Agenda item

Report FSD17068

In view of the contract with Mercer Ltd for actuarial services expiring on

31^st March 2018 (the contract having been extended by the Director of Finance under delegated authority), it was proposed to re-tender the contract for a six-year period, with an option to extend for a further three years (covering triennial valuations in 2019 and 2022 and 2025 should the optional extension be exercised). The total value of a potential nine year contract was estimated at approximately £1,080k (based on estimated activity levels). At its meeting on 12^th September 2017 the General Purposes and Licensing Committee considered the proposals and agreed to delegate authority to the Sub-Committee to:

·  agree that the contract for the Council’s actuary be tendered, and the tender process to be followed;

·  agree the contract period, including any optional extension periods;

·  award the contract following the tender process; and

·  agree the approval process for any optional contract extensions.

With the process needing to comply with EU Public Procurement Rules (total contract value exceeding the EU threshold) itwas proposed to tender using an open process including advertising in the OJEU and on Contracts Finder. The Council would then be able to set its own conditions and evaluation criteria and with only four established potential providers neither a pre-qualification process would be necessary nor the use of a framework agreement i.e. the Actuarial, Benefit and Governance Consultancy Services Frameworklaunched in 2016 by the National LGPS Frameworks. It was also highlighted that the Framework’s evaluation criteria only provided a maximum price weighting of 20-40% depending upon the lot, with fixed element/activity weightings within that and a one-off joining fee of up to £5k, dependent upon the number of lots used. There would also be a requirement to use framework documentation and when tendering the contract in 2012 costs under another framework were considerably higher.

It was intended to ask tenderers to provide unit prices for the various activities which would be combined with estimated activity levels to provide a total tender price for evaluation. Evaluation of the tender was proposed on the basis of 60% pricing and 40% quality and carried out using the Council’s standard CIPFA evaluation model.

Due to the interrelated nature of the services there would be no benefit in splitting the service into different lots for tendering; this could be detrimental should different actuaries carry out different elements of the work.

Members considered permutations to the proposed length of contract e.g. 3 + 3 + 3 or 9 + 3 (to potentially provide more certainty and quality). It was also necessary to take account of triennial valuations and the Mears scheme. As a consideration and in view of the cost of tendering the Chairman suggested keeping the level of tendering to a minimum. Members also considered a proposed 60%/40% pricing/quality split and whether a higher percentage should be given to quality for this tender. It was also felt important to have an actuary who understood the L B Bromley ethos towards investments for the Pension Fund and was fully understanding of the Mears scheme. Innovations were also considered important as was having an actuary not prepared to add significant costs in dealing with future initiatives. On contract length, Members were advised that a 6 + 3 contract provided a good long term commitment. The Vice-Chairman supporting 6 + 3 suggested that continuity would be broken with three appointments i.e. 3 + 3 + 3; 6 + 3 on the other hand would provide a good period of continuity. On quality, he also referred to an actuary necessarily having in-depth management experience and ISO standards for professional management quality. He supported a rise in the quality profile (from 40%).

Having considered a suitable contact period Members agreed a contract length of six years with an option to extend for a further three years (6 + 3). Members also supported 60/40 as a preferred price/quality split for evaluation purposes.

Members also took the opportunity to agree a start time for future ordinary meetings of the Sub-Committee and, upon a vote, a start time of 7pm was agreed. However, for the meetings to be held on 21^st November 2017 and

14^th December 2017 to appoint fund managers for property and MAIF assets, a start time of 6pm was agreed.

RESOLVED that:

(1)  the contents of Report FSD17068 be noted;

(2)  the contract for the Council’s actuary be tendered using an open OJEU process;

(3)  the contract length will be for a period of six years with the option to extend for a further period of three years; and

(4)  authority be delegated to the Director of Finance to approve the optional three year extension in consultation with the Chairman of the Pensions Investment Sub-Committee.