SLOUGH BOROUGH COUNCIL. REPORT TO: Cabinet DATE: 9 th July 2007

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1 SLOUGH BOROUGH COUNCIL REPORT TO: Cabinet DATE: 9 th July 2007 CONTACT OFFICER: Baldish Dhanda Corporate Procurement Manager (For all enquiries) (01753) Colleen Sherlock HR Services Manager (01753) WARD(S): PORTFOLIO: All Planning, Transportation and Legal and Democratic Services and Leader PART I KEY DECISION MANAGED SERVICE PROVIDER FOR AGENCY STAFF 1 Purpose of Report To approve the strategy to be adopted in relation to the Council s procurement of temporary agency staff as detailed in Appendix A. 2 Recommendation The Cabinet is requested to resolve that Company C be appointed the Managed Service Provider for the Council's temporary agency staff as the Preferred Supplier following a competitive procurement process. 3 Key Priorities Taking Pride in Slough and Making a Difference to Communities and our Environment. Priority 5 Maintaining excellent governance within the Council to ensure it is efficient, effective and economic in everything it does. Aims 5.1 Improve financial and asset planning, monitoring and stewardship. 5.2 Improve project, performance and major project management. 5.3 Gain efficiencies and ensure effective procurement. 5.4 Ensure compliance with the law. 5.5 Improve corporate governance and democracy and ensure people and management practices are in place. 4 Other Implications (a) Financial Based on the spend figure provided at the tender stage ( 7 million) the estimated level of savings through direct lower rates is 0.35 million pounds, a 5% saving. However the spend figure does fluctuate from year to year depending on service needs and available resources

2 (b) Human Rights Act and Other Legal Implications If temporary staff occupy posts for sufficient time they can acquire employment rights which may have a financial consequence to the Council. The preferred agency will take on the employment of temporary staff thus enabling the Council to mitigate against this risk. A single source for the deployment of temporary staff will enable the Council to ensure that all recruitment checks are taking place across all agencies supplying the Council. (c) Workforce The harmonisation of rates of pay will reinforce the Councils commitment to equality. The provision of key performance indicators will enable the Council to monitor and analyse the use of temporary staff to ensure best use of resources. 5 Supporting Information 5.1 Legal Services, the Procurement Unit, Human Resources and the Tender Evaluation Panel recommend the Council move away from the current ad hoc approach adopted in relation to obtaining temporary agency staff across the authority to a more structured arrangement. It is recommended that Company C be appointed the Managed Service Provider for the Council's temporary agency staff as they were deemed to be the Preferred Supplier following a competitive procurement process. 5.2 It is anticipated once an award of contract is made in early July 2007, the Council will look to negotiate the contract terms and conditions with company C. Implementation will begin in mid-june for a period of three months with a go live date of October 2007 for the Managed Service Provider. Background 5.3 The Council spent close to 7million on agency staff with over 100 suppliers in 2006/7 financial year (down on the previous year). There is a need to formalise the contractual arrangements which vary greatly within the individual terms and conditions of the various agencies supplying staff. At present the Council has no consistent approach to the hourly rates for temporary staff covering a whole range of duties from social care, general administration to specialist professional individuals. The fee is made up of three distinctive components namely: 1. The rate of pay to the individual 2. On costs which consist of principally national insurance and payment for statutory leave under the Working Time Directive 3. A margin which represent the reward to the agency for securing and administering these arrangements. 5.4 Through the formalisation of the Council arrangements there is an opportunity to address the variance in rates of pay received by individuals particularly those who carry out the same duties and also address the margin paid by the Council which through investigation has been found to vary and in many cases represents poor value for money to the Council.

3 5.5 Work undertaken by the South East Centre of Excellence and Office of Government Commerce shows that best practice is for a single company to be appointed on the basis that they provide from their own company the majority of the agency staff but also offer a managed service or one stop shop for fulfilling all the council requirements, if necessary using first and second tier suppliers with whom they establish a commercial arrangement at preferential rates. Under this managed service the Council can have a single contact point and have all its agency requirements satisfied. All generic jobs will be subject to a mandated rate for the job with only specialist roles being left to the discretion of departments. Benefits and Savings 5.6 The Procurement Unit have undertaken a tender process in compliance with Standing Orders and the European Procurement Regulations. Refer to Appendix A for a comprehensive report detailing the tender process undertaken. 5.7 The tender was drawn up looking at best practice methods used in both the private and public sectors to appoint a singe company to provide a managed service. 5.8 The estimated level of savings through direct lower rates is over 0.35 million pounds, a 5% saving, based on the Council s expenditure of 7 million, which was the spend figure provided at the tender process. 5.9 It is further anticipated that the chosen supplier will provide other non cashable savings through the streamlining of associated processes that will enable contract management by the Council over the whole area of temporary staff usage. This will include: The introduction and use of technology for the booking of temporary staff, ordering, timesheet and invoice processing which will be through one supplier thus a significant reduction in current volume (Reduction from over 11,000 invoices in 2006/7 to an expected 12 per annum). Regular and structured management information and reporting with proactive management of the temporary workforce which will minimise employment issues and allow consolidation of invoices and reduce transactional costs involved in this area. A single source for checking compliance, audit and consistency in terms of all required checks having been carried out for employing temporary staff, as well as ongoing essential training. The Council can work towards reducing its reliance on agency staff and the management information that will be available via this arrangement will allow the carefully monitoring of agency staff engaged and will incorporate various triggers to alert officers when they need to review such arrangements. The Council can also compare between the cost of permanent and temporary staff and management information can be utilised to inform decisions about converting temporary arrangements to permanent. By capping rates of pay to temporary agency staff, creates a harmonisation of rates and will allow direct comparison with full- time equivalent posts. The Council would need an Agency Staff Policy addressing Temp to Permanent matters. Compliance with Council s Standing Orders and European Procurement Regulations. Consolidation of invoices and electronic booking of temporary staff will reduce unnecessary paper.

4 Harmonisation of rates of pay will reinforce the Council commitment to equality and diversity of staff. The agency will be the employer of temporary staff and this will mitigate against any claims from temporary workers for employment rights with the Council It should be noted that for this project to be successful, there is a need to recruit a full time Contract Manager. The Manager s primary responsibility would be to oversee the contract for the Council and manage the relationship and expectations of internal managers. This resource would sit within HR with a salary of 30,000 plus on-costs and be funded from the project savings. 6 Comments of Other Committees The Employment and Appeals Committee considered this report at its meeting on 21 st June 2007 and endorsed the recommendation. 7 Conclusion The Employment & Appeals Committee is requested to recommend the Council move away from the current ad hoc approach adopted in relation to obtaining temporary agency staff across the authority to a more structured arrangement. It is recommended that Company C be appointed the Managed Service Provider for the Council's temporary agency staff as they were deemed to be the Preferred Supplier following a competitive procurement process. 8 Appendix Attached A - Tender Evaluation Report. 9 Background Papers Agenda and Minutes Employment and Appeals Committee 21 st June 2007

5 APPENDIX A TENDER EVALUATION REPORT Project Title: Provision of Managed Services Provider for Temporary Agency Staff Procurement Unit Reference: PUR/06/01/05 The Procurement Unit drew up a Project Initiation Document for the above referenced project on the 19 January 2006, which was approved. Following this approval, the Procurement Unit met with London Borough of Havering to learn from the work that they had undertaken on behalf of London Centre of Excellence on temporary agency staff for the London Boroughs. This work attracted the interest of the Office of Government Commerce who have rolled out a national toolkit for the public sector. The Procurement Unit undertook workshops with Community Care on Friday 10th March with 9 staff present and a workshop with Children's Service on Tuesday 7th March with 16 staff present, being the departments with the largest levels of spend on agency staff. The aim of these workshops was to understand the specific requirements of these two units for recruiting agency staff to ensure the information was feed into the specification. A presentation was delivered at CMT by Jill Bell, Assistant Director Legal and Procurement Services on the 29th March to explain the agency staff strategy. The Chief Executive was also present at CMT; group exercises where undertaken to identify the needs of first and second tier managers and how they would envisage the operational running of a managed service contract. At this meeting, managers were asked whether they were in favour of a Vendor Neutral Managed Service or Master Vendor Managed Service. No decision was made on the preferred solution, so it was decided that the Council would allow proposals to be submitted for both solutions. Evaluation Methodology: CMT were asked to nominate individuals from their directorates to participate on the Tender Evaluation Panel (TEP). A TEP was formed consisting of the following members of staff: Roger Parkin Jean Cameron Head of Resources & Business Support SureStart Service Development Manager Green and Built Environment Education & Children Services Val Drake Care officer Education & Children Services John Bruynseels Group/Locality Manger (Learning Disability ) Community & Culture

6 Tony Gorksi Customer Services Manager Asst Chief Exec Colleen Sherlock HR Services Manager Human Resources Yvonne Cope Head of Libraries, Arts & Information Community & Culture Joanne Head E-Procurement Manager Finance & Property Services The Procurement Unit at Slough acted as a non voting member and managed the process. A restricted procurement process was chosen. The TEP drew up the selection and award criteria for the OJEU Notice and tender document. The Councils intention to run this tender was advertised on Official Journal of European Union on Wednesday 10th May Bidders were given 37 days to respond to the advert. A total of 45 expressions of interest were made in response to the OJEU notice, however only 20 completed PQQ were received from the following companies by the advertised closing date of 12:00 hours on Friday 16th June 2006: Company Name Date Received 1 Company A Company B Company C Company D Company E Company F Company G Company H Company I Company J Company K Company L Company M Company N Company O Company P Company Q Company R Company S Company T Copies of the PQQ were sent to the TEP on Monday 19th June 2006 to evaluate whether the companies met the published selection criteria. The TEP met on Tuesday 10th July 2006 to go through the Panel responses for the PQQ. Nine companies were deemed to have met the criteria stated within the OJEU and were short listed to receive tender documents. The TEP documented the reasons why

7 the other companies did not meet the selection criteria and filed these in the Project File. The ITT document took longer than anticipated by Procurement Unit to draw up primarily due to time required to draw up generic job families for the specification proposes. Tender documents were issued to the following short list of companies on Wednesday 15th November 2006 with the technical/price co- efficient being set at 50/50: 1 Company B 2 Company C 3 Company D 4 Company G 5 Company H 6 Company M 7 Company O 8 Company Q 9 Company R Company Name The timetable for the completion of the tender process was given as follows in the ITT: Action Target Date for Completion of the Process Issue Invitation to Tender (ITT) 15 November 2006 Deadline for receipt of written questions (by 06 December :00 hours) Issue answers to questions 13 December 2006 Closing date for receipt of Tenders (by 5 January :00 hours) Presentation and Demonstration of Ordering 22 January 2007 System for Temporary Agency Staff Notification of award Early February 2007 Commencement of New Contract 01 April 2007 The ITT afforded Tenderers the opportunity to submit questions relating to the selection process by Wednesday 6th December All questions and answers were circulated to all Tenderers by the Procurement Unit by Wednesday 13th December Written Technical Proposals were requested from the short listed firms by hard copy and soft copy form by the closing date of 12:00 hours Friday 5th January Seven proposals were received from the following companies by the specified closing date of Monday 18th December 2007:

8 1 Company B 2 Company C 3 Company G 4 Company H 5 Company M 6 Company O 7 Company Q Company Name On the Friday 5th January 2007 the received proposals were distributed to the TEP. Technical Offers will be evaluated as follows: Technical Evaluation Criteria: Experience of the Tenderer: 1. Tenderers should provide a brief description of their expertise in the field of managed service provider for the supply of temporary workers including the duration of time operating within the industry, and how candidates have been sourced, selected and tested. 2. Tenderers should outline the details of any relationships that they may have with any other first and second tier recruitment suppliers for the purpose of sourcing candidates in the event that there is a shortfall within their agency in the number of candidates required by their clients. 3. Tenderers should detail their recent experience of providing temporary workers as profiled within the Scope of Work to at least three local authorities of similar size to Slough Borough Council. 4. Tenderers should provide details of appropriate contact names within those local authorities cited and ensure that permission is gained for the Council representatives to obtain references as required. 5. Tenderers should be able to demonstrate their ability to cater for the size and cultural diversity within those local authorities cited. They should detail any issues that such size and diversity raised when servicing such Clients and how these were resolved. 6. Tenderers should be able to demonstrate that they and their first and second tier suppliers comply with the appropriate industry standard for Maximum Score:

9 quality and are accredited to the relevant accreditation bodies i.e. SEARCH and REC, CSCI. 7. Tenderers should provide details of the Equal Opportunities Policy they have in place and demonstrate how they can assist the Council in meetings its equal opportunities policies as detailed in Annex G Tenderers should provide details of the internal 10 HR Polices they have in place. Total for Experience of the Tenderer 100 Methodology: 1. Tenderers should provide comments on the Scope of Work contained at Section II of this document suggesting improvements where they think the intended service will benefit. The Key Service Requirements have been flagged in blue and Tenderers should ensure they provide details of how they intend to address these requirements. Failure to provide a response to the blue Key Service Requirements will mean that the Tenderer will be marked down for noncompliance. Tenderers should note that Social Services will be the biggest user of this Contract and special emphasis should be paid to their specific requirements. 2. Tenderers should evidence their ability to meet the staff standard requirements as detailed in Annex B. 3. Tenderers should provide examples of CVs produced from Tenderers existing systems against the jobs detailed in Annex B. 4. Tenderers should provide a detailed project plan from notification in the early February 2007 on how they intend to liaise with incumbent agencies and temporary agency workers with a go live date on 01 April The plan should take into account the existing temporary agency workers issue, training of staff, contractual issues etc. The project plan should detail the implementation, services to be provided, resource estimates and timing of key project milestones and associated project deliverables Total for Methodology: 250

10 Personnel: 1. Tenderers should confirm their ability to provide one dedicated Account Management staff member who will act as the Client Relationship Manager for Slough Borough Council, and at least two other dedicated staff members who will be first points of contact for temporary staffing requirements. 2. Tenderers should provide the CVs of proposed key Council s account. The following specific information demonstrating the experience of the proposed candidates should be provided: The length of time the proposed people have been with the company; The number of years for which the proposed people have worked within the industry; Other significant clients accounts which the proposed people have managed; Other companies with the industry for which the proposed people have worked. 3. Tenderers should provide an organagram showing the staff structure of their company and where within this structure the Account team servicing the Council would fit. Details should also be given of the escalation procedures proposed for the resolution of any problems which may arise during the management of the contract. 4. Tenderers should provide details of how they maintain standards for their staff and how thy maintain Continued Professional Development for professionally qualified staff Total for Personnel: 100 Performance Monitoring: 1. Tenderers should demonstrate their ability to provide details of performance monitoring of temporary staff, and the types of feedback which they can give to the Council in this specific area; 2. Tenderers should demonstrate how they measure the performance of first and second tiers suppliers; 3. Tenderers should provide examples of existing

11 reports against SLAs and/or KPIs used with other clients together with recommendations on how the service levels may be enhanced for the proposed contract. Total for Performance Monitoring: 50 Marks available for Technical Offer: (Percentage of overall marks available): TEP members independently completing their technical score sheets and submitted their score sheets to the Procurement Manager. Once all the score sheets had been collated the technical score at that stage of the process was as follows: Technical Evaluation Scores Tenderer Max score available Average Technical score recorded Ranking of Tenderer Company B Company C Company G Company H Company M Company O Company Q The Royal Borough of Windsor and Maidenhead (RBWM) expressed an interest to join this contract. The OJEU published on Wednesday 10th May 2006 allowed for other neighbouring local authorities and those authorities using IDeAMarketplace to join this framework agreement. All Tenderers were informed that RBWM may potentially be joining this contract. The following individuals participated on the TEP from RBWM: Gary Richardson Michelle Dear Richard Bunn Head of Procurement HR Manager Project Accountant The financial proposals were evaluated on Monday 22nd January by the TEP. If clarifications were required from Tenderers or any mathematical errors needed to be corrected then the Tenderers were informed. Financial Offers will be evaluated

12 as follows: Financial Evaluation Criteria Part A Charges for temporary staff for each level of skills/experience provided as listed within Annex B. Part B Charges for temporary staff converting to permanent employees of the Council Part C Charge for rebate structure. Marks available for Financial Offer (Percentage of overall marks available) Maximum Score The financial offers recorded and their score awarded as per the ITT were as follows: Financial Evaluation Scores Average Financial score Ranking of Tenderer recorded Company B Company C (E-System) Company C (V-Express) Company G Company H Company M Company O Company Q: Q Personnel Company Q: Q Direct It should be noted that Company C were offering two electronic ordering systems to the Council, which had different costs associated to them. Company Q was offering two different solutions to the Council. The Panel discussed the various merits of each technical and financial proposal. It was decided that Company B s proposal of a Vendor Neutral Managed Service was not suitable for the Council. There were concerns regarding the Company M joint bid; they had scored very low in the technical proposal as they failed to understand the Council s requirements. Also one of the companies in the joint bid was proposed as the lead for the managed service provider for the Council s contract; with the other company in the joint bid being a second tier supplier. Company O had submitted significantly low pay rates for the financial proposal compared to other Tenderers and against the council is currently paying. The TEP felt they had failed to understand the market rates or had deliberately put in low prices to win the contract and would not be able to honour these if awarded the contract. IT was

13 decided by the TEP that Company B, Company M and Company O should not to be taken to the next stage of the tender process. Although it was stipulated in the ITT, the three highest scoring Tenderers would be invited to undertake presentations to the TEP, it was decided the four highest Tenderers should be taken forward to the next stage. Presentations took place on the Friday 9 February Presentations were scored based upon the information requested below: Presentation Evaluation Criteria Score Available Ability of the Tenderers proposed team to demonstrate that: 1. They have a full understanding of the Council requirements. They have a strong and robust proposal for the Managed Service. 2. They have the required managerial and /or technical competence to deliver the services required by the Council effectively and reliably. They work together as a team and demonstrate complementary skills They have a robust electronic ordering system for 50 temporary staff which be accessed through the Council s website. The system is straightforward for non technical users. Does the look and feel if the system complements its functionality. Marks Available for Presentation 100 The presentation scores awarded as per the ITT were as follows: Presentation Evaluation Scores Max score available Average Presentation score recorded Ranking of Tenderer Company C Company G Non-compliant as not able to provide a full Master Vendor service Company H Company Q It should be noted on the day of the Presentation; Company G retracted their original bid to provide a full Master Vendor Managed Service and could only offer a service to provide administrative staff. The Council had already made a decision that it did not wish to engage with a number of providers in separate contracts for

14 their temporary agency requirements; therefore Company G s bid was rejected for being non-compliant. Having completed the financial evaluation the final score for each Tenderer at the end of the process detailed in the ITT, the following combined score for technical, financial and presentation were recorded: Tenderer Final Evaluated Score Ranking of Tenderer Company C Company G Non-compliant Non-compliant Company H Company Q The ITT stipulates the Tenderer achieving the highest combined Technical Offer, Financial Offer and Presentation will be nominated as Preferred Supplier. The Council will move to negotiate Contracts with the Preferred Supplier. The references provided by the Tenderer as detailed in paragraph 6.3, may be taken up by the Council. The Council also reserves the right to undertake a site visit to the business premises of the Preferred Supplier in order to satisfy itself that those proficiencies detailed by the Tenderers in their technical proposal are accurate. It was decided by the TEP that references, site visit would be taken up and submission of a Best and Final Offer (BAFO) by the two highest scoring Tenderers. Site visits were undertaken and the following items were covered: Site Visit Agenda Topics 1 Background to Contract - profile of staff, volumes, key clients, value of contract 2 Implementation Period 3 Ordering Process and System Demonstration 4 Timesheet and Invoicing 5 Performance of Contractor in relation to SLA and KPI 6 Relationship and Account Management 7 Management Information 8 Contract Management and Continuous Improvement of Contract 9 Benefits of the Contract quantify process and efficiency savings (pricing structure) The TEP undertook site visits to Plymouth City Council on Tuesday 20th March 2007 for Company C, which proved to be very positive. The TEP faced long delays

15 in Company H arranging site visits with their clients not being able to facilitate the visits. A site visit was arranged for Essex County Council on Thursday 5th April However the TEP felt this site visit was not comparative as Company H did not provide a Master Vendor Service; they were one of two Preferred Suppliers providing Essex with administration and clerical agency staff. The TEP requested that Company H facilitate another site visit where they were providing a Master Vendor account. On Monday 14th May 2007 the TEP met with London Borough of Lewisham. The TEP felt that Plymouth City Council s site visit was more conclusive that Company C were able to meet the Council needs. The TEP documented their views on the two site visits and filed these in the Project File. A Best and Final Offer (BAFO) document was issued to the two Tenderers on Wednesday 25th April The BAFO involved a submission of the Best and Final Offer by Monday 14th May 2007 and participation in an Open Day on Friday 18th May The purpose of the Open Day was for the Tenderers to meet with the Council s Key Stakeholders to understand in greater detail their specific staffing requirements and any challenges that they may face in the meeting those specific requirements. The BAFO Proposals were evaluated based upon the information requested below: BAFO Evaluation Criteria Ability of the Tenderers proposed team to demonstrate that: 1. They have a full understanding of the Key Stakeholders requirements and their specific challenges. Tenderers should identify the challenges which they anticipate facing and their solutions to these. (to be assessed on the Open Day). 2. They have the required managerial and/or technical competence to deliver the services required by the Local Authorities effectively and reliably. They work together as a team and demonstrate complementary skills. (to be assessed on the Open Day). 3. They can demonstrate they have successfully integrated their ordering systems into both Agresso and Oracle. If this is not possible, they should advise how they would plan to integrate with these systems and/or advise details of an alternative ordering process they are proposing 4. They can demonstrate in a revised implementation plan the timescales for implementation given a contract award date of 1 June This should include details of predicted timing and level of savings that the Authorities would see based on the 1 June date, which should be shown separately for the 2 Authorities. 5. They can demonstrate clearly how they would migrate existing agency

16 staff into their organisation and identify the timeframe for doing this. On the Financial Proposal Tenders should submit the following: 1. The margin to be applied for temporary staff for each level of skills/experience provided as listed within Annex A. Please note Annex A reflects the Royal Borough of Windsor and Maidenhead temporary agency expenditure for the financial year 2006/ Neither Slough Borough Council nor the Royal Borough of Windsor and Maidenhead Council expect to pay for temporary staff converting to permanent employees. We do however appreciate that there may be a short period before such staff may transfer without some form of payment and certain classifications of job type where this general principle would not apply. Tenderers are therefore asked to submit their proposals in this regard, noting the Councils position as previously stated. 3. In order for the evaluation team to consider various options in the regard I should be grateful if would submit your BAFO proposals on this basis of: a) That there will be no rebate payable, and b) That a rate of 1.2% (based on the total gross cost of temporary staff) will be payable quarterly in arrear. BAFO proposals were received from the two Tenderers by the specified closing date of Monday 14th May The following TEP personnel met the two Tenderers on the Open Day on Friday 18th May Roger Parkin Jean Cameron Head of Resources and Business Support SureStart Service Development Manager Green and Built Environment Education & Children Services Val Drake Care officer Education & Children Services John Bruynseels Tony Gorksi Group/Locality Manger (Learning Disability ) Customer Services Manager Community & Culture Asst Chief Exec Policy Colleen Sherlock HR Services Manager Human Resources Joanne Head E-Procurement Manager Finance & Property Services Gary Richardson Head of Procurement Windsor and Maidenhead Michelle Dear HR Manager Windsor and Maidenhead

17 Richard Bunn Project Accountant Windsor and Baldish Dhanda Corporate Procurement Manager Maidenhead Law and Corporate Governance The TEP met on Tuesday 22nd May to discuss the Tenderers BAFO and Open Day. The TEP recommendation was to place the Company C in position of Preferred Supplier status. This recommendation is made based upon the basis that having completed the published evaluation methodology this company has received the highest combined score for its technical, financial and presentation marks. Further their site visit to Plymouth City Council, references and Open Day showed that they had the relevant personnel, expertise and experience to meet Slough Borough Council needs. Their BAFO also showed that the levels of saving they had estimated were more realistic and they provided better margins. The TEP documented their views and filed these in the Project File.