Purpose

This report sets out proposals for the development and refurbishment of a new Children’s Home in the borough. The report seeks approval to carry out a closed tender exercise to identify the best contractor to carry out refurbishment at the South Norwood Home.

The refurbishment works are fully funded by Department for Education (DfE) capital funding and the asset we are currently developing for this purpose is a five-bedroom property located in South Norwood. The space and layout make it ideal to convert into a home for up to three children with complex needs, including rooms also available for care and support staff. This proposal is in line with Mayoral Priorities towards Children and young people and promotion of living healthier and independent lives.

The DfE grant is being used within the criteria laid down to bring this property already owned by the Council, but not in use, up to quality and safety standards that will be required to achieve Ofsted registration and safe operation for the intended group of young people.

The Council will outsource the operations of the care and support and the management of the building to an experienced residential children’s homes service provider. This offers the least risk of service failure as the Council does not currently have the skills base or staff structure to support operating a registered children’s home directly. Operating children’s homes is a niche specialist skill. Contracting with a partner also has the advantage that the Council does not need to directly employ specialist staff or managers. The risk of Ofsted judgements, which could reflect on the Council’s overall rating is also mitigated. The procurement for the provider is being carried out under a separate strategy.

This strategy report requests that the Council carry out a Single Stage procurement process to identify an appropriate contractor to carry out refurbishment works in line with the designs and plans produced by the lead design team. The value of the works is expected to be upto £650k which is well below the Works Thresholds as set out in the Procurement Act 23 (PA 23) (£4,327,500). However, as it’s above the low value threshold for Servies and Supplies (£173,100) set out in the Council’s Contract Standing Orders (CSOs) it is classified as  Above Threshold Non-Key Decision.

Decision

The Corporate Director - Children, Young People & Education (CYPE) resolved to:

Approve the commissioning intentions and procurement strategy in this report (and more particularly described at Appendix A Section 1) for the commissioning of the refurbishment and development of the new Children’s Home in the borough with an estimated cost of up to £0.650m to be funded from the Capital Grant received from Department of Education.

Reasons for the decision

This option is recommended on the basis that it is the only one that delivers an expertly run home which can deliver effective care and provide value for money to the Council.

Establishing a new children’s home in the borough will reduce pressure on budgets and contribute to the savings plan already outlined in the Medium-Term Financial Strategy (MTFS). Developing internal provision is part of our overall sufficiency pathway and will contribute to meeting savings requirements as part of the Stabilisation Plan.

Increased proportion of children with complex needs placed locally, thereby maintaining local connections, access to local partner services, family relationships and lower cost provision of council services to them.

It is proposed to procure via closed tender an invited list of smaller contractors, based on past work, experience, quality and cost. Our external Design Lead and as well as known contractors by the Council (with a track record of managing similar library refurbishments) has provided a shortlist of recommended suppliers to form the basis of this list with an estimated value of up to £0.650m.

This approach is considered lawful as the contract value is below the Procurement Act (PA23) works threshold and therefore not caught by the full PA23 Regulations.

Other than going out to a select group of tenderers the process will be run as if it was a full open tender process with tenders being returned electronically via the e-tendering portal using the Council’s standard ITT template.

Alternative options considered

Do nothing. Continue to purchase Children’s Home care from the open market at market rates, accepting that children will continue to need to live away from their homes. Recent DfE reporting states that the cost of Children’s Residential Care has risen on average 50% in the last 2 years This option will not contribute to making savings and would require the return of the £780,000 capital grant funding to the DfE.

The Do-Nothing option would also result in the Council having to pay the Grant back to the DfE. This option has been discarded.

Procure via Open Tender. Whilst this option would lead to increased competition this approach is not considered feasible as this would likely result in a high number of tenderers which would delay the process and require additional resources. In addition, tenderers may not provide high quality bids as they would not know how many other organisations would bid.

Procure via a Framework or DPS. Whilst the use of a mini-competition off a framework or DPS would narrow the market to suitable suppliers, this option generally favours larger, less local providers, which are not considered optimal for this project. Given the relatively low value of these works the Council is looking to procure a smaller local supplier. There is also usually a small fee/supplier rebate that is charged if we use a framework/ DPS which we can avoid by closed tender. Given the value is below the works thresholds the PA 23 rules do not apply in full and therefore the majority of the time savings of a Framework/DPS would not be realised in this procurement

Use an existing Term Contractor- the Council has a number of Term Contractors that we could use to procure these works. This would be a quicker route to market with a supplier which we have a long-term relationship with reducing some the of the risks. However, given the small nature of the contract a Term Contractor is likely to be more expensive than the preferred option as they would add a management fee to their costs and would likely sub-contract the work back out to smaller contractor(s).