Purpose

The decision will be to
undertake a future procurement to award a replacement contract for
the supply of temporary workers to enable the delivery of council
services.
 
Draft recommendation is to
approve the procurement strategy dependent on the outcome of market
research to determine the best solution for the Council’s
requirement.
 

Content

For the reasons set out in the
report and its appendices the Cabinet Member for Finance
AGREED:
 
·        
A Lot 1 contract called off from the Eastern Shires
Purchasing Organisation (ESPO) Managed Services for Temporary
Agency Resources (MSTAR) 4 Framework to supply temporary labour
through a managed service provider for 2 years with a further
option to extend for a further 2 years at a total estimated value
of £200m.
 
·        
A Lot 2 contract called off from the Eastern Shires
Purchasing Organisation (ESPO) Managed Services for Temporary
Agency Resources (MSTAR) 4 Framework to supply statement of works
solutions through a provider for 2 years with a further option to
extend for a further 2 years at an estimated value of
£40m

Reasons for the decision

The Council uses temporary
workers to provide short term resources to fill absences,
vacancies, add capacity and support transformation projects. The
council’s use of agency workers is a critical measure to
mitigate redundancies, especially as part of strategic workforce
planning associated with the Future Croydon Transformation
Strategy. It also supports service continuity and addresses urgent
capacity requirements in areas such as social care and housing.
Therefore, the prudent use of agency workers aims to reduce the
impact of permanent workforce redundancy, including the
employer’s redundancy costs, and the impact on the workforce.
Such an approach will also ensure an effective change management
approach, as well as maintain a constructive employee relations
environment with the trades
unions.
 
Agency staffing costs are met
within existing staffing budgets. Where overspends occur, managers
must find and deliver efficiencies elsewhere to offset these costs.
This ensures financial discipline while preserving essential
services. The largest proportion of agency spend relates to agency
workers themselves, comprising:
·        
Payments to workers
·        
Agency fees
·        
Statutory fees (such as national insurance,
pensions, and apprenticeship levy)
·        
The management fee for the Managed Service Provider
(MSP)
 
The proposed introduction of
two new contracts will enable the council to engage with multiple
providers, offering greater flexibility and the ability to drive
savings, particularly in transformation projects. This approach
strengthens the council’s capacity to respond to critical
demand while maintaining workforce stability and cost
control.
 
The two contracts consist of a
managed service provider (MSP) and platform to manage statement of
works. An MSP ensures the council has a supply chain of workers to
fill a range of temporary needs at a reasonable cost. The MSP also
provides a technological platform, known as a vendor management
solution (VMS) to provide the necessary compliance and controls
over authorisation and payments to workers, which in turn can link
back to the Council’s own workforce management and financial
system, Oracle.
 
Most councils, and large
organisations for that matter, use an MSP to manage their temporary
labour. Due to changes in how certain types of workers are
considered outside IR35 (the intermediaries legislation contained
in Chapter 8 of the Income Tax Act 2003), many organisations seek a
dedicated platform to manage statement of works and ensure
compliance with HMRC rules around the management of these types of
arrangements.
 

Alternative options considered

The options and alternatives
considered to deliver the procurement / contract / project,
including their respective costs & benefits, are included in
Appendix [A] of the full report. Gateway 1 Business Case, Section
2, part of this report. The potential tendering routes to then
procure the recommended option are included in Gateway 2 Route to
Market, Section 2, of Appendix [A].