191 Agenda Item 11

CABINET – 6th MAY 2014

EASTERN SHIRES PURCHASING ORGANISATION (ESPO) - URGENT ACTION TAKEN BY THE CHIEF EXECUTIVE

REPORT OF THE COUNTY SOLICITOR

PART A

Purpose of the Report

1. The purpose of this report is to inform the Cabinet of urgent action taken by the Chief Executive following consultation with the Leader of the Council to agree the terms on which ceases to be a member of the Eastern Shires Purchasing Organisation (ESPO) consortium.

Recommendation

2. It is recommended that the Cabinet notes the action taken by the Chief Executive, following consultation with the Leader, to agree the early departure of Leicester City Council from the ESPO consortium.

Reasons for Recommendation

3. The County Council’s General Scheme of Delegation requires that any urgent action taken by the Chief Executive between meetings is reported to the next appropriate meeting of the body concerned.

Timetable for Decisions (including Scrutiny)

4. Urgent action needed to be taken to co-ordinate decision making with that of the other member authorities.

Policy Framework and Previous Decisions

5. At its meeting on 9 th April 2013 the Cabinet approved the principles of a new Partnership Agreement for ESPO and authorised the County Solicitor to execute the Agreement and to make any minor amendments to it, in conjunction with the six other Member Authorities making up the Consortium (Cambridgeshire County

192

Council, Leicester City Council, Lincolnshire County Council, Norfolk County Council, City Council and Warwickshire County Council).

6. In September 2013 Leicester City Council served written notice of its intention to leave the Consortium. This was reported to the ESPO Management Committee (the joint committee which oversees ESPO’s work) at its meeting on 26 th September 2013.

7. At its meeting on 6 th March 2014 the ESPO Management Committee received an update on discussions with Leicester City Council on the terms of its departure from ESPO and agreed that the member authorities of ESPO should take the necessary decisions to enable agreement to be reached on an Exit Agreement providing for the early departure of Leicester City Council from the Consortium.

8. The other six members of ESPO have also put in place arrangements to seek approval to this Exit Agreement.

Circulation under the Local Issues Alert Procedure

None.

Officers to contact

David Morgan County Solicitor 0116 305 6009 Email [email protected]

Andrew James Head of Legal Services 0116 305 6009 Email: [email protected]

193

PART B

Background

9. ESPO has the status of a joint committee established under Section 102 of the Local Government Act, 1972. It operates under a Partnership Agreement between the Cambridgeshire County Council, Leicestershire County Council, Leicester City Council, Lincolnshire County Council, Norfolk County Council, Peterborough City Council and Warwickshire County Council made in 1999 and amended in 2005. It has been accepted that the Partnership Agreement requires further updating in order to improve the current governance arrangements for ESPO and to ensure that they are fit for purpose for the future. From September 2010 to June 2011, a fundamental review of the role and purpose of ESPO was undertaken through a member-led Business Strategy Review which resulted in a number of recommendations to improve the operational efficiency and effectiveness. The production of a new Partnership Agreement was an essential part of the process of implementing the changes recommended by that Review.

10. The Legal and Governance [officer] Group, comprising officers from each member authority, spent several months producing a new Partnership Agreement and on 7 th March 2013 the ESPO Management Committee considered a report recommending its adoption.

11. Six of the seven member authorities (Cambridgeshire County Council, Leicestershire County Council, Lincolnshire County Council, Norfolk County Council, Peterborough City Council and Warwickshire County Council) agreed that the Management Committee should approve the Partnership Agreement, recommend it to their individual authorities for approval, and authorise the Consortium Secretary (Leicestershire’s Chief Executive) to make the necessary arrangements for any final drafting amendments, to liaise with individual Consortium authorities, and execute the Agreement. Leicester City Council was not prepared to agree to the wording in the draft Agreement.

12. Without the agreement of Leicester City Council the matter could not progress and the new Partnership Agreement could not therefore be signed. However, in September 2013 Leicester City Council gave formal notice of its wish to leave the Consortium. Under the terms of the existing Partnership Agreement this required the City Council to give two years’ notice. There was however general agreement by Consortium Authorities that if it could be achieved an earlier departure would be in the interests of all parties.

13. To this end further discussions among the Legal and Governance Group has produced a draft Agreement which provides for Leicester City Council to cease to be a member of ESPO with effect from 31 st March 2014. The Director of ESPO has conducted a ‘due diligence’ review to identify any liabilities arising from the change in Leicester City Council’s status. This has revealed no current claims, disputes, or

194

challenges on any of the contracts in place. Previous ‘live’ issues have been concluded. Leicester City Council has ‘live’ disputes with two contractors on ESPO frameworks; neither is understood to have any implications for ESPO as the disputes are with the contractors.

14. The draft Agreement will provide for Leicester City Council to receive a share of any surplus declared by ESPO for 2013/14 i.e. while it was still a member, notwithstanding that this will not be settled until any surplus is finally determined later in 2014/15. The Agreement will also provide for cross indemnities between Leicester City Council and the remaining partners.

15. In order to tie in with the decision making processes of the other local authorities concerned a decision needed to be made in advance of this meeting of the Cabinet. Therefore in accordance with the delegated authority given to him (after consultation with the Leader) to take urgent decisions in between meetings the Chief Executive has agreed the terms of the Exit Agreement.

16. It is expected that following formal agreement of Leicester City Council’s exit, the remaining six local authorities will now enter into agreement for a new Partnership Agreement for ESPO, the basis for which was approved by the Cabinet on 9 th April 2013.

Background Papers

Report to ESPO Management Committee, 7 th March 2013: Consortium Agreement (including the full text of the draft Agreement) http://politics.leics.gov.uk/ieListDocuments.aspx?CId=704&MId=3810&Ver=4

Report to the Cabinet, 9 th April 2013: ESPO Consortium Agreement http://politics.leics.gov.uk/ieListDocuments.aspx?CId=135&MId=3631&Ver=4

Equal Opportunities Implications

17.The proposed new Agreement amends and improves the governance arrangements for ESPO but is not intended to otherwise influence service delivery and, in these circumstances, equal opportunities implications do not arise. The exit of Leicester City Council from the Consortium is not expected to affect those arrangements.