Sally O’Sullivan, Head of Tenant and
Leaseholder Services introduced the report and made the following
comments:
- This report was regarding the
proposed approach to the procurement of a partnering contractor for
day to day responsive repairs, voids, compliance and major
works;
- This service was currently provided
by Mears and the contract was due to expire on 31 March 2025;
- Due to the size and complexity of
this contract, the Council had to start the process now to ensure
that there was enough time to apply the right model and procure the
right partner to deliver this service;
- Officers sought the assistance of a
consultant to help get this right. The consultant chosen had worked
extensively with local authorities across Kent to procure the same
kind of contract, meaning they had a wealth of experience to apply
to this process;
- Officers had carried out a series of
workshops and discussed what was working well and what needed to be
improved with the current service and explored different options
for the approach to service delivery with the new contract.
Officers had a strong focus on local delivery and the employment of
local operatives;
- As part of this we looked at the
option to bring the entire service in house. This was discarded due
to a number of operational issues that would hinder set up and
smooth service delivery; these included:
§
Not having a depot available to work out of, to store plant and
materials and this would take substantial investment and time to
set up;
§
Requirement for additional management for finance and ICT;
§
The ability to cope with peaks and troughs of work through seasonal
demand;
§
The Council would still have to procure contractors to carry out
specialist works for example, asbestos management and electrical
safety.
- This was discussed more extensively
in section 3.12 to the committee report;
- Officers decided that the best
proposal was to rework and improve the current model which is Price
Per Property (PPP) and Price Per Void (PPV). This would mean there
would be in place, a fixed price agreement per property through
which the service provider would carry out repairs and maintenance,
using the national schedule of rates for anything that fell
outside;
- The main benefits of this model
included the following:
§
Less administration than if the Council were to approve individual
SOR for all jobs/voids;
§
Officers can focus on quality of works rather than value;
§
Officers would have faster repair completion as this model meant
the contractor would complete works without seeking authorisation
from TDC in a majority of orders;
§
Familiar way of working for TDC officers;
- The main disadvantage was that
contractors may try to charge in appropriately for repairs they
deemed as falling outside the price per property model or carry out
works in a property so that the final value falls outside the price
cap;
- Officer were going to write elements
into the contract to mitigate against these risks and this
includes:
·
Including a clear document that sets out what repairs are included
within the PPP and PPV;
·
Setting an appropriate cap to the price per property;
·
Clearly defining what happens when works go above the set cap;
- Officers were keen to extend the
provision of some of the in-house services; this would include
minor ground works, fencing and arborist works;
- Officers intended to keep these
services available to call off through this contract as well, to
provide resilience to the service;
- Officers had sought to include a
separate element into this procurement by introducing the
requirement for a bid and delivery partner as a separate lot. This
means we could have 2 partnering contractors; 1 for the main
elements for delivering repair and maintenance and 1 to be our
delivery partner for grant funded works.
- When grant funding became available
the Council had to be ready to bid for it and often deliver the
works within very tight timeframes. An estimated spend of £4m
per year for this element had been included, but this would not be
spent unless grant funding was available and the partner delivered
a winning bid application;
- This level of spending had been
included because officers were ambitious and wanted the best for
the Council’s assets and residents. When grant funding became
available the Council should be in the best position to be awarded
funding and deliver on what had been planned;
- Officers had engaged residents in
the formation of this proposal as they had valuable first-hand
experience of this service. Residents gave some beneficial feedback
and endorsed the model proposed;
- The intention was to continue to
engage with residents in this process by asking them to assist the
Council with the analysis of the tenders received.
Councillor Whitehead, Deputy Leader and
Cabinet Member for Housing made comments as follows:
- The level of work that goes into
both procurement and organisation of a housing service of this
scale is extraordinary; as is the progress that has been made
within Housing since we brought it back in house;
- The Portfolio Holder said that she
felt that on occasion, she was criticised for being too ambitious
in relation to Housing;
- The Portfolio Holder's ambition was
informed by knowledge and an understanding of both procurement and
risk, and never approve a strategy or approach that she felt could
endanger either Housing, or the Council’s ability to deliver
services;
- This contract was last extended in
2020; it could not be extended further. This meant that coming in
this May as an administration gave little to no lead time to
produce an extended in-house service across all areas; much as, as
evidenced by the determination to bring Housing back and produce
in-house temporary housing and the Council’s first in-house
rough sleeping accommodation, the general inclination was to create
and promote in-house services wherever possible;
- Ideals had to be considered in
relation to realities and the security of service, especially when
what was at stake was the quality of delivered service to a very
large number of our residents. As such focusing on areas that the
Council could deliver in-house, such as minor works and ensuring
that complex and specialist areas function and deliver without
interruption was essential;
- The Council was now focusing heavily
on the local economy in housing procurement. Contracts were now
prioritising local jobs, local call centres and included the
requirement for local apprenticeships to build not only the local
economy, but also build skills and employment
opportunities;
- This combined with the proposed
in-house expansion of minor works, to explore our delivery of
direct services, allowed the Council to deliver not only many
highly complex workstreams, but also created resilience. The sheer
scale of the number of new strategies being implemented and the
considerable growth of our portfolio means that ensuring
reliability of provision at a time when we were still a Council
with disproportionately low staffing for the scale of what we
deliver meant that considering the long term future of all projects
was essential;
- A significant amount of high level
of work had gone into the preparation of this procurement exercise,
and Members were asked to recognise just how hard Ms.
O’Sullivan and the team had worked.
Members asked questions and made comments as
follows:
- One Member asked what the process
and criteria for contracting out work was;
- They further asked under what
circumstances would the Council not want to continue with the
contract;
- The element on decarbonisation: Was
this to be given to a contractor who had the capacity to write bids
on decarbonisation or one who would be able to provide the works
for the decarbonisation element of the project?
- How did the price per property model
work with other Council departments who would be allocated part of
this project work?
- With the supply chain sometimes
contractors would get it wrong. Was the contract going to make such
contractors more accountable for their mistakes?
- Had officers considered value for
money when drafting these proposals? It appeared as though the
estimates were too high for maintenance costs per property in
comparison with the industry averages;
- Had options been considered to roll
this project over a year?
- Had an alternative business model
for managing this portfolio, like having one manager managing
between 100 and 120 housing units?
- This would manage these units with
help from the Legal Department, supervisors and one
contractor;
- What was the bottom line figure for
this project?
- Was it possible to develop a
parallel in-house service whilst this contract was being
developed?
- It was encouraging to note that the
Council was having a long contract partnership. Was there any
performance related payment built into the contract?
- Were there any independent auditors
in the market who could pick out any woolly performance stats when
performance reports were submitted to the Council?
- This approach was as good as it was
going to be monitored and enforced;
- An open and transparent tender
process would normally identify the right contractor. If the
process was unable to identify the right contractor that would be a
message for the Council to investigate why;
- One of the key recommendations from
the Grant Thornton external audit report was for less outsourcing
work and more in-house service provision;
- There should have been a lot more
member involvement in putting together these proposals;
- The triage for the two stage process
was what the Panel would need to be informed about;
- Accountability had to be built into
this whole process;
- One Member said that Grant Thornton
had not advised the Council to outsource less but was rather
reporting on progress over time. Officers worked hard and it was
important for Members to acknowledge that;
- One of the biggest risks faced by
the Council was cyber security. Digital integration being proposed
should consider issues of due diligence on third parties;
- With regards to the insolvency: the
no fault break clause would only mitigate further damage but not
stop damage to the Council’s balance sheet. There were no
mitigations detailed in the report.
Sally O’Sullivan and Councillor
Whitehead responded to Member comments and questions as follow:
- The officers’ view was that
this was a large, complex and costly task to procure a contract
like this approach was more appealing to the market and enabled the
Council to form a true partnership that should yield good
results;
- With regards to retrofit decarb
works; the Council was looking for a bid writer who would also be
able to deliver the project in partnership with the Council;
- There was a provision for other
Council departments call off on works they required. They would not
work by the PPP model; this is for social housing stock only;
- The Council would manage the
performance of the contractors and the contractors would take
responsibility for their performance;
- Contractors were able to raise any
safeguarding concerns as they go about their work;
- The Council considered value for
money with regards to the bid and delivery lot. This lot would
enable the Council to react quickly when grant funding became
available and provide the vehicle to deliver the works within the
tight timeframes that are often applied to grant funding all of the
proposed budget of £11 million would be spent each year;
- Capital works, for example, if a
property was discovered to have windows that were falling in and
posing a health risk and therefore needed repairs, we would have
the ability to react quickly to resolve the H&S issue without
having to carry out a lengthy procurement exercise for a contractor
to carry out the work.
- The current contract could not be
extended further. Any delays would risk the Council going against
procurement regulations or risking a failure in current service
provision
- Various models were explored and
this was viewed as the best as it would provide resilience for the
service;
- Setting up an in-house service as an
alternative approach would take about three years;
- Officers had not considered using
the performance payment approach as this can be difficult to
manage;
- Officers were confident that the
Tenant and Leaseholder Services team were capable of managing this
contract;
- The tendering process would start
with a pre-qualification questionnaire that would be open to any
contractor to submit a tender to. The Council would then choose the
top 3-5 tenders to invite to submit a full tender for the
contract.
Councillor K. Bright proposed, Councillor Will
Scobie seconded and Members agreed that the following
recommendations to Cabinet:
That Council explore the inclusion of a
performance related monitoring of the contract that would lock into
the contract a performance related fee and penalty.