Procurement Strategy for Business Critical software contract

Transcription

1 Key Decision Report of the Corporate Director of Finance and Resources Finance and Resources Digital Services Town Hall Islington N1 2UD Officer Key Decision Date:12/01/2016 Ward(s): All Delete as appropriate Non-exempt SUBJECT: Procurement Strategy for Business Critical software contract 1. Synopsis 1.1 This report seeks pre-tender approval for the procurement strategy and contract award in respect of Business Critical software contract for a two year term in accordance with Rule 2.5 of the Council s Procurement Rules. 1.2 We intend to procure business software applications supporting critical functions in the business. 1.3 In addition the business requires associated professional services throughout the period of the contract. 2. Recommendation 2.1 To approve the procurement strategy Business Critical software contract for a two year term as outlined in this report. 3. Date the decision is to be taken: 12 January Background 4.1 Nature of the service The current contract provides: Support and maintenance agreements for a number of line of business software applications supporting critical functions in the business: i. Housing Software ii. Revenues & Benefits software iii. Public Protection software

2 iv. Land & property software v. Payments software vi. Document management software Remote database administration services for the Housing, Revenues & Benefits and the Land and Property applications. Professional services relating to software upgrade, confirguation and development based on contractually agreed day rates The licences for the current systems were previously purchased outright and there is no requirement to pay any further licence fees. The support and maintenance is calculated as a percentage of the licence cost The existing systems have been configured to align with Islington s processes. There is a high level of integration both between these systems and with other key Islington systems and processes Long term commissioning needs may be affected by: Statutory changes - implementation of the new Universal Credit legislation between now and end of 2017, impact of general election results on statutory provision. Strategic changes - mobile technology for this type of system was previously limited in functionality and accessibility. The mobile application market has matured in recent years and this is likely to generate demand for new ways of working at Islington. These requirements are still evolving and will require some refining. Technology architecture changes - the majority of Islington s ICT is currently on-premise as opposed to in the cloud. The move towards cloud-based IT services is emerging and it is possible that a significant proportion of this particular contract may transfer to cloud delivery. Departmental reviews. Increasing use of shared services between local authorities The applications listed in underpin the key processes of a number of business areas and are vital to the day to day business of the council We have carried out an audit of current systems and charges in order to give us the true current cost of the contract. This forms a basis for the estimate of the contract value going forwards. This is the case for both the annual support and maintenance, remote database administration service and the use of professional services. 4.2 Estimated Value The total cost of this contract may be considered as follows: Cost of requirements gathering and due dilligence: This will be a substantial piece of work requiring significant resource input from business areas at strategic and operational levels as well as Digital Services/ICT Shared Service. Potential cost of change if the provider were to change: Costs under the current contract for year 2014/15 were: Support and maintenance including remote database administration service - 392,175. Professional services - 105,410. Total - 497,585. This therefore indicates an estimated 2 year contract cost of 995, A percentage reduction in budget would mean key business processes would potentially be impacted across the council.

3 4.2.4 Total lifetime costs for a two year term are envisaged to be approx. 995,170 based on the costs of the existing systems in addition to any further requirements. The contract has grown slightly from that agreed in the 2011 contract; further modules and functionality have been purchased in various business areas. 4.3 Timetable The current contract (including agreed extension) expires on 31 March Key decision to be taken in respect of this contract on 12 January Detailed requirements gathering exercise to begin February G Cloud procurement exercise to begin late spring/summer Contract(s) must be in place for the relevant applicactions by 1 April Any transition to new applications/suppliers will require project management and an appropriate amount of lead-in time A high level requirements exercise has been undertaken. This involved carrying out interviews with both operational staff and senior management from relevant departments. Findings and recommendations were presented to the Corporate Management Board on 15 October Options appraisal Due diligence has indicated the following: Market analysis there is limited competition in this technical field. Supplier/product analysis various product / service levels are available Procurement options appraisal: The current contract may not be extended beyond 31 March o OJEU tender - A contract is required for a two year term only. A costly and resourceintensive OJEU tender would therefore not provide best value for money. o Framework procurement (Crown Commercial Service) o G Cloud framework - Allows the procurement of a two year contract from amongst a number of suppliers in the relevant market. This is the preferred procurement route. High Level Requirements Reports have been produced detailing high level requirements for each business area. Recommendations: Short term - 12-month extension of current contract Medium Term - procurement of a two year contract. Develop the relationship with the chosen supplier(s) in order to maximise investment. Establish a steering group to drive the proposed procurements and to manage the required business change across business areas. Long-term - Develop a strategy for Business Critical software, in the context of the Shared ICT Service with Camden. Manage the procurement of any business critical systems in a holistic manner In regards to collaboration, and the upcoming shared ICT service with Camden, it is important to recognise a number of points: There is likely to be a period of significant ICT change and we will need to be mindful of the capacity for change in the business. Any long-term commitments made now could adversely affect the ability to realise efficiency savings from the shared ICT service. A shared service procurement involving stakeholder engagement from multiple departments across two organisations will be a complex and lengthy piece of work. Any subsequent transition to alternative systems is likely to require significant capital funding and careful scheduling. Camden use a variety of software solutions for the functions covered by this contract. Around two thirds of these solutions are the same products as used by Islington. Exploratory conversations have taken place between colleagues at both councils regarding collaborative opportunities.

4 The intention is to work together with Camden where appropriate. 4.5 Key Considerations The two year contract will be procured via the Crown Commercial Service G Cloud framework. The council may transfer some software services into the cloud (software delivered over the internet from remote servers) with the potential for future cost savings from decommissioning hardware infrastructure and maintenance There are no TUPE, Pensions or Staffing implications A London Living Wage (LLW) report will be produced for this contract, however LLW is not expected to be applicable. 4.6 Evaluation The value of the contract is 995,000 and is being procured via the Crown Commercial Service G Cloud framework The call-off from the framework will be carried out in accordance with the terms of the framework. The G Cloud procurement process entails carrying out a capability assessment using the online G Cloud tools available and by clarifying any queries with suppliers. A long list will be created, followed by a shortlist. This facilitates a direct award however, a customer must evaluate and identify which service best meets their requirements to enable them to direct award. There is no further competition/itq process because the pricing and services should be transparent to the customer. The pricing and the contract terms and conditions must be accepted as published for the selected supplier and service. 4.7 Business Risks Risk of awarding to a new supplier without adequately considering the cost of change and the complexity and timescales involved The proposed procurement route is the Crown Commercial Service G Cloud framework which is compliant with both EU regulations and with the council s Procurement Rules Opportunity to reshape the exisiting contract and software services in order to better support the organisation s needs. It is proposed that by contract end specific value-adding outcomes aligned to LBI business processes and change, will have been delivered Any significant transition to new software may impact on service users as many of the applications supported by the current contract have public-facing elements. In addition, were the business to experience problems in transitioning to new software, service users may be adversely impacted. 4.8 The Employment Relations Act 1999 (Blacklist) Regulations 2010 explicitly prohibit the compilation, use, sale or supply of blacklists containing details of trade union members and their activities. Following a motion to full Council on 26 March 2013, all tenderers will be required to sign the Council s anti-blacklisting declaration. Where an organisation is unable to declare that they have never blacklisted, they will be required to evidence that they have 'self-cleansed'. The Council will not award a contract to organisations found guilty of blacklisting unless they have demonstrated 'selfcleansing' and taken adequate measures to remedy past actions and prevent re-occurrences. The

5 adequacy of these measures will initially be assessed by officers and the outcome of that assessment will be reviewed by the Council s Procurement Board. 4.9 The following relevant information is required to be specifically approved by the Executive in accordance with rule 2.6 of the Procurement Rules: Relevant information Information/section in report 1 Nature of the service Software solutions and associated professional services to support critical functions in a number of key business areas. See paragraph Estimated value The contract is proposed to run for a period of 24 months at an estimated value of 995,000. See paragraph Timetable The current contract expires on 31 March Contract(s) must be in place for the relevant applicactions by 1 April See paragraph Options appraisal for tender procedure including consideration of collaboration opportunities See paragraph Consideration of: Social benefit clauses; London Living Wage; Best value; TUPE, pensions and other staffing implications See paragraph Evaluation criteria See paragraph Any business risks associated with entering the contract 8 Any other relevant financial, legal or other considerations. See paragraph 4.7 See paragraph 5 5. Implications 5.1 Financial implications: The cost of the contact is expected to be within existing budgets. A fuller assessment of the Financial Implications will be undertaken following the tender exercise. 5.2 Legal Implications: The Council has power to procure Business Critical software under section 111 of the Local Government Act 1972 and the council may enter into contracts for such services under section 1 of the Local Government (Contracts) Act The Corproate Director of Finance and Resources may make decisions relating to the procurement strategy for establishing such contracts upto the value of 2 million (council s Procurement Rule ).

6 The proposed contract is a service contract. The threshold for application of the Public Contracts Regulations 2015 (the Regulations) is currently 172, for service contracts. Contracts above this threshold must be procured with advertisement in the Official Journal of the European Union and with full compliance of the Regulations. The council s Procurement Rules also require contracts over the value of 172, to be subject to competitive tender. Appropriate use of the publicly procured framework established by the Crown Commercial Service, as proposed in the report, will satisfy this requirement. 5.3 Environmental Implications There are no significant environmental impacts associated with this procurement, although reliable online services contribute towards reducing the need for paper-based systems and ongoing improvements to the council s online offer will encourage more paperless working. A move to cloudbased systems will reduce the council s direct environmental impacts through a reduced need for servers, but there will instead be indirect impacts from the cloud providers servers. 5.4 Resident Impact Assessment: The council must, in the exercise of its functions, have due regard to the need to eliminate discrimination, harassment and victimisation, and to advance equality of opportunity, and foster good relations, between those who share a relevant protected characteristic and those who do not share it (section 149 Equality Act 2010). The council has a duty to have due regard to the need to remove or minimise disadvantages, take steps to meet needs, in particular steps to take account of disabled persons' disabilities, and encourage people to participate in public life. The council must have due regard to the need to tackle prejudice and promote understanding. A Resident Impact Assessment has been completed and will be forwarded to the Equalities Team. 6. Reasons for the decision: 6.1 Procurement of a contract is required to provide continued service of the council s key business processes. 6.2 It is recommended to procure a 2 year contract via the Crown Commercial Service G Cloud framework. 6.3 This recommendation is made as a result of conversations with colleagues at Camden Council. During the term of the recommended contract, options will be appraised for a Shared ICT Service consolidated procurement. 7. Record of the decision: 7.1 I have today decided to take the decision set out in section 2 of this report for the reasons set out above. Signed by: Corporate Director of Finance and Resources Date Background papers: None. Report Author: Anne-Marie Adair Tel: Anne-Marie.Adair@Islington.gov.uk