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RESOLVED: Confirmed
approval to create a Joint Venture Agency between Hackney Council
and Commercial Services Kent Ltd (CSKL), with the agreement to
provide recruitment agency services to all Hackney Departments and
Services.
 
REASONS FOR DECISION
 
Hackney’s annual agency staffing spend
is circa 48m per annum and as a result of increased budgetary
constraints and pressures, the Council needs to be more efficient
in its recruitment approach, whilst recognising the national
recruitment challenges in fulfilling certain roles (e.g. Social
Workers, Care Assistants, Children Services). A change in
Hackney’s temporary agency recruitment arrangement would
affect all services (existing and new temporary staffing
contracts).
 
The agency Joint Venture proposal seeks to
establish an innovative new public-to-public Joint Venture model
that would help meet Hackney’s requirements for recruiting
high quality agency staff in a way that maximises local employment
opportunities, supports community wealth building and generates
returned income to the council.
 
Hackney would leverage on the experience of
CSKL and knowledge in setting up a Joint Venture providing access
to its governance, support structures and existing supply chain.
CSKL have, together with their Partners in 23/24, returned
£3m back to local authorities and have partnerships with
Kent, Hampshire, Luton, Dudley, Surrey, Dorset and Halton.
 
The Teckal Joint
Venture would provide services to the council as a managed service
(master vendor). As a Master Vendor agencies would come direct to
The Joint Venture organisation and local resources would be engaged
to undertake direct fulfilment. Fulfilment would be managed by a
service level agreement and performance regularly monitored.
 
Joint Venture accesses supply chain via
managed DPS framework and would release opportunities to all
approved suppliers, in-line with Hackney’s requirements.
Maximum pricing is set (to match existing supply chain margins).
The Joint Venture would source candidates of suitable skills,
experience and qualification levels to be placed in roles across
the Council.
 
A key objective of the agreement would be to
source skilled, quality staff to complement our permanent
workforce, and to provide the Council with flexibility to meet gaps
in our workforce demand. Where we have particular challenges with
permanent recruitment, we may use Joint Venture resources to
provide additional search and recruitment capabilities to the
council.
 
Where it is appropriate for the business, the
Joint Venture would also seek to convert good agency staff to
permanent employment, according to the same terms and conditions we
have with our current supplier.
 
A critical success factor in the Joint Venture
model, is the direct fulfilment of temporary and interim staffing
requirements. To facilitate this fulfilment, the Joint Venture
would employ a number of experienced Fulfilment Consultants who
would be based in Hackney, whose duties would be to proactively
directly source candidates.
 
Through rental payment from the Joint Venture
and dividend payment, the Joint Venture would capture some of the
profit margin (agency fees) that is currently taken by our current
private sector supplier as part of the fulfilment process.
Dividends are returned to both Joint Venture parties each year from
the retained surplus of the Joint Venture (on a 50/50 split
basis).
 
Management of the Joint Venture would be
governed under a shareholder agreement and joint accountability
statement. The board of directors appointed by the shareholders
(from both parties) would have oversight on the day to day
operations and decision making process.
 
DETAILS OF ALTERNATIVE OPTIONS CONSIDERED AND
REJECTED
 
Alternative arrangements have been considered
for the fulfilment of the Council's agency recruitment needs
however, it is envisioned that these will not bring about the same
level of financial and non-financial benefits.
 
Competitive Open Tender
Pros;
· 
The competitive procurement process allows market innovation and
competitiveness in a transparent environment. Under the new
procurement rules we would be looking for the most advantageous
tender and we can apply our own terms and conditions to the
contract.
· 
The council has an established and experienced procurement process
to manage the risks associated with going to open tender.
 
Cons;
· 
The current contract with Matrix was tendered in 2017 and since
has  been
extended and we have not gone to the market. Going back to the
market could be a missed opportunity to learn from previous years
and implement a new agreement that will produce a more cost
effective solution and wider benefits to Hackney 
· 
Hackney continuation to pay agency fees to a recruitment vendor.
Agency average margins between 5% - 10% of total spend. Managed
Service Provider (Neutral Provider) average fee 0.5% of total
spend.
 
Hackney to deliver its Interim Staffing
Recruitment
Pros;
· 
More control of our agency recruitment and better ability to tailor
our recruitment to meet Hackney’s requirements.
· 
Potential ability to capture the fees retained by the current
Neutral Vendor.
 
Cons;
· 
Hackney is in-experienced in the setting up and delivering a
recruitment function that is able to deliver to the same demand of
the current interim staffing numbers.
· 
Risk that there will not be enough time to establish a new Hackney
led recruitment framework.
· 
Missed opportunity to learn through a partnership and a partner
that has the experience in setting up a recruitment function.