Agenda item

Report DRR16/018

In highlighting the current position in commissioning Total Facilities Management work streams, Report DRR16/018 provided an update on work with the Tri-Borough (Westminster City Council, L B Hammersmith and Fulham, and Royal Borough of Kensington and Chelsea) and Amey Community Limited, to identify cost savings through contracting via the Tri-Borough framework agreement for Total Facilities Management. The agreement permitted other London Boroughs to benefit from the procurement route with participating boroughs avoiding substantial procurement costs and securing savings earlier than would have otherwise been possible. Work related to the Framework focused on Strategic Property, Operational Property, and Facilities Management. A go live date on the Framework was expected to be 1st July 2016, subject to a successful completion of further due diligence work by both parties. Amey would also work in partnership with Cushman and Wakefield (previously DTZ) to reduce the Council’s property costs and increase income from property.

Discretionary sold services to schools, sitting under Operational Property, are currently operating at a loss and officers recommended giving notice of three months to cease this service. Given the impact on schools continuing to use the services, a brief period of consultation with the schools was recommended.

There was a need to continue providing value for money on services and to manage assets well. Benefits of commissioning Strategic Property, Operational Property, and Facilities Management, included: increased resilience; early revenue savings; procurement benefits; and time savings. Economies of scale would also be achieved along with future efficiency savings and service benefits. Additionally, Cushman and Wakefield would introduce more commercial experience for strategic property work. The services were key areas which were performing well but it was necessary to examine whether they were fit for purpose going forward.

The Portfolio Holder for Resources added that while he thought most of the staff questions were answered well, there were some that required further clarification. Considering the report informative, the Deputy Leader suggested that more financial information related to staff matters, such as redundancy implications, should be included in the summary front sheet and gave the example of The Landscape Group report. It was confirmed that Amey hoped there would be no redundancies; if there were, Amey would look to the Council to cover the cost. The report identified further that more work was necessary for due diligence and formal TUPE consultation after which comprehensive responses could be provided. 

Cllr Angela Wilkins (Crystal Palace) raised a number of questions about the level of savings, questioning whether they were robust. Cllr Wilkins was also concerned about pensions and certain costs including those associated with site surveys and pensions. Liabilities for the Pension Fund deficit would follow post-transfer although the deficit would continue irrespective of a transfer.

The Portfolio Holder for Resources continued to feel that more staff assurance was necessary, such a dialogue being considered essential. The Leader understood the concerns referring to further supplementary information circulated prior to the meeting (and tabled) with further questions/representations from affected staff. The Leader would give opportunity for the Trade Union representative to meet him.

There were significant benefits from the proposals going forward. No final decision on contracting with Amey as a call-off from the Tri-Borough Framework would be taken at this stage and staff responses would continue to be considered. As such, it was agreed that due diligence be undertaken with the outcome reported back to the Executive within two months so that a final decision can be taken with due consideration to the consultation responses.

RESOLVED that:

(1)  the outcome of staff and trade union consultation, along with the management response, as set out at Appendix 4 to Report DRR16/018 be noted;

(2)  additional funding for Operational Property as outlined at paragraphs 7.1 to 7.2 of Report DRR16/018 be agreed to cover full year costs pressures of £216k p.a. which will be met from the Central Contingency provision for loss of income from schools transferring to academies;

(3)  due diligence be undertaken with the outcome and assurances on staff issues being reported back to the Executive within two months;

(4)  should the Amey proposal be agreed, the savings of £116k p.a. related to Facilities Management approved as part of the 2016/17 Budget, will reduce to £76k p.a. (see paragraph 7.31 of Report DRR16/018);

(5)  the Mail Delivery service to schools ceases on 1^st April 2016and the £58k saving be taken in 2016/17 (see paragraph 7.7 of Report DRR16/018);

(6)  due diligence will need to be undertaken prior to the contract start date, as set out at paragraph 7.18 of Report DRR16/018, which requires one-off funding totalling net £309k - this would be funded from the 2015/16 underspend in the Central Contingency - due diligence being undertaken by both parties with any significant changes reported back to the Executive prior to any final decision and contract agreement; 

(7)  the additional income that Amey/Cushman and Wakefield believe will be generated through better management of Council assets, as set out at paragraph 7.8 of Report DRR16/018, and phased over three years, be noted;

(8)  upon agreement of the Amey/Cushman and Wakefield proposal in a final decision, a sum of £100k be set aside from Central Contingency for provision against potential future pension liabilities as set out at  paragraphs 7.22 to 7.30 of Report DRR16/018;

(9)  upon agreement of the Amey/Cushman and Wakefield proposal in a final decision, a sum of £287k of the overall budget be retained to fund four staff within the Client Unit as detailed at paragraph 7.6 of Report DRR16/018;

(10)  if the Council enters into  a contract with Amey, the £30k fee already paid to Amey, as set out at paragraph 3.9 of Report DRR16/018, for Amey to undertake a feasibility study, will be reimbursed;

(11)  the potential savings of up to £28k p.a. from the Liberata contract, as set out at paragraph 7.38 of Report DRR16/018, be noted;

(12)  schools be consulted on the withdrawal of the discretionary services as set out at paragraphs 3.27 - 3.30 and the Director of Corporate Services be delegated with authority to give notice terminating the services (but not to extend or renew) with the agreement of the Portfolio Holders for Education and Resources.