Cllr Ray Theodoulou. Yes Lead Member report dated 18 th March 2013 Tender documents Draft Contracts from the framework

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1 IT Managed Services/SAP Support Services Contract Cabinet Date 10th July 2013 Finance and Change Cllr Ray Theodoulou Key Decision Background Document Location/Contact for inspection of Background Documents Main Consultees Yes Lead Member report dated 18 th March 2013 Tender documents Draft Contracts from the framework Through coordination with Gareth Steer In preparation for the new contract the Project Team have undertaken a programme of research over the last 7 months. Customer insight has been gathered through: Gartner (International Research company) Other Councils GPS Framework Council Department Survey Project Governance Meeting Market suppliers Market Day SAP Meeting with partner authority Good practice and market behaviour insights have been gained through: A series of fact finding and challenge sessions with other local authorities allowing the full range of contract models to be explored in detail. A number of soft market review sessions with 10 potential suppliers Market Day attended by over 61 companies Additional one to one session with Industry Number of Analyst Calls with Gartner SAP Discussion groups Other council meetings Officer Andrew McCartney, Director of Programme Support. Andrew.McCartney@gloucestershire.gov.uk

2 Key Dates Activity Date Cabinet Approval 10 July 2013 Start Tendering process 19 July 2013 Deadline for Receipt of tenders 27 September 2013 (5pm) Award 25 October 2013 Start of Transition 11 November 2013 Go Live date 01 April 2014 Purpose of Report To inform Cabinet of the key provisions of the Invitation to Tender (ITT), evaluation methodology, payment and performance measures and the contract terms and to seek authority to proceed to issue the ITT and award the contracts for the ICT Managed Service Procurement and the SAP Support Services. Cabinet to: Recommendations 1. note the key provisions of the Invitation to Tender (ITT), evaluation methodology, payment and performance measures and the contract terms as set out in this Report; and 2. authorise the Director of Programme Support to proceed to issue the ITT in accordance with the above provisions 3. authorise the Director of Programme Support, in consultation with the Lead Cabinet Member for Resources and Change, to: a) enter into a 3 year contract (with an option to extend to a maximum term of 7 years) for the supply of ICT Managed Services; and b) enter into a 5 year contract (with an option to extend to a maximum term of 7 years) for the supply of SAP Support services, with the preferred bidder as determined using the evaluation methodology contained herein.

3 Reasons for Recommendations The current contract with Capita SIS expires on March As there is no ability to extend the current contract, a new one needs to be commissioned. The current SAP Support Service with Capgemini also expires on March The recommendation provides Cabinet with the opportunity to confirm its support for the Director of Programme Support to conclude the procurement process. To enable the council to keep its ICT and SAP Services running for the purpose of meeting its statutory duties; paying staff wages; and paying supplier debts as they fall due (thereby reducing the council s exposure to risk of legal claims arising therefrom).

4 Resource Implications The annual budget for ICT is currently 6.5m. Although 3m of this relates to various software, network and telephony costs which are controlled by the Client side. The cost of the ICT Support contract with Capita SIS and the SAP support contract with Capgemini are included in the ICT budget. (a) The anticipated contract value for the ICT Managed Services contract is estimated at between 7.5m-9m based on a contract term of 3 years. As there is an option to extend the contract term to 7 years and further options in the contract to procure additional services, the full cost of the contract could potentially, if the said options are exercised, total 35m. The 35m figure is a ceiling price and includes provision for the following elements: ICT Managed Services including application services, data centre services and professional services as defined in the tender document Additional services as required to deliver the roadmap of ICT services that will likely be required by the council during the tenure Additional services that we (acting as a central purchasing body) may wish to procure for partner organisations (b) The anticipated contract value for the SAP Support Services contract is estimated at between 1.1M-1.4m based on contract duration of 5 years. As there is an option to extend the contract term to 7 years, the full cost of the contract could potentially, if the said options are exercised, total 2m. These costs will continue to be funded from the ICT annual budget and through future bids via the MTFS programme. No addition budget is sought at this time. The procurement project, for both contracts, has been managed and financed from within existing council resources. The remaining costs of the project is projected to be 75K and includes: External legal support (if necessary) Consultancy Contingency through transition Current council IT assets will not be transferred to the new providers. Some staff currently employed by the incumbent ICT managed service provider will be subject to TUPE arrangements.

5 MAIN REPORT CONTENTS Executive Summary Gloucestershire County Council is currently operating a managed services contract for the provision of ICT Services that will expire in March The SAP Support Services contract also expires in March The anticipated contract value for the proposed new ICT Managed Services contract is estimated at between 7.5m-9m based on a contract term of 3 years. As there is an option to extend the contract term to 7 years and further options in the contract to procure additional services, the full cost of the contract could potentially, if the said options are exercised, total 35m. The anticipated contract value for the proposed new SAP Support Services contract is estimated at between 1.1M-1.4m based on contract duration of 5 years. As there is an option to extend the contract term to 7 years, the full cost of the contract could potentially, if the said options are exercised, total 2m. These costs will continue to be funded from the ICT annual budget and through future bids via the MTFS programme. No addition budget is sought at this time. In March 2013 the Lead Member for Finance and Change gave approval to start procurement for the ICT Managed Service. The RM717 framework is being used where 10 suppliers can bid for the contract. to start procurement for SAP Support service. The RM713 framework is being used where 20 suppliers can bid for the contract. The Project Team now needs to proceed with the issue of the full Invitation to Tender and award for both contracts. Background & Drivers Gloucestershire County Council is currently operating a managed services contract for the provision of ICT Services with Capita SIS. This contract was procured 7 years ago and has 9 months remaining. It will expire in March 2014 with no option for further extension. The existing contract for SAP support services was implemented in November It provides HR, payroll, finance, procurement and employee & manager self service. All payments to staff and suppliers rely on the smooth operation and availability of the SAP system. It will also expire in March The procurement for new ICT managed services contract will be used to meet the following specific drivers: The cost of the new ICT Managed Services contract is estimated to be 10-15% cheaper compared with current spend. Flexibility The contract is being procured to be flexible to large changes in council policy e.g. If the council halved in size the ICT contract costs would flex in line with this. Data Centre The current aging Data Centre is located in Quayside House as

6 part of the procurement the new provider will take responsibility for dealing with this issue and transitioning us to a new service. Better services The ICT service needs improving from its legacy contract state. Through a combination of strategic investment and a more flexibly provisioned partner we will address some of the base issues. In March 2013 a decision was sought from the Lead Cabinet Member for Finance and Change (now the Lead Member for Resources & Change) to authorise the officers to initiate the procurement of support contracts for (i) ICT Managed Services and (ii) SAP Support services on the understanding that further cabinet approval would be sought in respect of: (a) setting evaluation criteria in respect of both contracts and (b) obtaining delegated authority to award both contracts. Officers took the decision to procure these services through Government Procurement Service (GPS) frameworks for the following reasons: Model Contract/Cost saving By not needing to negotiate a contract ourselves we save money on external legal support, time to do negotiation and have the security of utilising a tried and tested contract Speed By not needing to do the OJEU notice, PQQ or short listing this allows us to deliver the ICT procurement faster and hit our dates in the knowledge this work has been done to a high standard by GPS Suppliers There are a good selection of suppliers on the framework (see appendix 4 for full list of suppliers on both frameworks). Invitation to Tender The Invitations to Tender (ITTs) have been developed in light of the objectives set out in the original Cabinet report and the ITTs will be distributed to all bidders on the frameworks as required. The key element of the ITT documents is the evaluation criteria which is summarised in appendices 1 and 2. All the ITT documents are available on request. An overview of the main provisions in the ITT documents are included in the commercial model, see appendix 3. Services Standards Service Standards for the ICT Service are informed by historical information that we have through managing the current contract but ultimately the future service standards will be influenced by the delivery model proposed by the bidders. Service Standards for SAP services will be described in the ITT and are based on GCC historical information. Performance Measures Performance will be measured through KPI s that have been developed during the

7 current contract plus some additional ones. There is a renewed emphasis on innovation and efficiency. Bidders will be able to suggest a version of the KPIs in their bids based on our framework. Information Management Information Management is strongly addressed in both model contracts including clauses for personal data, audits and FOI. Additional Work under the proposed new ICT Managed Services Contract The framework agreement allows the council to call-off additional work without requiring it to conduct a new procurement process, provided that such call-off would not result in an infringement of the relevant procurement legislation. In any event, work of a significant value (as decided by the council) will be put out to tender as a matter of course, ensuring that value for money is tested, We may act as a Central Purchasing Body for the purpose of calling-off additional work for our partner organisations (e.g. District Councils) through the proposed framework contract. The council s invitation to tender documentation will name such partners and describe the scope of the services they might require. A ceiling price of 10M will be set aside in the proposed ICT Managed Services contract to accommodate this provision if required. Evaluation Methodology The evaluation methodology is set out in appendices 1 and 2. The broad thrust of the methodology will evaluate the submissions in three broad areas: Commercial i.e. Price Service Delivery i.e. The people element of the service Technical i.e. The technical elements of the services Options The principle for undertaking the procurement was authorised in the Cabinet Report of the 18 th March The options considered in connection with this Report are: a) To accept the recommendations and authorise the procurement to continue and award both contracts b) To reject the recommendations and order the re-scoping of the procurement Implications of the Options Option a) The implication of accepting the recommendations will be to allow the procurement to proceed in accordance with the broad timeline set out in the Cabinet Report of the 18 th March 2013 The timeline makes key provision for

8 sufficient time to mobilise and demobilise services prior to the existing contract lapsing. This is essential in terms of: Option b) Maintaining ICT and SAP Services for the County Keeping costs of mobilisation down to the minimum Reducing the risk of a gap in service provision in the transitional period between one contract and the next one The implications of rejecting the recommendations are that the whole procurement is delayed. As a result this may include further possible implications of: The Council not having an ICT Managed Services contract at the expiration of the current contract which may mean the Council failing to meet its statutory duties and exposing itself to an increased risk of legal claims for negligence due to departments lacking ICT support The Council not having a SAP Support Service at the expiration of the current contract which may mean the Council is unable to pay staff or suppliers. That the Project Team cannot define the changes required by Cabinet to move forward causing further delays o The delay causing an additional delay in awarding the contract resulting in increased costs of delivery through the mobilisation phase as contract negotiations are rushed o The possibility of having to close the current procurement process and start again depending on the nature of the changes sought under any re-scoping o The delay causes a gap in the delivery of the service at the end of the contract period exposing the Council to the risk of using interim arrangements with the associated costs Risk Assessment: The key risks associated with the two options have been covered above. Equalities Due regard has been given to the Equalities Act 2010 and it is concluded that it is not of concern given the nature of the services involved Officer Advice To accept the recommendation as stated. Consultation Feedback: No additional feedback has been received that changes the view taken at the last Cabinet Report. Appendix 1 Evaluation Methodology and Criteria for ICT Managed Service Procurement

9 Appendix 2 Evaluation Methodology and Criteria for SAP Support Service Procurement Appendix 3 Commercial Model for ICT Managed Services Appendix 4 List of suppliers