A COMPUTER system designed to save taxpayers’ money has cost Kirklees Council £60,000 a year extra.
The Marketplace Electronic Procurement System proved so unpopular with staff that only one in six purchases was made through the network.
Kirklees also had to use a private company to process thousands of invoices which the system couldn’t handle.
Councillors will decide on Tuesday how to deal with Marketplace.
Kirklees introduced the system in 2007 in an attempt to simplify its purchasing and payment operations.
Marketplace allows staff to order goods or services from an appropriate supplier, review and approve the order, confirm delivery and pay the invoice.
Around 900 Kirklees employees use the system to buy goods from 8,000 suppliers.
But the council’s Resources Scrutiny Panel launched a special investigation into Marketplace in October last year after officials warned the system was “not achieving the maximum savings.”
The panel held seven meetings with council staff between November 2010 and February this year.
Investigators discovered there were a large number of medium-sized companies who just could not use Marketplace.
The panel report explained: “The system allows suppliers to upload their invoices to Marketplace.
“However, it only allows the submission of individual invoices or XML (Extensible Markup Language) files.
“The council’s large suppliers have the capacity and ability to create XML files. Very small suppliers, with single invoices, can easily upload that invoice.
“Problems arise with the large number of suppliers in the middle who lack the technical capacity to create XML files and who have too many invoices to make it practical for them to upload each one individually.”
Kirklees has dealt with this problem by sending the invoices to another company, Documetrix, which enters them into Marketplace at a cost of £1 per invoice.
The council sends Documetrix an average of 1,200 invoices a week – saddling taxpayers with a bill of around £60,000 a year.
However, 40% of invoices handled by Documetrix have to be sent back to the council because of discrepancies – for instance, the supplier may have failed to include their VAT number.
The report said: “Such a high level of rejects imposes a high level of double-handling of invoices with all the additional cost to the council and delay to payment to supplier.”
The panel also found a host of other problems with Marketplace, including:
Only 16% of procurement activity went through Marketplace in August 2010. This rose to 63% in October after some changes to the system, but usage plummeted back to 37% by March of this year.
Staff continue to use Kirklees credit cards to buy goods and services which “could and should be made through Marketplace”.
The system is not integrated with the council’s ledger meaning “it is never possible for a manager to extract a single, reliable financial report.”
Marketplace’s handling of invoices is “cumbersome and expensive.”
A helpdesk set up for the council’s 900 Marketplace users provides “inconsistent” advice.
Kirklees has “an organisational culture which has historically allowed staff to ignore an essential system and has taken little or no action to address misuse.”
The investigation was led by Clr David Ridgway.
The Colne Valley Lib Dem believes Marketplace will work better if staff are given more training.
He told the Examiner: “Four years ago the council decided to set up a procurement process which would link with the payment process.
“It was a laudable aim but I think the council did not put enough resources into training people to use the system.
“Marketplace is a powerful system but it hasn’t been used to its full potential.
“When something new is introduced, there is a reluctance, but that’s human nature.
“It sounds like a massively over-bearing system, but it isn’t. Where it was used, Marketplace worked very well because it’s a simple system.”
Clr Ridgway added that Kirklees staff were using council credit cards more often than they should.
“If you’ve got to go out and buy a ream of paper, it might be quicker to get it on a purchasing card from Staples rather than using Marketplace,” he said. “That’s the same in any company.
“Marketplace was intended to ensure that there was a consistent order trail. As soon as you start using other formats there’s a potential erosion of that paper trail.”
Clr Ridgway has made a string of recommendations to improve the operation of Marketplace.
But he also believes Kirklees should renew its contract for the system in October.
The council’s Cabinet will consider Clr Ridgway’s report at its meeting at Dewsbury Town Hall from 5.30pm on Tuesday.