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Waverley Borough Council Committee System - Committee Document

Meeting of the Executive held on 13/11/2001
HOUSING DEPARTMENT RESPONSIVE REPAIRS SERVICE - MEASURED TERM CONTRACT 2001 (MTC)



The purpose of this report is to update members on the tendering process for the Measured Term Contract, and to report on the evaluation and selection process for the successful contractors. The resource implications are detailed within the report and the Exempt annexe details the tenders received. Human Rights and Community Safety implications are part of the Landlords repairing obligations.
APPENDIX G

WAVERLEY BOROUGH COUNCIL

EXECUTIVE COMMITTEE – 13TH NOVEMBER 2001



Title:
HOUSING DEPARTMENT RESPONSIVE REPAIRS SERVICE –
MEASURED TERM CONTRACT 2001 (MTC)
[Wards Affected: All]


Note pursuant to Section 100B(5) of the Local Government Act 1972

The (Exempt) Annexes to this report contains exempt information by virtue of which the public is likely to be excluded during those items to which the report relates, as specified in Paragraphs 8 and 9 of Part I of Schedule 12A to the Local Government Act 1972 viz:-

The amount of any expenditure proposed to be incurred by the authority under any particular contract for the acquisition of property or the supply of goods or services. (Paragraph 8)

Any terms proposed or to be proposed by or to the Authority in the course of negotiations for a contract for the acquisition or disposal of property or the supply of goods or services. (Paragraph 9)



Summary and purpose

The purpose of this report is to update members on the tendering process for the Measured Term Contract, and to report on the evaluation and selection process for the successful contractors. The resource implications are detailed within the report and the Exempt annexe details the tenders received. Human Rights and Community Safety implications are part of the Landlords repairing obligations.


Introduction

1. The responsive repairs work that Waverley Borough Council carries out to its 5,500 properties is a key service within the Housing Department. It very often is the only contact that tenants ever have with their landlord, and consequently greatly influences the customers impression and subsequent attitude to the Council.

2. Currently the service responds to 15000 requests for repairs a year which individually range in value from 20 to over 8,000.


3. The Council does not operate a Direct Labour Organisation (DLO) and has traditionally procured the work through a network of local building contractors and other specialist firms. There has never been a contract in a traditional form between the parties. The contract has been let as an agreement based on prices submitted through a formal tender on a regular annual or biennial basis.

4. The lowest priced contractor would be placed at the top of the list for work and would receive the most depending upon their declared resource limitations. Other higher priced contractors would have proportionately lower amounts of work.

5. The system provided for flexibility, where contractors could be supplemented or replaced where shortages, delays or disputes occurred, however it could also lead to fragmentation and inconsistency of service delivery.

6. The last contract period has been particularly difficult. Of the five major contractors who submitted competitive quotes three have subsequently withdrawn from the contract either voluntarily or because of liquidation.

7. It has become obvious to your officers that the lowest price submitted does not guarantee either the quality or the commitment of the contractor. This is due, at least in part to the fact that this approach does not demonstrate the extent of the Councils financial commitment to the contractor. Therefore, there is little incentive for the contractor to commit sufficient financial investment to meet the councils Waverley’s needs and requirements fully.

8. The competitive process can also lead firms to submit unrealistic prices to secure the work. This does not ultimately benefit the Council as the subsequent delivery falls below expectations and the service to the tenants consequently suffers.

9. To overcome this situation it was decided to take a different approach to letting the new contract and a report earlier this year to the Executive Committee outlined these proposals.

Tender Preparation and Submission Process

10. Approval was obtained to engage a technical consultant, Ridge and Partners to advise your officers on the procurement process. They recommended the following:-

(a) A robust and detailed pre contract selection process should take place before tenders were issued.

(b) Invitations to tender to be sent to larger contractors who specialise in and are proficient in the organisation of delivery of generic maintenance services including specialist trades.

(c) A longer contract of at least three years to be entered into to provide a greater degree of certainty for the contractor enabling them to price economically and yet realistically.

(d) To attract the right size and quality of contracting firm the Borough area to be divided into two halves and a single contract be let to a separate contractor in each area.

(e) To require the contractor to put in place a monitoring system to ensure that the required standards set be the Council are achieved.

11. The process of tendering was carried out during the summer months of 2001.The tender documents were prepared with the assessment of Ridge and Partners who advised that the JCT MTC form of contract would be the most appropriate type of agreement.

12. In answer to the European and domestic advertisements 25 prospective contracting firms expressed an interest, and returned the requested information concerning the experience, financial standing and capacity of their company. 13 were short listed for further interview.

13. All 13 were visited at their offices and interviewed by a small team of officers, which included the consultants representative, and a member of the tenants panel. A final selection resulted in 12 tender invitations being sent out, of which 11 were received. These are listed in (Exempt) Annexe1.

14. The agreed basis for evaluation of tenders was that of most economically advantageous to the Council taking account of quality and price and not to be on price alone. Therefore with their tender submission the contractors were required to include method statements in answer to preset questions. This was designed to test the methodology by which the contractor would set up and consequently monitor the contract.

15. Subsequent to these price and method statement evaluation, a final short list of seven contractors was chosen. Three in the Western area and four in the Eastern area were invited in to make final presentations of their suitability for the contract, to a panel including the , the Portfolio Holder, the Director of Housing, an officer from internal audit, a Tenants Panel representative, and the consultant. By this process the most potentially suitable contractors were chosen.

16. The Local Government Act 1999 sets a general duty for Local Authorities to achieve best value. Section 3(1) of the Act states “a Best Value authority must make arrangements to secure continuous improvement in the way its functions are exercised, having regard to a combination of economy, efficiency and effectives”. With this in mind the contractor had to demonstrate that they were able to meet fully Waverley’s requirements and expectations, the key elements in addition to price are set out below:-

(a) To provide a high quality repairs service to the Councils tenants;

(b) An enthusiastic commitment to the contract arrangements and continuing relationship with Waverley;

(c) The ability to initiate and develop innovations in the future, with Waverley, which will improve the service and/or reduce financial cost to the council;

(d) To develop with Waverley an IT capability that will enable in the future the electronic transfer of information between the contractor and Waverley and the production of appropriate and accurate management information reports. This would be part of Waverley’s progress to compliance with Central Governments E Government initiative.

17. As a consequence of the above your officers preferred choice of contractor is not the lowest tenderer.


18. (Exempt) Annexe 2 shows the shortlist of contractors invited in for interview, their prices, and an index of the relative scores given by the panel in the process of choosing 2 contractors to whom each contract could be awarded.

19. The general requirements within the specification upon which the contractors have bid is now expecting a higher level of service than has previously been delivered ,the prices submitted therefore reflect this. It is expected that consequently the cost of responsive maintenance will rise by approximately 15% per year.

Maximum Order Limits

20. Within Standing Orders the current maximum limit up to which a responsive repairs order through the Schedule of Rates ,can be issued is 3,500. Over that sum a minimum of two competitive quotes need to be obtained. 21. Within the conditions of the new contract all the contractors have been asked to include within their bids, a discount percentage on works over 1,000. This potentially builds a better value into the agreement without the need to test the market further. Therefore, if required, administration of certain repetitive items of repair to be collected and ordered together, thereby taking advantage of the available discount, consequently enabling a more strategic approach to placing orders for works. The ability to do this is constrained by the current limit. 22. Also, currently the highest value for an individual job carried out within responsive repairs has risen to 8,000.

23. It is therefore proposed that the maximum limit for which MTC orders can be issued through the Schedule of Rates is raised to 10,000 for the duration of the contract.

Resource Implications

24. At paragraph 19, it is expected that the cost of responsive maintenance will rise by approximately 15% per year. This increase has been included in the draft HRA estimates for 2002/03.

Conclusion

25. As a result of this more extensive and thorough tendering exercise the Council is moving in the direction of longer contractual relationships with contractors

26. The responsive maintenance service is probably the most important indicator of tenant satisfaction. The result of this best value approach to Measured Term Contracting should lead to improvement in service delivery. Additional measures will flow from the Fundamental Service Review thereby ensuring that better value is achieved from the substantial sums spent on this service. The increase in the maximum to 10,000 associated with contractor discount prices will speed up the delivery of the service,

Recommendation

It is recommended that:-


1. the preferred contractors ,as selected by the Interview Panel be awarded the Measured Term Contract for responsive repairs to Waverley Borough Councils housing stock, for a minimum of three years subject to an annual review of targets achieved;

2. the Council enter into a formal JCT(MTC) contract with the selected contractors in accordance with the advice of Ridge and Partners;

3. the Draft HRA estimates for 2002/03 and subsequent years be adjusted to reflect the increase in costs outlined in this report; and

4. the Council be recommended that the upper limit for responsive repairs orders to be issued through the Schedule of Rates under the Measured Term Contract be raised to 10,000 and Standing Orders be amended accordingly.



Background Papers (DoH)

There are no background papers (as defined by Section 100D(5) of the Local Government Act 1972) relating to this report.



CONTACT OFFICER:

Name: Mr D Simmons Telephone: 01483 523374
E-mail: dsimmons@waverley.gov.uk