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Housing Services issues: specific failures of Audit Scotland report on Argyll and Bute Council ADP procurement

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Issues around the provision of Housing Services in this contract are integral to judgments on the integrity of the processes of the relationships between the Invitation to Tender, the contracted obligations, the management of the contract, an early variation to the contract and the validity of the contrast as it stands.

Housing Services for addicts in recovery were noted in the Invitation to Tender as being provided to service users  by five of the eight local service providers across Argyll and Bute – in Oban and Lorn, Kintyre, Bute, Cowal and Helensburgh and Lomond.

The Alcohol and Drugs Partnership [ADP] would have known exactly how many service users were being supplied with Housing Services from the quarterly and half yearly returns they were sent by by each of these 3rd sector local service providers whom they were funding to provide them.

This knowledge would, of course, have informed the content of the service specification for the Invitation to Tender [ITT] – in which Housing Services figure prominently in different ways.

It is worth mentioning at this point that much more scrutiny required to be applied to the construction of the Invitation To Tender [ITT]. It omitted a number of key issues of importance to users of addiction recovery service s and their Families, such as:

  • a 24 hour crisis service;
  • children and families support;
  • and the initially present but controversially removed post-contract.

The process of becoming dependent and of trying to stick to a recovery programme may need external assistance at any time of day or night – and emergencies affect others apart from the addict themselves.

Lack of Care Inspectorate Registration

In Item 8.20 [d] – and specifically under Home and  Community Support, the ITT lays down: ‘Provider must be registered with Care Inspectorate and comply with their requirements and standards.’

This is a flat contractual imperative and is in the present tense. Such a requirement would be expected to be a key qualifier for the ability of a bidder to deliver the services required in the tender.

Addaction apparently claimed in their bid submission that they were registered with the Care Inspectorate to provide Housing Services in Argyll and Bute. This was untrue but the Council seems not to have done due diligence on bidders and failed to become aware of this deception.

The contract set an impossibly short transition time to the take-over of the full delivery of community based addiction recovery services across Argyll and Bute – from 4th November 2014 to 1st January 2o15.

The process of registering with the Care Inspectorate is rigorous and time consuming. There was no time for the successful bidder, Addaction, to complete this registration process by their contracted start date on 1st January 2015.

Inexplicably, they did not even commence that process after the announcement of their winning bid on 4th November 2014. They were simply not going to be able to provide key services to the needy addicts for the foreseeable future – a matter which did not seem to perturb them.

When this situation became publicly known, the ADP Coordinator tried to cover up the mess by claiming that Addaction had commenced registration with the Care Inspectorate in October 2014 – which was a direct lie of which she must have been aware.

The Audit Scotland report says that the Council/ADP were aware that Addaction was not registered to provide housing services. If this were true, it would imply complicity on behalf of the council since Addaction had claimed in their bid that they were registered with the Care Inspectorate.

In items 15 and 16 under Care Inspectorate Registration, the report says: [15] ‘Addaction Scotland was in breach of the contract for almost two months as the contract states that the registration with the Care Inspectorate should be in place for the duration of the contract.’ [16] ‘The Council/ADP considered this to be a technical breach and explained that it was aware of this position regarding the registration and that alternative arrangements were in place to provide registered services during this period. The ADP and council were prepared to accept and work round this position.’

It can hardly be considered ‘a technical breach’ that a bidder – never mind a winning bidder – failed to meet what the ITT set as an imperative condition of contract – and what is, after all, a fundamental formal requirement to assure integrity and professional competence in the delivery of services to the vulnerable?

Moreover, ‘the alternative arrangements in place during this period’ of which the ADP/Council assured  the audit team [as quoted from Item 16, two paragraphs above] were not in place at all.

The ADP Executive Group had an emergency teleconference  – which we understand was not minuted – on the 18th December, in response so a flood of complaints that the ADP/Council were simply refusing to recognise there was a problem.

It was only when this public furore at the revelations of this mess and the resultant pressure from the two local MSPs explicitly for such alternative arrangements to be made, that the Council/ADP reluctantly and belatedly agreed to retain the discontinued services of the 3rd sector groups until the end of that month. And this was for one month, not the two months in which the report claims alternative arrangements were in place during Addaction’s breach of contract.

Two 3rd sector groups, one in Helensburgh and one in Kintyre, independently continued to provide these services out of a sense of responsibility to service users with whom they had worked. The Council/ADP made no arrangements with these organisations to continue to provide this support.

The reality is that these ‘alternative arrangements’ depended wholly on the professionalism and good will of these 3rd sector organisations, especially as it was not clear, initially, if they would be paid for this work at all – and at a time their staff were upset by lack of clarity over TUPE arrangements.

We consider it negligent of the audit team not to have made the simple checks necessary to verify this self-exonerating claim by the Council/ADP. This would quickly have shown yet another deception. The serial preparedness to accept, without testing, claims made by the organisation whose procedures they are commissioned to investigate is the core – and cultural – failure of this report.

Another received material inaccuracy endorsed by automatic inclusion in this report is the  statement in Item 61: ‘…the Executive Group members asked the commissioning team to offer a one month extension to existing service providers to mitigate any potential risk during the transitional period and in particular over the festive holiday period. In effect this resulted in Addaction Scotland and existing service providers providing a parallel service for the month of January 2015 to support a smoother transition, except in Kintyre, Mid Argyll, Islay and Bute, and in part in Oban where the existing providers chose not to agree to the contract extension.’

The 3rd sector groups in these areas continued independently to provide their services throughout the period to 25th February 2015.

Importantly, had the Council/ADP indeed previously been aware of Addaction’s non-registration, it is surely inconceivable that they would have left making the alternative arrangements for January with the 3rd sector groups – as they did – until the very last day of work before the New Year for most of the 3rd sector agencies concerned.

 Addaction’s immediate audit of service users needs

It later emerged that Addaction had conducted an immediate audit of service users needs and miraculously found that there was so little need for Housing Services that they would not seek to supply them.

Since the Council/ADP had been commissioning the provision of housing support services from the 3rd sector providers for many years; was aware from regular reports exactly how many service users were in receipt of these services; and had written the tender service specification on the basis of this information – there is serious concern as to how Addaction suddenly found such services to be totally redundant.

They had a profound vested interest in this finding since they were unable to meet their contractual obligations to deliver these specific services.

Did they assess the needs of the service users in a way likely not to flag up the the role of such services in their individual recovery programmes?

Did they assume that some service users who may not have needed housing support services at the time of the assessment would therefore never need them?

The audit team appears not to have considered this matter at all – yet it is centrally germane to the needs and wellbeing of the addicts whose recovery support is the raison d’etre of the ADP – and of the Scottish Government funding given to enable the delivery of such services.

The council is reported as telling the audit team that the Addaction review was already scheduled to take place immediately after the contract commenced. This is not the case. The review of services only took place when it was made public that Addaction were not in a position legally to deliver housing support services.

The review would appear to have been a device to boot into the long grass Addaction’s inability to comply with the contractual obligation to be registered appropriately with the Care Inspectorate.

The audit teams lack of rigour in investigating this matter does them no credit and undermines the credibility of the report.

The variation of contract issue

Following the review Addaction then applied for an immediate variation of contract – of whose obligations they had from the outset been in breach – to remove Housing Services from the services contracted  to be delivered.

The Council/ADP response was recognisably impromptu and unstable.

The audit team report says, in Item 23: ‘Subsequently in the minutes of the ADP Executive Group meeting of 19 February 2015 it was stated that “A variation will be prepared to make explicit that the review of the model of care required to be completed by year 3 will be undertaken from the outset by Addaction.” The ADP/council reconsidered this issue and is formalising a contract variation with Addaction Scotland.

When the issue of contract variation arose, For Argyll asked whether this variation – dropping the requirement to deliver the important housing support services, would not necessarily involve – as it must – a proportional adjustment  of the contract price. The review report makes no mention of this matter, nor has there been any statement on it.

It is, however a matter of relevance to the council’s responsible stewardship of public money. We would have expected the audit team to confront this issue.

The impact of the post-contract removal of housing support services

The post-contract removal of housing support services had a material impact on two 3rd sector service providers who would otherwise have bid for one or more of the lots tendered.

The Audit Scotland report acknowledges, in Item 25, that: ‘Two third sector organisations have confirmed to us that they believed that the projected minimum levels of housing support detailed in the ITT would have to be in place for the first 2 years of the contract and that this would be too difficult to deliver within the price of the contract. They did not therefore submit tender applications.’

Had housing support services not figured in the ITT from the outset, these organisations would have felt able to bid competently for one or more lots in the tender.

In Item 27 the report says: ‘The ITT detailed projected minimum levels of housing services going forward and we believe that the inclusion of this may have stopped some organisations from bidding for the contract.’

In Item 28 it went on to say: ‘We considered that that this immediate review of services and the non-supply of housing services could be material to this contract and may breach public procurement legislation. Ultimately this would be for the courts to decide. In these circumstances, we recommended that the council should take external legal advice, in addition to that already obtained internally, to satisfy itself that the contract is compliant with public procurement legislation’

Item 29 deals with the outcome of this recommendation to the council and the specific external legal advice it received, saying: ‘The advice stated that “it was the implementation of the review, and not the agreement of the variation, which has brought about the reduction in the Housing Support requirements” and that “the outcome of the review [whenever it took place] could not have been predicted… the status quo could have continued”. ‘

The report then says: ‘The advisers agree that it is ultimately for the courts to determine whether a change to a contract is a material one for the purposes of public procurement legislation.

While the audit team has been weakly content to leave this matter without further challenge, legal vulnerability from this situation clearly continues to trouble the team. The report makes a few additional mentions of tests of this vulnerability at law – which, given the cost of Judicial Review, is a test extremely unlikely to be made.

The lack of such a test being made ought not to be taken by anyone, including the audit team, to support assumptions that the process had integrity or that the contract is indeed legally secure.

In many ways the question of the legal soundness of the contract currently in operation is the hard heart of the matter. The audit team’s effective ducking of this issue, leaving it unevaluated, is in our view a dereliction of duty.

It is unacceptable to leave so important a matter to external legal advice bought by the subject if the investigation.

It must be possible for Audit Scotland to commission its own independent legal advice on such a matter – in order to be able to come to the independent objective judgment they are tasked with providing.

Why did the team not bother to do that?

In a way that signal failure sums up the spectrum of concerns For Argyll has about the specific fulfilment of this investigation.

Associated articles in this series:


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