Decision - Commercial Portfolio Estate Management Consultancy (1 April 2005 - 31 March 2012)

To approve the delegation of authority to the Director of Finance & Resources to extend the existing contracts for two years.

The principle of a two-year extension to the contract was approved by the Policy & Resources Committee in 2004, prior to tendering and again when contracts were awarded. The Policy & Resources report made no provision as to which decision-making body or person within the council would have the authority to exercise the option to extend contracts. As Policy & Resources approval was an Executive decision, the same is true as regards the contract extension and it falls to the Cabinet Member for Central Services to give the necessary authorisation to delegate authority to the appropriate officer, the Director of Finance & Resources.

The item did not appear on the Forward Plan previously as recent legal advice has indicated that it should be regarded as a key decision.

1.       That delegated authority be granted to the Director of Finance & Resources to extend the council’s existing contracts for commercial portfolio estate management consultancy by two years.

7.1           Both companies provide value for money in managing their respective portfolios, a fact demonstrated by the results of the bidding process in 2004.  At that time a detailed weighted scoring matrix was used to evaluate the bids; Cluttons had an overall score of 85% compared with the second place company at 35% and on the agricultural portfolio Smiths Gore scored 66% compared with the second company at 59%.  In addition, the basic management fee and the different fees charged for types of work under the portfolio remain competitive with fees currently being charged by other companies.  This has been well demonstrated by instances outside the contract where Cluttons have bid successfully for instructions such as the Amex sale and rent review.  Cluttons is one of the leading property management companies in the country and Smiths Gore is the biggest agricultural specialist with an excellent track record. It is therefore advised that both contracts represent value for money and should be extended.

7.2     The original report to the Policy & Resources Committee dated 8 December 2004 omitted to include a provision for delegating to the Authorised Officer (Director of Finance & Resources) authority to extend these contracts on behalf of the council. This report seeks to rectify that omission and enable the Director of Finance & Resources to extend these contracts for the two year extensions allowed under each contract. Having implemented Policy & Resources Committee’s contract decision in 2005, and having worked with closely with the contract holders (Cluttons and Smiths Gore) since then, the Assistant Director of Property & Design is best qualified to make a decision about whether to extend the contracts.

7.3      It is therefore recommended that the Central Services Cabinet Member grants delegated authority to the Director of Finance & Resources to make that decision.

1.       One possible option would have been to re-tender the contract but this is a long, expensive and resource intensive process which takes in excess of 12 months.  This was not considered realistic in the time available.

2.               The only other alternative could have been to terminate the contract with effect from 31^st March 2010 and bring the services in house.  This was discounted for the agricultural portfolio because appropriate staff (2 FTE) would not transfer and we do not have the expertise in house the agricultural portfolio having been managed externally for at least the last 75 years.  To bring the urban management back in house would have incurred greater costs than the running of the contract, not all of the staff currently managing the portfolio contract ( at least 8-10 full time equivalent staff work on the contract) would have transferred, we would be faced with appointing extra staff and finding additional accommodation and we would lose the ready access to the range of services and expertise (much of it freely available because of the existing contact) available from Cluttons.