Agenda item

Procurement Overview 2021/2022


A report of the Director of Finance was presented to provide the Corporate Affairs and Audit Committee with the annual overview of procurement activity undertaken for the financial year 2021/2022.


The Council had Contract Procedure Rules in place as part of the Council’s Constitution and these provided the governance in respect of procurement practices.


Public Procurement Notice (PNN) 10/21 – Threshold & Inclusion of VAT was published on 6  December 2021, which notified all Contracting Authorities of the uplift to thresholds and the inclusion of VAT on contract value from 1 January 2022.   The inclusion of VAT is due to Brexit and aligned the UK to all non-members.  The table at paragraph 5 of the submitted report showed the thresholds as at 1 April 2021 to 31 March 2022, which all procurement was required to adhere to.


During 1st April 2021 to 31st March 2022 the Procurement Team had been involved and supported service areas with 273 procurement activities that equated to a total of £62 million worth of contracts being awarded in the year.  It was confirmed some contracts might be 1 to 2 years in length and others could be longer or have options for extension.  A breakdown of activity was shown at paragraph 7 of the submitted report. 


There were currently 467 active contracts recorded on the contract register, which was publically available.  Work was being undertaken to ascertain how many of the contracts were with local suppliers and this information would be provided to the Committee when completed.


A report was presented to Corporate Affairs and Audit Committee on 9 June 2022, which provided a full overview of exemption activity for 2021/22 and a copy was attached to the submitted report at Appendix A for reference.


The Procurement Team continued to gate keep via Business World for any orders raised over £5k up to £100k which further strengthened understanding of the Council’s spend.


The Procurement Team supported service areas with procurement queries

and the Specialist Commissioning and Procurement Manager was currently working with the digital and organisational development colleagues in order to review and update the intranet and internet pages and develop some training for the Middlesbrough Learns site.   It was anticipated that this work would be completed by the end of the year and with training going live from 1 April 2023.


During 2021/22 the Council spent £8,149,948 via purchasing cards which was 30,446 transactions.  The majority of spend was low value with 19,785 (65%) being below £99, 9,875 (32%) was £100 to £1,000 and 787 (3%) was over £1,000.  A review of purchasing cards’ function in the Council would be undertaken led by the Specialist Commissioning and Procurement Manager.


Rebates for the cards were paid annually each year and were based on spend activity between 1 December to 30 November the previous year.  In February 2022 the Council received a rebate of £60,651.27.


It was highlighted that the Council had employed an officer specifically to work on VAT and also stabilise the banking functions.  Some more detailed work would take place around VAT over the next 3 to 6 months and this information would be provided to a future meeting of the Committee.


In line with the purchasing card policy staff were responsible for reviewing all spend on cards monthly, which included providing the receipt, detail of expenditure, cost centre and GL codes.  Managers with staff who had cards were also responsible for monitoring spend and the team shared monthly reporting and management of cardholders in line with the Council’s policies.


Executive approval was given on 7 September 2021 to award and implement the Supplier Incentive Programme (SIP) with Oxygen Finance calling off the North East Procurement Organisation (NEPO) Framework in order to pay suppliers as early as possible in return for a rebate payment. 


The SIP programme has now been implemented following a mobilisation period that involved a number of stakeholders from across the Council, including the Finance Accounts Payable (AP) Team, Business World Support Team and the Procurement Team.  Some internal practices had been identified that would be improved to ensure that the Council realised the benefits from SIP.   In order to understand actions that could assist Middlesbrough, Officers had met with South Tyneside Council who had had SIP in place for nearly 7 years and were seeing rebates over £400k and aiming for this to grow further.


PowerBI was used to produce quarterly reports on local spend which had been really useful.   Further work was needed in order to further increase reporting on spend and the Specialist Commissioning and Procurement Manager would be working with the data team over the next year to develop this.   A summary of the percentage performance of local spend during 2021/22 was detailed at paragraph 31 of the submitted report.


AGREED that the information provided was received and noted.


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