New Managed Service Provider for the provision of Temporary Agency Workers Item XX

Transcription

1 Officer delegated decisions template For procurements and waivers valued at 100,000 and greater Date: May 2008 New Managed Service Provider for the provision of Temporary Agency Workers Item XX All Wards Report authorised by: Nana Amoa-Buahin, Divisional Director of HR E: T: Report Submitted by: Dawn Matthews Recruitment Manager Human Resources 8th Floor, Phoenix House, 10 Wandsworth Road, London, SW8 2LL Phone: E mail address: dmatthews1@lambeth.gov.uk Executive Summary Since November 2003, our agency workers have been supplied via a Managed Service Provider, Badenoch and Clark (B&C), operating a Master Vendor solution. The current contract with B&C is due to expire in November The purpose of this report is to obtain approval for the appointment of Matrix Supply Chain Management as Lambeth s Managed Service Provider for the provision of Temporary Agency Workers by way of an access agreement with Barnsley Metropolitan Borough Council. Each proposal that was submitted was reviewed by a team from Human Resources, Corporate Procurement and Heads of Service and it was agreed that Matrix was best placed to be able to provide Lambeth with a high standard of temporary workers across all areas. The Council s main priorities are to tackle worklessness and support local regeneration. In line with these objectives the Council believes it is now time to move towards a procurement model which will help us achieve our aims. Therefore a Vendor Neutral model which will have a strong local focus will assist in doing so.

2 In the 2006/07 financial year, the Council spent approximately 31m per annum on the provision of temporary agency workers, which equates to almost 22% of its annual pay budget, excluding schools. Lambeth has progressed considerably over the last few years and whilst the current contract generated substantial cost savings and was fit for purpose when we embarked on our mission to streamline the provision of agency workers, the organisation is now approaching the second generation and our corporate objectives have changed. As a result, the current contract no longer fulfils all our requirements and we need to procure a partner that can deliver both our current and future temporary workforce requirements. It is important to note that on our journey to a better Lambeth success will not only come from permanent/fixed term employees within the organisation but the managed use of skilled and motivated agency workers who will contribute to the effective delivery of the councils priorities. Summary of Financial Implications In the 2006/07 financial year, the Council spent approximately 31m on the provision of temporary agency workers, which equates to almost 22% of its annual pay budget, excluding schools. A comparative review and analysis was undertaken of our current expenditure against that proposed by Matrix in relation to the mark-up fees to be paid to supplier agencies, the cost of transferring a temporary worker to a permanent member of staff and management fees. This analysis showed that the cost of service provided by Matrix will give rise to a saving on our current costs. This service provision will be paid for from the individual Business Units depending on their staffing requirements and budget controls. Additionally, the cost of implementing and integrating necessary IT software and programmes will be borne by Matrix. The comparative pricing matrix proposed by all service providers is contained in Part 2 of this report. Reason for exemption from disclosure The quality and pricing matrices are commercially sensitive and are exempt from disclosure by virtue of Schedule 12A of the Local Government Act Recommendations Matrix Supply Chain Management be appointed as the Managed Service Provider (MSP) for the provision of Temporary Agency Workers to Lambeth, by way of accessing a collaborative contract, at an estimated cost of 98m over a period of 3 years and 6 months. The contract between Matrix and Barnsley MBC commenced on 23 rd April 2007 and will expire on 22 nd April Barnsley MBC established their MSP contract as a collaborative agreement and Lambeth intend to access this, with commencement of the service from the 3 rd November

3 I have seen this report and approve it for onward submission to DCB and or SCB: Signature Date Nana Amoa-Buahin, Divisional Director of HR Departmental Divisional Director I approve the above recommendations: Signature Date Helen Sach Chair of the Departmental Commissioning Board Signature Date Mark Hynes Chair of the Strategic Commissioning Board Delegated Authority: I / We approve the above recommendations: Signature Date Mike Suarez Executive Director of Finance & Resource Signature Date Derrick Anderson Chief Executive * Please be sure to complete the signatory information (name and title) above. 3

4 Scheme of Delegation Note For procurements valued as below, the relevant signatories must sign this report: 1 Over 1 million Executive Director with agreement of Executive Director of Finance & Resources and Chief Executive 2 500,000-1 million Executive Director with agreement of Executive Director of Finance & Resources 3 250, ,000 Executive Director 4 125, ,000 Directors and Assistant Directors & Divisional Directors within their division 5 50, ,000 Assistant Divisional Directors Declarations of Interest (or exemptions granted): None. Consultation Name of person consulted Department or Organisation Date sent Date respons e received Report section reference INTERNAL Nana Amoa-Buahin Divisional Director of HR Cllr Jackie Meldrum Cabinet Member and Deputy Leader of the Council Sally Leigh Helen Sach Farrukh Akbar Dominic Stanton Head of Corporate Procurement Corporate Financial Controller Divisional Director Resources (CYPS) Head of Care Management (ACS) All Michael Holmes Project Manager (IT) Owen Barclay Legal and Democratic Services

5 Hamant Bharadia Jason Hinton Head of Finance (OCE) Group Finance Manager (F&R) Report history Is this a Key Decision ( 250k+), a Non- Key Decision or For Information? X Key Decision Non-Key Decision For Information If a Key Decision ( 250k+), enter the date it was first entered into the Forward Plan: If a Key Decision ( 250k+), enter the date the final cleared report was sent to Chair and Vice-Chair of Overview & Scrutiny and Head of Scrutiny: If a Key Decision ( 250k+), within two days of approval a copy of this report must be sent by to your departmental CCO. Will this be done? X Yes No Background Documents MSP options appraisal documents Specification of Service Evaluation Report Appendices New Managed Service Provider for the provision of Temporary Agency Workers 1.0 Context 1.1 In November 2003, Lambeth procured Badenoch and Clark as Managed Service Provider, operating a Master Vendor Solution, to provide agency workers across the council (excluding schools). Prior to this arrangement, Business Units were responsible for procuring agencies to supply their division with agency workers. In this 5

6 time over 20% of the council s total workforce was agency. Key Council Priorities: Set out the Department s overall approach to value for money Ιnclude specific value for money performance indicators. Ensure that all documentation for audit scrutiny is quality assured in line with current procedures. 1.2 In December 2004, The CPA report stated: The Council has applied good procurement practice to improve the effectiveness of its contracts and supplier relations, for example, the consolidation of all supply arrangements for agency workers into a single contract with Badenoch and Clark. 1.3 Since the contract was implemented in November 2003, the Council s priorities have changed and as a result in 2005 a Deed of Variation was signed. This was to allow the Council greater financial control within the existing contract, and to further reduce spend. 1.4 Although Lambeth has reached its objectives for cost saving, reducing the overall number of agency workers and to ensure that an auditable process is followed when an agency worker is placed, there is continuing need to support local regeneration within Lambeth and to tackle worklessness. 1.5 On 7 February 2008 the Audit Commission published the results for our 2007 CPA, stating that Lambeth Council is improving strongly. On the basis of a range of performance indicators, Lambeth is among the ten most rapidly improving councils nationally. 1.6 To ensure continuous improvement, Lambeth as a second generation authority must now focus on the wider objectives to ensure success. 1.7 In summary, the drivers underpinning planned changes are: To Access a collaborative contract, which would best serve the Council by negating the need to follow the lengthy tendering/ojeu process and promote collaboration. Support local regeneration within Lambeth and to tackle worklessness. To ensure that all partnership agencies adhere to Lambeth s comprehensive safer recruitment procedures. Further reduction in the number of agency workers and to reduce spend. 2.0 Proposals and Reasons 2.1 Current position In the 2006/07 financial year, the Council spent approximately 31m on the provision of temporary agency workers, which equates to almost 22% of its annual pay budget, excluding schools. Agency workers are currently sourced from: 6

7 The Managed Service Provider (MSP), Badenoch & Clark (B&C) 3 tiers of suppliers (89%) A small, specialist number of agencies (7%) Self-employed specialists, sometimes referred to as Contractors (4%). 2.2 At present, there are 651 agency workers at Lambeth, the highest volume of which are based in are based in Children s and Young People s Services. Whilst we are aiming to reduce the number of agency workers across the council in the long term, it is necessary to continue using some agency workers. The Council recognises that the effective use of agency workers is both a necessity and a benefit. Temporary workers provide flexibility within the workforce to cover sickness, vacancies during the recruitment process, one-off projects and planned absence. 2.3 The Service Requirements of the current contract are split into five key areas: Account Management: There is an Account Manager, who has overall responsibility for the account, and is based on-site. He is supported by two members of staff who are dedicated to the current contract Management of 3 rd Party Supplier Relationships: The MSP is responsible for managing 3 rd party suppliers. The number of agencies supplying workers through this contract has reduced from 99 (supplying 700 agency workers) in November 2003 to 64 (supplying 651 agency workers) in April New standardised Terms and Conditions were put in place with these agencies as well as training being provided on Beeline (the online system for managing agency workers) and the new process Online Services/Technology: This is an integral part of the contact. The online system (Beeline) allows hiring managers to request workers electronically (subject to approval from HR), and also facilitates online processing of timesheets. A monthly consolidated invoice is also produced using information from the system Categories of Temporary Workers Requirements: In the last month, 26.5% of the agency workforce was supplied by the Managed Service Provider; 63.5% by the 1 st & 2 nd Tier suppliers and 10% by specialist agencies Management Information (MI): The monthly MI reports are circulated electronically and detail the following information: An overview of the number of active temporary workers, spend, departmental costs during 2007/08 and turnover; Recruitment activity including assignment breakdown by category and directorate, assignment tenure overview and tenure and charge rate averages by category; Full supplier listing on all current active temporary workers and a breakdown of suppliers against vacancies filled; Diversity monitoring; An analysis of unapproved and rejected hours. 2.4 The Managed Service Provider is responsible for meeting agreed levels of service. In the current contract, these are: 7

8 2.4.1 Sourcing candidates for vacancies and submitting suitable CVs within 48 hours of the initial request; Cascading temporary vacancies to 1 st & 2 nd Tier suppliers after the 48 hour grace period; Sharing cost savings with the Council, in the form of a rebate (11% rebate on each assignment 6% to LBL and 5% to B&C); Providing meaningful monthly management information, as specified by LBL; Carrying out a robust pre-placement checking procedure prior to engaging agency workers; Ensuring that an Account Manager is assigned to this contract and based at LBL offices; Ensuring a formal process is in place to deal with complaints Attending monthly contract monitoring meetings with the Council. Direction of travel 2.5 A Project Team comprising representatives from Human Resources, Corporate Procurement and Heads of Service devised a specification document which was submitted to four providers (Comensura, Hays, Badenoch & Clark and Matrix Supply Chain Management) as an invitation to tender for supplying agency workers to the council. A financial matrix was also despatched to the suppliers, asking them to provide information on costs of their service. 2.6 Bids were received from Comensura, Matrix Supply Chain Management and a third supplier Network Managed Service (Pertemps), who was not originally invited to tender. Hays and Badenoch & Clark did not submit bids in response to our invitation to tender. The proposal received from Network Managed Service (Pertemps) was not evaluated in relation to service provision as an initial analysis of their management fee showed that their model was not cost effective, thus their proposal was dismissed on price. Following a review of the quality of service and the financial matrix received, the evaluation panel, made up of representatives from the Corporate Procurement Team and Human Resources short-listed two providers for a clarification meeting. 2.7 EVALUATION PROCESS: The MSP Project Team/Evaluation Panel conducted a comprehensive review of the proposals received, based on a scoring threshold of 70%, for quality of service. Each panel member evaluated the proposals received from Comensura and Matrix in response to our specification of service, which related to the transfer of our business to their service, IT implementation, performance standards, supply chain and management, candidate vetting and management, time sheeting and invoicing and pricing. The service providers were asked to show their prices and fees in two ways: Option 1: Broad categories our 16 categories consolidated into 4 areas; General, Care, Professional and Executive (SMG3 equivalent and above). Option 2: The costs in relation to our existing 16 individual categories of temporary agency workers. 8 In comparing these options based on our 2006/07 temporary agency worker expenditure, the Option 2 would pricing proposed by Matrix was the lowest thus would provide greater financial benefit to the Council.

9 2.8 Each Evaluation Panel member used a tender evaluation score sheet to independently record their evaluation and score for each tender bid. Following independent scoring, the panel came together to discuss their results and allocate an agreed score for each of the criteria in the two proposals received. 2.9 The panel short-listed Matrix Supply Chain Management based on the following factors: 1) service provision score and 2) price. The Financial evaluation and the Quality Scorecard are contained in Part 2 of this report. GENERAL INFORMATION 2.10 IT: From implementing the contract award to going live Matrix advise that as most of the necessary data already exists with Badenoch & Clark, the integration process can take up to 50 working days. Without standardised data, this process would normally take 90 days. Matrix.net (web-based access portal) can integrate with Oracle and Matrix could build in new technical projects Lambeth may have during implementation. Matrix.net is a user access tool, which will enable the council to streamline the process of requesting temporary workers, time-sheeting, invoicing and generate real time management information reports to support our strategic needs Under the new contract, Lambeth will have a dedicated Account Manager on site 2 or 3 days per week supported by two Account Co-ordinators and Helpdesk Support based in Matrix s office. In addition to these days, the Account Manager will undertake field work and/or market research with a view to encouraging local suppliers (SME/BMEs) to enrol onto the MSP Supply Chain. Matrix will also engage with Job Centre Plus (JCP), making it a primary supplier in tier 1 of the supply chain of agencies and/or providing an opportunity for JCP to compete at other tier levels As part of their commitment to continuous improvement, Matrix will proactively identify areas of savings by negotiating rate reductions of the supplier agencies and agency workers. Standard CRB checks are included as part of the quoted management fee and Matrix will ensure that their supplier agencies have a pool of vetted/crb verified candidates in place. 9 CONTRACT MANAGEMENT 2.13 Lambeth will work closely with Matrix to ensure KPI s that support the council s priorities are put in place. These will be used to measure their performance across the contract. Lambeth will be in receipt of Management Information reports, which will consist of measurable data such as; agency placements, summary of evaluation by candidates, weekly timesheet reports, detailed breakdown of invoices, equal opportunity statistics, suppliers with places filled, summary of cost code spend and cost savings report. VALUE FOR MONEY 2.14 Cashable savings The procurement exercise generated some savings compared to our incumbent MSP. On a like for like basis, these are approximately 272,000 per annum. However, we have accessed these savings as non-cashable due to the committed ambition to reduce agency spend, resulting in a reduction of collected savings.

10 Non-cashable savings will result from efficiency savings by having a more streamlined and cohesive neutral vendor service provision. Additionally, three desks will be released at Phoenix House, which will negate the need for new office/it resources. Cashable Savings: 0 Non-Cashable Savings: 272, Comments from Executive Director of Finance & Resources 3.1 The financial resources required are held within individual Departmental revenue budgets. Agency workers expenditure is funded either through vacant posts or project specific budgets. The award of this contract should not require additional funding. There is a separate programme to reduce the reliance on agency workers which should reduce the overall cost, and the reduction in fees and charges should contribute to additional savings which at this time are not quantifiable. 4.0 Comments from Director of Legal and Democratic Services 4.1 The Council has delegated the power to deal with the award of contracts to the Chief Executive. 4.2 The Council has adopted the Commissioning Manual and the matters set out therein shall apply to the purchase of all works, goods and services purchased by the Council and as such would apply to the award of contract proposed in this report. The Commissioning Manual requires that all contracts with a value in excess of 25,000 must be competitively tendered, following an open advertisement in an appropriate publication. Barnsley MBC have complied with these requirements. Before officers may use their delegated powers they should obtain the approval of the Strategic Commissioning Board. 4.3 The EU procurement regime applies to this tendering exercise by virtue of the Public Contracts Regulations As this service is described in Schedule 3 B the Council is not obliged to publish a contract notice in OJEU. Barnsley MBC have complied with all requirements of the Regulations. The European Commissioners have issued advice saying that part B contracts and contracts that fall below the thresholds should be competitively tendered to provide fairness, transparency and to ensure that there is no discrimination against an applicant from another EU member state. In tendering these services with the possibility of other local authorities having access to the benefits of the contract Barnsley MBC have complied with this advice. 4.4 The Council s Constitution requires that all matters affecting two or more wards or the expenditure of 250,000 or more must be published in the Forward Plan. A copy of this report should be sent to the Head of Scrutiny five clear days before the recommendations are acted upon. 5.0 Results of Scrutiny and Consultation views 5.1 Prior to reaching the decision to appoint Matrix, consultative views were obtained from Lambeth Hiring Managers, the Corporate Procurement Team and the local authorities that employ the services of the MSPs approached. 10

11 Hiring Managers were asked for their opinion on the current service provider, B&C, and what improvements they would like to see in awarding a new contract. 6.0 Organisational Implications 6.1 Risk management: Service disruption if the contract is not implemented on time. Transfer of business from Badenoch & Clark IT - invoicing billing and configuration of data 6.2 Equalities Impact Assessment: LOW risk. The Council has a long standing history/record in this service area and continuously ensures that the service industry statutes are complied with. In order to encourage local suppliers to enrol on the supplier panel, Matrix will host a series of forums in partnership with Lambeth. In creating jobs for local people, Matrix will engage with Job Centre Plus, making it a primary supplier in tier 1 of the supplier chain. 6.3 Community safety implications: This contract will link to the Community Safety strategy by tackling crime and disorder by the use of rigorous procedures for CRB checks and also by making employment opportunities more accessible for local young people, through the inclusion of Job Centre Plus. 6.4 Environmental implications: Engaging agency workers from within the Borough is advantageous as it reduces the need for transportation and therefore lowers carbon emissions. Matrix.net is a fully online ordering and processing system, this will reduce the Council s reliance on paper, thereby showing commitment to sustainability. 6.5 Staffing and accommodation implications: The London Borough of Lambeth currently has 651 agency workers, the implementation of a new contract will affect everyone who is currently an agency worker. With the Account Manager working at the Phoenix House office 2 or 3 days per week, this will enable of staff to hot desk. Currently the MSP has 3 dedicated desks, which will now be released for Council staff. 6.6 Workforce Code of Practice: There may be TUPE implications for the Badenoch & Clark staff who are presently managing our current provision. Matrix will be responsible for managing any TUPE arrangements associated with the new contract. 6.7 Procurement implications: The Corporate Procurement Team worked with Human Resources in reaching the recommendation to appoint Matrix as the Council s managed service provider. As a public sector authority, accessing a collaborative contract represents value for money for the Council as it negates the need for a lengthy formal tender process which would require substantial use of staff resources. Value for money is also materialised by the increased buying power generated by collaborative agreements. 6.8 Any other implications: None 11

12 7.0 Timetable for Implementation No. Item Description Due Date 1 DCB approval of the appointment of Matrix 14 th May 2 SCB approval 21 st May 3 Award of Contract 30 th June 4 Termination of B&C contract 1 St July 5 Implementation period July - Nov 6 New Contract commences 3 November 7 Contract review May