LONDON BOROUGH OF WALTHAM FOREST

Transcription

1 LONDON BOROUGH OF WALTHAM FOREST Meeting / Date Cabinet /December 2015 Report Title Cabinet Portfolio Report Author/ Contact details Wards affected Public Access Appendices ICT Data Centre & Infrastructure Tender Councillor Clyde Loakes Deputy Leader, Portfolio Lead Member for Chief Operating Officer functions Paul Golland, Chief Information Officer (Interim) Operations Directorate, ICT Services paul.golland@walthamforest.gov.uk None OPEN Appendix 1 - Contract for Landline Rental, Voice Call and Broadband Services Appendix 2 - Strategic Procurement Board Business Case Appendix 3 - Equalities Analysis screening form 1. SUMMARY 1.1 This report seeks Cabinet approval to progress with a strategic sourcing and procurement tender for an external ICT supplier(s). The tender will specify the Council s requirements across a key set of business as usual services that include data centre hosting, network and telephony support, and end user computing and explain the rationale to award a direct contract in the interim for Landline Rental, Voice Call and Broadband Services. 1.2 ICT will consult the business to ensure these services meet future business needs and engage independent specialist IT consultancy advice to deliver technical assurance and guidance. 2. RECOMMENDATIONS 2.1 For the reasons set out in this report Cabinet is recommended to: Agree to tender for business as usual ICT services that include data centre hosting, network and telephony support, and end user computing in accordance with the procurement approach as set out in Appendix Agree to waive Contract Procedure Rules and a direct award of an 18 month contract for Landline Line, Voice Call and Broadband Services to the current supplier, Daisy Communications Limited Note that officers propose to engage a specialist IT consultancy firm to provide expert advice and support in engaging with the market and

2 provide technical assurance around developing a suitable tender specification. 3. PROPOSALS 3.1 The Council currently has a several contracts that are near or at the end of their term with different suppliers. These are: Data Centre Services, software and support for the council s core telephone and Call Centre systems and the provision of end user devices supplied by Kelway (UK) Ltd. Landline Line, Voice Calls and Broadband Services Rental and voice calls including line rental, outbound call charges and broadband services provided by Daisy Communications Ltd Wide Area Network (WAN) data circuits including all major circuits to/from the Town Hall and other sites from Virgin Media Business. ICT peripherals e.g. keyboard, mouse, USB sticks, DVD drive supplied by European Electronique & Kelway (UK) Ltd 3.2 The contract for Data Centre Services was originally awarded to Insight (UK) Ltd in March 2010 with 2e2 operating as Insight s sub-contractor. After 2e2 went into administration the remaining contract was novated to Kelway (UK) Ltd in May In March 2014, the Council issued a Request for Quote for Data Centre Services via the Crown Commercial Services Framework RM717 and suppliers on the Westminster Tri-borough framework. A contract award to BT was recommended but after a period of negotiation the Council could not agree satisfactory terms and the process was abandoned. 3.4 There was no loss or deterioration of service as Kelway continues to provide the Council s Data Centre Services on the same terms and conditions as the existing contract pending the completion of this proposed procurement. 3.5 Since 2014, the Council has agreed a new Digital Strategy with a significant impact on supporting technology. It also faces further austerity measures and to make additional cost savings. 3.6 As a result, ICT has taken the opportunity to review its future operating model to establish the most appropriate IT support arrangements for the Council over the next few years and how this is sourced. 3.7 Based on work undertaken by PwC, it was identified that it is practical to combine all of these infrastructure services into one potential outsourced contract. Their work set out the potential savings achievable from moving to six different operating models and identified this model as the recommended option. 3.8 The tender is expected to set out a maximum 7 year contract term based on an initial 4 years plus an additional three year extension option. The initial 4 year term takes the contract up to 2020 which is seen as key date for assessing the future scale and scope of Council services and key to deciding whether to take up the 3 year contract extension option.

3 3.9 Whilst the tender is developed, the Landline Rental, Voice Calls and Broadband Services contract needs to be renewed. To maintain this key service it is proposed to waive Contract Procedure Rules and agree the direct award of an 18 month contract to the current supplier (Daisy Communications Limited). A detailed justification for this approach is set out in Appendix 1 and the legal implications set out in paragraph Officers plan to report back to Cabinet by July 2016 to confirm the scope of the new external IT support contract(s) and gain formal approval to award Therefore at this stage, the impact on staff currently employed in the service is not yet known. This impact could include staff being eligible for Transfer of Undertakings Protection of Employment (TUPE) or redundancy depending on the scope of the future contract. 4. OPTIONS & ALTERNATIVES CONSIDERED 4.1 Option One Develop a new supplier contract: this option is the recommended approach and is set out in this report. 4.2 Option Two Do Nothing: this is not a viable option as a number of contracts have or are due to expire. These contracts need to be replaced to allow operational services to function and ensure compliance with EU legislation for tendering of goods and services. 4.3 Option Three Re-tender existing ICT contracts: this option involves tendering for each of the separate ICT contracts but is unlikely to deliver significant savings and limits the ability of ICT to meet future business needs. 5. SUSTAINABLE COMMUNITY STRATEGY PRIORITIES (AND OTHER NATIONAL OR LOCAL POLICIES OR STRATEGIES) 5.1 ICT is a key enabler for supporting the Council s major transformation agenda. It is crucial that IT can adapt and flex to meet new demands and changing requirements. 5.2 It will support the current digital strategy by supporting the use of online council services and channel shift to digital for contacting the Council. 6. CONSULTATION 6.1 This contract will consider options for outsourcing a number of services. Once the specific options are assessed and potential TUPE issues are clearer then both unions and staff will be fully consulted. This will be undertaken in line with the Council s standard procedures. 6.2 Senior business management will be engaged to ensure future requirements are effectively covered in the tender specification. 7. IMPLICATIONS 7.1 Finance, Value for Money and Risk Total savings of 475,000 are included within Redefining Waltham Forest 2 for ICT to be achieved as a result of this tender approach. However, 300,000 has already been achieved in 2015/16 from a

4 significant review of current contracts and staffing provision, in preparation of this tender. The residual savings target of 175,000 is expected to be achieved from this procurement approach The annual value of existing contracts, net of the savings achieved and will be covered by this new contract is as follows: Contract/Supplier Value Data Centre Hosting/ Kelway 816,000 Unified Communications/ Kelway 173,000 Support for ICT Software and Services/ Various 250,000 Managed Printing/ Ricoh 220,000 Wide Area Networks/ Virgin 315,000 Landline Rental & Call Charges/ Daisy 230,000 Mobile Telecoms Call Charges/ EE 220,000 Microsoft Select Agreement/ Microsoft 197,000 Annual Contract Total 2,201, The annual salary budget for staff in scope is 650,000. Therefore the existing total annual revenue budget for services in scope is 2,851,000 which over the 7 years is 20m This procurement approach will also include a full options appraisal on the potential funding models for this contract, including the funding for hardware. The funding models may consider a full revenue funding model or a mix of capital and revenue. Currently, the Council-owned IT infrastructure hardware has an estimated replacement value of 2.5m. The estimated replacement value of end user computing devices i.e. laptops, desktop PCs and tablets is 1.5m. This means a total of 4m of hardware needs replacing over the potential 7 year contract term. The replacement costs of this ICT hardware are not covered by the existing revenue budget but funding options will be considered as part of this new service arrangement. Detailed option analysis will be undertaken for the best funding route and will form part of the final cabinet paper in July This gives a potential overall contract value for the full 7 year term of 24m and means OJEU procurement procedures will apply Funding of 70,000 will be required to meet the costs of engaging a specialist IT consultancy firm to provide technical support as well as a project manager to support the tender process. This funding will be met from the existing provision obtained in the budget strategy reserve for ICT transition costs There is a risk that the market will not respond to this tender process in a favourable way and this could be mitigated by putting the options in

5 7.2 Legal lots. Given the significant financial challenges over the medium term, there will be a degree of flexibility within the new contract and this will have to be fully determined before final award The Council has the power to undertake the proposed course of action by Section 1 of the Localism Act 2011 which provides a General Power of Competence to local authorities. Given the anticipated term and value of proposed contract this procurement will need to comply fully with the Public Contract Regulations 2015 and the Council s Contract Procedure Rules Staff currently employed in the service will, in the event of service provision change, be eligible to transfer their employment to the new provider under the Transfer of Undertakings (Protection of Employment) Regulations This report is also seeking a waiver of the Council s Contract Procedure Rules to allow the direct award of an interim contract for Landline Rental, Voice Calls and Broadband Services pending the completion of the proposed procurement. Such a contract for the anticipated term and value would ordinarily need to be procured following a fully compliant EU procurement tender exercise. Rule 1.8 of the Council s Contract Procedure Rules states that the EU procurement regime, in particular the Public Contract Regulations cannot be waived A direct award is therefore not compliant with the Public Contracts Regulations However, given that the value of the contract is relatively low and as the purpose of the contract is to maintain current services while the proposed procurement is undertaken, the risk of challenge to the direct award is considered to be low. 7.3 Equalities and Diversity An initial screening exercise of the equality impact of this decision was undertaken and determined there was no impact on the Council s equality duty Further analysis will be undertaken prior to contract award to a selected supplier(s). 7.4 Sustainability (including climate change, health, crime and disorder) This initiative supports the Council s current digital strategy and ICT is a key enabler supporting all business areas. 7.5 Council Infrastructure This contract will directly support the Council s IT infrastructure. BACKGROUND INFORMATION (as defined by Local Government (Access to Information) Act 1985)