BOROUGH OF POOLE
25 JUNE 2009
APPOINTMENT OF GRANTA ASSOCIATES, CONSULTANTS
PART OF THE PUBLISHED FORWARD PLAN - NO
STATUS - GOVERNANCE
1.1 This is a joint report of the Council's Chief Finance Officer and
Monitoring Officer. It has been prepared further to their respective governance responsibilities and in consultation with the Head of Human Resources, following the revelation in May 2009 that a consultant employed by the Council had a previous conviction for corruption and false accounting.
1.2 The purpose of this paper is to:
a)set out key findings arising from a detailed review of the award of a six month contract of service to Granta Associates Ltd for Members consideration;
b)consider what could or should have been done differently in awarding this contract and make recommendations as to how the Council's existing regulatory and policy framework might be best strengthened to better safeguard the interests of the organisation and individual commissioning officers acting on behalf of the Council in the future;
c)set out the scope and nature of the work being undertaken by the consultant in question prior to his dismissal, assess any risks arising to the Council as a result of his involvement in the projects concerned, and detail how this work will now be taken forward to ensure these projects are not unduly delayed or de-railed by recent events to the detriment of the Council.
2 DECISIONS REQUIRED
2.1 It is recommended that Audit Committee Members:
a)note the key findings arising from this review as set out in Section 3 of this report further to the detailed account of the action taken and procedures observed in determining an award
of contract to Granta Associates Ltd set out in Annex A and consider whether any further review by a third party would be desirable in ensuring the good governance of the Council;
b)endorse the need for additional provisions relating to the use and appointment of consultants at the Council to be drafted by the Head of Financial Services, further to the current review of the Council's financial regulations for consideration and adoption by full Council in September 2009;
c)request that the Head of Financial Services consult with new Head of HR, when appointed, to determine how CRB checks might be of use and relevance in the future when drafting additional provisions relating to the use and appointment of consultants at the Council further to the current review of the Council's financial regulations for consideration and adoption by full Council in September 2009.
3 SUMMARY OF MAIN FINDINGS & CONCLUSIONS
3.1 It is evident that officers acted in good faith in attempting to secure a
speedy and cost-efficient resourcing solution to a known and urgent business need. In doing so they sought proper professional advice and observed current Council contract standing orders and HR policies and procedures. The decision to appoint Granta Associates Ltd was made in accordance with the Council's decision making procedures. There is no evidence of any wrong doing on the part of any officer or member of this Council. Nonetheless, it is also evident that the Council's extant regulations in respect of contracts of service failed to protect the interests and reputation of the Council itself and the commissioning officers concerned in this instance.
3.2 A full account of the action taken and procedures observed in
determining the award of contract to Granta Associates Ltd is set out in Section 4 below for Members full consideration. The key findings arising from this review are that:
a) There was a legitimate and documented need to secure a
- suitably experienced and expert procurement resource from outside the organisation to meet an identified and urgent business need further to the decisions of the Business Transformation Board in autumn 2008.
There is nothing to suggest that the approach taken by officers to identify a resourcing solution was in any way untoward or inconsistent with Council standing orders or HR policies and procedures. The officers concerned sought appropriate prof~ssional advice and guidance in progressing a considered and cost-efficient solution for the Council.
c)The Head of Financial Services did not ask Mr Osman to provide an up to date CV before recommending him as a possible resourcing solution to support the work required. Her decision not to do so was determined in good faith based on the verbal recommendation made by the Head of Procurement at the City of York Council, her previous understanding of Mr Osman's CV (as presented by the recruitment agency involved in his previous appointment by the City of York Council) and her belief that Mr Osman had been out of the country since completing his contract at York due to his father's ill health.
d)It is apparent that Mr Osman did not include information relating to his former employment at the CPS, his impending prosecution or his subsequent conviction in the CV provided to the City of York Council in 2006 nor allegedly to TFL in 2008, nor to the recruitment agency responsible for recommending him at both organisations. It was not unreasonable for officers in either organisation to rely on the completeness and veracity of the CV provided via the recruitment agency concerned. Nor does it seem very likely that he would have chosen to reveal his conviction to officers at Poole had he been required to provide an up to date CV prior to his engagement by the Council.
e)Mr Osman was not asked to make a personal declaration of criminal convictions nor could he have been made the subject of a CRB check by the Council, due to the limitations the CRB place on when checks can legitimately be carried out. These checks are not currently explicitly required in the award of contracts of service for the kind of advisory services in question. Consequently, officers did not act improperly, were not negligent, nor did they in any way contravene current Council regulations in not requiring these checks to be undertaken.
f)Officers and the Portfolio Holder for Resources complied fully with contract standing orders in the award of a contract for service to Granta Associates Ltd on the basis of an agreed exception and this was properly published as a Portfolio Holder decision in accordance with the decision making processes of the Council.
g)Whilst officers and members complied with all relevant Council policies and regulations, it is evident that the Council's extant regulations in respect of contracts of service failed to protect the interests and reputation of the Council itself and the commissioning officers concerned in this instance. The current review of the Council's financial regulations will set out additional provisions relating to the use and appointment of consultants at the Council.
h)Mr Osman was engaged to provide expert advisory services in support of a number of strategic procurement initiatives and projects at the Council. His work has been reviewed independently by other senior officers at the Council who have confirmed in each instance that:
- the work done was of a high standard;
- Mr Osman had no scope to act in any way as to prejudice the proper conduct of the procurement exercises in which he was involved as an advisor to the Council's own commissioning officers;
- Mr Osman had no authority or opportunity to expend Council resources and was not involved in any evaluation or recruitment process resulting in the award of contracts or employment of others.
i)officers acted immediately to investigate the anonymous allegations made about Mr Osman when they were received in the Chief Executive's office. The allegations were also sent to two members of the Council. The officer investigation resulted in the speedy termination of Mr Osman's contract with the organisation when he confirmed that he had been convicted for fraud and false accounting in 2007 and that he had failed to reveal that in undertaking the contract for the Council.
4 FINANCIAL IMPLICATIONS
4.1 There are no financial implications arising to the Council as a result of
any of the work undertaken by Mr Osman whilst under contract, nor any arising from the early termination of his contract in May 2009. Senior officers have been concerned to put in place alternative resourcing solutions as quickly as possible following the termination of Mr Osman's contract. Whilst arrangements have been made, it is inevitable that some projects will be delayed and the quantum of savings and efficiencies estimated in relation to the projects concerned may be adversely impacted in 2009/10 as a result.
5 LEGAL IMPLICATIONS
5.1 There are no legal implications arising to the Council as a result of any
of the work undertaken by Mr Osman whilst under contract, nor any arising from the early termination of his contract in May 2009.
5.2 In undertaking screening arrangements there is a need to comply with
CRB requirements on the scope of when screening can and cannot take place and to take account of the provisions of the Rehabilitation of Offenders Act.
6 RISK MANAGEMENT IMPLICATIONS
6.1 It is felt that there should be little further reputational risk arising to the
Council as a result of Mr Osman's work at the authority based on the conclusions reached through the independent review of the nature and scope of Mr Osman work following the termination of his contract in May, as summarised in paragraph 3.2 h) above. Alternative resourcing solutions have been identified to prevent the work in which he was engaged from being lost or derailed: although some delay will result in respect of the staffing agency and postal services contract work pending the appointment of additional procurement staffing resources in the next few weeks.
7 EQUALlTIES IMPLICATIONS
7.1 There is a need to ensure consistent screening arrangements apply to
contractors as apply to employees when considering whether or not a CRB check is necessary further to any appointment process.
8.1 The Council and its officers have been embarrassed by the recent
revelations regarding Mr Osman's previous conviction for fraud and false accounting. However, it is evident that the has been no wrong doing on the part of any officer or member of this Council. Officers and the Portfolio Holder for Resources complied with Council policies and regulations and acted in good faith in attempting to secure a speedy, cost-efficient resourcing solution to a known and urgent business need. Nonetheless, it is also evident that the Council's internal control environment could be further strengthened through the introduction of additional regulations regarding the use and appointment of consultants and the award of contracts for service to better safeguard its interests. Further consideration might also be usefully given as to whether the Council's current approach to how CRB checks might be used in the award of contracts for service in the future.
Chief Finance Officer Head of Financial Services
Monitoring Officer Head of Legal Services
Specialist implications officer
Head of Human Resources
A REVIEW OF THE AWARD OF A CONTRACT OF SERVICE TO GRANTA ASSOCIATES L TO IN JANUARY 2009
DETAILED REPORT FINDINGS
1.1 The Council's Business Transformation Board was established in I
September 2007 to direct the delivery of a complex programme of I organisational change projects designed to help drive out efficienciE facilitate service improvements and secure step change I transformations in the way in which the Council does business.
1.2 By late summer 2008 it became evident that capacity issues,
competing priorities, skills shortages and a lack of suitably experienced and expert in-house procurement resources in particular, were preventing the organisation from making progress in three key I projects within the Programme: Print Design, Agency Staffing and I Postal Services. The Board discussed how these problems could be overcome during the autumn of 2008. The need to resolve these difficulties was given added urgency at that time by the imminent closure of the Council's in-house Print Design Service scheduled
for Christmas 2008 and the pressing need to put in place robust arrangements to manage the external supply of Print & Design services as soon as possible thereafter by way of effective risk mitigation for the organisation.
1.3 The Board concluded from its discussions that these projects were
strategic procurements, necessitating the specification of common service needs across all parts of the organisation through the development of a series of corporate framework contracts. The development of corporate contracts of this kind is fundamental to the Council's ability to secure significant efficiencies through the aggregation of demand - allowing the Council to use it's considerable buying power within the market place as leverage to help secure competitive price and volume contracts with third party suppliers.
The Board was in universal agreement that the Council did not have the necessary in-house skills or experience needed to do this work and determined in late autumn 2008 that specialist external support was needed to meet the urgent business needs of the organisation. This is evidenced by the minutes of the relevant Board meetings and stands as a matter of record should members of the Audit Committee wish to scrutinise them.
There was a legitimate and documented need to secure a suitably experienced and expert procurement resource from outside the organisation to meet an identified and urgent business need further to the decisions of the Business Transformation Board in autumn 2008.
2 IDENTIFYING A RESOURCING SOLUTION
2.1 The Head of Financial Services and Business Change Programme
Manager were tasked with securing an appropriate resource to deliver the work needed as soon as possible. Given the urgency involved, the Head of Financial Services and Business Change Programme Manager sourced a number of CVs from leading recruitment agencies with a view to arranging a competitive interview process from a short-list of suitable candidates. This approach was taken to reduce the typical lead-times involved in going out to public advert - usually in the order of 3 to 4 months between advert and an appointee taking up post. This approach is consistent with HR policy and practice at the Council in such circumstances.
2.2 Having reviewed the CVs received, officers concluded that none of
the individuals put forward by the agencies concerned were suitable for interview. This was because they either did not have the experience and expertise needed, or were far too expensive or both. Prices quoted typically ranged from between £700 to more than £1,000 per day. Moreover, Hays advised that fixed price short-term employment contracts for procurement specialists were proving very difficult to secure due to the shortage of good procurement professionals working in the public sector arena. Hays also advised market conditions in this particular professional field meant that the Council should expect to pay up to £80,000 per annum to attract the right kind of candidate if it was to be offered as an employment opportunity as opposed to a contract for consultancy services.
2.3 The advice received from Hays presented several significant
problems for officers to grapple with - not least the potential for pay equality and re-grading issues to arise across the organisation if the Council had proceeded on the basis of offering an employment contract. Following discussions involving the Head of HR, the view was taken by commissioning officers that the work should instead be offered as a contract for service: as the work required was for a relatively short fixed-term period,of 6 months to deliver very specific specialist products and that it would be very difficult to recruit on the basis of a six-month employment contract. The Head of HR advised that any such arrangement should not exceed six months. In light of these considerations and the increasingly urgent need to resolve matters, it was agreed that commissioning officers would speak to their professional contacts to see anyone could be recommended.
There is nothing to suggest that the approach taken by officers to identify a resourcing solution was in any way untoward or inconsistent with Council policies and procedures. The officers concerned sought appropriate professional advice and guidance in progressing a considered and cost-efficient solution for the Council.
3 THE RECOMMENDATION OF MR OSMAN
3.1 In pursuing her own professional contacts. the Head of Financial
Services spoke to the Head of Procurement at the City of York Council where she had worked previously. He recommended Mr Adam Osman. a consultant employed by City of York Council under contract in 2006/07. Mr Osman had been well regarded for the high standard of his work, speed and expertise in helping to develop the procurement function of that Council. Mr Osman had reported to the Head of Procurement at York for line management purposes. and he felt that Mr Osman would be suitable for the work envisaged at this Council. When asked by the Head of Financial Services whether he knew what Mr Osman had been doing since leaving York, he advised her that he understood he had gone to Istanbul to deal with family affairs when his father was taken seriously ill but that he had recently returned to England.
3.2 The Head of Financial Services had known Mr Os man in a
professional capacity further to his work at York. She had been party to his appointment there, which had followed from a competitive interview process. Mr Osman had been recommended for interview at that time by a reputable recruitment agency who provided his CV and references further to their own internal vetting processes. These did not reveal any cause for concern and it was not unreasonable for officers at York to rely on the information provided by the recruitment agency in making their appointment. Officers at York remained unaware of Mr Osman's conviction (which happened after he completed his contract at York) until recent events. Hence, at the time of his appointment at Poole in January 2009 neither the Head of Financial Services nor officers at York knew about his conviction and had no reason to doubt his credentials or ability. Clearly. had this been known, he would not have been recommended by officers.
3.3 The Council's current regulations concerning contracts of service
differ to those for contracts of employment. Contracts for employment are subject to the Council's HR policies whereas contracts for service are subject to the Council's Contract Standing Orders. Each require different procedures to be followed. Employment practice requires individual applicants to make a personal declaration regarding any criminal convictions they may have. No similar requirement is specified in awarding contracts of service to companies or individual consultants under the Council's current contract standing orders (except in the provision of contracted care services where CRB screening is specified as a contract requirement). Equally, the due diligence tests as set out in the Council's current contract standing orders, are geared towards testing the financial health of a company - that is to say the capability of companies to execute a contract where the contracted value will exceed £100,000 - rather than investigating the possibility of financial impropriety.