Decision Maker:

Outcome: For Determination

Is Key Decision?: Yes

Is Callable In?: Yes

Date of Decision: September 2, 2024

Purpose:

Content: RESOLVED:   1.  To approve the procurement of a framework with a value of up to £24m for capital lifts works over the 4 year framework period. Page 59   2.  To approve the procurement of a 4 year (2+1+1) Framework Agreement for Capital Lifts works to appoint a minimum of 3 contractors.   3.  To delegate the contract award for the Framework Agreement and 1st year call off contract to the Group Director, Climate Homes and Economy, following consultation with the Group Director, Finance and Corporate Resources, and the relevant Cabinet Members, Housing Services & Resident Participation, and Insourcing & Customer Services. This is to allow sufficient time frames for due diligence in ITT evaluation and Leaseholder consultation to commence as soon as practically possible.   4.  To note that the report on the contract award for these works will be reported to the Cabinet Procurement and Insourcing Committee (CPIC).   Reason(s) For Decision   1.  The current interim contractual arrangement was put in place in June  2021, and is currently being delivered by Apex Lifts Limited. This contract was established to allow PAM to cover the interim period while a new framework was being procured to include both Lift Repairs and Lift Capital Works. This was proposed by two previous business cases. However, this contract is only delivering repair and maintenance, and no capital renewal works are currently being delivered. This has resulted in LBH being unable to invest accordingly in its lift stock.  2.  The business delivery strategy detailed in the two previous business cases have been deemed inadequate by the Service as a result of a change in the strategy to now have two separate delivery strategies; 1) A Lift Capital Works  Framework Agreement and 2) A Lift Servicing, Repairs and Maintenance (revenue) Contract. 3.  The purpose of the development of a separate delivery strategy for Lift Capital Works Framework Agreement is to provide the Council with an effective and efficient delivery mechanism to address the backlog of capital investment works, maximising the number of lift renewal projects to be delivered per annum, and to contribute to broader Council ambitions of creating a fairer, safer and more sustainable Hackney.   Alternative Options (Considered and Rejected)   In order to consider options for this procurement, the project team carefully considered some key decisions relating to contract types, and the context of wider housing strategy;   Option 1 - Let multiple 10 year Term Contracts Consideration was given to using longer partnering contracts for these works as part of this procurement exercise. These contracts have significant advantages, including delivery efficiency savings, increased social value and greater certainty for supply chain partners.   However, such contractual arrangements take a minimum of two years from developing initial proposals to contract mobilisation. In the absence of an existing arrangement, it is imperative to implement a solution in a much shorter time-frame. For this reason, it was concluded that this option is not as viable as others identified, and, therefore, rejected.   Option 2 –  Letting one Term Contract The option of letting a single term contract was considered.  However, this was quickly discounted because of the lack of an alternative contractor should they not perform, and also the lack of recent capital investment has meant that there is likely to be too much work for a single contractor to undertake.  It was concluded that this option is not as good as others identified, and, therefore, rejected.   Option 3 - Insourcing the entire contract Technical resources with very specialist qualifications would be required for the lift renewal and installation works.  There is very limited time available to scale up to recruit such a team and it  is not clear this would be possible. The specialist nature of lift parts would also require the council to put in place new supply chains sufficient to cover the wide range of brands and types of lifts in the borough. This is likely to be prohibitive and presents a very significant risk to successful investment in lift renewal programme.   A further barrier is that it is not possible to consult with leaseholders on the appointment of the DLO.  This would mean that 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 unlikely to be forthcoming).  This would be too significant a financial loss to the council as would not allow to recover costs incurred. This option would also mean that the council would take full responsibility for design work and for the health and safety of operatives which is a very significant risk for the Council.   Option 4 - Framework of 3 Contractors for Lift Capital Works The preferred option involves letting a Framework Agreement of 4 years duration and including 3 contractors.  Where any of these contractors fail to perform, the Council could remove or suspend them pending improvement, and award the works to another contractor on the framework.  Lift renewal projects could be allocated on an annual basis or mini-tendered between all contractors on the framework allowing for competitive pricing.    The preferred option involves letting a framework contract of 4 years duration and including 3 contractors. The first lift renewal programme of 39 lifts  will be split between the 3 top contractors on contract award. Any of these  contractors fail to perform, the council could suspend or remove them, and award the works to the next contractor on the framework.  Future Lift renewal projects will be awarded based on ranked KPI scores, with the option of a mini-tendered process between all contractors on the framework.   This option allows the Council to manage the risk of under performance and allow management of capacity across framework contractors.   Option 5 - Appointment via an External Framework Due to the requirement for leasehold engagement, the strategic nature, value of the contract and specialist area, an external framework is not deemed to be a suitable option for this requirement.  For these reasons, it was concluded that this option is not as good as others identified, and, therefore, rejected.