Agenda item

[ Report of the Assistant Director for Planning, Building Standards and Sustainability. To be introduced by the Cabinet Member for Climate Change and Sustainability.]

Cabinet are asked to approve the appointment of a pipe system supplier for future DEN  in Tottenham Hale – this will be to approve a direct award from DEPO Framework to Logstor including approval of the financial commitment.  Cabinet will also be asked to delegate authority to the Director of HRP in consultation with the Director of Finance and Lead Member to finalise the contract details and sign the final agreements.

The Cabinet Member for Climate Change and Sustainability introduced the report, which sought approval to a contract award to Logstor UK Ltd for the District Energy pipe supply. This decision did not commit the Council to any spend. However, it did create a clear delivery path to allow the developers the Council were collaborating with to deliver the project to start building the network on the Council’s behalf. It clearly helps to deliver this ambition programme and the Manifesto commitment of delivering a municipal energy company to deliver affordable, low carbon energy.

In response to questions from Cllr Cawley- Harrison, work was progressing for a DEN  to be in place for Tottenham Hale  by 2024 and Wood Green by 2025.

The Cabinet placed on record their thanks to Emma Williamson, the Assistant Director for Planning for her considerable work as the Lead Planning officer and support to councillors in her role. Emma was leaving the Council to take up a new post and the Cabinet wished her well in her new position.

RESOLVED

1. To confirm the award of a call-off contract from the Stoke City CouncilDEPO framework for DEN Pipe Supplier to Logstor UK Ltd (Logstor) for a period of 3 years from 1/5/20 to 30/4/23. The contract value over the life of the contract (contract period + extension) is estimated to be £1.7m and so this falls under CSO 9.07.1d

2. To give delegated authority to the Director Housing, Regeneration

& Planning to approve the final terms and conditions upon which the Council will enter into a call-off contract with Logstor under the Stoke City Council DEPO.

Reasons for decision

This appointment allows the DEN team to manage the quality and price risks associated with the incremental installation of the network.

It will allow the team to obtain prices from the market for incremental

installation of pipe to help inform the business case so that LBH can make decisions on whether or not to proceed with the DEN project.

The contracts do not commit LBH to any spend at this time. Materials will be called off from the contract as and when different phases of network installation are approved.

This approach allows developers in Tottenham Hale to work directly with

LBH’s chosen suppliers and conform with LBH’s quality assurance requirements.

The DEPO framework allows for direct award where either

• The chosen supplier is the cheapest on the basis of framework

rates;

• There is a need for urgency; or
• For consistency where a supplier has been used on an earlier

Phase 4.6 In this case, a direct award is recommended because there is a clear price advantage between the chosen supplier’s standard rates and those of other suppliers on the framework and there is also a need for urgency so that we do not delay the developers we are working with.

Alternative options considered

To note that the recommended route is to:

1) Nominate a single system provider that all developers must use.

2) The system provider to have design responsibility for interfaces across the

network.

The costs for these aspects are estimated at c. £1.6m for the supply of pipe materials and c.£100k for the overarching design responsibility

Installation of the pipe then has two aspects i) civil engineering (i.e.

roadworks/excavation and associated site management) to allow installation of pipe and ii) installation of the pipe itself.

For works on private developers’ land, typically a main contractor has already been selected (on the basis of the best price for constructing the scheme) and will be responsible for civil engineering associated with the pipe. However, the pipe installer is yet to be selected. The recommended route of nominating a system supplier still allows a mini-competition for these installation works using an approved list of installers to ensure competition.

Where LBH is the developer, the recommended route of appointing a preferred system supplier still allows options to either

i) procure civil engineering and pipe installation separately; or

ii) procure civil engineering and pipe installation together

Options around this are discussed below.

Do nothing

This will lead to developers and others generating their own technical requirements for the network which will create quality and cost issues

Procure a single installer to install the entire network (although theinstaller would need to work with the main contractors on each site who would undertake civil engineering works to facilitate install).

This would give maximum control to LBH but also requires developers to grant access to their sites – which raises significant contractual issues. The uncertainty over timing of the project means it is better to procure works as and when (as allowed via the preferred option) rather than procuring them up front to an assumed timetable and then varying the contract (which will come with a cost). It has been ruled out.

Assuming the approach of appointing a single pipe supplier with responsibility for stress calculations is chosen to give continuity, several alternative routes to market were considered Run a mini-competition to choose supplier from DEPO rather than direct award.

The DEPO framework allows for either direct award or mini-competition. A mini-competition is considered of little value given the need to avoid committing to any expenditure in the contract creates little leverage.

Run a mini-competition to choose pipe supplier via LBH Dynamic Purchasing System (DPS)

There is an option to run a mini-competition via LBH’s DPS for a pipe supplier.

This is considered less favourable than running a mini-competition from

DEPO because it has higher overheads for LBH (it would require LBH to develop bespoke specifications, contracts and evaluation criteria) but has similar drawbacks in terms of low contract value and lack of commitment to a minimum volume meaning market interest will be low (and burden on suppliers to bid is relatively high even by DPS).

Run an OJEU compliant procurement

There is an option to run an OJEU compliant procurement from scratch but this is considered less advantageous than using either the existing DEPO f/work or the LBH DPS and has been ruled out.