Agenda item

The Scrutiny & Overview Committee is asked: -

1.     To evaluate the work undertaken to date to prepare for the procurement process to responsive repairs service.

2.     To reach a conclusion on whether there is assurance that a robust process has been used,

3.     To reach a conclusion on whether there is assurance that the process has been open, transparent and informed by residents

The Committee considered a report set out on pages 13 to 14 of the agenda, a summary of feedback from their meeting residents set out in the agenda supplement and the Cabinet report on the Responsive Repairs Contract. The Committee was asked to evaluate the work undertaken to date in preparation for the re-procurement of the responsive repairs contract. In doing so, the Committee was asked to consider whether there was assurance that a robust process was being used and that the process was open, transparent and informed by residents.

During the introduction to this item, the Chair highlighted that in preparation for the meeting the Committee had received a briefing from officers on the preparation of the reprocurement process. Site visits had been conducted to three Council blocks located across the borough to speak to residents and get an understanding of their views on the Responsive Repairs service. Finally, an online meeting was arranged on 13 June 2022 to give residents the opportunity to discuss the service. The feedback from which had been used to inform the questions of the Committee.

The preparation for the meeting had also been informed through discussions with the LGA and the Leader of Swindon Council, Councillor David Renard, who was an LGA Lead for Housing. These discussions had highlighted the benefits of using an insourcing model, as it would offer the Council greater control over the service provided for residents.

The Chair explained that questioning on this item would be broken down into four areas, namely contract options, tenant services, risks and social value. Before opening the meeting to questions, the Chair of the Housing Improvement Board, Martin Wheatley, was invited to provide feedback on the reprocurement process based on informal discussions with other board members. From the feedback provided by Mr Wheatley, the following points were noted: -

·         The Board were broadly supportive of the decision to split the current contract into three but had concluded that ongoing work was needed to ensure that the best outcomes for residents were achieved.

·         It was recommended that there should be flexibility built into the boundaries of the two responsive repairs contracts to ensure that the service delivered to tenants could adjusted as needed.

·         It was recommended that a forum should be set up by the Council with the three contractors to ensure there was opportunity for discussing potential risks and resolving issues promptly.

·         There was a preference for engaging with bidders about the geographical areas they would be bidding for, rather than this being set by the Council.

·         There was a need for appropriate contract management and audit to ensure there was compliance with the terms of the contract and to stop any potential ‘gaming of the system’,

·         It was recommended that staff from the successful contractors were embedded within the Council to ensure a joined-up service was delivered.

·         It was recommended that both tenants and council staff are involved throughout the procurement process and during the delivery of the contracts 

·         The timetable for the procurement of the new contracts was extraordinarily demanding and would need to be closely managed.

·         There was support for the social value provision in the contract, particularly the need for employees and apprenticeships in the borough and ensuring the was diversity in the workforce.

·         It was recommended that the Council should make connections to wider professional networks to learn best practice.

Finally, it was also confirmed that the Housing Improvement Board would be happy to guide and support the Council during the development of the reprocurement process. Following the feedback from the Chair of the Housing Improvement Board the meeting was opened to questions, with the first concerning the payment of the London Living Wage to the staff of any new contractors.  It was confirmed that the need to pay the London Living Wage would be embedded in the terms of the contracts.

It was noted that the report recommended continuing with a contracting out approach, as it was not feasible to insource the service in the 18-month time frame available following notice being given by Axis on the current contract. However, it was questioned why the 18-month period had been built into the contract if it was not sufficient to mobilise the service for this option. It was also questioned whether consideration had been given to insourcing specific areas of the service such as repairs on void properties.

In response to these questions, it was advised that the primary consideration was to ensure there continued to be a service in place for tenants once the current contract ended in July 2023. Having evaluated the options open to the Council for the delivery of the service, it had been concluded that it would have been too ambitious to run the process for contracting parts of the service and insourcing others at the same time. Options such as insourcing specific parts of the service, such as the team dealing with void properties had been considered, but it was concluded it would not be possible to deliver this in the available timeframe. However, the contract would be structured to keep open the option for potentially insourcing parts of the service at a later date.

Given it was proposed that the contract would move from a price per property model to an average order model, it was questioned whether the previous model had contributed to the failure of the contract. It was highlighted that the contract had indexation provision which meant it had increased during the life of the contract, but the high rate of inflation had made it more difficult for contractors to achieve value which was not unique to Croydon. The price per property in Croydon was in the middle of the range paid for by other authorities, but the price for voids was low which was reflected in the quality provided.

In response to a question about what tenant involvement in monitoring the delivery of the contract would look like, it was advised that this would start from the existing structure, and it would be up to tenants to inform what it looked like going forward. Residents would be involved throughout the lifetime of the contract and would help to assess whether the resident engagement indicators in the contract were being met. It was also confirmed that residents would be involved in the assessment process for bidders on the new contracts. It was recommended that training should be offered to tenants who were involved in the delivery of the contract to ensure that the benefit from this was maximised.

It was questioned whether there had been any work undertaken to identify best practice at other local authorities and to provide reassurance on the identified delivery model using three separate contracts. It was confirmed that procurement consultants, Echelon, who had been engaged by the Council to inform the process, had a benchmarking group of authorities with a wide variety of performance. It was highlighted that the specific model used was not normally the driver of good performance, instead it was usually determined by good contract management.

It was confirmed that there had been benchmarking of the tender scoring balance, which had found that a 60% quality to 40% price balance was common practice. The weighting awarded for social value tended to vary, with some Councils awarding as much as 20% to this weighting.  As the contract for gas related services was more straight-forward a 50/50 split between quality and price was considered to be ,ore appropriate.

The Committee had a number of questions about the performance management of the new contracts, the first being when contract management processes would be triggered. It was confirmed that the contractual escalation procedure would be set out in the contract and could for instance be triggered if 0.4% of repairs carried out in a month resulted in complaints. It was emphasised that it was important the right indicators were set for the contract and that a strong working relationship was built with the contractors.

As a follow-up, it was questioned what penalties could be put in place if the Council deemed the contractor was not meeting its expectations. It was explained that in the event a contractor was underperforming, it could ultimately result in the termination of the contract, but this would be a last resort and an escalation process would need to be followed. Another potential penalty would be to take certain parts of the service aways from the contractor if they were underperforming in a specific area.

In follow-up to the comment that one potential action to address underperformance in the contract would be to take the underperforming part of the contract away from relevant contractor, it was questioned how this would work in practicality. It was confirmed that in the eventuality the Council decided to remove one area of the service away from a contractor, the first option would be to offer it to the other contractor. If this was not possible then a new procurement process would need to be followed for the specific service area. 

It was agreed if the Council was going to have strong contract management system it would require the provision of accurate data and a robust quality assurance process. As such it was questioned whether the Housing Service was in a position to ensure the right tools were in place to manage the contract. It was confirmed that the culture of the Housing Service was being reviewed to ensure that all areas were working together as a team for the benefits of residents. By bringing the contact centre in-house, it would mean that the Council was in a much better position to hear directly from tenants when the service was not being provided at the level expected.

Reassurance was sought that there was sufficient capacity within the Council to deliver the improvement work required within the Housing Service at the same time as the Responsive Repair service re-procurement. It was confirmed that most of the senior vacancies in the service had been filled. The next step was to review the team structures and capacity requirements to ensure these were fit for purpose.

It was highlighted that housing conditions in the Council’s non-standard constructed properties was a key issue, with it questioned whether there was a proper understanding of the level of work required. It was confirmed that the wider condition of the Council’s housing stock would be covered by the Asset Management Strategy. The Council understood the different types of properties it held, but the improvement work would be informed by a rolling series of five-year stock condition surveys, the first of which would be delivered in 2023.

It was highlighted that many residents had been made to feel as though they were not being listened to by the Council or that they were lying. As such, it was questioned what the Council could do to rebuild its relationship with tenants. It was advised that successfully rebuilding the relationship would be dependant on the work to change the culture within the service and through ensuring the right solutions were in place. Moving the contact centre in-house would enable the Council to gauge the mood of residents more easily and this feedback would be used to drive improvement.

It was agreed that it was important to empower residents, so they were able to track the progress of repairs, were fully informed of their rights and knew how to complain if they were unhappy with the service. It was confirmed that the introduction of technology to allow residents to track the status of their repairs and other services would be included in the contract. The Committee agreed that as part of any communications strategy with residents, it should include updating and distributing the tenant handbook. There was support for using technology to improve the service delivered to residents as much as possible and it was identified that it would also help to manage the capacity of the contact centre to ensure they were free to take calls from those who were unable to access the Council through other routes.

Given that technology was always improving, with new products available, reassurance was sought that the contract would provide IT systems that could be replaced and upgraded as required. It was confirmed that the contracts would set out the Council’s minimum expectations of what had to be delivered. It was then down to the bidders to set out what they could provide in response to this specification, which would then be evaluated by the Council. There would be provision in the contract which allowed the Council to negotiate changes within reason.

It was questioned whether the Council was currently able to track the tenant journey from reporting a fault to a repair being completed. It was confirmed that satisfaction with a repair was collected through surveys following completion of a job. This information was compared to data provided by Axis. It was recognised that the Council needed to get better at using data. It was expected that the new contract would allow the tracking of a repair from the point of first contract through to completion, with much of the process automated. Any data collected through the new system would be held by the Council, rather than the contractor.

One of the Council’s tenants. Ramona Beckford, who had attended the resident meeting held the previous evening, was in attendance to provide feedback to the Committee. During which it was advised that resolving the high vacancy rate within the Housing service should be a priority with caretakers highlighted as an excellent resource for residents. As a means of improving the culture within the service, it was suggested that tenants should be involved in the recruitment process for key roles within the service and could participate in the induction process for new staff.  Finally, it was emphasised that staff needed to be made aware of the expected culture within the Council and where this was not being achieved, performance should be actively managed.

The Committee agreed that the Council had some fantastic caretakers who needed to be supported with the right technology and training to do their jobs properly. It was also agreed that there needed to be a comprehensive training programme for all staff within the service to ensure they were fully equipped for their roles and were able to effectively support residents.

Considering the performance of the Responsive Repairs service had been poor for a significant period of time under the present contractor, the Committee agreed that including a compensation scheme paid for by the contractors in the new contracts would be a means of acknowledging when performance fell below the expected standard. It was noted that contractors would be likely to include the cost of any such scheme in their bids, but the Committee concluded that it would still be worth pursuing, as it would also serve to incentivise good performance.  Confirmation that tenants would have the opportunity to assist with rewriting the complaints process was welcomed.

Moving on to risk, it was questioned whether there was a plan in place should the reprocurement process be delayed meaning it was not possible to get new contractors in place by the time the Axis contract ends.  It was advised that the reprocurement process was a complex programme with many different Council services involved and had been identified as a corporate priority. The team had been working with the Council’s Programme Management Office to develop a detailed project plan which was monitored on a weekly basis. Every work stream in the project plan had its own risks set out in a risk register along with identified mitigation. The Committee asked to be supplied with a copy of the project risk register to provide further reassurance on risk management.

In the event it was no longer possible to complete the full negotiated process within the available timescales, the process could be shortened by not going ahead with the full negotiation. Although this may mean the outcome was not as refined as would be expected through the negotiated process, it would create additional capacity within the timeline. Another option would be to work with another contractor on a short-term basis if additional time was needed beyond the end of the current contract. It was confirmed that updates on the delivery of the reprocurement process would be provided for scrutiny.

The Committee agreed that it was essential for the future delivery of the service to ensure that the team responsible for contract management was fully resourced and trained. Without strong contract management processes in place, there was a risk that the mistakes made under the present contract would be repeated. It was confirmed that contract management would be strengthened going forward with additional levels of rigour introduced. Having the primary performance data held by the Council would assist with managing the new contracts and be key to identifying areas of concern at an early stage.

It was questioned whether there was a possibility that one bidder may end up winning more than one contract.  It was advised that the process would limit how many contracts could be won to prevent both repair contracts being let to the same company. The contract would set out the minimum expectations of what should be delivered and managed through key performance indicators (KPI). The final KPIs would be refined in conversation with the contractors.

It was highlighted that the service would continue to be managed by staff within the Housing Service and many of the existing Axis staff would transfer to the new providers under tupe. Although some reassurance had previously been given that changing the culture of staff within the Housing Service was a priority, it was questioned whether training clauses for staff transferred under tupe could be included in the contract. It was agreed that further consideration needed to be given to how a requirement to change the culture amongst the contractor’s staff could be incorporated within the contract.

The Committee had concerns about the valuation given to the contract in the report. Although it had been based on know factors, there was considerable risk that factors such as rising inflation would lead to significant cost increases over the medium to long term. As such, it was agreed that it would be more prudent to list the valuation as a cost range rather than a specific amount. In response it was advised that the Housing Revenue Account (HRA) did have reserves available that could be drawn down if needed to manage cost escalation. The HRA business plan was being revised and would be brought to the Cabinet in September for approval.

The Committee also identified the introduction of new software, Northgate, within the Housing service and a new telephony system across the Council as significant risks. Without these being in place and working as intended, there was a concern that it would make insourcing the contact centre more challenging than it already was in the timeframe available. 

Moving on to the social value aspect of the discussion, it was questioned whether there had been any consideration given to using more eco-friendly options for voids and boiler replacement. It was confirmed that this work would be part of the new stock condition approach which would include provision on how to get to net zero. This would then inform the work required through the Asset Management Strategy. There would be a requirement in the contract to move to more eco-friendly options as part of any responsive repairs carried out, but the majority of this work would be delivered through the Asset Management Strategy. The Council was looking to set up demonstration projects to establish the best options for achieving its climate change commitments. The successful schemes could then be replicated across other housing with the same type of build.

The Committee welcomed the inclusion of the social value criteria in the contract, but did question how its delivery would be monitored. It was advised that the contract will include specific measures that all bidders are asked to bid against, including those related to social value. These are then evaluated as part of the tender process. Although the Council would not be able to dictate the employment policy of a contractor, it would be able to set targets on specific areas such as the number apprenticeships offered. The Committee agreed that the social value aspects of the contract would need to be carefully worded to ensure they delivered the maximum value for the local community.

At the end of the questioning session, the Chair thanked the Members, Officer, guests and residents for there participation in the scrutiny of this item.

Conclusions and Recommendations

Following its discussion of this item the Scrutiny and Overview Committee reached the following conclusions and recommendation. These have been grouped within the four areas agreed earlier in the meeting.

Contract Options

From all the evidence heard, the Committee agreed that it would be reasonable to conclude that the Council has done a competent and professional job at assessing the options available when notice was given on the current responsive repairs contract. Officers demonstrated an understanding of the risks presented by the short timeframe to reprocure the present service, which it was proposed would be split across three contracts (one for gas related services and two geographically split contracts for responsive repairs) and an insourced contact centre.

It was accepted that given the need to ensure there was a responsive repairs service in place beyond the end of the current contract in July 2022, that the immediate focus needed to be on the re-procurement process. Although it was advised that the contract left scope for potentially insourcing parts of the service at a later date, the Committee agreed that options for insourcing should be evaluated now, informed by best practice at other local authorities, to ensure the Council had the best delivery model in place for residents. This was supported from evidence from the LGA, Swindon and Lambeth, which indicated that insourcing the responsive repairs service could deliver significant benefits, not least placing the Council in full control of the service it provided to residents.

RECOMMENDATION 1: That the scope for bringing all or part of the current responsive repairs service inhouse is evaluated as a priority to ensure that the outsourcing delivery model proposed by the Council offers the best outcomes for residents.

RECOMMENDATION 2: That there should be periodic reviews of the delivery model, including an options appraisal on the benefits of insourcing either all or part of the service, to ensure the optimal structure is in place.

RECOMMENDATION 3: That the current re-procurement and delivery of the new responsive repairs contracts should be informed by best practice and experience from other local authorities.

Given the challenges experienced with the present contractor, the rationale provided for splitting the contracts and bringing the call centre in-house seemed to be logical, given that this option should improve the service for residents. These plans were clearly popular amongst those tenants who had been consulted by the council officers and the Scrutiny and Overview Committee.

The Committee recognised that insourcing the contact centre would ensure that the Council maintained direct communication with its residents, which was lost under the present arrangement with the contact centre delivered by the contractor. It would also enable to Council to have greater ownership of the data needed to performance manage the new contracts, which was seen as a significant benefit. Given the poor performance of the Council’s current telephony system, it was essential for the new contact centre that the installation of the new telephony system was successfully delivered.

The Committee welcomed the commitment to upholding the living wage in the contract. The confirmation that break-clauses and no-fault termination clauses would be included in the contract was also reassuring given the length of the contract sought.

Tenant Services

The Committee welcomed confirmation that the performance criteria for the new contracts would be designed in cooperation with residents to ensure that these new contracts delivered a significantly better service than the previous one. The Committee would also request the opportunity for Scrutiny to review the performance indicators prepared for the contract, before they are finalised, to bring an additional level of rigour.

RECOMMENDATION 4: That the key performance indicators created to performance manage the new contracts are reviewed by Scrutiny before they are signed off.

It was highlighted that the satisfaction rate for the current service was lower amongst BAME groups, which was concerning and would need to continue to be tracked under the new contract. A greater level of analysis was a needed to understand the reasons why there was a lower satisfaction rate in BAME groups, which may be helped under the new contracts, as the Council would retain control of the data collected. Similarly tracking the service satisfaction for other vulnerable groups such as those who are elderly or with disabilities is essential.

Given residents had endured poor performance and sub-standard housing conditions under the current contractor, it was likely to be a long journey for the Council to rebuild trust.  The Committee agreed that that the inclusion of a compensation scheme for residents would go some way to demonstrating the Council’s commitment to a new start for the service. Although it was likely that bidders would build the cost of a compensation scheme into their pricing, it was agreed that it would also provide the contractor with a financial incentive to ensure appointments are kept, repairs are made promptly and are completed thoroughly.

RECOMMENDATION 5: That provision for a compensation scheme for residents who experience poor performance, and paid for by the contractor, is included in the contracts for the new services . The Committee would ask to be kept updated on the outcome of this work.

The Committee welcomed confirmation that there would be an expectation that new technology would be used to keep residents informed on the progress of their repairs. Not only would this help to improve communication with residents, but it would also help to manage the capacity of the contact centre to ensure those residents who were unable to use these options, found it easier to speak directly to the Council. 

RECOMMENDATION 6: That the of use technology to improve the level of communication with residents needs to be set as a minimum expectation in the tender specification.

The responsibility for and the tracking of communal repairs was a reoccurring concern for residents which needed clarification. It also chimed with other concerns raised that many tenants did not know what their rights were or the complaints process.  As part of rebuilding trust with residents, basic information such as responsibility for services and the complaints process should be communicated to all residents as a priority.

RECOMMENDATION 7: That Housing Services commits to ensuring that the Tenants Handbook is updated and distributed to all residents to ensure they are aware of the level of service they can expect, how to access these services, how to complain when the expected service is not delivered along with confirmation of their dedicated Housing Officer.

Another reoccurring issue for residents was the management of legitimate concerns about damp and condensation in Council properties, particularly those of non-standard construction. The Committee agreed that there needed to be a better understanding of the condition of the Council’s housing stock and welcomed confirmation that a system of rolling stock surveys would start in early 2023. In doing so, it would inform the Council’s asset improvement strategy, which would be used to prioritise improvement work on properties with significant damp issues.

Many residents echoed the benefit of having a caretaker either onsite or shared between a number of blocks to repair simple issues. At present this service was understaffed and the Committee agreed that it would create considerable goodwill if the Administration gave a commitment to ensure this service was fully resourced with staff who were provided with regular training.

RECOMMENDATION 8: That a political commitment is given to ensuring the Caretaker/Handyman Service for Council housing is fully resourced and trained.

Risk

The Committee was reasonably reassured that there was mitigation in place for most risks, although it would request that the full risk register is shared with the members of the Committee to provide an extra level of reassurance. It was also requested that a map of the customer journey through the Housing Service is provided.

The integration of the new software in the Housing Service and the new telephony system in the Council, with the systems of the three new contractors was identified as a significant risk, which needed to be resource appropriately to ensure that it could be delivered.

Although the performance of the current contractor had not been at the level expected by either the Council or residents, the Committee agreed with residents that the culture within the Housing Service was equally poor and needed to be addressed if the service was to be improved. Given that many of the existing Axis staff would transfer across to the new providers through TUPE, there was significant concern about whether the Council had the capacity to change the behavioural culture that contributed to the poor performance Further evidence was needed to provide reassurance that there was a robust plan in place to change the culture of the service and ensure that the new contract required the contractors to deliver similar culture change amongst staff transferred under TUPE. The Committee agreed that monitoring the change in culture would need to be a priority for the Streets, Environment & Homes Sub-Committee.

RECOMMENDATION 9: The expectations of the Council on the contractors to improve the culture of the staff transferred through TUPE needs to be clearly set out in the contract, with accompanying performance measures to track progress.

 Reassurance was given that senior management recognised that the culture within certain parts of the Housing Service needed to change, and work was underway to ensure this was delivered. The Committee was concerned about whether there was sufficient capacity within the service to deliver a cultural change programme at the same time as a large procurement process and agreed that additional support may need to be allocated to ensure that any culture change programme could be well advanced by the time the new contracts were awarded. This would help to ensure the new contractors were being effectively supported and managed by the Council.

RECOMMENDATION 10: That sufficient capacity is allocated to ensure the delivery of the culture change programme within the Housing Service can be progress as far as possible by the time the new contracts are awarded.

The Committee agreed that the figures provided for the cost of the new contracts needed to make clear that they were a prediction based upon current known factors. Given the potential risk from high inflation and supply chain issues, the Committee would recommend that a cost range is provided rather than a specific figure.

RECOMMENDATION 11: That the estimated figures provided for the cost of the contract are reviewed and replaced with a cost range, to take account of the uncertainty in both the national and world economy.

Social Value

Both residents and the Committee welcomed the commitment to social value being included in the weighting of the contract, particularly the emphasis on local employment, apprenticeships and delivering climate change targets. It was recognised that to ensure delivery of these commitments would require careful wording in the final contract to ensure that outcomes were both deliverable and could be tangibly measured.

RECOMMENDATION 12: That the tender documents explicitly set out the Council’s social value priorities it expects bidders to help deliver, particularly in terms of local employment, supporting the local suppliers and climate change commitments.

RECOMMENDATION 13: That the measure to track the delivery of the social value aspect within the new contracts are reviewed by Scrutiny before they are signed off.