LONDON BOROUGH OF WALTHAM FOREST

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1 LONDON BOROUGH OF WALTHAM FOREST Meeting / Date 22 nd June 2015 Report Title Cabinet Portfolio Report Author/ Contact details Wards affected Public Access Contract for the provision of Total Facilities Management Councillor Loakes, Deputy Leader John Osborne Interim Contracts, Compliance and Commercial Manager Corporate Asset Management 302 Sycamore House Town Hall Complex Forest Road E17 4JF None specifically Open Appendices 1. SUMMARY 1. Letter of intent 2. LBWF Equality Impact Assessment and Amey Inclusion Policy 3. Tri Borough Equality Impact Assessment 4. Amey s Environmental and Sustainability policies 5. Sustainability Matrix 1.1 This report seeks approval to award the contract for the provision of Total Facilities Management services across the council to Amey Community Limited through the Tri Borough framework contract. In reference to the Cabinet report on 20 th January 2015 this decision has been delegated by Cabinet to the Assistant Director of Asset Management and Delivery in consultation with the Lead portfolio holder and Chief Operating Officer. 2. RECOMMENDATIONS 2.1 For the reasons set out in this report the Delegated Authority is recommended to: Agree to access the Tri Borough framework and directly award a contract for the provision of Total Facilities Management Services to Amey Community Ltd, for a period of five years (from 1 July 2015 until

2 1 July 2020) with the option to extend for 3 years + 3 years (i.e. 8 years or a maximum of 11 years). 3. PROPOSALS 3.1 Due to reductions in government funding, the Council needs to save 45 million by 2016/17. This value however is expected to increase as the fiscal consolidation programme continues up to the end of the decade resulting in renewed pressures on councils and further cuts in government funding. This means we need to make some fundamental changes to the way we deliver our services. As part of Redefining Waltham Forest, a special review programme has been established to help services prepare for these changes and consider how they can meet the challenges that lie ahead. 3.2 The Council is required to deliver a total facilities management (TFM) service across the council s building portfolio. This includes the provision of the following services; Cleaning, Mail Services, Security Services, Moves management/ space planning, Porterage service, Grounds Maintenance, Reception services, Cyclical maintenance, Reactive repairs and maintenance and Helpdesk and Customer Services. 3.3 The report to Cabinet on 20 th January 2015 also sets out the review process which was undertaken to arrive at the options previously considered by Management Board and the Strategic Procurement Board. 3.4 The three boroughs of the Royal Borough of Kensington and Chelsea, Westminster City Council and the London Borough of Hammersmith & Fulham entered into a 10 year total facilities management contract with Amey Community Limited ( Amey ). The arrangement included a Framework Agreement (FA) which allows other London Boroughs to benefit from this procurement based on the terms and conditions of the Call Off contract. 3.5 As part of the framework procurement route, the council commissioned a feasibility study from the Tri Borough in Feb 2015 to understand the savings that could be achieved should Facilities Management (FM) be outsourced through the Tri-Borough framework. 3.6 The results of the feasibility study showed a potential saving of 25% ( 1.4m based on a number of assumptions) to the council which compared favourably to the soft market testing that was conducted as part of the strategic sourcing plan (SSP).development 3.7 A meeting with the Tri Borough and Amey on 22/04/15 provided confidence to both Council officers and PwC advisors that outstanding issues could be reasonably and speedily resolved to enable the achievement of the MTFS savings. On 28/04/15, potential competitive dialogue suppliers were informed of the Council s intention to cease competitive dialogue. On 15/05/15 a letter of intent (see Appendix 1) was sent to Amey informing them of this decision and engaging them in 6-week pre-contract negotiations.

3 3.8 Pending contract award decision and contract signature, a 3 month mobilisation programme will take place with Amey Community Ltd. (the council to be supported through this by 3B Consultants) with the aim of achieving a go live date of 1 st October OPTIONS & ALTERNATIVES CONSIDERED 4.1 A review of options was undertaken during the SSP to determine the preferred delivery models in relation to six key business requirements. The results of the options appraisal highlighted that TFM was considered to be the council s preferred option. 4.2 In procuring the TFM contract both calling off a framework and competitive dialogue process were considered. 4.3 A review of possible frameworks was undertaken during the SSP stage with the Tri Borough framework being considered the most favourable option. 4.4 The Competitive Dialogue procedure was commenced in conjunction with the Tri Borough feasibility study and was terminated prior to negotiations as the feasibility study produced favourable and earlier savings when compared to soft market testing. 5. SUSTAINABLE COMMUNITY STRATEGY PRIORITIES (AND OTHER NATIONAL OR LOCAL POLICIES OR STRATEGIES) 5.1 Amey have a strong localisation agenda with clear community strategy priorities, this involves, but is not limited to the following: Apprenticeships through the contract; Multiple work experience opportunities; Recruitment focus within Waltham Forest and a recruitment fair to engage SME s; community days per year; and Partnering with Waltham Forest charity and sponsorship of events. 6. CONSULTATION 6.1 Internal Council stakeholders have been involved in the procurement process and a Project Team has been established that includes representatives from Property, HR, Transformation, Procurement, Finance and Legal Services. 6.2 The FM service leads have been involved in the options appraisal and creation of the SSP and as such have been kept well informed throughout the process to date. 6.3 HR has been involved and a full consultation timetable will be produced during mobilisation to comply with the TUPE regulations.

4 6.4 Unions have been informed of changes to the service with a meeting arranged with Amey to raise questions and discuss concerns. A communication plan is being implemented to ensure that all staff and users are kept informed during the pre-mobilisation and mobilisation processes. 6.5 Amey have strong TUPE experience and offer various training and career path/ progression opportunities. 6.6 Amey will be providing the London Living Wage. 7. IMPLICATIONS 7.1 Finance, Value for Money and Risk In 2013/14, the Council spent 6 million on FM services in scope of the procurement By procuring a TFM contract through the Tri Borough framework, the Council anticipates making an approximate saving of 1.49 million/ year (in accordance with the feasibility study conducted by Amey) based against the spend baseline ( 6 million). This equates to a saving of 25% which compares favourably to the soft market testing conducted in the SSP (a range of 15%-20%) A risk exists to the figures noted above as they are based on Ameys feasibility study which in turn was based on high level data provided by the Council at the time. As the mobilisation process proceeds, and a more comprehensive data set is exchanged between the parties, Amey and the Council will work towards agreeing a final scope and coverage of service which may impact +/- on the potential savings forecast An exercise has been carried out to map the 2015/16 Total FM budget to the 2013/14 spend thereby identifying those budgets that need to be consolidated into a single budget pool for FM. The difference between the 2015/16 dispersed budgets to the 2015/16 budget pool will constitute the savings for the council Further savings may also result from the gainshare agreement that has been built into the contract. Should Amey realise efficiency savings through the life of the contract (either through existing services, or by bringing new services into scope) these savings will be split between the council and Amey 80/20 respectively (80% of the saving will be received by the Council and 20% by Amey). 7.2 Legal Whilst Facilities Management is not a statutory requirement it is incidental to the support of statutory functions Section 1 of the Localism Act 2011 gives local authorities the power to do anything that individuals may generally do (the general power of competence). The Council also has power under section 111 of the Local Government Act 1972 to do anything necessary or incidental that

5 is conducive to carrying out its functions and the letting and management of this contract would come within these powers The Council must comply with its own Contract Procedure Rules set out in Part 8 of its Constitution. Under Rule competitive tendering is not required where the Council procures through a legally compliant framework which the Council has the right to access. As set out in the report (section 3.4) the Council has the right to access the Tri Borough framework If it is necessary to extend any of the existing FM contracts in order to complete the mobilisation process, they will have to be extended in accordance with the Council s Contract Procedure Rules and the appropriate waiver of the Rules relating to competition will have to be given if the contract does not contain a provision for extension. 7.3 Equalities and Diversity The Council s property assets provide access to services to all sectors and all members of our communities and Amey will be required to ensure that services are delivered in a way that is accessible and meets the needs of service users Amey s Inclusion Policy is appended to this report (Appendix 2) In addition, Amey have provided the following statement around Equalities and Diversity in relation to the TFM contract: All of our policies and processes are informed by the Equality Act Code of Practice 2010 which incorporates the Code of Practice on Racial Equality in Employment 1984 (2005 Revision), the Human Rights Commission s Employment Code of Practice, and the Public Sector Equality Duty, introduced in Amey s Inclusion Policy, covers all aspects of the protected characteristics under the Equality Act 2010, including: Race (including colour, nationality and ethnic or national origins) Sex Gender reassignment Pregnancy and maternity Disability Sexual orientation (gay, lesbian, bisexual and heterosexual) Marriage and civil partnership Religion or belief (including atheist beliefs and no religion or belief) Age. We comply with all legal obligations relating to equality and diversity in the UK and in each overseas country in which Amey employs staff. Our Inclusion Policy is underpinned by policies and procedures that confirm our commitment to attracting, recruiting and retaining highly competent individuals by promoting equality and applying fair processes and procedures, including:

6 Amey Inclusion Policy HR-InclDignity-PO-001 Amey Recruitment Policy HR-Recruitment-PO-002 Dignity at Work Policy HR-InclDignity-PO-002 Amey Learning and Development Policy HR-TRAINING-PO-001 Learning and Development Brochure An initial screening exercise of the equality impact of this decision was undertaken and determined there was no potential impact on service users with protected equality characteristics (see Appendix 2). Furthermore, the equality impact assessment completed by the Tri Borough, as part of the procurement process for the framework, is also attached and indicates no potential impact on service users with protected equality characteristics (see Appendix 3). 7.4 Sustainability (including climate change, health, crime and disorder) Amey have a comprehensive environmental and sustainability policy that will be applied to all services delivered under this contract (Appendix 4). Amey have advised that they have previously delivered savings through sustainable initiatives however it is too early to determine when this will occur for the WF contract Sustainability will be a key aspect of the mobilisation planning with the council ensuring (through KPIs- to be determined during mobilisation) that sustainability is considered in each service offering provided by Amey. Appendix 5 details the impact that Amey s policies have on water, energy, air, waste, land, bio-diversity, transport and buildings. 7.5 Council Infrastructure The contract for the TFM service will be managed by a new clienting function It s suggested that the strategic management of the contract will sit in the Major Contracts and Delivery Unit function with the operational and performance contract management sitting in the service. It is proposed that the structure comprises of: (a) (b) (c) to provide amongst others, the link with strategic management, provide the overview of the change control process, undertake the performance monitoring and operational monitoring supervision to provide the operational contract monitoring and spot checks 6 for the first year to assist with the above Subject to consultation, it is proposed that the clienting function for the service will sit under the Property and Contracts Manager within Corporate Asset Management.

7 7.5.4 All service delivery will be managed by Amey. This will require them to be on site and as such requires an area in the council from which they can be based. The size and location of this will be determined during mobilisation. 8. BACKGROUND INFORMATION (as defined by Local Government (Access to Information) Act 1985) 8.1 London Borough of Waltham Forest, TFM Feasibility Report, 20 th March 2015.

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