Procurement fraud is regularly reported to be the single largest area of financial loss to local government. It is vulnerable because there are multiple ways to commit fraud, some of which are price fixing, bid rigging, double invoicing etc. It is therefore also vulnerable to being exploited by Organised Crime Groups (OCGs).
The Home Office (sponsors of this pilot) made a commitment in its Serious and Organised Crime (SOC) strategy to support more collaboration between law enforcement and councils to contain the risk that SOC might benefit from council procurement. This was a key part of that work
The pilot plan
The pilots were focused on councils’ publicly procured services and had the flexibility to examine all contracted services or a prioritised sub-set (based on threat and risk).
It was proposed that there are two key phases to the pilots.
- Phase one: data washing against Organised Crime Group (OCG) data held by law enforcement to better understand the scale of the Organised Crime (OC) threat to publicly procured services in the council.
- Phase two: will follow-up on the first phase, to take forward joint council/police work using a range of actions to reduce the public procurement links to OC.
The action planning phase intended to establish a strong partnership to tackle the threat. The council with the police jointly agreed a range of activity and central to that was the council’s fraud investigation activity. The funding was used to pay for additional resource (people/skills) in support of that. The funding paid for one dedicated FTE Investigator to work on the phase two of the project over the coming 18 months liaising with police and Home Office The funding also paid for the employee to complete the new CIPFA following Accredited Counter Fraud Specialist training following Investigators move to Single Fraud Investigation Service (SFIS)
The council fraud investigation team joined with the Council Internal Audit team, Corporate Procurement (contract management) and police capability to support investigations.
The emphasis was on developing stronger partnership working primarily, but not exclusively, between the police and councils. It acknowledged that there are a range of powers and actions available to the council as well as to the police that can be used to benefit OC links to procurement fraud.
Issues, challenges and barriers
Issues included extracting the over 19,000 suppliers into a format that was able to be automatically data washed within the police system. Whilst this was a success Durham Police also conducted a manual data wash with the council’s investigator which yielded greater results. The benefit of Durham County Council and Durham Police covering the same geographical area was a huge advantage. No other issues or challenges were identified.
Outputs and outcomes
It was important that the council took a proactive approach to follow up the initial work that has been started in this pilot.
Raising awareness
- Sharing the results of this pilot Given we were a major contributor to the pilot we are more advanced than most in this particular area.
- The analysis of the results suggest that awareness sessions would be of value to employees involved in licensing and the award of contracts for taxis e.g. higher risk areas
- All employees are to be reminded when procuring goods and services to check if the council already has contracts in place and if so to use those contracted suppliers.
Protecting and reducing vulnerability
- The council was supportive of implementing a non-involvement statement particularly in high value/high risk procurements. Colleagues at Durham Constabulary were supportive of vetting these types of procurement on our behalf. During the pilot however this was questioned by the Cabinet Office regarding its use in England and Wales. Given the report now formally recommends this to be implemented, it is assumed this is no longer an issue. This will be confirmed and then subsequently progressed with procurement colleagues.
Taking action collaboratively
- The council now has a point of contact with the Police and a Corporate Fraud Investigator now sits at Police Headquarters at Aykley Heads at least half a day a week
- A memorandum of understanding has been agreed between the police and the council in order to continue to get a shared benefit from the arrangement.
- The council is also represented on the multi-agency partnership group, led by Durham Constabulary set up to disrupt Serious and Organised Crime across the force area.
Impact
As mentioned the council continues to positively to tackling fraud in all forms but the impact of the work completed in this project has enabled us to share our practice and findings with other both nationally and regionally. Presentations were made to the Lcal Authority Chief Auditors Network jointly with the Home Office and sharing of best practice continues.
In addition the council is preparing to complete the data washing exercise again in 2019.
Size of Grant
£51,350 (£15,800 2014/215 and £35,550 2015/2016)
Contact details
Paul Bradley CPFA, Chief Internal Auditor and Corporate Fraud Manager, Durham County Council, [email protected], 03000 269645