Use of Consultants – Council Statement

A Council spokesman08:35 Friday 25th March 2011
Peterborough Breakfast Show BBC Radio Cambridgeshire

ANDY GALL: Yesterday we brought you the outcome of the inquiry into whether Peterborough City Council is spending too much money on consultants. The three-man panel made 31 recommendations to the Scrutiny Committee, and called for the process of hiring consultants to be made more transparent. PCC couldn’t put someone up to talk to us, because the report will be discussed at a Cabinet meeting in June, but they did send a statement.

VO: “Peterborough City Council has some of the best controls in the country for managing and monitoring its use of consultants. We are already implementing many of the recommendations in the report as part of our drive for greater transparency, and ensuring we are always providing the best value for money for our taxpayers. Over the past 4 years we’ve been able to take £68 million out of our budget because of this work. We’d like to thank the consultants who’ve worked for us in the past, and those who continue to work for us, for sharing their expertise with our staff to enable us to improve the skills and knowledge we have within our own workforce.”

ANDY GALL: And in today’s Evening Telegraph you can get Council Leader Marco Cereste’s thoughts and comments on the report.

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2 thoughts on “Use of Consultants – Council Statement”

  1. The facility to comment, and past readers comments, appear to have disappeared from the Peterborough Evening Telegraph’s news article on the report.
    Some of the coverage seems to miss the major point: the need to dispel the opacity of how the £9.5 million contract awarded to Amtec in August 2008, without call-in, was subcontracted to V4 Services Ltd, incorporated as a limited company in April 2008, and whose directors include a consultant already working with PCC for at least 4 years in a position of great influence. The £9.5m 4-year contract value envisioned in the Key Cabinet Member Decision of Aug 2008 has been well exceeded, and that account should be set out.

  2. A few dots more – The Use of Consultants in Local Authorities

    In a week when a large organisation has been brought down by their senior management and outside agencies operating outside the rules, what lessons will other organisation take from this when they employ cunning and duplicity in their general conduct, when without appropriate scrutiny allow an abuse of rules intended for use in exceptional situations and by their use circumvent the normal rules of good governance?

    Peterborough City Council (PCC) has a written constitution and a set of rules that in theory govern the conduct in office of the elected members and employed officers. The rules cover the procurement process to ensure that PCC can demonstrate efficient, fair and transparent procurement process and ultimately evaluate the tenders by some predetermined criteria on a fair and reasonable basis, and thus ensure that the award of contract represents the best arrangement.

    The appointment of consultants is just that, appointed they haven’t won in competition or through the usual procurement process. They have not demonstrated best value because they have not been tested or compared in an open and fair way. It is the personal recommendation of the lead procurement officer in many cases this is Director of Strategic Resources John Harrison.

    The decisions to appoint consultants often involve the use of waiver rules to override the contract standing orders (CSO). This is the definitive rule – a rule that allows you to disregard other rules. The reasons for waiving the rules are provided by the officer leading the procurement. The cabinet has the power to waive the council’s rules and do so routinely on the guidance of the lead procurement officer. Thus provided the lead officer has a suitable reason (which can be open to interpretation), broadly speaking they will be economic technical or organisation it’s accepted. Thus the appointment of consultants is at the discretion and gift of the lead procurement officer

    Using a waiver rule is not a contravention. However when they are used extensively and in such a way that the wavier rule is used to routinely to bypass the normal rules of good governance, it becomes an abuse of power. In the Executive Decision section of PCC’s web site there are numerous decisions implemented by waiving CSO.

    Consultants appointed by waiving CSO, evade the rules of competition, fairness and transparency, and thereby it becomes the custom. The expense and ever-growing employment of consultants had raised issues over their appointments. PCC at the instigation of its consultants who they had appointed to run the procurement department procured a Professional Services Partnership (PSP) with Amtec. This however has raised more issues and has not quelled the debate or anger over the use of consultants and their commercial in confidence contracts which prevent public scrutiny. This has resulted in councillors and officers pedalling half-truths to conceal the extent of their involvement and deny that the council has any contractual arrangement with Amtec’s delivery partner V4 Services.

    So why are councillors and officers prepared to go to extraordinary lengths jeopardising their personal integrity and honesty to cover up the extent to which consultants they appointed are operating within the council?

    In the Executive Decision for the PSP the case and reasons are clearly set out to ensure that the appointed ‘current suppliers’ were retained. In the Executive Decision for the PSP contract the statement reads:
    ‘One of the key benefits to the Council of the Professional Services Partnership is to ensure that the current supplier base is not fragmented or subject to poaching, particularly with those suppliers that are currently contributing to the Medium Term Financial Strategy and who therefore present a significant risk to the authority by not being tied to a secure commercial services contract’.

    The current suppliers are the appointed consultants working on the ‘Medium Term Financial Strategy’ (MTFS). The ‘current suppliers’ are directors of small companies being employed by PCC on separate rolling contracts as interim managers, among these companies
    • Virtus Services Ltd – Paul Tonks, Adam Jacobs
    • Options Enterprises Ltd – Ben Ticehurst,
    • V4 Services Ltd – Ben Ticehurst, Paul Tonks, Adam Jacobs
    • TMI Systems Ltd, – Paul Tonks (Non Executive Director),
    • GAJ Services Limited – Adam Jacobs

    The criteria for evaluating the financial bids for the PSP only 20% was based on price. However price was not an issue, in the Executive Decision for the PSP part of the statement reads ,
    ‘Since the rate prices submitted by the suppliers on the framework were of a similar value, the emphasis of the evaluation was based primarily on the quality aspect of the submission hence a weighting of 80%’.

    This statement effectively dismissed cost comparison criteria. The interpretation of ‘similar value’ is of course open to interpretation. Had the preferred bidder been the lowest and not just described as similar the selection process would have been met and they would have been awarded the contract on price, but of course the preferred bid was not the lowest and consequently the quality issues were evaluated and of course only the existing Key Suppliers could meet this.

    In the Executive Decision for the PSP contract the statement reads
    ‘A key evaluation criteria therefore, was how the supplier would demonstrate a seamless transition from the existing fragmented arrangements to a single secure arrangement. This involved the supplier ensuring that they had appropriate transitional arrangements with the key suppliers the Council has currently contributing to the Medium Term Financial Strategy’.

    In order for a potential PSP supplier to be able to demonstrate the key evaluation criteria they would have to involve discussion and negotiation between the potential PSP supplier and the existing Key suppliers

    In the Executive Decision for the PSP contract they quote the case of supplier A whose bid was eliminated because supplier A could not demonstrate that they could achieve this key criteria.
    • How could supplier A without discussion or negotiation with the existing key suppliers meet this key criteria?
    • How could the evaluation team know supplier A couldn’t demonstrate that they could achieve this criteria without discussion with the existing key suppliers?

    This key criteria locks in the existing key suppliers to whoever was awarded the PSP. This is a clear statement that unequivocally shows the key suppliers were at the centre of this process and were key to its outcome. It is therefore inconceivable that PCC was not party to the contractual arrangements between Amtec & key suppliers – V4 Services.

    Who ever bid for the PSP would therefore have to enter into detailed negotiation with the existing key suppliers in order to demonstrate to PCC that they could meet this key criteria, and the key suppliers would have to share this with PCC in order to verify that the key suppliers had a suitable arrangement with PSP bidders.

    The solution to the ‘existing fragmented arrangements’ with the key suppliers was the formation of one key supplier – V4 Services. This satisfied the key criteria and Amtec were able to demonstrate that this had been met and V4 services (Tonks, Ticehurst & Jacobs) could verify to PCC this had been met.

    The procurement of the PSP ensured that the PSP provider would work integrally with key suppliers and the key suppliers because of their unique arrangements within PCC had the ultimate choice of which bidder they would collaborate with and they selected Amtec.

    The Denial
    Amtec Consultancy and V4 Services
    ‘There is no arrangement between PCC and V4 Services. The Council have a contract with Amtec Consulting Group who use V4 Services as a delivery partner and there is no arrangement between PCC and V4 Services Ltd. Please refer to the findings of the Consultancy Review March 2011, undertaken by the review group on behalf of the Sustainable Growth Scrutiny Committee’.

    See USE OF CONSULTANTS Report of the Sustainable Growth Scrutiny Committee Task and Finish Group Page 13 (11)(ToR 3)
    ‘The Professional Services Partnership (PSP) as it came to be known, has an underlying Cabinet Member Decision Notice that authorised the appointment of Amtec Consulting Group through an OGC Buying Solutions Framework. Services are however delivered through V4 Services Limited, a delivery partner to Amtec, which is essentially a sub-contractor to Amtec. The group noted that the appointment of consultants under the V4 Services contract is supported by a robust governance process which means that every individual assignment within that contract is authorised by the executive director of strategic resources via the approval of a business case’.

    From V4 Services
    ‘V4 Services has been Peterborough City Council’s Business Transformation delivery partner since 2006. The transformation programme includes more than 70 individual projects and the overall programme is on target to deliver collective cumulative savings of £48mil by March 2011’.

    Nominated Sub-Contractors
    The PSP bidders did not have a choice over which ‘delivery partner’ (sub-contractor) to appoint and did not get asked to choose from a list of at least three proposed sub-contractors. PCC have nominated their existing key suppliers to be the delivery partner a sub contactors of the PSP since payments for their services go via Amtec. This arrangement passes the test used in law to define the appointment of nominated subcontractors, being a nominated sub-contractor establishes a direct contractual relationship between the client and the subcontractor. The work of Nominated subcontractors remains the liability of the employer.

    From a PCC web page
    “Peterborough City Council appointed AMTEC Consulting plc and its delivery partner, V4 Services Ltd, to establish a central hub providing the opportunity to share services and drive the agenda rather than reacting to it.”

    Which bit of this is a lie? V4 services did not come into existence until April 2008.
    It would be true to say that Tonks, Ticehurst & Jacobs who formed V4 services were employed by PCC in 2006 and are referred to as Key Suppliers in the procurement process for the PSP. Key Suppliers were the only option given to the PSP bidders and are for the purposes of contract are a nominated sub contractor which establishes a direct contractual arrangement between the client and the nominated subcontractor ‘the Key Suppliers’ (V4 Services). Payments have been made directly to V4 Services as well as the other key suppliers named in this article.

    ‘There is no arrangement between PCC and V4 Services’. This is the repeated answer when questions are asked of PCC about its relationship with V4 Services. V4 Services claim they have been working with PCC since 2006.

    If it is the case that there is no arrangement between PCC and V4 Services, then the key criteria given in the PSP had the effect of gifting the Key Suppliers (V4 Services) a position of enormous advantage to negotiate the best deal with PSP bidders for themselves. PCC was therefore compromised:
    1. They were obligated to accept the deal between the Key Suppliers (V4 Services) and Amtec.
    2. It was Key Suppliers (V4 Services) who were able to choose who they worked with.
    3. The risks in this transaction for improper financial deeds are open and transparent.
    4. The appointment of a PSP provider directly benefited the Key Suppliers (V4 Services) who are able to exploit their key supplier status.

    The key suppliers were being paid vast sums of money, in fees and salaries directly by PCC before the PSP came into use. In their arrangement with Amtec the Key Suppliers had the motive and unique opportunity to negotiate better rates and performance related payments with Amtec. Amtec will no doubt add their on cost for being the main supplier, and PCC are still paying their key suppliers via Amtec. For PCC to deny their arrangement with the Key Suppliers when it is evidentially clear from information on PCC own web site if there were no key suppliers the PSP with Amtec would not exist. In fact Amtec do not publicise the deal with PCC at all.

    From PCC’s point of view denial and silence with regards to the use of these key suppliers will be maintained because concealment is their only option. They would not want to own up to being beguiled, compromised and out witted by their key suppliers who continue to exploit their unique position. PCC have in effect signed blank cheques to V4 Services and continue to pedal half truths to cover up their own ineptitude, whilst V4 Services proclaim and exaggerate their arrangement with PCC.

    What has astounded me is the lack of any reference to the appointment of Virtus.
    Having spent considerable time searching through the PCC web site I am unable to find any reference to Virtus being appointed. They are listed n FOI documents relating to the payments of £423021.60 during Nov 2008 – 09. They have therefore invoiced PCC, and are on PCC Oracle and the P2P system. I would therefore like to know:
    1. How Virtus came to be on the PCC Oracle and the P2P system?
    2. Who authorised, arranged and entered the details of Virtus onto the Oracle P2P system?
    3. Who approved their contract with the council?
    4. What is the purpose of their contract?
    5. Was there a cabinet decision to approve a contract for Virtus,
    6. Were they ‘waived’ on to the councils Oracle and the P2P system?
    7. Given that Tonks and Jacobs hold senior positions within the council did they enter their own companies (Virtus) details onto the Oracle and the P2P system?
    According to their web site Virtus have been working with PCC since 2006.
    Paul Tonks was MD of Civica until 2006 when he joined PCC as Head of Business Transformation. Paul Tonks is a director of, V4 Services, C3 consulting, Non Executive director of TMI and director of Virtus as is Adam Jacobs. Virtus were paid £423021.60 during Nov 2008 – 09 why?'s%20accounts.pdf
    ‘The commercial and procurement unit is part of the council’s strategic resources department and sits within the business transformation team. The data now available through Oracle and the P2P system has informed a clear understanding of ‘who’ spends and ‘why’, paving the way for more informed budget planning and future supplier negotiations’.

    PCC Constitution

    The following links provide the executive decisions for the appointment of various consultants including GAJ services, V 4 Services, Options Enterprise, TMI etc who have been paid by PCC and whose directors are Tonks, Ticehurst & Jacobs

    Appointment of Consultants – Strategic Sourcing Project (Strategic Resources) A decision was taken to award a contract Civica.
    Appointment of Consultants – Business Transformation Team (Strategic Resources)
    to award a fixed term contract for a period of six months (March to August 2007) to Penna

    Electoral Software for the verification of personal identifiers – Electoral Services (Strategic Resources) A decision was taken to allow an extension of the present contract with Northgate Information Solutions

    Termination of existing contracts with Anne Corder Recruitment and Blue Arrow – Business Transformation (Strategic Resources)
    Appointment of Consultants/Suppliers – Business Transformation Team (Strategic Resources)

    award fixed term contracts for GAJ Services Limited.
    award fixed term contracts for the period 8 January 2007 to 31 May 2007 to Business Synchronicity
    award a contract to Digital Vision
    award fixed term contracts for Interim Manager for Programme and Project Management and Performance Management.
    allow an extension of the present contract with the Halcrow Group Limited
    award of a contract to Rockpools for the services of an Interim Solicitor

    27/11/2006 Award the contracts for the Interim Head of Efficiency to Options Enterprises Limited and the Interim Efficiency Project Director, Delegate authority to the Director of Strategic Resources to award the contracts for the Interim Procurement Manager and Interim HR Adviser.

    Authority to appoint an Interim Director of Education and Children’s Services, via Veredus Interim Management, for three days a week for a maximum period of 6 months in the sum of £1,100 per day.

    The creation of a new Chief Officer post of ‘Head of Strategic Procurement’

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