Purpose

Following the removal of the Contracts Forward Plan Cabinet report, this report is required to brief the Mayor and Cabinet and seek approval to commence a procurement exercise to appoint a contractor under a new Mechanical Measured Term Contract (MTC) for the Council’s corporate and operational estate ahead of the expiry of the Council’s existing contract in April 2027.

Decision

DECISION:

1. To approve the commencement of a competitive procurement exercise for the Mechanical Measured Term Contract, with a maximum estimated contract value of £12million.
2. To approve the proposed procurement strategy to appoint a single provider for an initial period of two years, with the option to extend for up to a further two years in one-year increments, subject to satisfactory performance, ongoing service requirements and budget availability.
3. To authorise officers to undertake the procurement process in accordance with the Procurement Act 2023, the Council’s Constitution and Contract Procedure Rules, including preliminary market engagement and the development and publication of the procurement documentation.
4. To delegate authority to the Corporate Director Housing & Regeneration, in consultation with the Mayor, to award the contract following completion of the procurement exercise, provided the award is within the approved maximum contract value.
5. To authorise the Director of Legal Services (Monitoring Officer) to execute the necessary contract documentation following the award decision.

Action by:

David Joyce, Corporate Director, Housing and Regeneration

Sarah Steer, Interim Head of Facilities Management

Reasons for the decision

The existing Mechanical MTC is due to expire in April 2027 and a replacement contractual arrangement is required to ensure continuity of planned and reactive mechanical maintenance and statutory compliance services across the Council’s estate. The service supports the safe, compliant and effective operation of Council buildings and is therefore an ongoing operational requirement.

The Council proposes to undertake a Competitive Flexible Procedure in accordance with the Procurement Act 2023. This procedure is considered appropriate given the breadth and operational importance of the requirement and will provide flexibility to structure the procurement to appropriately test suppliers’ technical capability, service delivery model, mobilisation arrangements and commercial proposals. The final design of the procedure will be informed by preliminary market engagement and will be proportionate to the nature, complexity and value of the requirement.

Commencing the procurement exercise at this stage is necessary to progress the replacement contract as quickly as practicable and to minimise the risk to service continuity arising from the expiry of the existing contract. The procurement will enable the Council to test the market, secure value for money and ensure that the future contract reflects current operational requirements, service standards and budgetary controls.

Alternative options considered

The current contract supports the Council’s corporate and operational estate, including Corporate Buildings, Leisure, Education and Parks assets and provides day-to-day mechanical works, reactive maintenance, planned servicing, small projects and statutory compliance checks. The service is critical to ensuring that the Council maintains safe, compliant and operational buildings for residents, service users and staff. 

Option 1 – Undertake a multi-lot procurement exercise:?The Council considered dividing the requirement into separate lots, either by service area, discipline or other defined workstreams. This could provide opportunities for specialist providers and potentially increase competition for individual elements. However, it would create additional contract management requirements, multiple interfaces between contractors and a greater risk of fragmented responsibility for planned maintenance, reactive repairs and statutory compliance. It could also result in duplicated management costs, inconsistent service standards and reduced economies of scale. On balance, a single-provider model is considered more appropriate for this requirement. 

Option 2 – Alternative procurement route:?The Council considered the use of an existing compliant framework agreement or other appropriate procurement arrangement. While these routes may provide a compliant means of procurement, they may provide less flexibility to tailor the specification, pricing structure, evaluation methodology and contract management arrangements to the Council’s specific estate and operational requirements. A Council-led procurement is therefore considered better suited to securing a bespoke Mechanical MTC and enabling the requirement to be fully tested through the market. 

Option 3 - Insourcing the delivery of works - Insourcing was considered but would require the Council to establish and maintain the necessary operational structure, including recruitment and retention of suitably qualified staff, specialist competencies and accreditations, management and supervision, vehicles, equipment, systems and out-of-hours resilience. Given the range and variable nature of the mechanical maintenance requirement, this is not considered the most economically or operationally advantageous delivery model. An outsourced model provides access to an established specialist workforce, greater flexibility to respond to changing demand and avoids the fixed costs and operational risks associated with establishing an in-house service. However, there is insufficient time to undertake this option before the current contract expires.

The recommended single-provider approach is considered to provide the most appropriate balance of value for money, competition, service continuity, operational resilience and contractual accountability. It will provide the Council with a single point of responsibility, consistent service and compliance standards and clearer contract and performance management arrangements across the estate. Preliminary market engagement will also be used to test the proposed single-provider model, including market capacity, SME accessibility and whether alternative lotting arrangements would deliver any material commercial or operational benefit. The outcome of this engagement will inform the final procurement structure.