PURPOSE
1.
To establish a procurement mechanism, and a
target timetable to select a Strategic Transformational Partner and to identify
governance arrangements for the development of the Partnership.
BACKGROUND
2.
The development of a Strategic Partnership has
been in several phases.
3.
The procurement of advisers on scope, development
and procurement process and type of partnership was reported to the Cabinet on
21 October 2005. This report set
out the principles of the development of a Strategic Partnership, as well as
key indicative timetables and costs.
4.
An initial Feasibility Study was reported to
Cabinet on 17 January 2006 and the drafting of an Outline Business Case, by PA
Consulting, was commissioned.
5.
The Outline Business Case was accepted as the
basis of further developmental work by the Delegated Decision of the
politically accountable Cabinet member on 29 August 2006.
6.
The Scrutiny Committee has considered the
development of the Strategic Partnership on two occasions and has actively
considered whether or not to pursue a line of enquiry into the emerging
partnership.
STRATEGIC CONTEXT
7.
The Partnership is being developed in order to
assist in the delivery of a medium term financial plan which requires
substantial efficiency savings year on year and the delivery of continually
improving services with an ever greater customer focus. These objectives are set out in the Aim High
Corporate Plan under the outcome of become a high performing, cost-effective
Council.
8.
A successful Strategic Transformational
Partnership has the potential to deliver a substantial percentage of the
required corporate efficiency savings over a three to five year period, well in
excess of the national “Gershon” efficiency requirements. The simultaneous enabling of significant
improvements in customer focus is both a mechanism by which efficiencies are
delivered and a discrete corporate objective.
CONSULTATION
9.
The decision proposed in this report concerns
procurement processes and timetables.
These are the means to deliver outcomes, such as better customer
services and more efficient operation of the Council, which are the subject of
direct public consultation, for example through the Citizens Panel. The technical details of the mechanism for
delivery do not lend themselves to wider public consultation.
10.
Consultation with stakeholders and with staff
potentially affected by the Partnership takes place through established
mechanisms as and when necessary.
LEGAL
IMPLICATIONS
11.
The external partner in the proposed Strategic
Transformational Partnership may share substantially with the Council the risk
and reward of the Partnership. The
value of the contract will significantly exceed EU procurement thresholds and the
procurement process must be compliant with EU procurement rules.
12.
The decision to pursue a procurement exercise
creates no obligations on the Council beyond establishing the framework within
which the procurement, and any subsequent contract, will be delivered.
OPTIONS
Procurement
13.
Procurement may be by one of five routes:
(a)
S-Cat
(b)
Catalyst
(c)
OJEU open procurement
(d)
OJEU restricted process
(e)
OJEU competitive dialogue
14.
S-Cat and Catalyst are UK Government procurement
mechanisms which pre-qualify firms and consortia for appointment to
projects. The Council could approach a
number of firms or consortia on either list and run a mini competition to
select a provider on best value principles.
15.
This is not the recommended option. The S-Cat process is being wound down and
contracts let through that mechanism have to be in place during October
2006. This to too tight a timescale for
the STP procurement.
16.
Catalyst is a new, currently quite limited, list
of providers. The list excludes some of
the major players in local government improvement programmes and is not
therefore a viable option.
17.
Finally, each list is closed and procurement by
either list-based method would prevent a consortium put together specifically
for the Isle of Wight Council opportunity, perhaps including one or more
Island-based providers.
18.
The three OJEU processes have their own merits
and draw backs. Each is open to any
provider who chooses to make a proposal.
19.
The open process requires all interested bidders
to make a full tender, which must then be evaluated by the Council. This is the most time-consuming process, for
unsuccessful bidders and for the Council.
As many as 20 or 30 bids could be anticipated, the great majority of
which will be rejected at the shortlisting stage.
20.
The restricted process has an additional
phase. Potential bidders are invited to
complete a Pre-Qualification Questionnaire, to ascertain their suitability for
the proposed Partnership against a number of specified criteria. From a substantial number of bidders the
pre-qualification phase produces a short list of around 8 providers who are
invited to submit full tenders for evaluation.
21.
Each of the open and restricted processes lead to
a short-list of providers who can be invited to make presentations for final
evaluation.
22.
The final OJEU alternative, competitive dialogue,
requires the Council to engage in developmental discussions with a range of
potential providers to ascertain what the marketplace can offer. A Specification is developed over a number
of stages as potential partners are rejected and the proposals of the remaining
bidders are refined.
23.
The competitive dialogue route is ideal for
projects where the marketplace is rapidly evolving and the procuring Council is
not entirely clear about what services they are wishing to buy. It is the most time-consuming and
resource-intensive process. It is also
a new addition to the available list of procurement methodologies and is thus
the most vulnerable to challenge.
24.
It is recommended that the OJEU restrictive
process be followed.
Process and Target Timetable
25.
The proposed timescale under the OJEU Restricted
procedure set out below balances the need for a rapid process to let a
partnership contract as quickly as is practically possible and the need to
develop the specification carefully ensuring it has the benefit of wide
internal ownership, and public scrutiny.
26.
Timetable:
·
Cabinet approval of procurement process – 3 October 2006
·
Gateway Review – November 2006
·
Announce successful bidder – May 2007
27.
The evaluation criteria and weightings must
be clearly established in the Invitation to Tender documentation. The criteria
must be specific enough to inform potential bidders of the nature of the
services to be procured and indeed the basis upon which the contract is to be
awarded, but can be sufficiently broad to ensure that it does not exclude any
services which the council wishes to procure nor unduly constrain a reasonable
degree of flexibility and judgement in selecting the successful bid.
28.
The objective of the selection process is to assess the responses to the
Pre-Qualification Questionnaire and to select a number of potential service
providers who will proceed to the next stage of the procurement exercise. In
other words, it is the shortlisting of those companies who will be invited to
tender.
The key shortlisting criteria, using information
drawn from the completed PQQ responses, will be as follows:
·
Economic and Financial Standing - Applicants must be in a sound
financial position to participate in a procurement of this size. This may
entail independent financial checks.
·
Governance - The existence of satisfactory corporate governance
arrangements.
·
Track Record - Evidence of a successful track record of providing
similar or comparable services to those being sought by the Council.
·
Capacity and capability - Evidence of the totality of resources and core
competences (relevant to a potentially successful STP).
29.
Subsequent to this shortlisting process, those applicants who are
invited to tender will have their tenders evaluated (in due course) against the
award criteria as set out in the OJEU contract notice.
GOVERNANCE
30.
Clear governance arrangements are essential. It is proposed that:
·
The Cabinet be the principal decision-maker,
approving the Pre-Qualification Questionnaire, the Invitation to Tender and
Specification, making the conditional award of contract and approving the
mobilisation phase.
·
The Invitation to Tender will specify project
management and performance management structures identifying roles for senior
accountable officers, the Chief Executive as project sponsor and for the
Cabinet Member for the Economy, the Customer, Communications, Tourism &
Leisure, as senior accountable politician.
EVALUATION
31.
Evaluation of Pre-Qualification Questionnaires is
essentially a technical exercise to be led by Officers, reporting to the
Cabinet through the lead Cabinet member.
32.
The accountable Cabinet member will recommend a shortlist
of bidders following the Pre-Qualification Questionnaire process.
33.
Evaluation of tenders is
a more intensive process, again led by officers. Reporting of recommendations should be to a panel comprising
senior officers, including the Chief Executive and Director of Finance and lead
Cabinet members including the Leader of the Council, the Cabinet Member for
Resources and the Cabinet member accountable for the Strategic Transformational
Partnership.
34.
Short-listed firms will be invited to a final
presentation-based evaluation phase.
35.
Presentations will be evaluated by the same panel
which recommended the short-list. That
panel will itself recommend, following the presentation evaluation, a preferred
supplier to the Cabinet.
36.
The final evaluation stage should be as open as
possible. Presentations to the
evaluation panel will be in front of observers which may include elected members,
other senior officers and workforce representatives. Commercial confidentiality must, however, be assured.
RISK MANAGEMENT
37.
There are risks associated with the procurement
phase. These will include:
·
No acceptable proposal being made by a suitably
qualified bidder. This is unlikely as
the market is well-established with major and niche providers.
·
Slippage of timetable due to unavoidable factors
such as ill-health or other unavailability of key players. Little slippage is built into the timetable
and any significant slippage will have an impact on the 2007-2008 budget.
Contingency provisions will need to be written into that budget.
·
Technical error in procurement process. The risk of challenge is relatively low but
the consequences are significant.
Procurement of external technical and legal advice will assist in
mitigating this risk.
·
A partnership being entered into on the basis of
a specification which does not deliver the needs of the organisation. This risk can be mitigated by continued use
of external capacity and advice from PA Consulting and other white collar
advisers, including legal advisers. The
involvement of the Scrutiny Committee would assist significantly in managing
this, and other risks.
38.
The principal risk of mitigation in relation to
the latter risk, is to conduct a Gateway Review now which will provide
appropriate challenge around the assumptions underpinning the proposed
Contract. There may need to be further
Gateways built into the process as we proceed.
39.
In order to balance the risk of the mobilisation
phase not resulting in a contract with the preferred partner the Council should
identify a first reserve from those firms short-listed, to become the partner
in the event that business planning with the preferred partner breaks down.
40.
Adopting a timetable and initiating a restricted
OJEU procurement process creates limited risk.
The detailed specification can continue to develop and the Cabinet can,
in due course, take a decision to issue an appropriate ITT – or not to proceed
with the procurement within the indicative timetable (or, indeed, at all).
FINANCIAL IMPLICATIONS
41.
There is an allocated reserve of £410,000 for the
further planning and procurement of the STP and/or the delivery of immediate
performance or efficiency projects.
42.
Member approval for work undertaken by PA in
relation to the development of the Strategic Transformational Partnership is
currently to a maximum of just over £200,500.
Fees paid to PA to date amount to £125,000 with a further commitment of
£58,000.
|
RECOMMENDATIONS 43.
It is recommended that: (i)
A restricted OJEU procurement process is
adopted. (ii)
An OJEU Notice and Pre-Qualification
Questionnaire consistent with paragraph 27 be published, once a Gateway
Review has been undertaken to the satisfaction of the Chief Executive in
consultation with the accountable Cabinet Member, on advice from the project
group. This will be evaluated in accordance with the paragraph 28. (iii)
The outline timetable set out in paragraph 26
be noted. (iv)
The Cabinet receive a future report approving
the Invitation to Tender and Specification. (v)
That the Deputy Chief Executive in consultation
with the Leader of the Council, the Cabinet Member for Resources and the
accountable Cabinet member for the Strategic Transformational Partnership be
authorised to invite a long-list of qualified bidders to submit tenders. |
BACKGROUND
PAPERS
44.
Cabinet papers - 21 October 2005 and 17 January
2006
45.
Delegated Decision – 29 August 2006
46.
Feasibility Study
47.
Outline Business Case
Contact
Point : John Lawson, Director of
Policy, Performance and Partnerships
and
Deputy Chief Executive, '
823203, email [email protected]
JOHN LAWSONDirector of Policy, Performance and Partnerships and Deputy Chief Executive |
COUNCILLOR
TIM HUNTER-HENDERSON Cabinet Member for The Economy,
The Customer, Communications, Leisure and Tourism |