In-Depth Review of Supported Businesses
North Lanarkshire Council · 18 May 2023
Back to Audit and Scrutiny Panel — 18 May 2023 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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North Lanarkshire Council Report Audit and Scrutiny Panel Does this report require to be approved? ☐ Yes ☒ No Ref Date 18/05/23 In-Depth Review of Supported Businesses From James McKinstry, Chief Officer (Assets and Procurement) Pamela Humphries, Chief Officer (Place) Janie O’Neill, Chief Officer (Education, South) E-mail mckinstryj@northlan.gov.uk humphriesp@northlan.gov.uk oneillja@northlan.gov.uk Telephone 07939 281102 07939 280710 1. Background 1.1 Panel Members will recall the previous Scrutiny Work Programme report of 8 September 2022 detailing that in-depth scrutiny reviews identified by Panel Members were to be undertaken on specific areas of activity or issues that were identified. 1.2 Approval of the annual composite Scrutiny Programme was granted at the meeting of 16 February 2023, and this contained the requirement to undertake an in-depth scrutiny review of Supported Businesses. 1.3 This followed a request submitted by an Audit and Scrutiny Panel Member in February 2023 requesting that an in-depth scrutiny review was undertaken of Supported Businesses. Executive Summary This report notifies the Audit and Scrutiny Panel of the in-depth scrutiny review process that has been carried out to address matters and questions raised regarding the council’s governance, support, business functions and operational processes used, to facilitate the involvement of Supported Businesses in its procurement and enterprise development activity. Recommendations It is recommended that the Audit and Scrutiny Panel: • Consider the information presented in relation to the in-depth scrutiny requested and note the position. The Plan for North Lanarkshire Priority Improve economic opportunities and outcomes Ambition statement (5) Grow and improve the sustainability and diversity of North Lanarkshire's economy
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1.4 The source document used to initiate the review was the Council’s Annual Procurement Report 2021-22 which was approved by Finance and Resources Committee on 14 September 2022. https://mars.northlanarkshire.gov.uk/egenda/images/att98654.pdf 1.5 In the reporting year 2021-22 the council spent £1.4 million pounds with Supported Businesses. This included internal procurement expenditure with North Lanarkshire Industries and 7 low value contract awards made to other Supported Businesses. 1.6 Procurement legislation requires the council to include a summary within its Annual Procurement Report of any steps taken to facilitate the involvement of Supported Businesses in Regulated Procurements during the reporting year. 2. Report 2.1 This report refers to both Supported Businesses and Social Enterprises. For clarity a definition of each is set out in paragraphs 2.2 and 2.3 as while terms can be interchangeable, there are clear distinctions. 2.2 Supported Businesses are social enterprises whose main aim is to integrate disabled or disadvantaged people socially and professionally. Their workforce must be at least 30% disabled or disadvantaged, as specified in EU Directive 2014/24/EU. 2.2 Social Enterprises are businesses with a social or environmental purpose and whose profits are re-invested into fulfilling their mission. They empower communities, tackle social problems, and create jobs - particularly for people who are at a disadvantage in the standard jobs market. 2.4 In relation to the in-depth scrutiny review request of Supported Businesses, Chief Officers were asked to provide a response to each of the following 9 individual questions: 1 How many supported businesses does the council have/support? 2 What processes does the council have in place for assisting Supported Businesses/Social Enterprises? 3 Who decides on funding and how are any funding awards monitored? 4 What is the council budget in 2023-24 for Supported Businesses? 5 What is the process in place to identify Supported Businesses eligible for contract awards in the first place? 6 What checks are in place to verify such businesses are in operation and are a viable entity? 7 How does the council monitor if the business that was awarded the contract, actually spends the money on what’s been stipulated in the contract? 8 What community benefits do these contracts generate for local communities? 9 How does the council monitor/measure it’s return on the £1.4 million investment and ensure value for money. 2.5 Appendix 1 of this report provides the Audit and Scrutiny Panel Members with a full detailed response for each question. 3. Measures of success
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3.1 Where possible and in line with Procurement Legislation and internal procurement procedures, Supported Businesses and Social Enterprises are provided with the opportunity to bid for contracts that support the delivery of council and service priorities. 3.2 Other measures of success include the following: • An increase in the appointment of Supported Businesses and Social Enterprises who have suitable experience and capability to deliver the required supplies, services or works. • Continued delivery on the vision of the North Lanarkshire Social Enterprise Framework and the implementation of the Action Plan 2021-26 against the main themes to Stimulate the Sector, Develop Stronger Organisations and to Realise Market Opportunities. • Continued work with external business support partners to offer training and development and other complimentary support to facilitate the growth and development of the social enterprise sector in North Lanarkshire. • Continued promotion of the use of North Lanarkshire Industries as a route to market for the goods and services identified in their portfolio. • Best Value is both demonstrable and achieved. 4. Supporting documentation 4.1 A full response to the questions raised can be found in Appendix 1 of the report. James McKinstry Chief Officer (Assets and Procurement) Pamela Humphries Chief Officer (Place) Janie O’Neill Chief Officer, (Education - South)
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5. Impacts 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality- and-fairer-scotland-duty-impact-assessments Yes ☐ No ☒ 5.2 Financial impact Does the report contain any financial impacts? Yes ☐ No ☒ If Yes, have all relevant financial impacts have been discussed and agreed with Finance? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts have been discussed and agreed with People Resources? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☐ No ☒ If Yes, have all relevant legal impacts have been discussed and agreed with Legal and Democratic? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☒ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☒ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact?
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Where the impact identifies a requirement for significant technology change, has an assessment been carried out (or is scheduled to be carried out) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☒ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.9 Risk impact Is there a risk impact? Yes ☐ No ☒ If Yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed? 5.10 Armed Forces Covenant Duty Does the report require to take due regard of the Armed Forces Covenant Duty (i.e. does it relate to healthcare, housing, or education services for in-Service or ex- Service personnel, or their families, or widow(er)s)? Yes ☐ No ☒ If Yes, please provide a brief summary of the provision which has been made to ensure there has been appropriate consideration of the particular needs of the Armed Forces community to make sure that they do not face disadvantage compared to other citizens in the provision of public services.
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Appendix 1 – Response to Questions 1. How many Supported Businesses does the council have/support? The council owned Supported Business is North Lanarkshire Industries (NLI). Council procuring services are required to assess whether their goods and services can be procured internally from NLI against the identified portfolio of goods and services that they provide, before making their decision to procure externally. The council’s e-procurement solution Pecos is used to place purchase orders with NLI for goods and services. Contract awards to other supported businesses can vary from year to year depending on the demand for goods and services and the number of successful bids made by Supported Businesses in response to the council’s contracting opportunities. In the reporting period under scrutiny, outwith the internal business allocated to NLI, the council made a total of 7 individual contract awards to the 3 suppliers highlighted. Procurement Type Supplier Contract Title Community Benefits Contract Strategy Chief Officer Regulated: Above £50k for Services Angela Harvey Salon Training and Education Vocational & Skills Based Interventions (Hairdressing & Beauty Care) £277,777.00 Yes Education Non- Regulated Supplies Scotland’s Bravest Manufacturing Company Signage - Hartwood Road, Shotts £7,042.00 Not Required Community Operations Non- Regulated Works Aqua Specialist Environmental Services Headstone Foundation Repair - Coltswood Cemetery £24,051.00 Not Required Assets & Procurement Non- Regulated Works Aqua Specialist Environmental Services Playground Upgrade - St Joseph’s PS £24,619.00 Not Required Assets & Procurement Non- Regulated Works Aqua Specialist Environmental Services Headstone Base Repairs - Coltswood Cemetery £48,838.00 Not Required Assets & Procurement Non- Regulated Works Aqua Specialist Environmental Services Nursery Footpath - Christ the King PS £24,035.00 Not Required Assets & Procurement Non- Regulated Works Aqua Specialist Environmental Services MUGA Footpath - St Maurice’s HS £81,290.00 Not Required Assets & Procurement Total £487,562.00 £487,562.00
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2. What processes does the council have in place for assisting Supported Businesses / Social Enterprises? Procurement leads are required to complete a contract strategy document for goods and services above £50,000 and for works above £500,000. The document is signed off by Chief Officer, Corporate Procurement and Service Procurement Leads prior to the commencement of a contract award process. The document contains a section with a declaration to establish whether the requirements of a particular contract can be provided by NLI and if so, council services are required to commit to engaging in dialogue with them to procure the goods and services. If it is established that NLI cannot provide the requirements of the contract, the reasons must be documented. In addition, this section also contains a declaration to establish whether the contract can be considered as a ‘Reserved Contract,’ i.e., exclusively reserved for other Supported Business only to be invited to bid for the contract opportunity. If it is established that the requirements of the contract are not suitable to be exclusively reserved for other Supported Businesses, the reasons must be documented. The council co-produced a North Lanarkshire Social Enterprise Framework and Action Plan which covers the period 2021 to 2026. This document can be viewed at: Social Enterprise Framework.pdf (northlanarkshire.gov.uk) A Steering Group is in place to oversee the implementation of the Framework and Action Plan. The Framework’s vision is for a competitive and dynamic social enterprise sector in North Lanarkshire which supports inclusive and green growth, delivering innovative solutions and proactive responses to local needs and to maximise local public and private procurement opportunities. The three key themes of the Framework are to Stimulate the Sector, Develop Stronger Organisations and to Realise Market Opportunities. A range of business support is in place to support the sector. An officer is also in place in the Enterprise Team who specialises in sectoral support for social enterprises. The main support available locally and nationally includes: Lanarkshire Business Gateway Services – Social Enterprise and Supported Businesses can receive free support to set-up, grow and sustain their businesses. This is through a range of 1 to 1 advisory services, workshops, events and access to the council’s Expert Help Framework (subject to eligibility) which can provide a range of specialist advisory support in key areas including strategy, HR, marketing, digital and procurement. Supplier Development Programme – This Programme provides free support to organisations to assist them to become more able to tender for public procurement. A range of events and training are delivered including national and local meet the buyer events. More information can be viewed at: www.sdpscotland.co.uk Business Grant Funding – The council’s business grant funding schemes are available to social enterprises and supported businesses subject to eligibility criteria. North Lanarkshire Social Enterprise Network – The Network supports new, established or aspiring social enterprise in North Lanarkshire to grow and develop. Just Enterprise –is a national programme designed to help sustain, develop and grow social enterprises and enterprising charities in Scotland providing one to one specialist support, group workshops and programmes, webinars and online learning. Just Enterprise - National Support, Delivered Locally
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First Port - supports individuals all across Scotland to start, develop and grow their ideas into businesses with social impact at their core. They can provide funding, advice and support - About – Firstport VANL – Provides support to the sector and in particular around governance and through the promotion and support for volunteering and the development of the voluntary and community sector. Social Enterprise Scotland - Social Enterprise Scotland – is an independent membership- led organisation which is the representative body for social enterprises in Scotland. Social Enterprise Academy – Social Enterprise Academy International Support through transformational learning and development of individuals, teams, organisations and communities to build sustainable enterprises that achieve their social impact. They also operate a schools programme which North Lanarkshire participates in. Through the UK Shared Prosperity Fund, additional support is being developed to put in place to additional and complementary support to facilitate the growth and development of the social enterprise sector in North Lanarkshire aligned to the Framework and action plan up to 31 March 2025. 3. Who decides on funding and how are any funding awards monitored? In relation to business grant funding, applications are reviewed against the criteria for the scheme and the evidence of the need for funding. An officer reviews the application and makes a recommendation to a manager within the Council’s Enterprise Team for final approval. Applicants must submit evidence of how the grant funding has been spent. Funding is retrospective based on the successful completion of the activity funded. 4. What is the council budget in 2023/24 for Supported Businesses? The council do not have a budget that is specifically reserved for supported business in relation to contract award procedures but as per the response to Question 2, the council and External Partner Agencies provide a wide range of local and national business support services to support the sector. 5. What is the process in place to identify Supported Businesses eligible for contract awards in the first place? As per the process documented in response to Question 2, if it has been identified in a contract strategy document that a contract opportunity can be reserved specifically for a Supported Business, the Council has access, through Scottish Procurement, to a national collaborative framework designed for the Scottish Public Sector and third sector bodies, with a clear path for the procurement of goods and services from Supported Businesses and in doing so, support the integration of disabled and disadvantage citizens into the mainstream workforce. The commodity groupings within this Framework are Furniture and Associated Products; Document Management Services; Personal Protective Equipment and Uniforms and Signage. There are a total of 7 contracted Supported Businesses across all commodity ranges on this Framework. Under Procurement Legislation, if there is not a suitable Framework that the Council can use to establish a call-off contract, a contract opportunity for supplies and services above £50,000
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and for Works above £500,000 must be openly advertised through the Public Contracts Scotland Advertising Portal. In terms of transparency, equal opportunity and fair treatment for all, these contract opportunities are available to all Suppliers including Supported Business who have registered on the portal. When contract award procedures have been completed, the Council is also required under legislation to publish Contract Award notices to inform interested parties of the contract award details including value, duration and the successful supplier (s). This can potentially lead to supply chain opportunities for Supported Businesses and other third sector organisations. The North Lanarkshire Industries Business Plan for 2015-2021 was approved at the Housing and Social Work Services Committee in April 2015. This demonstrates the Council’s continued commitment to support NL Industries and to secure a sustainable and viable future for the business in the key workstream areas of Soft Furnishing Activity (Re-upholstery/Re-cycling), Beds, Sofa Production, Removals/Storage, Secure Document Storage and Fire Maintenance and Equipment Maintenance. 6. What checks are in place to verify such businesses are in operation and are a viability entity? The source data to support the information provided in the council’s Annual Procurement Report is extracted from the National Public Sector Advertising Portal - Public Contracts Scotland. This is a 3rd party software solution managed by Scottish Government. The registration process requires each supplier to identify whether they are a third sector supplier and thereafter to indicate if they are a: • Supported Business or Supported Employment Programme whose main aim is the social and professional integration of disabled or disadvantaged persons, where at least 30% of the employees are disabled or disadvantaged workers. • Social firm (where their primary purpose is to support the employment of people at a disadvantage in the workplace, at least 25% of the workforce is disadvantaged, and which generates over 50% of its income through sales of goods and/or services). • Charity (described by the Office of the Scottish Charities Regulator as an organisation which meets the charity test, meaning it must have only charitable purposes as defined in charity law and must provide public benefit). • Other type of third sector body. If they indicate that they are a Charity, they must provide their Charity Number and CIC Incorporation number. The council then has access to standard reports in the portal to analyse the number of contract awards made in a particular reporting period, to organisations who have declared that they are operating in the Third Sector and also for contract awards that were reserved for sheltered workshops and economic operators, whose main aim is the social and professional integration of disabled or disadvantages persons. 7. How does the council monitor if the business that was awarded the contract, actually spends the money on what’s been stipulated in the contract?
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Procurement leads are required to complete a contract strategy document for goods and services above £50,000 and for works above £500,000. The document is authorised by key stakeholders prior to the commencement of a contract award procedure. The document contains a section on contract management to establish the ongoing contract and supplier management arrangements throughout the duration of each specific contract. It covers the following areas: • Nominated contract owner; • Level of CSM to be applied; • CSM Performance Scorecard Frequency; • Minimum CSM scored to be maintained throughout the contract; • Detailed KPI’s and areas of assessment • Mitigating factors/actions to be incorporated into the contract in the event of continued failure to maintain minimum CSM scores; • Management Information reports required to be provided throughout the contract term. 8. What community benefits do these contracts generate for local communities? The council’s General Contract Standing Orders and the ‘Reform Act,’ legislation set out the requirement for Community Benefits related to regulated contracting activity, which is contract awards in excess of £50,000 for supplies and services and £2,000,000 for works. In addition to complying with the community benefit requirement the appropriate Chief Officer must, in carrying our all-relevant procurement exercises where the estimated value is in excess of £500,000 comply with the council’s policy of promoting community benefits. The contract strategy document contains a section to identify sustainable benefits for each specific contract. Procurement leads are required to identify if community benefits are achievable within the contract and to identify the specific community benefits expected to be delivered. From the contract analysis table provided in response to Question 1, there were 6 non- regulated contract awards made that were not required under legislation or internal policy to be considered for the inclusion of community benefits. The only regulated contract award made to Angela Harvey Salon Training and Education was for vocational and skill-based interventions (2021-25) for young people across all North Lanarkshire school establishments. The primary aim of this framework was to enhance to employability skills and post school pathways to better equip our young people for the world of work. A significant focus of the framework is to ensure the availability of adequate specialist provision for our schools and programmes supporting pupils with complex and additional needs. The nature of this framework already delivers benefit to our communities so there were no other specific additional community benefits identified on the contract strategy for this procurement. North Lanarkshire Industries (NLI) is a supported business and a discrete part of Employability Services which is within Education and Families and all staff are North Lanarkshire Council employees. NLI has several NLC and external contracts to fulfil on an annual basis alongside income targets. For other Council services they deliver on a range of contracts, and these include: - manufacturing and upholstering furniture (beds, sofas and seating areas)
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- soft furnishings (bedding and curtains) - furniture storage service for displaced tenants - document storage service - Council fire equipment maintenance contract Each of these contracts is negotiated and delivered within the terms of a contract agreed with each customer. In terms of the benefits secured by our communities through NLI delivering services on behalf of the Council these are at the heart of the supported business. NLI has 31 staff in total of whom 25 (81%) have a range of significant disabilities. While receiving the rewards and benefits due to all NLC employees this group of staff also get support from the management team at NLI on a range of issues. These include training and support within the workplace in all employment skills such as team working, communication, health and safety at work and specific vocational skills related to their role. In addition, staff are supported by the management team on a range of subjects not directly related to employment, but which are either a concern for individuals or an issue requires additional support because of their disability. These are wide and varied subjects but include signposting employees to support with housing, money management, benefits and health challenges and, at times, acting as their advocate in such matters. Therefore, the social return on this investment by various NLC departments in contracting services with NLI is that 25 people with significant disabilities are employed in a real working environment with all the rewards that having a job brings. These are not only the financial rewards of employment; the psychological benefits of work also promote positive physical and mental health and research tells us that those in work see their GP less often than people who are unemployed. There is also a contribution to every community of having residents in work and the financial security combined with a sense of pride and purpose, that this offers employees and their families. 9. How does the council monitor / measure its return on the £1.4m investment and ensure value for money? The council monitors and measures its return on investment through standardised contract and supplier management processes and procedures. The vocational education team along with the ASN strategy group are responsible for managing individual contract awards from the overarching flexible framework. The control mechanisms of the direct award ensure which provider best suits the needs of the pupil and compliance with rank order and spend. Call-off decisions are based around the school leader’s assessment of the learner group/child’s needs and therefore the suitability of the course for the child, the availability and the affordability. Supplier performance and feedback is shared with all schools to determine future decisions. Through active contract and supplier management the council will also be able to determine whether the framework is still fit for purpose. The contract awards made to Aqua Specialist Environmental Services and Scotland’s Bravest Manufacturing Company were low value, non-regulated, one-off contract awards for supplies, services and works.
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These contracts would have been managed by the respective Contract Owners at a low level to ensure a quality service was provided by the contracted suppliers in accordance with the specification of requirements, delivered by the agreed timelines and within budget. All services contracted with NLI by other Council services are subject to a Service Level Agreement (SLA) which details the service being required and its costs, along with any other conditions applied by the service to the contract. There are monthly contract review meetings with each service to review performance, budget and issues such as health & safety against those agreed in the SLA. NLI is also commercially competitive with mainstream businesses and secures external contracts with a range of customers including NHS and other local authorities.