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Subject: |
Collaborative Procurement of Hard Facilities Management Contracts - planned, term and reactive building maintenance |
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Date of Meeting: |
10 October 2019 |
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Report of: |
Executive Director, Economy, Environment & Culture |
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Contact Officer: |
Name: |
Angela Dymott, Martin Hedgecock, Martin Hilson, Claire Hutchinson |
Tel: 01273 291450, Tel: 01273 295047, Tel: 01273 291452, Tel: 01273 290795 |
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Email: |
angela.dymott@brighton-hove.gov.uk, martin.hedgecock@brighton-hove.gov.uk, martin.hilson@brighton-hove.gov.uk, claire.hutchinson@brighton-hove.gov.uk |
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Ward(s) affected: |
All |
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FOR GENERAL RELEASE
1. PURPOSE OF REPORT AND POLICY CONTEXT
1.1 To report upon the outcome of the procurement exercise for hard facilities management services which has been undertaken by Orbis Property Services and led by Surrey County Council’s (SCC) Orbis Procurement team and to seek approval to award to the BHCC Reactive Fabric Repairs Framework element only. This report follows on from the report taken to Policy & Resources (P&R) Committee in March 2018 where authority was given to commence the procurement of contracts through an Orbis procurement led by SCC for the delivery of hard facilities management services and where it was agreed that a future report on the outcome of the procurement exercise would be brought back to P&R.
1.2 To seek approval to procure and award contracts and places on framework lots for the other Hard Facilities Management services not awarded under the above mentioned procurement in partnership with East Sussex County Council (ESCC) Property and Procurement officers which is being led by this council’s Orbis Procurement team.
1.3 Hard facilities management services include all forms of external contractor delivered building planned maintenance and responsive repairs, statutory compliance certification, testing and term maintenance servicing of mechanical, electrical and water service installations. These services relate to civic offices, historic, operational, commercial buildings, social care premises, educational establishments and schools but exclude council housing and highways.
2. RECOMMENDATIONS:
2.1 That Policy & Resources Committee:
(i) Approves the award of the council’s BHCC Reactive Fabric Repairs framework agreement for a duration of three years and an option to extend by up to one year.
(ii) Approve the procurement of the other Hard Facilities Management services not awarded by working in partnership with East Sussex County Council (ESCC) led by the BHCC Orbis Procurement Team.
(iii) Grants delegated authority to the Executive Director Economy, Environment & Culture:
· To procure the planned maintenance framework agreements set out in Appendix 3, term maintenance contracts set out in Appendix 4 and standalone procurements set out in Appendix 5. All as referred to in 2.1(ii) above, including the award of term contracts and places on framework lots.
· To enter into any subsequent call-off contracts to the framework agreements referred to in 2.1(ii) above should it be considered appropriate at the relevant time; and
· To approve the extension to the framework lot agreements and term contracts, if required, dependent upon satisfactory performance.
3. CONTEXT/ BACKGROUND INFORMATION
3.1 Orbis Property Services procurement exercise for hard facilities management services
3.1.1 In January 2018 the council joined Orbis partners at Surrey County Council (SCC) and East Sussex County Council (ESCC) in a procurement exercise for new contract arrangements for planned maintenance works, term maintenance and reactive maintenance. This was led by the SCC Orbis Procurement team and sought a common approach for all three sovereign authorities. A committee paper was brought to Policy, Resource & Growth Committee on 29th March 2018 seeking authority to proceed with the procurement process.
3.1.2 Due to a rigid timetable restrictions which applied to SCC’s route to market there was no time to include a full market engagement day for contractors in order to explain the opportunity and invite feedback which could then be used to inform the process. As a result a low number of bids were received from contractors that compromised a good outcome for this procurement exercise. Following this procurement each of the authorities undertook due diligence across all outcomes. BHCC officers put forward a positive collective Orbis Property solution to rewind the process to the market engagement stage. This was supported by ESCC but was not a solution that would work for SCC.
3.1.3 The outcomes highlighted a number of risks and issues for the council in terms of evidencing value for money, the likely quality of services and the capacity to deliver the required projects. Some of those risks and issues which resulted from the procurement exercise are set out in more detail below:
- Significantly increased costs, over and above market movements in relation to term maintenance contracts which officers questioned in light of the Council’s statutory duty to achieve best value;
- Non-compliance with some key aspects of facilities and asset management service requirements;
- Lack of ongoing competition in relation to planned maintenance projects due to the low number of bidders for the frameworks and the poor quality of response from the market. Not addressing a key objective of providing ongoing opportunities for local SMEs in line with the BHCC Social Value framework. This all coupled to the risk that future mini-competitions for specific contracts might also get a low number of responses.
- A number of bidders either scored abnormally low on quality or abnormally low or high on price, which suggests that the market was unclear about the scope of the requirements which would compound the risks and issues described.
3.1.4 For these reasons BHCC has taken the decision not to award the contracts and frameworks which were subject of the SCC led Orbis procurement. Instead, as advised by the Orbis Director of Procurement, the council should undertake a new procurement process with East Sussex County Council, who also decided not to award contracts following the recent procurement exercise for similar reasons.
3.1.5 BHCC Framework Agreement for reactive fabric repairs
The procurement exercise was managed successfully by the BHCC Property team in collaboration with Orbis Procurement with the result that 10 locally based SME contractors achieved the necessary Selection Criteria scoring and progressed to the Invitation to Tender (ITT) stage. It will have a term of 3 years and covers reactive fabric repairs and minor works managed through the 24/7 BHCC Premises helpdesk. The framework will have an approximate annual value of £300k. Subject to satisfactory performance there is an option for the framework agreement to be extended for a further year, making a total approximate framework value of up to £1.2m. The 4 successful contractors who are due to be awarded a place on the framework agreement are all local SME’s resourced to respond to all reactive emergencies within 1 hour. Each individual job below a value of £1,000 will be called off in rotation and all works valued above £1,000 will be procured through a mini competition between 3 or more of the framework contractors. The authority to procure this framework was granted by Policy, Resources & Growth (PRG) Committee in March 2018 and approval to award is now being sought.
3.2 BHCC and ESCC Collaborative Property Hard Facilities Management Services Procurement
3.2.1 Work has started on a re-procurement of all of the contract arrangements for both planned maintenance works and term maintenance contracts in collaboration with ESCC. Both authorities remain keen to support our local SMEs for the planned maintenance works and seek economies of scale for the term maintenance contracts.
3.2.2 Property Services in each authority manage a number of assets and customers on behalf of their respective sovereign authorities providing access to a range of services and the hard facility management services form part of this offer.
3.2.3 The approximate annual spend across these two sovereign authorities for all hard facilities management services is approx. £18m. as follows;
3.2.4 Workstream BHCC ESCC
Planned maintenance works c. £8m c. £7m
Term and reactive maintenance works c. £1.7m c £1.5m
For BHCC planned maintenance the number of projects and spend against each of the proposed Lots was as follows for 2018-2019;
|
Lot |
Lot Name |
2018-19 Spend over £25k |
2018-19 No. of projects over £25k |
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1 |
Mechanical Services |
£1,447,000
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12 |
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2 |
Electrical Services |
£98,000 |
2 |
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3* |
Doors and Windows |
0 |
0 |
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4** |
Flat Roofing |
£1,504,633 |
10 |
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5a |
Building Works up to £100k |
£2,112,000 |
39 |
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6 |
Building Works £100k to £250k |
£2,499,000 |
15 |
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7 |
Asbestos Removal Works |
£115,000 |
2 |
*BHCC do not have an intention to use this Lot at present as most requirements for this Lot are fulfilled elsewhere, however it is the intention to allow BHCC to consider use of this Lot in the future if its needs change.
**PAB members queried the amount being spent on flat roofing. BHCC (like the majority of other Local Authorities, those with schools in particular) has a significant number of buildings with flat roofs. Modern high-performance thermally insulated flat roofing systems offer robust, cost-effective, carbon reducing solutions which usually include 25 year warranties.
For BHCC term and reactive maintenance works the spend against each of the proposed Lots is anticipated as follows for the 5 years of the proposed contracts;
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Lot
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Lot Name |
2018-19 Cost |
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1 |
Passenger & Goods Lifts / Escalators |
£68,500 |
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2 |
Hoist / Care Equipment |
£14,100 |
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4A |
Mechanical Services (including Air Conditioning) |
£365,740 |
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5A |
Electrical Services |
£290,998 |
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Stand-alone procurement |
Legionella Reports (Cyclical) including Low Value Legionella Responsive Works |
£390,000 |
|
Reactive Framework |
Helpdesk reactive fabric works under £15K |
£571,148 |
3.2.5 The requirements will cover the majority of corporate and non-corporate buildings and assets within each authority’s responsibility (excluding BHCC social housing and highways property). In addition, some of the framework arrangement(s) may be open for other local public sector organisations to call off contracts from; the details of which will be finalised prior to going to the market.
3.2.6 In April 2019 Property and Procurement teams from BHCC and ESCC met to collaboratively agree the terms of reference (TOR) for the Dynamic Property Procurement Group (DPPG). Please see Appendix 2 for the TOR.
3.2.7 Framework Agreements for planned maintenance
The DPPG reviewed the various framework lots used in the previous procurement exercise, their thresholds, maximum number of allocated contractors to each lot and have agreed the lot structure for the new procurement as contained in Appendix 3, subject to market feedback and further review.
3.2.7.1 The call off contracts awarded via mini competition under the framework agreements will be awarded for a duration of up to four years subject to satisfactory performance. Works shall be called-off through mini-competitions within each Lot. Works of a specialist nature can be procured outside of these frameworks, in line with Contract Standing Orders, where it makes economic sense such as stonework repairs, resurfacing of school playgrounds, etc.
3.2.7.2 The aim is to ensure that framework agreements are awarded following a
robust transparent process that is well communicated. It shall
enable local SME’s the opportunity to bid for a place on the frameworks to achieve a good outcome that delivers quality planned maintenance works and embeds, delivers and demonstrates real social value to our City. All bidders will be asked to provide a performance statement on social value, firstly as part of their evaluation for a place on the frameworks and then annually where a KPi, to be developed by the DPPG, will evidence year on year continuous improvement in adding social value to the City. Those awarded a place on the framework must sign the BHCC Social Value Framework pledge to adopt the principles. Bidders together with their supply chains must demonstrate examples of how they will add social value to the local area such as through employing local labour, interview conditioning to help young people in employment, training & upskilling, apprenticeships, work placements, school trade days, sponsorships, prioritising locally sourced materials, avoiding waste through recycling/reusing materials, innovation & offering cost saving alternatives, being a good neighbour, supporting & collaborating with charities & voluntary organisations, etc.
3.2.8 Contracts for term and reactive maintenance works
The proposed term maintenance contracts will cover routine servicing, statutory compliance testing and associated reactive remedial works replacing four current term and reactive maintenance contracts for mechanical, electrical, legionella, lifts and hoists servicing and maintenance. The DPPG reviewed the various term contract lots which were used in the previous procurement exercise and have agreed the lot structure for the new procurement shown in Appendix 4, subject to market feedback and further review.
3.2.8.1 These term contracts will be awarded for a duration of five years with an option to extend for a further two years subject to satisfactory performance. The aim is to ensure that a robust transparent and competitive procurement process enables BHCC and ESCC to meet their statutory duties whilst achieving economies of scale and added value through collaborative procurement. It aims to embed, deliver and demonstrate real Social Value to our City through these contracts as outlined in 3.2.7.2 above.
3.2.8.2 It is very unlikely that the outcome will result in any savings for BHCC as existing arrangements have benefitted from six year long fixed prices that have falsely supressed market rates.
3.2.9 Contracts for specialist maintenance - standalone procurements
The DPPG has reviewed the various term maintenance contract lots previously proposed and has agreed that certain areas should be conducted as standalone procurement activities, see Appendix 5, in order to replace existing arrangements when they expire in September 2020. Each will be assessed to establish the appropriate route to market such as procuring through an existing framework run by a central purchasing body. Each standalone contract for these areas will be awarded for a duration of up to seven years.
3.2.10 Anticipated Timetable - the anticipated timetable covers pre-tender, selection,
tender award and mobilisation stages and can be found at Appendix 6.
4 ANALYSIS & CONSIDERATION OF ANY ALTERNATIVE OPTIONS
4.1 Failure to have robust routes to market for the procurement of all forms of building maintenance increases risks to meet statutory and Health and Safety liabilities, of inhibiting service delivery, may not deliver best use of scarce council budgets, and would not provide an opportunity for local SME contractors or delivery of social value within the City.
4.2 Insource the hard facilities management services – The diverse nature of
planned maintenance framework works means that skilled specialist workers are required in a wide variety of construction and maintenance fields e.g. carpenters, brick-layers, plumbers, electricians, flat roofers, pitched roofers, scaffolders, tarmac layers, etc. To insource this would be challenging and very costly given that TUPE is likely to apply as well as many other implications. In addition, the market is very uncertain at the moment and ability to retain and attract such a large, diverse team of suitably qualified skilled and experienced staff might create an unsustainable pressure on the council, particularly as salaries and associated benefits are lower than those offered in private practice. Furthermore, the infrastructure required would need significant investment in plant, equipment, buildings and depot, welfare facilities, specialist management and administration capacity as well as requiring additional support staff in legal and finance. However, the possibility of in-sourcing the more targeted specialist areas of term maintenance and reactive works, like mechanical, electrical, legionella, lifts and hoists servicing and maintenance are being considered through a series of feasibility studies within the Facilities & Building Services in Property & Design as these teams do have a small number of in house skilled manual workers and engineers. TUPE and salary levels would still apply and the council would need additional storage depots,offices and management capacity. There would again be knock-on implications for legal and finance teams. The risks need to be considered against any potential for savings.
4.3 Constructionline – Currently for the procurement of planned maintenance works BHCC use lists created within Constructionline. Constructionline was set up over 20 years ago as a Government run scheme. To be accredited to the scheme contractors have to meet pre-qualification criteria to assess suitability and competency such as financial checks, Health and Safety policy assessment, training, insurance etc. However there have been recent changes in the membership levels, fees and checks applied by Constructionline to contractors when registering and as such BHCC feel this is not a sustainable compliant route to market in the future.
4.4 Existing frameworks – BHCC could access framework agreements already put in place by central purchasing bodies and other public sector organisations. The access would either be by direct call off or through mini competition as defined by each framework agreement. There are numerous options available to BHCC for the scope of the hard facilities management services detailed previously in the report. With respect to the planned maintenance frameworks and term contracts the use of such agreements would limit the opportunity to deliver specific social value to the local area or provide opportunities for incumbents or local SMEs.
5 COMMUNITY ENGAGEMENT & CONSULTATION
5.1 Regular consultations take place with all ESCC and BHCC Property and
Procurement officers as well as all service client officers in the relevant Directorates. The relevant representatives on the DPPG meet regularly to progress the collaborative procurement.
5.2 A thorough market engagement exercise has been undertaken to ensure that contractor’s views are considered in determining the most appropriate structure for the proposed new arrangements. This commenced by the issuing of a Prior Information Notice (PIN) on 20 June 2019 to notify the market about a joint market engagement day on the 23 July in relation to BHCC & ESCC term, reactive and planned maintenance requirements. The response was so good that a second market engagement day was held on 31 July to meet demand. The aim of the market engagement days was to obtain feedback from potential bidders on the following in order to inform future delivery and procurement activity:
· Current market interest and capacity
· Factors affecting successful delivery
· Appropriate procurement models and structures
· Value for money and commercial considerations
· Social Value including employment and environmental considerations
The days were facilitated by BHCC procurement and well attended by a large amount of contractors showing interest in BHCC and ESCC planned, term and reactive maintenance contracts. The invaluable engagement and feedback gained is informing the specifications and tender documents. A follow up market engagement day is to be held in October to continue to build on the good level of interest so far.
5.3 The draft P&R report went to Procurement Advisory Board (PAB) on 15 July 2019 and it was resolved that the report and recommendations were noted.
6. CONCLUSION
6.1 The recommendation supported by officers and PAB is to proceed in accordance with the recommendations set out in Section 2 of this report.
7. FINANCIAL & OTHER IMPLICATIONS:
Financial Implications:
7.1 The planned, term, and reactive maintenance works included within this procurement process will be met from existing budgets and funding built into projected budgets for future years. The individual contracts procured for these works would be subject to the market conditions at the time, and though there may be some economies of scale they are not expected to generate significant budgetary savings. However, they may lead to efficiency savings, for example through reduced administration time. With the emphasis on quality of work as well as cost, there could be cost avoidance of repeat works or insurance costs.
Finance Officer Consulted: James Hengeveld Date: 09/09/19
Legal Implications:
7.2 The Council has a duty to secure continuous improvement in the way in which its
functions are exercised having regard to a combination of ‘economy, efficiency
and effectiveness’ (known as the duty of best value referred to above).
7.3 In accordance with Part 4 of the Council’s Constitution, Policy & Resources
Committee is the appropriate decision-making body in respect of the
recommendations set out in paragraph 2 above. In addition, in order to comply
with CSO 3.1, authority to enter into contracts in excess of £500,000 must be
obtained by the relevant committee.
7.4 The Council’s Legal officers will advise on the framework agreement and term
contracts during the procurement process. The procurement process must
comply with all relevant public procurement legislation as well as the Council’s
Contract Standing Orders (CSOs).
Lawyer Consulted: Wendy McRae-Smith Date: 10/09/19
Equalities Implications:
7.5 Where applicable, items of maintenance work within a programme will
consider the Equality Act 2010 to improve access and general facilities to address the diverse needs of staff and users of the council buildings. Planned maintenance works may lead to a temporary reduction / change in access or other facilities. Where this may be the case the Contractor, Client and Contract Administrator work together with staff and users to agree how these changes can be managed to minimise any negative impact.
Sustainability Implications:
7.6 Sustainability will be improved through the rationalisation of assets, associated
infrastructure and environmental improvements. Energy efficiency measures will be incorporated into maintenance and improvement works where appropriate.
7.7 Sustainable Procurement is supported through specific KPIs and specifying certain requirements such as Waste to Landfill and Sustainable Sourcing of materials.
7.8 The market engagement will collate feedback from bidders on what they propose can be delivered in terms of social value under the contracts. Officers are anticipating that suggestions may cover employment and environmental considerations such as volunteering, buying local, reuse, reduce waste and reducing the impact on climate change. The DPPG shall subsequently develop cost/quality weightings for the evaluation of submissions at SQ and ITT stages which can include sustainability. For BHCC the signing of the Social Value pledge shall be a stand or fall assessment.
7.9 In terms of the market and supply chain this might be; employing local labour, interview conditioning to help young people in employment, training & upskilling, apprenticeships, work placements, school trade days, sponsorships, prioritising locally sourced materials, avoiding waste through recycling/reusing materials, innovation & offering cost saving alternatives, being a good neighbour, supporting & collaborating with charities & voluntary organisations.
7.10 BHCC and ESCC operate different Social Value requirements. BHCC has the Social Value framework principles and ESCC a SV charter. There is a need to ensure both requirements are met and this will be monitored by the DPPG.
Any Other Significant Implications:
7.11 The maintenance of operational properties is part of the BHCC Corporate Property Strategy & Asset Management Plan to ensure efficient and effective use of assets contributing to the City and the council’s strategic priorities.
SUPPORTING DOCUMENTATION
Appendices:
1. Other Implications
2. DPPG TOR
3. Planned Maintenance Frameworks
4. Term & Reactive Maintenance Contracts
5. Stand Alone Procurements
6. Anticipated Timetable
7. Summary of Core Work Streams
Documents in Members’ Rooms
Background Documents
1. Policy, Resources & Growth Committee, 29 March 2018 Agenda item 120
2. PAB report, 29 January 2018
3. PAB report, 15 July 2019
APPENDIX 1
Crime & Disorder Implications:
1.1 There are no direct implications in respect of the prevention of crime and disorder
within this report although certain items of maintenance work try to minimise vandalism through design, specification and the use of relevant materials.
Risk and Opportunity Management Implications:
1.2 The risks and opportunities are dependent upon the successful outcome of the frameworks and contracts, robust contract and financial management to ensure that works are completed safely within budget, programme and meet any associated statutory duties. The DPPG are monitoring risk throughout this procurement through a live shared Risk Log document updated regularly by Property and Procurement officers. A high profile risk is that labour and supplier costs are steadily increasing due to an uncertain market. Another is that the market may not engage as before, this is being mitigated through improved communication by the BHCC Orbis Procurement team and the market engagement days.
Public Health Implications:
1.2 The term maintenance and reactive works contracts include water management,
mechanical, electrical and lift statutory compliance and servicing. Failure to have robust processes to manage these areas could lead to significant public health implications e.g. proliferation of Legionella Bacteria, etc. Other planned works programmes will prioritise projects that reduce risk to public health e.g. structural repairs, etc.
Corporate / Citywide Implications:
1.4 The collaborative working on this procurement with ESCC provides added value. All regular forms of maintenance and repair of BHCC properties are part of the BHCC Corporate Property Strategy & Asset Management Plan in order to ensure efficient and effective use of assets contributing to the City and the council’s strategic priorities. By providing opportunities for local SMEs the procurement of the new arrangements will be supporting the local agenda.
APPENDIX 2: Dynamic Property Procurement Group (DPPG) Terms of Reference (TOR)
· Incorporate lessons learnt into all aspects of the process.
- Review process at clear milestones.
- Agree timeline and possible extensions to existing contracts.
· Clear split of term and planned maintenance contract tendering processes, forming two work streams for each stage.
· Scope and lots are to be agreed for work streams; which are to be combined between the two authorities, and which are to be separate.
· Market engagement, one event followed up by specific engagement meetings/sessions as required.
· Data to be presented in a consistent manner and to ensure suppliers understand how to upload data on InTend and any other technological requirements.
- Communicate clearly on all aspects of the process with dedicated contacts for each authority. Review ITT specifications, quality questions, ensure easy cost comparisons.
- Agree meaningful, easy to collect KPIs and a mechanism for how results will be managed.
- Agree evaluation process for both stages and mechanism award criteria.
- Ensure Evaluator training days are held before each stage so all are clear on marking criteria.
- Ensure economies of scale where appropriate for term and reactive maintenance.
- Support local SMEs for Planned Maintenance Programme supplier solutions.
- Incorporate social value requirements for each authority.
- Ensure appropriate and adequate resource is made available to achieve the project objectives and programme.
- Guarantee sovereign authority governance is adhered too
- Develop a clear joint PQQ (SQ) covering both term and planned maintenance using either PAS 91[1] or the standard CCS SQ as a basis with quality questions.
- Ensure the OJEU contract notice clearly defines the offer to the market, the scope and the opportunities this presents in particular to our Local SMEs.
APPENDIX 3: Framework Agreements for planned maintenance
* BHCC do not have an intention to use this Lot at present as most requirements for this Lot are fulfilled elsewhere, however it is the intention of the procurement to allow BHCC to consider use of this Lot in the future if its needs change.
APPENDIX 4: Contracts for term and reactive maintenance
APPENDIX 5: Contracts for specialist maintenance - stand alone procurement
APPENDIX 6: Anticipated Timetable
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Key Milestone |
Date |
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Market Engagement DAY 1 across both Term and Framework |
23 & 31 Jul 19 |
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Procurement Advisor Board (PAB) |
15 Jul 19 |
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Document for final review |
Oct 19 |
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P&R Committee |
10 Oct 19 |
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Publish OJEU Contract Notice |
4 Nov 19 |
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Deadline for SQ Applications |
Dec 19 |
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Inform Applicants of Outcome and Selection |
Feb 20 |
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Tender Stage Term & Reactive |
Issue ITT documents Term & Reactive Contracts |
Feb 20 |
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Deadline for receipt of ITTs |
Mar 20 |
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Final Moderation and Confirmation of Final Selection of Bidders |
May 20 |
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Tender Stage Planned |
Issue ITT documents Planned Framework Contracts |
Mar 20 |
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Deadline for receipt of ITTs |
Apr 20 |
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Final Moderation and Confirmation of Final Selection of Bidders |
Jun 20 |
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Award Stage Term & Reactive |
SGM (part 2) Gateway 3 (Award) approval |
May 20 |
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Approval of Reg 84 report |
May 20 |
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Contract award date / Contract Award Letter sent |
May 20 |
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Contract Signed |
Jun 20 |
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Contract Start |
1 Sept 20 |
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Award Stage Planned |
SGM (part 2) Gateway 3 (Award) approval |
Jun 20 |
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Approval of Reg 84 report |
Jun 20 |
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Contract award date / Contract Award Letter sent |
Jul 20 |
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Contract Signed |
Aug 20 |
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Contract Start |
1 Sept 20 |