Agenda item

The Homes Sub-Committee is presented with a report updating on the Repairs & Voids and Heating procurement since the Cabinet decision in June 2022.

The Sub-Committee is asked to note the content of the report.

The Sub-Committee considered a report set out on pages 15 to 38 of the agenda, which provided an update on the process to re-procure the repairs/voids and heating contracts for the Council’s housing stock. The report had been included on the agenda to allow the Sub-Committee to seek reassurance that the re-procurement had followed the process agreed by the Mayor in June 2022. It would also help inform the Sub-Committee’s consideration of the Cabinet report on the outcome of the re-procurement process at its next meeting on 27 February 2023.

The Cabinet Member for Homes, Councillor Lynne Hale, Corporate Director for Housing, Susmita Sen, Director of Housing – Estates & Improvement, Stephen Tate, Strategic Procurement Manager, Matthew Devan, Finance Manager, Orlagh Guarnori and Peter Gudge from Echelon, the Council’s advisor on the process, all attended the meeting for this item.

The item was introduced by the Cabinet Member for Homes, who highlighted to the Sub-Committee that the repairs/voids and heating contracts were some of the biggest and most important contracts for the Council. As such the Cabinet Member had been receiving twice weekly updates on progress made. The level of resident involvement in the re-procurement process was particularly important, with feedback indicating that residents had valued being involved. Thanks was given to the officers for their excellent work throughout the re-procurement process to date.

The Director of Housing – Estates & Improvement explained to the Sub-Committee that the first part of the process could be broken down into four sections. The first was to set the tender strategy, which had been agreed by the Mayor on 22 June 2022. The next stage was the procurement process which was coming to an end with the Mayor due to consider a report on the outcome of the process at the Cabinet meeting on 6 March 2023. Following the decision being made the next step would be to demobilise the current service and mobilise with the new contractors. Once the new contractors had been mobilised, the final phase would be the ongoing management of the contracts.

Before questioning commenced on the information presented in the report, the Chair highlighted that the Sub-Committee had received a briefing prior to the meeting on the re-procurement process and had been reassured that the level of resident and tenant engagement delivered reflected the level of engagement set out in the original tender strategy document agreed by the Mayor in June 2022. 

The first questioned asked by the Sub-Committee questioned why it had been decided to procure the contract for repairs and voids as two separate lots and why repairs and voids had been combined. It was advised that the contract had been split into two lots based on geographical location to mitigate the risk of having only one provider. It was acknowledged that repairs and voids could be delivered as separate contracts but combining the two allowed contractors increased scope to flex their resources as needed.

It was noted that one of the aims from the tender strategy was to encourage smaller to medium sized enterprises (SME) to bid for the contracts and as such how the risk from this would be managed. It was advised that one of the reasons behind the decision to divide the repairs/voids contract into two lots based on a 70% - 30% geographical split had been create to a contract based on a smaller area, which would make it more manageable for a smaller company.

In response to a question about whether the tender strategy had required bidders to demonstrate how they met other Council priorities; it was confirmed that the Mayor’s priorities had been set out in the tender documents for bidders to respond to. This could be evidenced through items such as having an electric fleet of vehicles. All bidders have also offered other items such as road safety training and others that reflected the Council’s policies such as Health & Safety, Safeguarding and a Contractor Code of Conduct. It was highlighted that the appendix provided with report to the Sub-Committee explained how responses on these items would be scored.

It was questioned whether best practice had been identified prior to commencing the re-procurement process. It was advised that when the tender strategy was being prepared the team had reviewed what had worked and what had not in the previous contract. This had resulted in the decision to in-source the contact centre to allow the Council to directly rebuild its relationship with residents and have control over the data collected. Best practice had been sought from elsewhere and bidders had also brought forward their own suggestions for best practice.

Given it was proposed that the out of hours contact centre would be provided by the winning bidder of Lot 1, it was questioned how the relationship with the Council’s own in-hours service would be managed. It was advised that it would be essential to ensure there was a good flow of data between to two services, to understand what was happening with residents repairs. Having an in-sourced contact centre would allow the collection of real time feedback from residents which would allow the service to understand any areas of concern.  Confirm of what services could be provided out of hours would need to be clearly communicate to residents, as it would not be possible to provide the same level of service available during standard operating hours.

It was questioned whether having the successful Lot 1 contractor providing the out of hours contact centre could lead to a conflict of interest with the Lot 2 contractor. In response it was advised that all the Lot 1 bidders worked on a national basis, which meant they had the capacity to deliver an out of hours contact centre service. As Lot 2 had been designed to be attractive to smaller providers, not all of these had an out of hours call centre, with some offering an on-call system instead. The Lot 1 contractor would transfer issues raised on properties under the Lot 2 contract to that contractor to respond. It was agreed that the delivery of the out of hours contract centre would need to be closely monitored to ensure poor service did not arise due to miscommunication.

As a follow-up, it was questioned what system would be put in place to manage the out of hours service from the client side. It was confirmed that management of the contract needed to be looked at in the context of the wider Housing Transformation Programme, but good contract management would be needed for both the in and out of hours contact centre service.  Consideration had been given to delivering the out of hours contact centre in-house, but on the grounds of cost and quality, it had been decided that the Lot 1 contractor would be asked to price for this service, as all bidders had their own established out of hours contact centres already in place.

It was confirmed that the structure for the in-house contact centre was currently being considered to ensure that the expected level of service improvement was delivered. It was likely that the level of staffing would be higher than would normally be expected to ensure that targets could be met.

As it was recognised that the re-procurement process had produced a lot of good practice, it was questioned how this learning could fed into other transformation projects across the Council. It was advised that delivery of the re-procurement of the repairs/voids and heating contracts had not solely been the responsibility of the Housing service, with the Procurement and Finance teams also involved along with project support from the Programme Management Office. A lessons learnt exercise had been run half-way through the procurement process to check that nothing had been missed and to record what had gone well. It was highlighted that the high level of resident involvement in the project had made a fundamental difference and once the new contracts were implemented there would be further engagement with residents on the delivery of the contract.

In response to a question about whether the number of bidders had been impacted by the process being in part run in August 2022, it was confirmed that the Council had down well to get the level of interest it had in the contracts given the volatile market for these services. This may have been helped by the soft market testing carried out in advance of the process. It was confirmed that data originally used for the tender did not include the right volume of work, but this had been corrected at an early stage and had not impact upon the process.

As staff would be transferred under TUPE from the current provider, whose performance led residents to raise concern about the level of service provided, it was questioned what could be put in place to ensure that the right culture and processes were in place from the outset of the new contracts. It was confirmed that the culture was set by the organisation, and during the mobilisation period the expectations of the customer experience would be set out to staff. The contractors would also want to put their staff through a training process to ensure they started the contract on a good footing. Going forward good contract management was essential to ensuring the expected level of service was being met.

As the report noted that the bidders had raised concern about the use of financial penalties within the contract to manage poor performance, reassurance was sought that any such penalties could be enforced. It was advised that the use of financial penalties would be decided through the contract management process and would need to be supported by good quality data. It was essential that both parties were clear on what part of the service was failing and the improvement required. Financial penalties included those available through Right to Repair legislation, requiring certain repairs to be made in a statutory timeframe, and a £25 per day penalty for void properties not delivered within agreed timescales.

It was advised that all the bidders had confirmed that they would be able to work with the NEC system being rolled out within the Housing service. To mitigate against the risk that the new system may not be in place for the start of the new contracts, all bidders had been asked to include a proposal within their bids for an interim option. The NEC system would be able to provide real time data which would help with managing the quality of service being provided to residents.

There was concern flagged about the potential risk that the service to residents may worsen in the short-term as the existing contract was wound down. It was advised that there were several measures that could be put in place to mitigate against this risk including bringing the call centre back in-house earlier than intended and looking at other providers to provide additional capacity for outstanding routine work. The demobilisation process would be closely monitored to ensure that any such mitigation could be deployed at the right time.

It was noted that further work was needed with the current provider to establish the backlog of jobs outstanding. Once this process had been completed, the team would then need to discuss with the new providers how any outstanding repairs could be finished. The Sub-Committee was advised that depending on the volume of work outstanding, it may be necessary to look at another contractor to pick up the outstanding repairs.

It was confirmed that if another contractor carried out work that was identified as outstanding under the current contract, then the cost for this work should be deducted from the contractor as it had already been paid for. There was also a 12 month liability clause in the current contract should work not be completed to the required standard, which gave the contractor the opportunity to rectify the issue. The Sub-Committee agreed that potential volume of work outstanding was a significant risk that would need to be closely managed by the Housing service.

In response to a question about the key performance indicators (KPI) that would be used to monitor the delivery of the new contracts, it was highlighted that the current system made it hard to understand the customer journey. The new NEC system provided a higher level of functionality including a portal for residents to monitor the status of their repairs. A list of KPIs had been provided in the report to the Sub-Committee and included areas such as customer satisfaction, turnaround times, and appointments made and kept. It would be essential to ensure that residents played a key role in informing the contract management process using their feedback to guide the service delivery. Given the importance of contract management to contracts of this size, a specialist team would be created to monitor delivery.

As a follow-up it was questioned how the new approach to the monitoring and delivery of the contract would prevent the repetition of past instances of non-escalation of outstanding repairs. It was advised that at present the Service did not have access to good enough real time data. The new NEC system would provide real time data which would ensure there was a greater understanding of the reasons for outstanding repairs. The in-house contact centre would also help to ensure that patterns and trends could be flagged in real time. The complaints process for the service also needed to be improved to ensure that learning from complaints was a key part of the process.

In response to a question about the cost of mobilisation, it was advised that contractors, as part of their bids, had outlined the resources needed for mobilisation. Some viewed it as a normal part of their business, so had not included additional costs, but others had built this into their bids. It was expected that the Housing service would provide a mobilisation plan for the contractors, and it was likely this would require support from across the Council to deliver. It was also confirmed that additional staff resource would need to be brought in to provide capacity for the mobilisation process.

It was confirmed that the risk register for the re-procurement process was regularly reviewed and up until now the key risk had been keeping to the procurement timeline. Looking forward the key risks were likely to include the timeline for mobilisation and demobilisation, the interdependency between the new NEC and its integration with the new contractors, and ensuring staff understood the new systems. Staffing structures and recruitment within the Housing service was being reviewed to ensure the right resources were in place to manage the new contracts.

At the conclusion of this item the Chair thanked those present for their attendance at the meeting and their engagement with the questions of the Sub-Committee. 

Actions arising from the meeting

Following the discussion of the re-procurement item at the meeting, the Sub-Committee agreed the following actions that would be followed up after the meeting.

1.      As the Sub-Committee would have the opportunity to review the Cabinet report on the contract award at its next meeting on 27 February 2023, it is requested that further information on the next steps for the mobilisation and the ongoing management of the contract are provided for this meeting.

2.      The Sub-Committee would ask that they are kept informed on progress to implement the new NEC system, especially if any issues arise that may delay delivery.

Conclusions

Following its discussion of the re-procurement item, the Sub-Committee reached the following conclusions: -

1. Given the challenging timetable for the re-procurement process, the Sub-Committee recognised that it would have taken a lot of hard work from all involved to ensure that the process had remained on track, on programme and on time.
2. The Sub-Committee agreed that the project remaining on track was a positive indicator that the culture of the organisation was improving. Going forward it was essential that the experience and learning from the re-procurement process was used to inform the wider corporate learning on project management.
3. The Sub-Committee was happy that the level of tenant and residents’ involvement reflected what was set out in the original tender strategy and agreed that the level of engagement should be seen as a example of best practice by the wider organisation.
4. The Sub-Committee welcomed confirmation on several specific areas, including: -
   • The contracts being split to provide an opportunity for smaller contractors to bid.
   • That financial penalties had been included in the contract.
   • That the outstanding disrepair work under the current contractor would be separated from the ongoing work of the new contractors.
   • That the staff of the contractors would be co-located with council staff.
   • That there was a clear recognition that the level of data available was not good enough and that this was being actively addressed through the installation of a new system.
   • That it had been identified there was a need to provide mitigation to manage the risk from installing and integrating the new NEC system, to ensure there was not any undue impact on the start of the new contract.
5. Given that prior feedback from tenants and leaseholders had raised significant concerns about staff culture, the Sub-Committee welcomed acknowledgment of this issue and confirmation that steps would be taken to define and provide training on the expected staff culture going forward during the mobilisation period.
6. The Sub-Committee agreed that there was a risk of there being a significant backlog of work outstanding at the end of the current contract and welcomed confirmation that officers were working with the contractor to understand this and put appropriate mitigation in place.