Agenda item

‘The Retender of the Exchequer Services Contract’ was a report that had been looked at by the Executive on 11^th July 2018. The report summarised the outcome of the soft market testing exercise that had been undertaken by officers, and the procurement approach for the retendering of the contract. The Executive was recommended to note the outcome of the soft market testing exercise, and to approve the retendering of the contract. The Executive agreed to the recommendation.

The report had been scrutinised by the Executive, Resources and Contracts PDS on 5^th July. At this meeting it was proposed that in view of the size of the contract, the report should be scrutinised by the Contracts and Commissioning Sub Committee, and that the Executive’s decision should be subject to review by it.

It was noted that whilst officers were satisfied with the performance of the current contractor, no further extensions were permitted, and so the contract had to be re-tendered. The Chairman referred to the part of the contract dealing with business rates. He asked if any changes relating to business rates were made by central government, would there be enough flexibility in the revised contract to allow for this; the answer to this was affirmative.

The Chairman referred to ‘cash collections’ and asked if in this digital age, LBB still required a cash facility as part of the contract. Mr John Nightingale (Head of Revenues and Benefits) explained that cash collections were still required. Cash was still collected from some schools and the kiosk in the Stockwell Building; some people still came into the Council to pay their council tax using cash.

Members discussed the current scope of the contract, and the services that had been added into the contract since the original contract award. There was also a discussion about the potential to add in additional services at a later date. It was noted that the Web Recruitment module of the ResourceLink software was not fit for purpose and so this part of the contract would not be renewed.

The report had advised  that the new provider should undertake a health check after 12 months to see what improvements and savings could be made. The Vice-Chairman wondered how this would work out practically, and how LBB could be sure that the benefits of any efficiencies were accrued by LBB.

A discussion took place concerning Service Level Agreements and Key Performance Indicators, and a Member asked when the KPIs would be available. Emma Pearce (Head of Performance, Governance and Contracts—Commissioning and Procurement) clarified that this information should be available by the beginning of September. The Chairman asked if a document of some sort could be presented to the September meeting that would outline the KPIs for the new contract.

A Member mentioned that Liberata had been good at attending committees every six months to provide updates and to answer any questions that Members had. She asked if this practice would be formalised in the new contract. The Director confirmed that for any contracts in excess of £5m, there would be a clause written into the contract that stipulated that a representative of the contractor had to be available to attend PDS meetings to address performance issues if required.  A Member expressed the view that in the case of large contracts, a clause should be included which gave LBB the ability to call Directors and Chief Executives to PDS meetings.

A Member asserted that it was wrong for the Council to be generating huge ‘wet blanket’ contracts that made it impossible for small businesses to take part in the tender process, and that this was contrary to central government policy. He felt that small businesses should be allowed to tender for specialist parts of the contract.

The Director of Commissioning responded that the current contract had been operating for fifteen years without any risk, and it was the case that the additional services added in to the contract had resulted in significant savings for the Council. If more contractors were involved, this would result in increased invoice generation and an increase in the number of client teams.

The Head of Commissioning and Procurement (Dave Starling) stated that LBB did consider central government policy. Large contractors were encouraged to use local businesses for sub-contracting work if possible. Liberata had invested heavily in software updates and maintenance and LBB would not be able to duplicate this.

A Member referred to the Public Regulations 2015. He asked if LBB had the legal authority to amend the Regulations if needed. The answer to this was no. There were exemptions to the Regulations, but the Regulations themselves could not be changed.

A discussion took place concerning the matter of TUPE and pension liability. The Director of Commissioning provided assurances that LBB was not at risk of financial loss in any way with respect to TUPE and pension liability. It was imperative that any matters relating to TUPE and pensions involved the Contract Manager. These were matters that would be factored into contracts.

The Chairman referred to section 3.5 of the report that identified a number of services that had been added into the contract by change control notices. He wondered why ‘BIDs’ (Business Improvement District) had been added. It was explained that BIDs had been added as the Council was responsible for collecting Business Rates and a proportion of this was allocated to the BID later.

Similarly, the Chairman asked why ‘school sold services’ had been added. It was noted that four schools remained under local authority control and had not converted to Academies. Resultantly, this contracted out service had to remain in place as the Council had a statutory duty to provide the service to schools that were still under the control of the local authority.

The Chairman referred to section 4.3 of the report which looked at some of the options to add in additional services. He asked why LBB were still writing cheques. It was explained that a small number of staff on the payroll were still payed by cheque, as were a small number of pension payments. The Chairman hoped that in the near future, the practice of using cheques could be eliminated. Members were informed that Claudine Douglas-Brown (Head of Exchequer Services) would be drafting a report concerning this and that the report would be presented to the Executive, Resources and Contracts PDS Committee for their consideration.   

The Chairman noted section 4.8.1 of the report which was to do with a review of the current contractor accommodation. It noted that the contractor paid £437k towards accommodation costs. The Chairman commented that now may be the time for a review of the Civic Centre Accommodation Strategy. The Committee was informed that a report on this had gone to the Executive for consideration on July 11^th.

The Committee discussed the Aquila Heywood contract that provided the pensions software, and the reasons suggested by officers for a contract extension.

Members discussed the various tender options that had been looked at. It was noted that the favoured option was to tender the contract ‘as is’ with the option for the provider to offer a price for the additional services set out in section 4 of the report.

A Member felt that there should have been an option 5 added to the report where consideration was given to splitting the contract into smaller sections. The Director of Commissioning stated that this option was not included as it would not provide value for money.

The Chairman asked why a contract period of 8 years had been preferred (with an option to extend for a further 4 years). He asked why LBB did not opt for a 10 or 15 year contract, which may provide a bigger discount. One of the reasons given for this was due to possible changes in innovation and technology which could make a longer contract period undesirable.

A Member suggested that Liberata and other large contractors like Amey be asked what smaller sub-contractors they were using. The Head of Procurement and Commissioning confirmed that the contractor on the Waste Services Contract was using small businesses as sub-contractors, and were providing apprenticeships.

The Chairman referred to the Evaluation Criteria outlined in section 9.5 of the report. It was noted that the evaluation criteria was normally 60% price and 40% quality. The Chairman asked if this could be modified given the size of the contract. The Director of Commissioing stated that for this to change a valid business case would need to be made. 

Members noted section 9.8 of the report which was the Indicative Procurement Timetable. The Chairman asked if the time-scales outlined were reliable, and the Director assured that they were.

The Chairman drew attention to papers that had been placed on a table in the room that were related to individual contract areas. The Director of Commissioning stated that the papers were confidential service specifications and should not be removed from the room. The Director declared that it was not in the remit of Members to comment on service specifications.

RESOLVED that:

1) The Retender of the Exchequer Services Contract report is noted.

2) The Contracts and Commissioning Sub-Committee endorse the recommendations agreed by the Executive on 11^th July 2018.

3) A document is presented to the September meeting that would outline the KPIs for the new Exchequer Services Contract.

4) A document be provided to the Committee on or around 9^th October (after the contract specification had gone out to public tender) to appraise Members concerning KPIs. This would be disseminated via email as there was no meeting scheduled for October.