Council invoiced for £4m with no contract in place

This is a Guest Post

All Folkestone & Hythe District Council councillors and officers, especially the s151 officer of the Council, owe a fiduciary duty to the local council taxpayer.

A fiduciary duty refers to someone who manages someone else’s money or property. 

It will not comes as a surprise that during 2021/22, out of £9.6m worth of contracts, £4m were issued with retrospective purchase order (RPO). As such the Council failed to follow its own processes and procedures. Or put another way, 42% were issued with RPO. What is important to remember here is, a purchase order is a contract.

The process is set out in the Council’s Contract Standing Orders, as per page 20, and the Council’s Financial_Procedure_Rules

To understand why Retrospective Purchase Orders have serious negative consequences for the Council, one first needs to understand what a Purchase Order (PO) is.

• A PO is a confirmation note from the Council to a supplier to deliver goods or services. It is a document created by the Council that officially authorises the purchasing transaction, when accepted by a supplier, this becomes a binding contract between the parties.

• The correct order for a PO can be best summed up thus:

A Retrospective Purchase Order works like this:

However, as the Council already have the invoice, which does not relate to a purchase order, as one hasn’t been raised.  I would suggest you think about that. The end point of a purchase is to send out a purchase order; which is a contract, right? Well, the Council already have the goods or service so it’s like shutting the barn door after the horse has bolted! A purchase order is the document the Council send the supplier, formerly requesting they supply goods or services at a price they state. So, as I say, it’s a bit late in the day if you already have the invoice.

Doing the purchase order first, is part of the process of internal control. Internal controls facilitate the achievement of procurement and financial goals, such as spending policy compliance, reporting accuracy, and risk mitigation. They are the mechanisms, rules, and procedures to ensure the integrity of financial and accounting information, to promote accountability, good governance and prevent fraud.

As I said, the Council raised £4m worth of RPOs in 2021/22, or rather 650 of them. The single largest retrospective purchase order was for £662,564. And the top eleven for sums above £100,000, totalled £2.2m as can be seen in the spreadsheet link below.

Retrospective Purchase Orders 2021/22

So it’s clear, the Council did not follow its own process and procedures. And without a purchase order; which is a contract, in place, invoices should never have been received. It also means there was no bona fide contract, meaning s265 of the Public Health Act 1875 would not protect Council officers from liability, including the s151 officer at the time Charlotte Spendley.

Lets not forget, the same issue around retrospective purchase orders was raised at the Audit and Governance Committee on the 29 November 2017, in work undertaken by the internal auditor, as can be seen in Report Number AuG/17/11, where it states at page 9:

“The percentage of retrospective purchase orders (RPO) for the Council as a whole was 20% or 1 in 5. Since monitoring the use of RPO’s began their numbers have fallen to between 8-15% across the Council.

So it has happened before, and what that’s saying: once bitten, twice shy, well obviously it doesn’t apply to Folkestone & Hythe District Council, as they went and did it all again. 

One notes not a single sitting Cllr, regardless of party, discovered this information, not one. Between them they were rewarded with allowances totalling £321,709, in 2021/22. It was I, the public face of the Shepway Vox Team, who uncovered the abuse of retrospective purchase orders.

This is why I ask all those who live in the Folkestone Central ward to vote for me, because I will endeavour to ensure that Council’s officers are following the correct processes and procedures as set out in its constititution.

Vote Rylands

Folkestone Central

May 4th