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					             STROUD DISTRICT COUNCIL                                    AGENDA
                                                                        ITEM NO
                          CABINET

                       10 December 2009                                     17
Report Title                PROCUREMENT        OF    HOUSING     RESPONSIVE
                            MAINTENANCE CONTRACTS
Purpose of Report           To provide Members with Procurement Planning
                            proposals for the future procurement of 3 Housing
                            Repairs contracts scheduled for renewal in October
                            2010.
Decision(s)                 Cabinet RESOLVES:

                            1. To tender one District wide Responsive
                               Maintenance and Void Reinstatement Contract
                               (option 3).

                            2. To extend the Planned Electrical Testing and
                               Rewiring Contract until 30 September 2010 and
                               combine this with the Responsive Electrical
                               Contract (option 4).
Consultation and            Consultation is being held with tenants, Maintenance
Feedback                    Focus Group, local contractors, existing contractors and
                            other housing providers.
Financial Implications      The contracts that are to be re-tendered to start on 1
                            October 2010 (February 2010 for electrical testing and
                            re-wiring if not extended) have a combined current value
                            of £2.25m per year.
                            A district wide tender for general voids and responsive
                            maintenance would entail letting a single contract with
                            a value of £1.8m per annum with possible savings of
                            £360,000 (20%).
                            A single contract for electrical testing, replacement and
                            re-wiring combined with responsive electrical works
                            would have a value of £450,000 per annum with
                            possible savings of £15,000 per annum.

                            Peter Clanchy, Business Accountant (HRA)
                            Tel. 01453 754121
                            Email: peter.clanchy@stroud.gov.uk
Legal Implications          The contract procurement process must comply with EU
                            Public Procurement Regulations. This will include the
                            requirement to advertise the contract in the Official
                            Journal of the European Union (OJEU).

                            Peter Cox, Solicitor
                            Tel: 01453 754330
                            Email: peter.cox@stroud.gov.uk
Report Author               Hilary Smart, Repairs Manager
                            Tel: 01453 754155
                            Email: hilary.smart@stroud.gov.uk



Cabinet                                  1                             Agenda Item 17
10 December 2009
Report No. 284-12-09
Portfolio Holder             Councillor Debbie Young, Cabinet Member for Housing
                             Tel: 01453 887565
                             Email: cllr.debbie.young@stroud.gov.uk
Options                      1. Two separate contracts, North and South, for
                                responsive maintenance and void reinstatement.
                             2. Two District wide contracts one for void reinstatement
                                and one for responsive maintenance.
                             3. One District wide contract for responsive
                                maintenance and void reinstatement.
                             4. Electrical responsive maintenance to be tendered
                                with electrical planned maintenance contract.
Performance
Management Follow Up

1.0.   Introduction

1.1.   The following Responsive Maintenance contracts are due to be retendered and
       relet in October 2010 (this timetable was agreed by Cabinet on 10 July 2008
       and amended on 11 June 2009).

          Contract            Contract No and         Relet Date        Annual Value
                             Current Contractor                         (approximate)
Responsive Maintenance           H1521/04            30 September      £500,000 (Resp)
 & Void Re-Instatement        Quadron Services           2010
         (North)                     Ltd                               £400,000 (Voids)
Responsive Maintenance           H1541/05            30 September      £500,000 (Resp)
 & Void Re-Instatement        Jeakins Weir Ltd           2010
         (South)                                                      £400,000 (Voids)
 Electrical Responsive           H1554/05            30 September         £200,000
  Maintenance (whole           Pearce Platford           2010
         district)              Electrical Ltd

1.2. The following Planned Maintenance contract is due to be retendered in February
     2010.

          Contract           Current Contractor       Relet Date        Annual Value

Planned Electrical Testing           EESI           February 2010          £250,000
and Rewiring Contract




Cabinet                                     2                           Agenda Item 17
10 December 2009
Report No. 284-12-09
2.0.   Timetable

2.1.   Below is an approximate contract letting timetable. The timetable is slightly
       generous to allow for complications and any unseen problems.

Date/Month               Activity                                    Time Needed
December 2009            OJEU Notification                           40 days
January 2010             Market testing with contractors
February 2010            Evaluation of Expressions of Interest
February/March 2010      Prepare Bid Documentation
March/April 2010         Tender Period                               40 days
May (June)               Tender Evaluation (method statement         Time    needed   is
                         evaluation, site visits and interviews)     dependant on how
                                                                     many contracts are
                                                                     let
July to September        Contracts Award and Lead-In Period          3 Months
1 October 2010           Contracts Start

3.0.   Partnering

3.1.   Our existing contracts have been typically let on a 3 year term, extendible by a
       further 2 years on the basis of satisfactory performance. On 10 July 2008
       Cabinet agreed the use of term Partnering Contracts (TPCs) for the
       responsive maintenance contracts. TPCs are let over a longer term, 5 years
       extendable to 10 years with break clauses, and strict performance targets.
       Partnering contracts have the following advantages:-

       •   gives time to build relationships
       •   provides a less adversarial approach to contract management
       •   encourages continuous improvement and development of the service
       •   time to facilitate investment in the service and facilities
       •   improves security of employment for contractor operatives
       •   provides increased opportunity to support apprenticeships
       •   gives the contractor time to develop a real place in the community

3.2.   There are presently 3 separate contracts comprising Responsive Maintenance
       and Void Reinstatement (North), Responsive Maintenance and Void
       Reinstatement (South), and a separate contract for all Electrical Responsive
       Maintenance.

3.3.   In addition to this, and with a view to achieving both better value as well as
       improved customer service, alternatives for packaging these contracts have
       been explored in this report.

4.0.   Investigation and Analysis

4.1.   A visit was made to Poole Housing Partnership by Councillors, Tenant
       Representatives and officers on 6 July 2009. Poole Housing Partnership has
       been rated with 3 stars by the Audit Commission and delivers an ‘excellent’
       repairs service.

4.2.   This visit opened the doors to considering different possibilities for procuring
       Stroud District Council’s responsive maintenance contacts, improving services
       to tenants and being more cost effective.


Cabinet                                   3                              Agenda Item 17
10 December 2009
Report No. 284-12-09
4.3.     A further visit has been made to Tarka Housing Association (an innovative
         housing association) and visits are planned to Cheltenham Borough Homes
         (rated with 3 stars) and Gloucester City Homes (rated two stars) to further
         develop our knowledge of best practice in the procurement of repairs.

4.4.     Provelio Ltd (Consultancy) is working the Council on the procurement of these
         contracts and has experience of tendering partnering contracts using a range of
         pricing mechanisms.

5.0.     Alternatives for Service Delivery

5.1.     North and South Contracts

5.1.1. Two contracts let North and South of the District for responsive maintenance
       and void reinstatement. This is how the contracts are presently let. The
       advantages of this are that if one contractor fails to perform we have the safety
       net of an alternative contractor to assist in undertaking both responsive repairs
       and void reinstatement.

5.1.2. This split means that there are cost duplications between the contractors as
       they will both have set up costs and separate premises. It is also not viable for
       small contracts to have specialists employed on them and currently electrical
       work on void properties is subcontracted out by both of our main contractors.

5.1.3. The last two occasions that these contracts have been advertised for tender
       they have not attracted a great response. Only 5 contractors expressed an
       interest and passed the Council’s financial checks in 2008.

5.2.     Separate District wide Voids and Responsive Contracts

5.2.1. Voids for the whole District let as one contract with the responsive let as a
       separate contract. The annual contract values would be:

         Voids £800,000 and Responsive Maintenance £1,000,000.

5.2.2. The advantage of splitting the voids and responsive repairs would be that there
       would be a focus on voids and the contractors’ staff resources would be
       dedicated to this work. Presently responsive repairs and voids sometimes
       share resources i.e. if an operative from responsive is sick a replacement may
       be taken from void work to cover.

5.2.3. The Council is working to reduce void turnaround times from 27 days to 25
       days. The repair times are critical if this is going to be achieved (and possibly
       surpassed). A dedicated void contract would assist with achieving this.

5.2.4. The disadvantage of splitting these contracts if two different contractors were
       successful there would be the need for two sets of premises, with two sets of
       overheads and there is unlikely to be any significant cost savings. There is still
       potential for the specialist work to be included saving £15,000.

5.2.5.    Due to the differing nature of responsive and void work it could not be
          assumed that one contractor could cover the work of the other if one contractor
          failed to perform, so this advantage would be lessened or lost.




Cabinet                                     4                             Agenda Item 17
10 December 2009
Report No. 284-12-09
5.3.     One Comprehensive District Wide Contract

5.3.1. One comprehensive contract covering responsive maintenance,                   void
       reinstatement work. Total value approximately £1,800,000 per annum.

5.3.2. A contract of this size should attract a good response from potential contractors
       and the size of the contract would also attract a competitive price. Actual
       savings are difficult to approximate but could be up to 20% based on advice
       provided by a consultant who has been involved in similar tendering exercises.
       The Council will therefore benefit from economies of scale.

5.3.3. Savings would be underpinned by a contractor only having one set of set up
       costs and only needing one depot in the District (whereas having two contracts
       could double these overheads).

5.3.4. The size of the contract would allow for it to include specialist work to
       undertaken at schedule of rate prices such as wet floor shower repairs and
       UPVC repairs.

5.3.5.   The cost of maintaining UPVC windows and doors has increased as the
         Council has replaced wooden and metal windows throughout the District. In
         2007/2008 this work cost approximately £50,000. It is estimated that a saving
         of 30% could be made on UPVC repairs (£15,000) if this work constituted part
         of a larger tendered contract.

5.3.6. A further advantage of this option is that there would be only one tender
       evaluation exercise rather than three or more. Councillors, tenants and officers
       are fully involved in the tendering evaluation process through Maintenance
       Focus Group. The process is extensive, extremely time consuming and has to
       be repeated for each contract. As an example of the work involved, the current
       gas contract, which was let in 2009, involved the following assessment:

         •   20+ assessments of pre-qualification questionnaires
         •   5 visits to contractor sites from Rugby to Taunton on 3 separate days
         •   Comprehensive evaluation of 10 method statements for the top 8 contractors
         •   1 day of interviewing

         Having one evaluation process would bring about savings in Officer, Councillor
         and tenant time and expenses.

5.3.7. This approach has been adopted by Poole Housing Partnership (who has
       received three stars by the Audit Commission following inspection) and they
       identify further benefits as:

         •   Economies of scale (more competitive pricing)
         •   The contractor knows the client well and vice versa
         •   Only one set of monthly contractor meetings (rather than three)
         •   Monitoring and reporting on one contract (rather than three)
         •   The contractor has an intimate knowledge of the stock and residents
         •   Crossover work can be dealt with i.e. if the contractor sees something
             wrong they can fix it rather than get another contractor in (better customer
             service)

5.3.8. There are of course risks associated with placing a long term contract to cover
       the whole district. This will be mitigated by:

Cabinet                                     5                             Agenda Item 17
10 December 2009
Report No. 284-12-09
         •   Ensuring there is a thorough performance management system in place
             including monthly monitoring and reporting.
         •   Incentivising high levels of performance with a bonus/sanction system
             linked to the achievement of performance indicators.
         •   Incorporating a break clause in the contract that is triggered by falling
             performance levels.
         •   Incorporating a formal review of the contract after five years.
         •   Contingency planning for the service in the event of the contractor failing to
             perform.

5.4.     Electrical Contract(s)

5.4.1. The Responsive Electrical Contract, worth £200,000 per annum, is currently let
       as a stand alone contract and covers responsive repairs for the whole District.

5.4.2. Asset Management has a separate contract for electrical testing and rewiring
       valued at £250,000 per annum.

5.4.3. The Council could continue to procure both of these as stand alone contracts
       or they could be combined to produce a larger contract with more competitive
       rates. It is estimated that £15,000 per year could be saved if these were
       procured as one contract.

5.4.4. Other advantages include clarity and continuity with electrical work i.e.
       managing defects periods, determining which contractor should undertake the
       work, less duplication of contractor monitoring and meetings.

5.4.5.   The Planned Electrical Testing and Rewiring Contract is due to be
         retendered in February 2010 and if this option is agreed it would have to be
         extended until 30 September 2010.

5.5.     Contract Improvements

5.5.1.   It is intended to let the contracts for a period of up to 10 years. This is longer
         than the current contracts. The potential advantages of longer term contracts
         include:

         •   It will be more attractive to contractors leading to greater competition in the
             tender stage.
         •   It provides an opportunity for stronger working relationships to develop.
         •   It provides the basis of increased viability for investment in the contract
             including training, implementation of Personal Digital Assistants (PDAs) for
             real time work updating, Opti-time (for making customer appointments at
             first point of contact) and other technology to improve the management of
             the contract.

5.5.2. The new contracts would be flexible to allow for extra or more extensive work
       to be included as the relationship develops, such as major works voids.

5.5.3. Systems thinking in repairs will continue and any improvements or changes
       can be incorporated into the service through the partnering process.




Cabinet                                      6                              Agenda Item 17
10 December 2009
Report No. 284-12-09
5.5.4. An all inclusive composite schedule of rates (SOR) will be used for the new
       contracts. We presently use an SOR comprising 2700 items and this leads to
       extra work being added on by contractors as the SORs are not clear. A
       composite schedule would have approximately 200 items and each item would
       include all ‘extras’. This would help with budget management as our costs
       would be known in advance of ordering.

5.5.5. Investigations will be made as to local and national procurement groups which
       may enable savings to be made on the supply of materials for our contracts.

6.0.    Consultation and Information

6.1.    Members of Maintenance Focus Group, will be attending a presentation on 2
        December 2009 and the groups views will be fed in to the process. In addition
        to this two consultation events are being held for tenants on 13 November
        2009. Scheme Managers, Estates & Repairs Teams are being kept informed
        and consulted through Team Meetings.

6.2.    Local and existing contractors’ views will be sought at a contractor forum which
        will be held in January 2010.

6.3.    The Council’s current financial regulations make it prohibitive for smaller
        contractors to compete for the Council’s responsive maintenance contracts.
        This has meant contracts being awarded to national companies as local
        companies cannot meet the Council’s financial demands. Accountancy and
        Audit will be consulted over contract packaging options and asked to consider
        making prudent changes to enable local contractors to compete for contracts.




Cabinet                                   7                              Agenda Item 17
10 December 2009
Report No. 284-12-09

				
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