Decision Maker: Cabinet Procurement and Insourcing Committee

Outcome: For Determination

Is Key Decision?: Yes

Is Callable In?: No

Date of Decision: October 7, 2024

Purpose:

Content: RESOLVED:   1.  To approve the procurement strategy for the re-tender of the security service framework for the duration of four years for regular and ad-hoc security requirements, and concierge services.   2.  To note that the Council’s security services and housing concierge requirements will be procured as two separate lots under this procurement exercise.   Reasons For Decision   1.  The 24 month extension of the current security service contract secured in August 2023 was agreed on the basis that the Council would explore:   ·  Insourcing option: in line with the Hackney Insourcing Model, undertake the development of a business structure and financial model to establish an insourced council service.  ·  Reprocurement option: with a focus on identification of opportunities for modernisation and cost efficiencies. ·  Modernisation & optimisation of the estate: identify and shape critical upgrades to the CCTV Infrastructure to enhance the security provision and enable cost savings through insourcing and/or reprocurement.   2.  The Concierge Services was established in Hackney in the 1980’s-90’s across 13 locations. Initially conceived to provide reception and security services, it evolved into primarily a security service with functions such as admitting residents and visitors, supported by CCTV surveillance. Despite its initial purpose, concierges continue to perform traditional reception services such as taking messages and receiving parcels. 3.  The introduction of concierges and CCTV has proven successful in reducing crime in the area, including squatting, graffiti, criminal damage, unauthorised access (rough sleeping) and drug-related activities. We recover the entire cost of the service £1.3m, from tenants and leaseholders receiving the service. 4.  The initial Concierge security service contract was awarded on 4 August 2018 and ended 3 August 2022. It was extended for a year, for some feasibility work to take place and extended again for a further 2 years by Cabinet Procurement and Insourcing Committee in August 2023. Therefore, the new  contracted service provider must be in place and operational by July 2025. 5.  The Landlord and Tenant Act 1985 governs service charges, which are variable and related to actual costs incurred for estate management. The consultation process will seek residents’ preferences regarding the continuation of concierge services, operational hours, and service levels and is different to statutory leaseholder consultation.  There are currently 125 leaseholders who contribute towards the concierge service and the Council must undertake Section 20 consultation with them all. Section 20 consultation with residents for Lot C has now completed. 6.  The vacant premises security (Lot B), which comprises regeneration sites and projects has a core workforce of 27 staff. The service fluctuates in demand due to changes in the number of vacant premises at any given time, and the duration of the additional demand for security provision varies depending on the period of time the premises are vacant. This generates significant financial and business continuity risk to an insourced model from the ease of resource scalability required to satisfy quick paced demand change. 7.  The Residential Concierge security (Lot C), which comprises the 13 tower blocks and is funded by residents, has a core workforce of 26 officers. 8.  These numbers do not include supervisory, management or response officers working across more than one Service Lot. 9.  The Council’s first review of the account (comprising 16 sites across all 3 security service lots) undertaken by independent industry experts, concluded that LBH does not have the maturity in service experience to insource under its current model, and that the Concierge and Vacant Premises services should remain outsourced due to the nature of the services. 10.Retaining an outsourced service also provides the level of management expertise afforded via industry professionals, which is not an intrinsic skillset within the Council. Including the management of specialist services such as dog handlers too.     Alternatives Considered and Rejected   Option 1: Not to extend 1.  The option not to extend was considered and rejected on the basis that the Council has a duty of care to provide safe and secure environments for its staff and visitors.    Option 2: Retain Fully Outsourced Service 2.  The Council rejected the option to retain a fully outsourced service as it has been able to identify efficiency opportunities that may facilitate the implementation of a modernised insourced model for parts of the current service. This is, however, subject to further financial modelling and review is cognisant of the Council’s worsened financial position. 3.  In its obligation in delivering its Sustainability & Insourcing Policy, the Council has opted to explore these opportunities further rather than procuring all elements of the service at this stage.     Option 3: Insource these security services 4.  In addition to the operation risks and challenges posed to the Council through the provision of an insourced service, the Council rejected the option to insource these services under the current security model due to the additional cost base related to an insourced security service, such as on-costs, pension contributions and additional working hours. 5.  Insourcing the Concierge service specifically would result in an increase from 26 to 39 officers to deliver the service on Council employment terms & conditions, which translates to a £384K annual cost increase. One particular reason is a variance between the number of contracted working hours established in Council employment terms as compared to external service providers. 6.  Moreover residents have autonomy in the decision for the future scope and indeed continuation of the concierge service as they pay the full cost. Cost analysis has identified that each tenant & leaseholder would be subjected to at least a £449 annual increase in costs to deliver the current levels of service under an insourced model. 7.  Given the current cost of living crisis it is not felt that benefits from insourcing would be proportional to the increase in costs to the residents and the HRA is not able to revert back to its historic position of subsidising the service. 8.  It is feasible that residents would invariably discontinue the service in its entirety on a cost basis only, which carries safety risk to the local community in these areas and therefore reputational risk to the Council too. 9.  Case studies of insourcing concierge services at other London local authorities has shown additional oncosts have been required to deliver the service, much in line with the Council’s own cost analysis, and that service levels were significantly reduced in part in order to offset some of the additional expenditure. 10.Resident consultation will shape the levels of service for each of the thirteen residential blocks based on lower contracted costs and Section 40 Consultation will govern whether residents approve costs following and based on the results of the tender exercise.