Agenda item

[Report of the Head of Procurement. To be introduced by the Cabinet Member for Finance.]

London Construction Programme (LCP) is undertaking a number of procurements that will enable the Council and other LCP members across the London region to utilise these contracts/DPS

The Cabinet Member for Finance introduced the report which sought approval for the Council to lead on the development and implementation of the procurement strategy to create bespoke commercial arrangements to support Haringey and other London Construction Programme (LCP) Members to deliver their Estates Strategy.

In recommending the report for approval, the Cabinet Member highlighted that the London construction programme was a good example of collaborative working across the public sector. The framework aimed to provide multibillion access to construction projects and would be led by the Council.

RESOLVED

1. To approve the replacement of the existing LCP pan - London Major Works Framework;

2. To approve the establishment of two LCP pan - London Dynamic Purchasing Systems for the provision of construction, estates and property related professional services and minor works;

3. To delegate authority to the Head of Procurement to admit suppliers to the Dynamic Purchasing Systems and award successful Suppliers onto the replacement Major Works Framework following, the completion of the procurement exercises conducted in accordance with the Public Contracts Regulations 2015 (as amended).

Reasons for decision

The establishment of the proposed major works framework and DPS’s does not place any contractual obligation on the Council or other LCPMembers to award any call off contracts against the Dynamic Purchasing Systems or the Major Works Framework.

Where it is intended by the Council to commission works or services, these would be undertaken in accordance with the Council’s Contract Standing Orders (CSO). Where this involves a key decision, Cabinet approval will be sought in accordance with CSO paragraph 9.07.01. (d).

The LCP was established in 2012 and currently has a total Membership of 43 London Authorities. The LCP is a virtual organisation hosted and led by Haringey’s Strategic Procurement Team, managed by the Head of Procurement in Haringey Council.

The primary purpose of the LCP is to design, create and maintain a number of pan-London construction and works related contract vehicles (including frameworks and dynamic purchasing systems where appropriate) that can be accessed by public sector organisations across the London region and reduce the administrative burden of each organisation establishing their own contracts.

The current LCP Major Works Framework expires in May 2019, the proposed second-generation major works framework is intended to supersede the current framework as it expires, retaining continuity for LCPMembers calling off such works.

The intention is to commence the procurement process for the framework and DPS under the Public Contract Regulations 2015 ahead of Brexit. This will avoid any disruption to the process, as the Government has already confirmed procurements commenced prior to Brexit will continue under the current Regulations.

Extensive LCP member and market engagement has been undertaken to ensure the structure of the contractual arrangements meet the requirements of the LCP members and is sustainable within the sector.

There have been significant capacity issues within the current portfolio of frameworks that public sector has been able to access. This is primarily due to the limited number of contract vehicles and the same suppliers appearing across these frameworks. To provide an example of the issue, Haringey recently approached a leading framework with 30 providers registered in the category and only received one response due to capacity issues in the market. The DPS will allow LCPMembers to access to a wider supply chain than those restricted by frameworks and provide additional multi-billion-pound capacity in each sector.

There are several benefits being derived from the establishment of the Framework and the DPS’s; these include:

• Flexibility in use of all common forms of contracts associated with construction works and services;
• Specific provisions to support the use of local and regional SME’s (LCPMembers can invite local or regional suppliers to bid for contracts);
• Provisions to support social value initiatives such as apprenticeships, hard to employ groups, modern slavery, payment of London Living Wage (LLW), use of local supply chains and business etc.
• Sustainable procurement and environmental considerations that include provisions for sustainable building materials, increased air quality, carbon reduction, noise pollution etc.
• Active monitoring and enforcement of the Key Performance Indicators (KPI’s). The KPI’s are essentially aligned to performance, social, economic, and environmental values. Failure to comply could result in suppliers being suspended from the framework and DPS.
• The contract vehicles will generate revenue that will contribute to cost recovery of establishing these vehicles and generate a surplus to contribute to the ongoing operations of Strategic Procurement.
• Comprehensive management information will be available through the DPS; this will include market intelligence relating to number of responses to requirements, average price paid, capacity within the market, spend with local SME’s etc.
• Avoidance of significant procurement associated costs for LCPMembers individually putting in place their own contractual arrangements for these services.

Alternative options considered

Do Nothing - This option would expose the Council to significant criticism from LCPMembers for not meeting the obligations of the LCP to create a suite of contracts and frameworks in this sector. All LCPMembers (including Haringey) would have to seek alternate procurement arrangements incurring significant additional costs and resource effort.

Establish a framework for professional services and minor works – this option was discounted in preference to the use of a DPS for these works and services. This is primarily due to the restrictions applied to the duration of a framework and the limitation of suppliers only being able to be admitted at the point of establishment of the framework. In comparison to a framework, a DPS enables an unlimited number of suppliers to join at any time; provided they meet the accreditation and enrolment criteria. The duration of the DPS can be much longer than a traditional framework period (4 years) (the LCP will be 7 years with a further option to extend another 7 years).