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RESOLVED:
 
That the Cabinet
Procurement and Insourcing Committee approved:
 
The procurement of a Void Utility Management
provider under a concession contract to provide void utility
management services, at nil cost to the Council.

Options Appraisal And Business Case (Reasons For
Decision)
 
The Building Maintenance Voids team deals with
c. 430 properties per year, updating, decorating and preparing
Council properties to be re-let to Hackney residents. The Void
co-ordinators spend a disproportionate amount of time ensuring the
utility accounts for the previous resident have been closed down
and any debt cleared, and then arranging the new supply for the
incoming resident.
 
This activity was previously administered by
British Gas up until 2021 before they ceased to provide the
service. This has added an administrative burden to the Void team,
with the net effect of increasing the length of time that a
property is Voided. It is estimated that sourcing a provider for
this activity could help return Void properties to market a week
earlier.
 
As part of the service provided, we would
expect the provider to ensure that electricity and gas meters are
upgraded to the latest Smart Meter technology.
This paper seeks permission to approach the
market to find a supplier to provide this service on behalf of the
Void team.
 
Due to the current cost of living crisis, the
Building Maintenance service has seen an increase in the number of
gas meters that have no credit on them, which prevents gas
operatives from performing their annual gas appliance servicing
compliance activity. They are then required to “Cap”
the gas meter, which means the resident is not able to use any gas
appliance (including the boiler), until the gas meter has been
“uncapped” and the resident’s appliances
serviced.
 
As part of this procurement we would seek a
Void Utility Management provider that will provide support to
vulnerable residents, to help reduce the number of gas meters that
are being capped within Hackney’s housing portfolio. We would
expect the provider to work with the resident who finds themselves
in financial difficulty, signposting to relevant support services
including the Financial Inclusion team at Hackney Council.
 
The chosen provider will be in a position to
offer their gas & electricity supply product to the resident,
benefiting financially from being the chosen provider, hence the
reason for this being a concession contract. The resident will
still retain the option to contract with a provider of their choice
and not the provider that gets awarded this contract. This is a
risk that the selected provider will need to contend with.
 
An initial search of the market place has
identified that there are a few providers that offer Void Utility
Management services, however it is unclear how many provide
additional support to vulnerable residents, which is a key
requirement for this procurement exercise.
 
Preferred Option
 
Going to market to find a Void Utility
provider, who will also provide support for vulnerable residents,
is a key requirement to move the Building Maintenance Void service
forward. The specialised nature of the activity lends itself to
being performed by a dedicated service provider, which would enable
the Void team to focus on preparing the Void property so that it
can be re-let to a Hackney resident. The Council should see a net
benefit from the anticipated reduction in the Void duration. It is
anticipated that void properties could be returned to the market a
week earlier which could bring in an additional £139.73 per
property (£70k per annum).
 
There is no cost to outsourcing this activity
as the provider will be in a position to market their services to
the resident moving into the property. It is estimated that the
provider will be able to make a profit of £100 per supply at
a property, (£200 if both gas and electricity are supplied to
the resident). The concessionary value of the contract is
calculated based on the provider being referred up to 500 void
properties per year, with average annual revenue of £1,690
per property (the average cost of electricity and gas for an
average 3 bed property from 01/04/2024). As Void properties will be
sent to the provider over the course of a year, it is assumed that
this will result in a half year of revenue for the provider for new
customers in each year. 
 
Refer to assumptions figures as set out in the
main
report.
 
It is expected that the support provided by
the concessionaire will mean fewer Hackney residents end up in
crisis situations due to them not being able to pay for their gas
and electricity supplies.
 
A provider who will install new smart meters
in all void properties will be a huge benefit to helping the
Borough to become a greener place to live. It will reduce the
number of visits that a service provider will have to make to the
property, whilst also giving much more visibility to the resident
of their energy usage, which could help them to change their
behaviour over time to reduce their energy usage and
expenditure.
 
In order to optimise value for our residents
while minimising direct costs to the Council, the adoption of an
Open Tender Procedure for this concession contract is paramount.
The implementation of an Open procedure aligns with our commitment
to transparency, fairness, and competition, thereby ensuring the
most advantageous and cost-effective outcome for all stakeholders
involved
 
 
Alternative Options
(Considered and Rejected)
 
Do Nothing:
This option was rejected as it would prevent
the Void service from moving forward, improving the Void turnaround
time and providing a better resident experience.
 
Recruit an additional Void co-ordinator to
focus solely on the Utility disconnection and connections process.
This option was also rejected as it would not deliver on the
secondary objective of sourcing support for vulnerable residents.
It would also result in an extra unnecessary step in the upgrading
of meters at the property to smart technology. Recruitment of
additional staff would also add an additional cost to the service,
which contrasts unfavourably with the zero cost of finding an
external provider to manage the service at no cost.
 
Framework Call-off:
An initial search for a compliant framework
suitable for this concessions tender yielded no viable options.