Award of Measured Term Contracts for Building Repair and

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					LONDON BOROUGH OF CAMDEN                       WARD: All

REPORT TITLE:
Award of measured term contracts for building repairs and maintenance to
occupied housing premises in all districts; to voids north (Hampstead and Gospel
Oak districts); to voids south (Kentish Town, Camden Town and Holborn districts)
and to temporary & sheltered housing.

REPORT OF:          Director of Housing and Adult Social Care

FOR SUBMISSION TO:                                           DATE:
Housing and Adult Social Care Scrutiny Committee             20 July 2009
Executive                                                    22 July 2009

SUMMARY OF REPORT:

This report asks the Executive to approve the award of measured term contracts for
building repairs and maintenance to occupied housing premises in all districts; to
voids north (Hampstead and Gospel Oak districts); to voids south (Kentish Town,
Camden Town and Holborn Districts) and to temporary & sheltered housing .

The contract period is from 1 October 2009 to 31 March 2011, with the option to
extend to 30 September 2012.

This report is being brought to the Executive as it relates to a key stage of a revenue
contract where the contract exceeds £5,000,000 and it is proposed to outsource or
bring a service back in house.

Local Government Act 1972 – Access to Information

No documents requiring listing were used in the preparation of this report

Contact Officer:
Mark Everest
Procurement and contracts manager
Standards and compliance group

33-35 Jamestown Road
London NW1 7DB
mark.everest@camden.gov.uk
020 7974 5514
RECOMMENDATIONS:

1)     The Housing and Adult Social Care Scrutiny Committee is asked to note the
       report and forward any comments to the Executive.

2)     The Executive is asked to approve the award of the following contracts:

       Measured term contract for building repairs and maintenance to occupied
       premises in:

       a)     Hampstead District to organisation 9
       b)     Gospel Oak District to organisation 1
       c)     Kentish Town to organisation 1
       d)     Camden Town to organisation 1
       e)     Holborn to organisation 6

       Measured term contract for building repairs and maintenance to void
       properties for:

       f)     North (Hampstead and Gospel Oak districts) to organisation 3
       g)     South (Kentish Town, Camden Town and Holborn districts) to
              organisation 1

       Measured term contract for building repairs and maintenance to occupied
       and void premises for

       h)     Temporary and Sheltered Housing to organisation 9

3)     The Executive is asked to grant delegated authority to the Director of
       Organisation Development with regard to deciding, following appropriate due
       diligence, on the application of the Code of Practice on Workforce Matters.




Deputy Director of Housing and Adult Social Care:


Date: 9 July 2009
1.    Introduction

1.1   On 10 September 2009 the Executive approved the procurement strategy
      for measured term contracts for building maintenance to occupied and
      void properties in all districts and in temporary and sheltered housing and
      for occupational therapy work (report reference HASC/2008/48). The
      report to the Executive set out an overview of the services, as well as the
      proposed contracts, procurement strategy and process. This information
      is not repeated in this report.

1.2   This report asks the Executive to approve the award of contracts for
      building repairs and maintenance to:

      a-e)   occupied housing premises in all districts
      f)     voids north (Hampstead and Gospel Oak districts)
      g)     voids south (Kentish Town, Camden Town and Holborn districts)
      h)     temporary and sheltered housing

1.3   As these contracts are valued at over £5,000,000 and it is proposed to
      outsource and bring back an existing service as part of the
      recommendations, the decisions to award are reserved to the Executive

1.4   In line with the Council’s standing orders, the remaining contract for
      occupational therapy work will be approved by the Director of Housing and
      Adult Social Care, unless the recommendation proposes an outsourcing of
      the existing service, in which case officers will report back to Executive. A
      decision is planned for July 2009.

1.5   The procurement strategy approved by the Executive anticipated contract
      start dates of 1 July 2009. In April 2009 the Director of Housing and Adult
      Social Care decided to put the contract start dates back by three months
      to 1 October 2009 to allow more time to complete the tender process. The
      existing contracts were extended under delegated authority to 30
      September 2009 to ensure that there was continuity of service.

2.    Main features of the new contracts

2.1   The new contracts put a much clearer focus on managing quality of work
      and customer satisfaction through a comprehensive set of Key
      Performance Indicators (KPI’s). Each of these KPIs has a methodology
      for measurement and will be reviewed in regular performance meetings
      with the appointed contractors.

2.2   There are two important features of the KPI’s that are being introduced
      into the contracts for the first time to help drive performance improvement:

            The contract sets minimum levels of acceptable performance
             (MLAP’s). If the contractor’s performance drops below the MLAP’s,
             the Council can trigger a range of actions under the contract, for
             example not placing further orders with the contractor until the
             performance issues have been addressed.

            Payments to the contractor are incentivised through an element of
             payment that is linked to performance up to a maximum of 5% of
             the contract value. The KPIs that impact on payment are customer
             satisfaction, appointments kept and repairs completed on time.

2.3   Under the contract, the KPI’s, including the minimum and target
      performance levels are reviewed annually to ensure that we can drive
      continuous improvement.

2.4   In addition, the contracts include the following improvements:

            Increased reporting requirements for contractors in the event of non
             completion of work or no access
            Improvements in the setting of appointments, including evening and
             Saturday working
            Requirement for 20% post inspection of completed work by the
             contractor
            A simplified schedule of rates to assist ordering and reduce cost
             variations on completion

3.    Tender Process

3.1   A contract notice was published in the Official Journal of the European
      Community on 18 September 2008 inviting expressions of interest for all
      contracts. The closing date for expressions of interest was 20 October
      2008. Advertisements were also placed in other trade journals and in the
      Hampstead and Highgate Express and on the Council’s website in order to
      try and attract local companies.

3.2   Forty five organisations expressed an interest in the contracts and
      following work related and credit reference checks 15 organisations were
      invited to tender for each of the occupied and voids contracts.

3.3   Invitations to tender were issued on 18 January for return on 25 February
      2009 for the occupied contracts, and on 29 January 2009 for return on 10
      March 2009 for the voids contracts, and on 12 March 2009 for return on 21
      April for temporary & sheltered housing. Tenders were received from each
      of the organisations listed in Section 1 of Part II of the report. A total of 9
      organisations submitted tenders for one or more of the contracts.

3.4   The tender evaluation panel for the occupied and void contracts included
      four council officers and four resident representatives, representing DMCs,
      CASP and the Leaseholders’ forum. The tender evaluation panel for the
      sheltered and temporary housing contract included two sheltered housing
      residents. The panels evaluated the tender submissions to identify the
      most economically advantageous tender for each contract. In line with the
      agreed procurement strategy, the tenders were scored on a ratio of 60%
      cost and 40% quality.

3.5   Quality was scored against detailed method statements addressing:

         Customer focus and tenant liaison, including demonstrating
          experience and approach to working in occupied and void homes,
          effective consultation and involvement, working in diverse communities
          and managing security

         Managing quality and performance, including proposals for checking
          the quality of works and remedying defects effectively and quickly

         Environmental sustainability, including ability to meet the Council’s
          standards for environmental sustainability of materials and working
          methods

         Management of health and safety issues, including methods for
          ensuring compliance with legislation and processes for identifying and
          managing health and safety risks

         Implementation and mobilisation, including details of contract start
          up and mobilisation proposals

         Organisation, resources and management, including demonstrating
          organisational capacity, previous track record on similar contracts and
          proposals for managing delivery.

         Processes and systems, including proposals for how workflows and
          information will be managed, payment processes, audit controls, risk
          management and knowledge management strategies

         Added value and wider social benefits, including added value
          offered through (for example) existing supply chain deals, support with
          IT integration, collaborative working benefits and commitment to local
          employment. .

3.6   In addition to reviewing the tender documents, the panel undertook
      interviews and visits of tendering organisations to inform their quality
      scores. Tenders that did not meet the threshold for quality were not
      scored on price. The price and quality scores were combined to give a
      total score for each tender. The scores were then ranked to give the most
      economically advantageous tender for each contract. Finally, the panel
      gave consideration to the overall viability of the recommendations for all
      contracts.

3.7   All of the tenders – including those from existing repairs contractors – have
      been rigorously evaluated against the more challenging demands and
      requirements of the new contracts. It is important to stress that the new
      contracts are not an extension of the existing contracts and that all
       tendering contractors have been assessed on their proposals for, and
       capacity to deliver, the new requirements, as well as their track record.

3.8    A number of organisations qualified their tenders in relation to TUPE
       liabilities and withdrew their tenders after being asked to remove these
       qualifications (see table below).

       Contract Area                          Organisation
       Gospel Oak occupied repairs            3,4, 7 & 8
       Kentish Town occupied repairs          3,4,5,7 & 8
       Camden Town occupied repairs           3,4,5,7 & 8
       Holborn occupied repairs               4&5
       Voids North                            4&5
       Voids South                            3,4,5,7 & 8
       Temporary & Sheltered Housing          4

3.9    The final evaluation scores for each contract are attached as appendix 1.
       The tenders recommended for award of contract were agreed by the
       tender evaluation panels and were modelled against a number of
       permutations for award of contract. The recommended awards provide the
       most economically advantageous arrangement for the Council and are set
       out in the table below.

       Contract Area                          Recommended Award of Contract
       Hampstead occupied repairs             Organisation 9
       Gospel Oak occupied repairs            Organisation 1
       Camden Town occupied repairs           Organisation 1
       Kentish Town occupied repairs          Organisation 1
       Holborn occupied repairs               Organisation 6
       Voids North                            Organisation 3
       Voids South                            Organisation 1
       Temporary & Sheltered Housing          Organisation 9

3.10   Following consideration of the overall viability of the recommendations for
       all contracts, the evaluation panel’s recommendation was influenced by
       two factors:

             The assessed financial limit of organisation 9 means that they
              cannot be recommended for more contracts.

             The tender evaluation panel felt that to award organisation 1 the
              Holborn occupied contract would lead to concerns about their
              capacity.

3.11   The recommended award for the temporary & sheltered housing contract
       proposes outsourcing an existing service as it is currently held by the
       Council’s in house contractor, Building Maintenance Division. In addition,
       the new contract packaging means the recommended award for the voids
       south contract involves bringing a service back in house. This new
      contract includes voids to the Holborn district which is currently undertaken
      by a private contractor. The recommended award may therefore give rise
      to the transfer of staff both in and out of the Council.

4.    Efficiency savings

4.1   Notional savings have been modelled for year 1 of the recommended
      tenders, based on the current expenditure of over £17.1m a year. This
      modelling anticipates savings of £1.95m or 11.4% against a target of 3% in
      the approved procurement strategy. The modelling assumes a consistent
      pattern of demand for repairs and the highest possible level of payment
      linked to performance.

5.    Leaseholder consultation

5.1   The proposed contracts are currently subject to a Notice of Proposal under
      the Leasehold and Commonhold Reform Act 2002 Schedule 2 and period
      for observations is due to end on 6 July. The Executive will want to take
      account of leaseholders’ observations in considering the recommendations
      in this report and officers will provide information on these at the Executive
      meeting.

6.    Comments of the Director of Organisation Development

6.1   The Executive will be aware that a number of the existing term contracts
      are held by the Council’s in house contractor, Building Maintenance
      Division (BMD). Although the packaging of the new contracts has
      changed, the recommended award of contracts may result in transfers
      under the Transfer of Undertakings (Protection of Employment)
      Regulations 2006 (“TUPE”). It is too early at this stage to specify the
      people management implications or precise numbers of staff that may
      transfer either in or out of the Council.

6.2   Following the decision by the Executive on the award of these contracts,
      detailed discussions will take place with the relevant organisations to
      confirm any TUPE implications. Consultation will then take place with
      affected staff and recognised Trade Unions regarding any transfers.

6.3   Discussions have been ongoing with the recognised Trade Unions
      throughout the tendering process, commensurate with the level of
      commercial confidentiality of this process. They are aware of the possibility
      of TUPE implications, and also that if BMD were to be awarded contracts
      there would need to be efficiencies made across the service to increase
      productivity and meet the contract specification and price.

6.4   Should BMD be awarded any of the contracts more detailed scoping would
      need to be undertaken to determine the efficiencies to be made, and
      consultation with staff and recognised Trade Unions commenced as soon
      as possible. Any organisational change will be conducted in accordance
      with the Council’s Organisational Change, Redeployment and
      Redundancy policy.

6.5   With regard to the application of the Code of Practice on Workforce
      Matters in relation to two-tier workforce issues, due diligence work is
      required to assess this fully, should there be a transfer-out of Council staff.
      The Executive is therefore requested to grant delegated authority for the
      Director of Organisation Development to make this decision, following the
      appropriate due diligence.

7.    Comments of the Director of Finance

7.1   This report proposes a contract award for a substantial part of the revenue
      repairs budgets. Camden is budgeting to spend £34.547m on revenue
      repairs in 2009/10. This area has made efficiency savings of £1.964m in
      the 2009/10 budget setting process through plans to programme priority
      repairs more efficiently. The HRA is under severe medium term financial
      pressure due to reductions in government subsidy. The contract is
      expected to make savings of £1.95m (para 4.1) which will contribute
      towards addressing these pressures.

7.2   The financial implications of the potential TUPE transfers have not been
      modelled. The contract process ensured that costs were absorbed within
      the bids made in this process. The contract award process has been
      mindful of the need to assess the financial viability of the bidding
      organisations which is reflected in paragraph 3.10.

8.    Comments of the Head of Legal Services

8.1   Under Contract Standing Order 3.4 and 7.2, the Executive must agree
      each key stage (including the contract award) of a contract in excess of
      £5,000,000 or where a service might be brought back in house.

8.2   The contract(s) are subject to the Public Contracts Regulations 2006 and
      there must be a 10 day standstill period between informing bidders and
      those who expressed an interest of the Council’s decision and actually
      entering into contracts with the successful bidders. Contract award notices
      will also have to be posted.

8.3   In relation to the possible TUPE transfer back to the Council and possible
      outsourcing, this will depend on whether the successful contractor / BMD
      still employ staff in the undertaking at the time the new contractor takes
      over the contract or whether it redeploys staff to work on other contracts.
      As TUPE happens by operation of law it is not possible to be certain at this
      stage as to the number of staff who may transfer, but ongoing HR and
      legal advice will be required throughout the contract start up period.


REPORT ENDS