident, due to a lack of an accurate and complete centrally held contracts register and effective monitoring arrangements.
• We recommend that all spend over the stated threshold in the CPR be reviewed and matched to a central contracts register (in development) in a timely basis.

Key Findings

Our work has concluded the following:

Award of contract and review of contract service specification
No procurement exercise had been undertaken to appoint MetPro, in accordance with the Council’s CPR.

No written contract between the Council and MetPro could be found.

There is no record of an approval and authorisation for the use of MetPro for providing security
services.

In the absence of a formal procurement exercise, we could not locate the following documents/confirmation for MetPro, which the CPR require:

• Financial viability of the company
• Equal Opportunities Assessment
• Criminal Records Bureau checks
• Confirmation of company’s Public Liability Insurance arrangements
• Confirmation of the company’s Health and Safety registration
• Confirmation on the SIA licence status of the Company Officers
• An agreed specification which outlined the service to be provided
• An agreed schedule of rates for payment of invoices
• A process for monitoring performance of service delivery to establish if the Council was receiving value for money.

There has been a failure to comply with the Council’s Policies and Procedures with regards to roles and responsibilities. Officers interviewed had assumed a corporate contract was in place and relevant checks on MetPro had therefore been undertaken. Recently, from September 2010, assurance was given to officers we interviewed that a corporate contract was being procured by the CPT as they were aware at that time that no contract was in place with MetPro. At the time of writing this report this procurement exercise had not started, however a detailed specification existed.

Roles and Responsibilities of key officers in the procurement and contract management
arrangements – vendor spend analysis

Council spend with MetPro between 2007 and 2011 exceeded the relevant thresholds for which a term or annual contract should have been established. Monitoring arrangements centrally, as documented within the CPR, were not designed effectively to identify all vendors that exceed tender limits. The control implemented within the CPT monitored the top 10 spend of vendors per service. However, this was not sufficient to identify the MetPro spend, which was above the relevant threshold during 2007-2011. This resulted in a failure to comply with the CPR.

Vendor Set-up and VAT compliance

There was no record of standard approval checks being undertaken by Corporate Procurement, and of the standard Vendor Request Form, to confirm the adequacy of the approval process required for accepting the vendor and to confirm the set up information on SAP Financial System. Our sample testing of invoices highlighted there had been payments of invoices in the names of MetPro Group and MetPro Emergency Response Ltd where a valid VAT number had not been quoted. However a full review of all payments of invoices should be completed to identify all instances where a valid VAT number had not been quoted and the implications discussed with HMRC.