Purpose

This report sets out to achieve approval for a procurement strategy
to deliver compliant and effective contracts for the provision of a
range of Mechanical and Electrical contracts across PAM.

Content

RESOLVED to
approve:
 
1. 
A1. Establishment of an M&E Framework of
Contractors across 9 Lots, with a value of up to £80m ex VAT.
The contract term will be up to 6 years (4+2).
 
B1.  Procurement of three Specialist M&E works
contracts , to establish strategic long
term agreement for up to 5 years (3+1+1), with a combined value of
up to £9,343,250 ex VAT. The three contracts will be for the
following requirements;
· 
Door Entry Systems
· 
Aerials
· 
Lightning Systems 
 
B.2. Procurement of
two Specialist M&E works contracts to establish Tactical
1 year Direct Award contracts via Public
Framework, with a combined total value of up to £1.45m ex
VAT. The tactical contracts will provide an interim arrangement
while the strategic contracts are procured. These two contracts
will be for the following requirements;
· 
Door Entry Systems
· 
Aerials
 
C. Procurement of up
to three Consultancy support professional services contracts, to
provide specialist advice for the development of the framework. The
estimated combined value will be up to £60k ex VAT. These
contracts will provide specialist advice for;
· 
Consultancy - Heat Recovery Units & Air Source Heat Pumps
· 
Consultancy - Communal Ventilation
· 
Consultancy - Wet/Dry Risers & Sprinkler Systems
 
2. 
To delegate the contract award for the Framework Agreement to the
Group Director, Climate Homes and Economy, following consultation
with the Group Director, Finance and Corporate Resources,  This is to
allow sufficient time frames for due diligence in ITT evaluation
and commencement and management of the Leaseholder consultation
process to commence as soon as practically possible. 
 
3. 
To note that where the Group Director has signed off on the report
on the contract awards for these works and services, this will
subsequently be reported to the Cabinet Procurement and Insourcing
Committee (CPIC) by the Group Director
 
Reasons For Decision
 
1. A new procurement strategy has been
developed to drive improvements, provide a step change, and secure
compliant and effective contracts for the provision of a range of
Mechanical and Electrical contracts across PAM. The primary goals
and objectives are to deliver M&E contracts that achieve the
following:
· 
Compliant procurement processes
· 
Agreed rates to allow for forecasting and planning
· 
Ensure Value for Money across M&E spend portfolio
· 
Address Section 20 requirements in most effective and efficient
way
· 
Secure suitably experienced and skilled Supply Chain, and build
effective working relationships  to drive continuous improvement through
performance management and reporting
· 
Effective management of Maintenance and compliance to statutory
requirement, including provision of support for DLO
· 
as well as Options to deliver capital investment to help in
reduction of maintenance costs, and improve services for
residents
· 
Opportunity for added value through delivery of improved social
value and sustainability within M&E contracts
 
Proposed
Approach
 
2. It is proposed to run a number of
tender 
processes in order to establish the M&E Framework and
specialist contracts;
 
Following an analysis of the M&E contract,
4 categories were identified;
 
Electrical Contracts where multiple suppliers
would be needed
 
Mechanical Contracts were multiple suppliers
would be needed
 
Specialist M&E contracts where only one
supplier would be needed
 
Consultancy support contracts, where internal
resources for specialist M&E requirements are unavailable
Following careful consideration, it was agreed
that contracts falling within categories 1 and 2 would require one
supplier to deliver the day-to-day repair and maintenance
requirements. Should any further capital investment programmes of
work and/or new installations be identified (subject to budget),
additional suppliers will be required to deliver these, and/or
provide back up to the DLO.
 
As a result the
proposed approach identified is summarised as follows:
 
A. M&E Framework
· 
An M&E framework with 9 lots (two electrical and 7 mechanical),
as listed within Appendix 1. Each lot would deliver both repair
& maintenance as well as new installations.
· 
The top three scoring bidders would be appointed to the framework,
for each lot.
· 
Each first place bidder would be awarded the repair and maintenance
contract for the lot.
· 
Mini competitions would be run between all lot specific framework
suppliers to identify the most economically advantageous supplier
to deliver specific programmes of work (as and when budget was
available).
 
B1. Specialist Contracts
· 
Specialist contracts only require one supplier for delivery
· 
As such there is no benefit for this to be part of the framework
agreement
· 
Three separate procurement processes would be undertaken to deliver
these specialist contracts, to secure 5 year Measured Term
Contracts;
· 
Door Entry
· 
Aerial/Digital TV
· 
Lightning System
 
B2. Tactical Contracts
· 
Tactical contracts are interim contractual arrangements that are
required to ensure continuity of service.
· 
There are current contracts in place that have or will shortly
expire before the longer term specialist contracts are awarded.
· 
Therefore 12 month direct award
contracts will be established via a public framework to allow
sufficient time for the tender process to deliver the strategic
contracts.
· 
Two separate procurement processes would be undertaken to deliver
these tactical contracts, to secure 12 month Measured Term
Contracts;
· 
Door Entry 
· 
Aerial/Digital TV
 
C. Consultancy Support
· 
Consultancy support contracts are needed to provide the necessary
technical advice and competencies to specialist lots on the
framework.
· 
There are currently no internal resources with the knowledge and
competencies necessary for these specialist lots.
· 
The consultant will be required to provide advice and guidance for
pre tender actions, including drafting the specification and
technical evaluation questions for tender. This may also include
evaluation of bids where necessary.
· 
Therefore a tender process will be
undertaken to establish up to 12 month contract for the following
disciplines;
o 
Consultancy - Heat Recovery Units & Air Source Heat Pumps
o 
Consultancy - Communal Ventilation
o 
Consultancy -  Wet/Dry Risers &
Sprinkler Systems
 
See attached Exempt Appendix 1 for further
details.
 
 
 
Alternative Options
Considered and Rejected
 
The following alternative options were
considered;
 
Insourcing
The execution of the M&E works would
necessitate the deployment of technical resources that possess
highly specialised qualifications. The time available to scale up
and recruit such a team is extremely limited, and it is unclear
whether this would be feasible or beneficial to the Council.
 
The specialist nature of the repair,
maintenance and upgrade works would also require the council to
establish new supply chains for parts and materials, with
sufficient capacity to cover the wide range of works involved. This
is likely to be prohibitive and presents a very significant risk to
successful investment in any upgrade programme of work.
 
A further barrier pertains to the fact that it
is not possible to consult with leaseholders on the appointment of
the DLO. Consequently, works subject to a Section 20 notice (above
£250/unit) would not be fully rechargeable without additional
procurement work, or a dispensation from the First Tier Tribunal
(which is improbable). It is evident that this would result in a
substantial financial loss for the council, which would not be
feasible to recuperate.
 
The council would also be taking on full
responsibility for any design work and for the health and safety of
operatives if this option was selected. This would be a significant
risk for the council.
 
This option was rejected
 
Individual
Contracts
To date, individual contracts have been placed
for each of the contract requirements within the framework. This
has resulted in short-term agreements and previous reliance on STAs
and external frameworks to reactively secure a supply chain in
response to expiring contracts and urgent compliance work.
 
Due to the number of contracts required, there
would also be an extended timeframe to deliver all 10 contracts
within the necessary timeframe for current expiration. This
approach would ensure the continued reliance on reactive measures
to secure short-term contracts with relevant markets and suppliers.
A significant change is required in the strategic approach to PAM
establishment of contract agreements, with the objective of driving
continuous improvements and avoiding reliance on STAs and external
frameworks.
 
This option was rejected.
 
Using an existing
External Framework
While this does form part of the procurement
strategy to award tactical and consultant contracts, the option of
an M&E Framework Agreement is intended to move LBH away from a
reactive approach to contract agreement and towards formation of a
LBH Framework. The utilisation of external frameworks is a valid
approach within the context of LBH. Nevertheless, an overreliance
on a procurement strategy can incur significant costs and present
numerous disadvantages.
 
Due to the requirement for leasehold
engagement and recovery of leasehold costs, the strategic nature,
value of the contract and specialist area, an external framework is
not deemed to be a suitable option for this requirement. After
careful consideration, it was determined that this option was not
as viable as the others that were identified and, as such, it was
rejected for the framework and strategic contracts.