Legal, finance and audit staff in Corporate Services may not immediately welcome framework agreements with open arms. You might mistakenly view this as a barrier.
Remember that they have the onerous responsibility of ensuring that the council’s spending is prudent and that public money is accounted for. When the rules appear to change, they might be inclined to hold back.
You should approach them with outline proposals as soon as you think frameworking is the best strategy for a programme of construction work.
Procurement Strategy Workshop
Invite legal, finance and audit staff to a Procurement Strategy Workshop, along with senior officers representing the external and internal stakeholders. The purpose is to:
- Confirm the choice of procurement method
- Identify the barriers to implementation and find solutions
- Agree how to package the programme of work
- confirm the way forward.
MCC’s Better service delivery diagram shows how everyone is involved.
Those unfamiliar with frameworking should attend a preliminary presentation explaining what frameworking is, when it is suitable, how it works and how it will affect the stakeholders.
A good place to start is Strategic issue 1, which will ensure your corporate procurement structure enables you to strategically consider and implement Rethinking Construction principles.
The barriers to frameworking discovered by MCC are likely to recur in all local government framework agreements until everyone settles in to this long-term way of working:
- The market is not set up to work in frameworks
- The supply chain (and probably many stakeholders) is lacks the skills needed for partnering
- There is a lack of trust left over from decades of adversarial relationships
- Work packages are likely to become more complex
- Conflicts may arise between financial regulations and partnering frameworks
- There is likely to be a lack of understanding of the requirements of frameworking by both the client and the service provider
- VAT is an issue.
CIPFA’s How to develop a procurement strategy: a guide for local government attempts to facilitate close working relationships between procurement officers and their auditors, with a view to removing the perceived obstacles to change. It has been prepared in order to help people move outside their traditional ‘comfort zones’ and accommodate the culture changes that are required to achieve modern and effective procurement.
CIPFA’s Standing Guide to the Commissioning of Local Authority Work and Services covers the whole procurement process for legal, finance and audit staff.
Specific Legal, Finance and Audit Issues
Legal, finance and audit officers will be particularly interested in the following topics.
The Prudential Code
Under the present system of credit approvals, central government controls local authority borrowing. This is being replaced by a new system that gives councils greater freedom to invest in capital works, provided plans are affordable, prudent and sustainable. See Appendix 11 and CIPFA’s The Prudential Code for Capital Finance in Local Authorities (2003).
Schemes that will offer better services and save money in the long term are more likely to go ahead under this new system.
With the emphasis is on long-term benefits, programme officers and accountants will need to sharpen up skills in forecasting and whole-life costing.
A framework agreement differs from traditional project contracts in two main ways:
- The framework is not a contract in itself to do any work
- The framework incorporates processes that encourage the parties to adopt the principles and improvement targets in “Rethinking Construction”.
Manchester City Council (MCC) has mapped The Office of Government Commerce’s Gateway Flowchart against the processes for setting up and running a framework agreement.
Sequence of tasks
MCC has prepared a Gantt chart showing the sequence of tasks needed to set up a framework agreement. It shows that it took them 45 weeks from a standing start. Hence the programme allows ample time for you to be sure you are satisfied with every step in the process.
With the ‘in principle’ agreement of members and regulatory officers, the next step is to consult the stakeholders.