An inquiry is under way after Birmingham City Council broke its own rules by failing to put a £254,000 contract with financial consultants PricewaterhouseCoopers out to tender.
Council chief executive Stephen Hughes has ordered a disciplinary investigation into the conduct of senior city officials who approved a deal with PwC to deliver a programme of behavioural change workshops with 100 local authority managers.
He admitted officers did not follow proper procedures because they were “working to an extremely tight timescale” to get the contract signed.
The probe comes as it emerged the council spent more than £400,000 in six months on consultants to deliver the previous Government’s Total Place scheme, which encourages local authorities and public agencies to share budgets and work more closely together.
The bills were paid by the council using money from the Working Neighbourhoods Fund, a Government cash pot to reduce unemployment and deprivation.
Competitive quotes from at least three bidders must be sought for contracts worth more than £150,000, according to the council’s procurement regulations.
But the council did not seek alternative bidders for the contract awarded to PwC and also broke rules set out by the Office of Government Commerce.
PwC was appointed by Be Birmingham, the council-led strategic partnership, to run Total Place collaborative leadership courses.
The contract was then sub-let by PwC to Common Purpose, a not-for-profit organisation dedicated to promoting more effective civic leadership.
As well as hiring PwC, the council paid consultants Taylor Haig £163,000 for advising on the Total Place programme.
One consultant at the London-based firm was paid just over £1,000 a day for 23 days work.
The £400,000 consultancy bill was criticised by Sir Albert Bore, leader of the council’s opposition Labour group. Sir Albert (Lab Ladywood) said: “I had no idea this sort of money was being spent on consultants.
"We must have more transparency. There is a huge amount of money being spent on consultants from a pot which is supposed to deal with deprivation, but if you look at the worst areas in Birmingham today they are virtually the same as they were 30 years ago.
"You have to conclude this expenditure has not had the desired effect.”
Details of the contracts for PwC and Taylor Haig emerged following a Freedom of Information Act question from Larry Brown, a member of the public.
The council also issued an apology to Mr Brown for breaching the Data Protection Act after he was identified to either PwC or Common Purpose as the author of the question.
For several months officials at Be Birmingham denied they had done anything wrong in correspondence with Mr Brown. Jayne Bench, head of finance at Be Birmingham, wrote to Mr Brown stating that it had not been necessary to run a full procurement procedure.
The use of the Office of Government Commerce framework agreement reduced the administrative burden in terms of the time and cost compared to running a full procurement procedure and helped to ensure legal compliance, she said.
Ms Bench added: “The requirement has been advertised and capable suppliers have been identified through competitive procurement.”
But the council’s attitude changed abruptly after Mr Hughes agreed to investigate the PwC contract personally.
In a letter to Mr Brown on July 18, Mr Hughes admitted: “Birmingham City Council did not fully follow procurement procedures in agreeing this order with PwC. In using the Catalyst Framework Agreement we should have sought quotes from other providers on the list.
“PwC should have run a mini competition amongst potential suppliers. It appears that the need to commission this work in an extremely tight timescale led to officers failing to comply fully with our procurement process.
“I have asked the strategic director of development to whom the relevant officers report to carry out a disciplinary investigation. I have also instructed Procurement to distil the key lessons from the episode and ensure they are fully disseminated across the organisation.”
There is no suggestion that Common Purpose or Taylor Haig acted incorrectly. Mr Brown is also questioning some of PwC’s charges in the council contract.
The firm was paid £72,900 for research and design, £36,000 for administration and £12,000 for learning materials.