(Cabinet 10 December 2014) The supply of Hard Facilities Management (Hard FM) maintenance services to the County Council estate

Transcription

1 Somerset County Council Cabinet 10 th December 2014 (Cabinet 10 December 2014) Paper H Item No. 11 The supply of Hard Facilities Management (Hard FM) maintenance services to the County Council estate Cabinet Member(s): Cllr David Huxtable Cabinet Member for Resources Division and Local Member(s): All Lead Officer: John Houlihan- Strategic Manager Corporate Property Group Author: John Houlihan - Strategic Manager Corporate Property Group Contact Details: ( ) Report Sign off Forward Plan Reference: Seen by: Name Date County Solicitor Honor Clarke 20/11/14 Monitoring Officer Julian Gale 20/11/14 Corporate Finance Kevin Nacey 26/11/14 Human Resources Martin Walsh 20/11/14 Property / James Stubbs & Procurement Richard Williams 26/11/14 Senior Manager Richard Williams 24/11/14 Cabinet Member Cllr David Huxtable 26/11/14 FP14/10/06 Summary: This report sets out the recommendation to award the contract for The supply of Hard Facilities Management (Hard FM) maintenance services to the County Council estate following a competitive tendering process. The new contract is to commence on 1 st April 2015 The existing term contracts for both building fabric and building services maintenance have been in operation since These contracts were initially procured for a 3-year term and have been extended year on year, since 2011pending the development and implementation of a procurement strategy for these services The current contract involves 23 separate contractors and 48 individual contracts. The procurement strategy which this award implements is to secure a single facilities management contract with either one or a consortium of suppliers, to cover the scope of activities required. The key benefits this contract will provide are: Lower contract costs, compared with the current baseline. Estimated savings up to 44%, which will be shared between SCC and Schools who are the main customers of the contract. Service improvement through stream-lined management H - 1

2 processes and single point of accountability Social Value achieved through the contract requirement for apprenticeships and local employment opportunities Local employment Local based SME (small medium sized enterprises) employed as part of the supply chain. Contract requirement Local spend supporting the local economy as a contract requirement. Supporting the Corporate objectives (County Plan ) The new contract was procured through a competitive tendering process to ensure quality of supply and value for money. The contract approach and length of appointment will take in to consideration the wider Council initiative regarding other Facilities Management services (soft FM) and the potential to bring both requirements into a Total Facilities Management (TFM) solution over the next 2-4 years. Contract Term: This contract will therefore be for a 2-years with a potential 2-year extension to give a maximum of a 4 year overall duration. The details of all providers and the results of the evaluation process are set out in the confidential Appendix A Tender Evaluation Report. This Appendix is confidential as it contains commercially sensitive information. It also compares the proposed new contract rates with the current ones, demonstrating significant financial savings to the Authority. Recommendations: Reasons for Recommendations: That the cabinet agrees to: 1. Agrees the case for exempt information for Appendix A to be treated in confidence, as the case for the public interest in maintaining the exemption outweighs the public interest in disclosing that information 2. Subject to the approval of recommendation (1) above, agrees to exclude the press and public from the meeting where there is any discussion at the meeting regarding exempt or confidential information. 3. Approves the contract award to the bidder (Bidder A identified in Appendix A) who supplied the most economically advantageous tender for supply of property maintenance services, to commence on 1 st April The Council has a statutory duty to ensure building services, such as gas supplies, boilers and legionella tests are compliant with current legislation, in parallel to keeping its properties generally fit for purpose. The proposed Term Maintenance contractor has been identified H - 2

3 as offering the most efficient delivery to the Council. The decision now needs to be taken to award the contract so that the mobilisation programme can begin on 6 th January 2015 to achieve a 1 st April 2015 go-live date. Appendix A contains commercially sensitive information relating to the tender submissions from the recommended suppliers. Detailed commercial reasons for these recommendations are set out in that Appendix. Links to Priorities and Impact on Service Plans: The approved Council s County Plan ( ) contains four main focus areas; 1. Safe and healthy 2. Equal opportunities 3. Thriving economy 4. Quality services This contract will help support the following business plan aims: Safe and Healthy: Our children feel protected and safe:- There are mandatory stipulations within the contract regarding DBS requirements. Equal opportunities: Boost prospects for those seeking work:- The contract contains a number of KPI measurements regarding local employment and local spend. Thriving Economy: Encouraging the creation of jobs:- The contract includes a requirement to provide two, new local apprenticeships. Helping existing firms to expand:- There is a requirement within the contract to engage and partner with the local SME s. Quality Services:- Joining up with partners:- The contract has been formed as a strategic partnering arrangement to ensure that every pound spend delivers the maximum benefit to the taxpayers and residents of Somerset. Key Social Values: Priorities H - 3 Bidder Commitment Customer dedicated team for the County Apprenticeships throughout the contract life Our People Work experience placements Delivering skills for life at work programme Our Economy Our World Employing local SME s in the supply chain Direct investment in Somerset Growth planning Community benefits through donated hours Integration into the Somerset community Proactive environmental delivery opportunities

4 Energy management & carbon reduction Strategic Property Client Service Plan Key Priority 3 Delivery of property programme in relation to maintenance. The approval and subsequent implementation of this contract will deliver the requirements of the Strategic Property Client Service Plan. Consultations undertaken: Financial Implications: Legal Implications: HR Implications: Risk Implications: A project steering Board was formed in January 2014 to which progress and key decisions have been agreed with, prior to formal submission. The steering board members are; John Houlihan Strategic Manager Corporate Property Group Richard Price Service Manager Commercial & Procurement Helen Acreman Divisional Manager Hard FM David Hayward Executive Officer Primary Heads Association Mike Lewis Strategic Manager Property Client Team Sarah Morgan Finance Manager Susan Fielden Strategic Manager CYP Compact Executive The Director for Business Development and the Cabinet Member for Resources have been updated on a regular basis on the scheme. The Chairman of Scrutiny Cllr Tony Lock was sent this paper for comment/approval (19/11/14) and subsequently approved the paper (26/11/14). The Opposition Spokesperson for Resources Cllr Crabb has been sent the paper for comment/approval (19/11/14). The selected contractor has been chosen to provide the best value for money solution by delivering the most economically advantageous tender (MEAT). Appendix A details the returned tenders final scoring comparisons. The County Council Procurement and legal teams have been fully engaged in the formation of the NEC 3 Term Service Contract (2013) that will be used for this appointment. Exempt information is defined by Section 100 of the Local Government Act 1972, by Schedule 12A to that Act. There are no direct SCC HR implications as a result of the contract. All potential TUPE information that has been supplied refers to the existing contractors. The following risks were identified in the draft project plan for the procurement process and noted in the prior non-key decision paper to proceed with this procurement. These are now shown with the relevant mitigation in place. Failure to obtain the necessary approval to commence procurement. o This was mitigated by approval of the prior non-key decision paper. H - 4

5 Failure to adhere to a robust and legally sound procurement process. o This has been mitigated by the commercial & procurement team ensuring compliance throughout the process. Insufficient capacity to undertake the process o This has been mitigated by a mixture of internal and external resources being made available for the tasks required. Insufficient financial resource. o The preferred bidder has adequately demonstrated via their financial model submitted as part of the ITT response that cost savings against the current expenditure levels will be achieved. Failure to attract providers in the market. o Of the 15 initial Pre-qualification returns, 13 bidders were invited to tender, of which 7 returned compliant tenders. o Bidders were required provide evidence they had engaged and included SME as part of the SME supply chain and contract embedded requirements Failure to procure a new contract. o This will impact on the need to deliver a public sector compliant contract to replace the current time-expired contracts, and consequently may harm the reputation of the Council in the eyes of the community and Central Government. Other Implications (including due regard implications): Scrutiny comments / recommendation (if any): All tenderers have given due regard to the awareness and application of the equalities, social and economic requirements of the Council. The contract documents will include requirements regarding monitoring of the successful Contractors compliance. Impact assessments have been completed and are set out in Appendix B. In summary these have been identified as; SME s (small, medium enterprises) loss of opportunity o Mitigated by SME engagement during the procurement and contract embedded requirements. Contractor staff not being DBS (disclosure & barring service) cleared for the contract commencement date o Mitigated by detailed on going appraisal during the contract mobilisation period. The Chairman of Scrutiny Cllr Tony Lock has been consulted and has approved the paper (26/11/14). 1. Background 1.1. The existing contracts were originally procured as Term Maintenance contracts split into three main disciplines, Building Fabric Maintenance (BFM), Electrical H - 5

6 and Mechanical. These were further split into 6 areas for BFM and two areas for both Mechanical and electrical. Due to contactor issues, which included poor performance, contractors not being able to fulfil the obligations and also bankruptcy, these were changed over time and there is at present only 1 Term Maintenance contact for BFM covering the whole County. There are no longer Term Maintenance contracts for M or E as these did not work as originally envisaged so these have been replaced by a labour and materials approach and tendered annually which has been both time consuming and has led to varying levels of service. In addition there are numerous smaller contracts for engineering works such as alarms, lightening conductors, emergency lighting etc. These contacts number around 20 in total. This approach is not consistent and is no longer aligned with EU procurement rules. Therefore a new approach was required to ensure compliance. As noted above the current arrangements are very disaggregated, with a large number of suppliers. Opportunities have been identified to realise process and financial benefits through a consolidation of this supply chain. During there existed a category plan to re-procure these services known as JD6 by the Southwest One procurement team., Consultations were subsequently carried out with the SCC corporate client, school representatives via the BMIS Advisory Board and also key stake holders in Children s Services, as well as other local authorities. It was agreed by all interested parties that a reprocurement exercise was needed to ensure compliance, maintain a high level of customer service and ensure best value was achieved by consolidating the number of contracts. This procurement was restarted by SCC in December A soft market testing process was carried out in January 2014, which included a localised supplier event to consider the impacts on SME s. The feedback from these events further informed the structure of our Invitation to Tender (ITT) documentation. Procurement Strategy and Approach: This proposal describes an aggregated contracting approach whereby a single provider, with an integrated supply chain of SME s will deliver the required services, thus gaining both economies of scale and process efficiencies. These efficiencies will also extend into the operation of the Southwest One Hard FM team that manages the contracts on behalf of the Council. The majority of the SCC-managed Hard FM spend relates to schools, via the BMIS (Building Maintenance Indemnity Scheme). The specifications are generally input-based, with the term maintenance contracts being remunerated against the National Schedule of Rates (NSR), for which the majority of suppliers currently apply a positive mark-up to the NSR. It should be noted that the proposed contract appointment, will in fact attract a reduction in the NSR rates. The existing asset register system (Genys1s) is currently in the process of being transferred to a new system (Atrium) The appointed contractor will be required to import electronic data on a daily basis to update the property asset records to assist effective contract monitoring and management The Hard FM services included for provision in this contract can be summarised H - 6

7 as the following activities: (Cabinet 10 December 2014) Lifecycle and Planned Maintenance e.g. like-for-like maintenance and/or replacement, typically linked to the Condition Survey Programme Small Works e.g. capitalised improvement or enhancements Planned Preventative Maintenance (PPM) e.g. periodic servicing according to a schedule Reactive Maintenance e.g. unplanned maintenance activities, typically following a fault or accidental damage Statutory Maintenance e.g. maintenance and/or asset replacement activities required by law Help Desk [inclusion or otherwise to be reviewed during the implementation phase] e.g. the central point to which building users report faults and requirements 1.3 The Cabinet Office reviewed and endorsed the SCC Hard FM procurement strategy, which requires the successful supplier to have in place a multiple supply chain (i.e. includes SME s as their second tier suppliers). 1.4 A robust contract management approach will be put into place by the Corporate Property Group to ensure the quality and commercial benefits are realised. 2. Options considered and reasons for rejecting them 2.1. The option of joining another Authority s framework agreement was investigated however none were identified in the Southwest or elsewhere that would have been appropriate to the needs of Somerset. Renewing current contracts not an option for the reasons set out above and specifically that these have been extended a number of times and are no longer compliant with EU procurement rules Recent strategic thinking has considered the possibility of incorporating current stand-alone contracts into larger multi-facetted or integrated contracts, placed with a single service provider. With this in mind we incorporated an option for the proposed contract to terminate in two years to allow for the aggregation of Soft FM elements of service in a combined tendering exercise. As further work is currently being undertaken around the evaluation and establishment of the most appropriate supply arrangement for the provision of Soft FM services. 3. Background papers 3.1. Appendix A provides a detailed tender analysis of the received bidder submissions. Appendix B Impact Assessment 3.2. No specific cabinet member conflicts of interest have been identified. H - 7