Summary: Mrs X complains the Council failed to honour agreements with Charity A, and mismanaged a bid for funding to provide services. This caused Charity A financial loss. The Ombudsman finds fault with the Council for poor record keeping and failing to have procedures and service agreements in place, which caused Charity A financial loss. The Council has agreed to repay Charity A and carry out service improvements.

The complaint

1. Mrs X complains the Council failed to adhere to agreed terms when engaging services from Charity A.
2. Mrs X complains the Council purposefully undercharged for Charity A’s services and failed to properly communicate expected costs. This caused Charity A to incur unfair costs.
3. Mrs X complains the Council failed to follow the correct procedure when arranging a financial bid for Charity A, and that this meant the bid details were wrong. This led to Charity A incurring further costs.
4. Mrs X also complains about how the Council handled her complaint, and that since she has complained Charity A has been negatively impacted.

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What I have and have not investigated

5. Mrs X also complained about Council officers sharing information about her with third parties. The Ombudsman does not investigation complaints about information sharing. These complaints are for the Information Commissioner.
6. Part of Mrs X’s complaint is also about the behaviour of a staff member and delivery of training materials. I have not considered these parts of Mrs X’s complaint as there is not enough evidence of injustice.

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The Ombudsman’s role and powers

7. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word ‘fault’ to refer to these. We provide a free service, but must use public money carefully. We may decide not to start or continue with an investigation if we are satisfied with the actions a council has taken or proposes to take. (Local Government Act 1974, section 24A(7), as amended)
8. The law says we cannot normally investigate a complaint when someone could take the matter to court. However, we may decide to investigate if we consider it would be unreasonable to expect the person to go to court. (Local Government Act 1974, section 26(6)(c), as amended)

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How I considered this complaint

9. I considered Mrs X’s complaint and information she provided. I also considered information from the Council.
10. I considered comments from Mrs X and the Council on a draft of my decision.

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What I found

Legal and administrative background

Public procurement

11. Public procurement is the process whereby public sector organisations acquire goods, services and works from third parties. It ranges from routine items (e.g. stationery, furniture or printed forms), to complex spend areas (e.g. construction, waste contracts).
12. Councils must adhere to the national Public Procurement Policy. The over-riding policy is that all public procurement must be based on value for money, which is defined as “the best mix of quality and effectiveness for the least outlay over the period of use of the goods or services bought”. This should be achieved through competition, unless there are compelling reasons to the contrary.

Good administrative practice

13. The Ombudsman publishes ‘Principles of Good Administrative Practice’, which we use as a benchmark for assessing the standards we expect when we investigate the actions of local authorities.
14. One of those principles is about being open and accountable. This includes keeping proper and appropriate records and having clear policies and procedures.

What happened

15. Mrs X founded Charity A. The Council previously worked with Charity A to carry out training to Council staff and other groups.
16. In October 2021, the Council asked Charity A to provide further training to staff.
17. Mrs X said she wrote to the Council in October 2021 on behalf of Charity A and advised the cost would be £50 per attendee.
18. In November 2021, Mrs X says the Council amended the charge to £35 without discussion. However, the matter was resolved as the attendee from the Council did not attend the training.
19. Mrs X said the same issue arose in February 2022 where the Council charged £35 per attendee for a training course from Charity A. Mrs X had told the Council the cost was £50 per attendee. Mrs X later agreed the cost could be reduced to £45 per attendee.
20. Mrs X said the Council put Charity A under pressure to cover the shortfall of costs because of the lower price.
21. In June 2021, Charity A made a joint bid with the Council for funding to provide community services to local residents. The bid was created with support from the Council. In the draft bid, Charity A set out what the funds would be used for. The draft bid also set out that should the bid be successful, further funds would be provided by the Council.
22. Mrs X says the Council changed the bid before submission to include itemised spending. This meant that Charity A could not recover funds that were not included in the itemised spending.
23. Mrs X complained to the Council in May 2022. In her complaint Mrs X said the Council had discounted training for staff which left a cost shortfall set out the issues with the training costs. Mrs X also complained about the Council’s management of the bid handling. Mrs X said the Councils actions had caused significant financial loss to Charity A.
24. In response to Mrs X’s complaint the Council said had previously honoured the lower price for training, and so the staff member had approved the training at a lower cost. It said the cost to the charity was minimal as the Council was supporting Charity A to create income.
25. In response to the bid management complaint, the Council said the bid was developed in partnership with the Council. It said it was reviewed by both parties before being submitted, and that it was clear added funding would be provided should the bid be successful.

Analysis

26. As part of my investigation, I asked the Council and Mrs X to provide correspondence of any service agreements in place about the training costs and the bid management.

Record Keeping

27. As part of my investigation, I have considered whether the Council has displayed good administrative practices.
28. I find fault with the Council for its record keeping. The record keeping from the Council is minimal, unclear and often has gaps relating to rationale and decision making. There is no policy or service agreement in place which sets out expectations from both sides. This likely contributed to the poor communication about the training and bid management. This was fault by the Council, causing Charity A injustice.

Training costs

29. I have reviewed the correspondence between the Council and Mrs X about the training costs. The Ombudsman has published guidance on good administrative practices from Councils. In this guidance, the Ombudsman sets out that Councils are expected to be

• Open and clear about policies and procedures and ensuring that information and advice provided is clear, accurate and complete.
• Handling information properly and appropriately, keeping appropriate records and taking responsibility for its actions.

30. The Councils complaint response recognises there was a shortfall in costs caused to Charity A by changing the training costs. However, this was offset by the support the Council was providing to Charity A to raise funds. In response to my enquiries, the Council said it had continued to promote Charity A and had ensured a further £600 was donated.
31. The Council was aware it had not communicated the change in costs to Charity A, and only agreed the change internally. This was fault by the Council, causing Charity A to provide services at a rate that was not agreed.
32. It was clear that Mrs X and Charity A had communicated a change in costs for the training, which the Council at first approved. To amend the costs without telling all parties was fault. The Council should have taken responsibility for this action and provided a remedy for this fault. It should have also set up service agreements going forward for how to manage further work with Charity A.

Bid costs and management

33. Mrs X says the Council changed information on the bid to say that funds would be allocated to certain things. This meant that Charity A could not use the funds to help it deliver the services it had agreed. The Council said that it had provided Mrs X with a copy of the final bid. It also said that any loss was balanced by a further top up amount that it would provide if the bid was successful.
34. Mrs X says she did not know about the top up amount to be provided by the Council and that she was not aware the top up costs would be itemised. The bid was successful and the funds were distributed to Charity A.
35. It is obvious from the communication between Mrs X, Charity A, and the Council there was no clear policy or procedure in place for the bid process. There was also no clear service agreement which set out the expectations from both sides.
36. This meant the process and communication between all parties became muddled, and professional relationships broke down.
37. Mrs X says Charity A incurred costs because of the change in information by the Council on the bid form. This meant she could not recover funds for things like fuel and training as the funds were not agreed to be allocated to this.
38. I uphold Mrs X’s complaint that Charity A was not made aware of the itemised costs. Council communication shows that it recognised the costs needed to be covered, but did not explain to Mrs X or Charity A how these costs would be paid. This meant that Charity A had to incur charges for things it could not claim back from the bid. Previously, Charity A had been under the understanding that it would be able to recover these costs.
39. Mrs X has calculated that Charity A incurred a shortfall of £3675.
40. With no clear service agreement or communication in place, I find that Charity A were caused injustice because of the Councils actions.
41. In response to my enquiries, the Council said that some of this cost has been repaid because it promoted Charity A, which resulted in a £600 donation. However, the fault was with the Council and the donation from a third party is not a remedy for fault by the Council.

Further work

42. The Council has since ended its contract with Charity A and asked the funds be returned
43. It is up to the Council to decide who it contracts for third party work, and therefore the decision to end the working relationship with Charity A is not something I can question.
44. However, I do find fault with the Council for failing to have a clear procedure and service agreements in place. This would reduce the likelihood of fault and confusion, and ensure the Council adheres to the Ombudsman’s guidance on good administrative practices.

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Agreed action

45. Within 4 weeks the Council has agreed to

• Write to Charity A and apologise for the fault identified
• Pay the shortfall in costs to Charity A. This is calculated to be £3675.
• Make a donation to Charity A for £150 in recognition of the injustice caused.

46. Within 12 weeks has agreed to

• The Council should develop a clear policy and procedure for supporting third parties with bid applications. This should include the development of service level agreements for both sides.

47. The Council should provide us with evidence it has complied with the above actions.

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Final decision

48. I have now completed my investigation. I find fault with the Council for failing to have policies and procedures in place for bid submissions. This meant that Charity A incurred a loss of funds.

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Investigator's decision on behalf of the Ombudsman