PAPER E2

Purpose : For Decision

REPORT TO THE EXECUTIVE

Date : 3 NOVEMBER 2004

Title : WAIVER OF CONTRACT STANDING ORDERS TO ALLOW AGGREGATION OF SPOT PURCHASE CONTRACTS WITHIN ADULT RESIDENTIAL CARE SERVICES

REPORT OF THE PORTFOLIO HOLDER FOR ADULT AND COMMUNITY SERVICES

IMPLEMENTATION DATE : 15 November 2004

SUMMARY/PURPOSE

1. To waive Contract Standing Orders in relation to the procurement of adult care services, pending the completion of a competitive tender process.

BACKGROUND

2. The commissioning practice can be improved by procuring home care services on block, rather than a spot basis. Contract Standing Orders also require me aggregation of purchases wherever possible.

3. Early implementation of block purchasing can be achieved by aggregation of multiple existing spot purchases of adult residential care beds. This proposed aggregation will have a positive impact on:

· the stability of care markets

· external commitment to investment in services.

4. An open/competitive tender process to let a number of lock contracts will run alongside this aggregation taking effect from April 2006.

5. In line with the commissioning strategy and service plan, good commissioning practice requires a move towards block purchasing of all social care services wherever possible. This is in line with national trends and allows better management of the social care market. The advantages are:

a. Better partnership working and capacity development

b. More efficient administration and monitoring of contracts

c. More streamlined payments/invoicing processes

d. Better quality services

e. Better training, leading to better skilled staff and workforce development

6. Aggregation of existing spot purchases until March 2006 provides a step approach to block contracting and allows the Council to gain the benefits of block purchasing whilst an open competitive tendering process takes place.

7. This approach will contribute to the following corporate objectives:

(a) Improving health, housing and the quality of life for all through better quality assured care and accommodation

(b) Encouraging job creation and economic prosperity by enabling better terms and conditions to be offered to staff

(c) Raising education standards and promoting lifelong learning through sign up to workforce development and training initiatives.

STRATEGIC CONTEXT

8. Contract Standing Orders require aggregation wherever possible and the proposed block contracts are an aggregation of existing spot contracts.

9. To let aggregated contracts through competitive tender would take between 12 to18 months, this process is about to start.

10. If Contract Standing Orders are not waived the advantages to the Local Authority, and to commercial partners, will not be delivered in the interim resulting in slower delivery of the service plan and commissioning strategy.

CONSULTATION

11 The Primary Care Trust have been consulted and support this approach.

12 Dialogue with individual providers and with representing trade bodies about the benefits of block contracting has been ongoing over a period of years. Formal consultation will form part of the competitive tendering process.

13 Reliance on a waiver of Contract Standing Orders will only be at the request of, and by agreement with, existing providers of spot purchased services, if initiated by any of those existing providers. The effect of this waiver is therefore not expected to affect the number of providers either in the market, or who are contracted with.

FINANCIAL/BUDGET IMPLICATIONS

14 At present the vast majority of residential care beds are purchased on a spot contract basis. This is not the most cost effective basis on which to purchase. Block contracting enables:

· reduced bureaucracy

· the ability to negotiate cost volume discounts

· improved investment opportunities

· the Council’s budget planning process to be better informed.

15 The Financial Benefits are difficult to quantify due to potential differences in individual spot to block transfers, but the cost of individual care packages will remain the same where existing contracts are converted into block contracts.

LEGAL IMPLICATIONS

16 This waiver of Contract Standing Orders is required given the potential value of contracts to be negotiated..

17 Contracts of this nature are exempt from the mandatory application of EU Procurement Regulations, under the provisions of Regulation 5 Part B (Residual Services) of the Public Services Contract Regulations (Category 25 – Health & Social Services).

18 We see the aggregation of existing spot purchases into block contracts as an interim to the competitive tendering process.

OPTIONS

19 Option 1 -To continue with the multiple spot purchases

20. Option 2 – Aggregate existing spot purchases wherever possible, waiving

standing orders

21 Option 3 - Accelerate the procurement process

EVALUATION/RISK MANAGEMENT

22 Option 1 Continuing with the existing arrangements means that we lose

the benefits to the Local Authority.

There is potential for providers to withdraw from the market or withhold investment in new services.

23 Option 2 This is the only way to achieve both the short term and long

term benefits of the block purchase approach

24 Option 3 There would be a disproportionate cost/benefit required in

accelerating this process both from a provider and Local Authority perspective

This option would weaken the benefit of the exercise by its destabilising effect on the sector.

RECOMMENDATIONS

Option 2 - That Contract Standing Orders be waived in order to allow an aggregation of existing spot purchases into block contracts.

BACKGROUND PAPERS

25 Adult and community Services, Service Plan 2005/6

26 IW Council Corporate Plan

27 Building Partnership and Capacity in Care – DoH 2001

28 Council Care Homes Property Review (Paper B3, Executive Committee : 18^th June 2003)

Contact Point: Sandy Weller – (01983) 520600 / [email protected]

GLEN GARROD Strategic Director, Adult and Community Services

GORDON KENDALL Portfolio Holder Adult and Community Services