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RESOLVED:
1. To Note the process used for
the selection of Asset Plus (using the GLA ReFit Framework) as the delivery partner for the
decarbonisation of heat in the Council’s Corporate Buildings
including appointment as Principal Designer and Principal
Contractor for CDM Regulations.
2. To award a 2 year contract to deliver
the Public Sector Decarbonisation Scheme 3b Sites project to Asset
Plus at a value of £16.6m and for the Council to continue to
work with Asset Plus across the whole portfolio of Corporate
properties.
3. To note that as further projects are
developed through the work that will be undertaken to assess the
heating systems in other Corporate Buildings, they will be brought
back to this Committee, Hackney Procurement Board or approved by
officers in line with the Gateway Process and financial scheme of
delegation.
 
Reasons For Decision
 
1. Decarbonisation of Corporate Properties is a vital step
in reducing carbon
across the Council’s operations identified in both
Manifesto commitments
and in the forthcoming CAP which is due to be presented for
adoption in
June 2023.
2. On completion, this project will replace largely end of
life gas powered
heating equipment in nine buildings with heat pumps
displacing 8m kWh
gas with 1.6m kWh electricity thereby saving in excess of
1,545 tCO2e.
3. The project will also act as a demonstrator that the
Council takes
decarbonisation seriously and is investing in Climate
Change mitigation
measures thereby acting as a beacon for other businesses to
follow.
4. The project will decarbonise heating through the
installation of Ground
Source Heat Pumps (GSHP) at London Fields Lido,
Clissold Leisure Centre and Stoke
Newington Town Hall and Library (one system managing both
buildings) and Air Source Heat Pumps (ASHP) at Queensbridge Leisure Centre, Trowbridge Centre and
3 schools.
5. The project will take 2 years to deliver with the ASHP
sites delivered in the
first year and the GSHP in the second. Completion is
expected around
December 2024 leaving a 3 month contingency before grant
monies
expire. The main reason for the protracted delivery is that
the GSHPs will
require permits from the Environment Agency as heat will be
extracted
from the aquifer below ground under the sites.
6. The project will cost £16.8m of which £16.6m
will be awarded to Asset
Plus to competitively procure, deliver and complete the
installations. The
remaining £200k will fund a Project Manager appointed
to manage the
project working with Asset Plus, the local sites and
property management
and the Grant Funder, Salix Finance.
7. In developing the Investment Grade Proposal (IGP)
project costs have
been estimated based on quotes obtained in August 2022
based on
concept designs, estimates for grid upgrade and
contingency. The Council
has included a further contingency to allow for some price
movements in
the market between the cost estimates used for grant
application and the
final pricing fixing through procurement stages described
below (14).
The quotes used to establish project costs were obtained
after most of the
recent construction cost inflation had been incurred in the
market.
8. The £12.2m Grant has been provided by Salix
Finance through the Public
Sector Decarbonisation Scheme 3b (PSDS) and will be
complemented by
£4.6m internal capital allocation approved through
the Capital
Programme.
9. Procurement of the project was completed in the second
half of 2021
through a competition within the GLA Re:Fit Framework where the 12
pre-procured contractors on the GLA ReFit Framework were invited to
provide terms against a portfolio of Council
buildings.
10. Three suppliers on the framework responded to the
competitive tender
issued. The bids were scored using a 90% quality score and
10% price
with Asset Plus scoring highest in Quality and joint
highest in price. The
90% quality also included suppliers ability to secure
competitive pricing
through their supply chain for the cost of the
installations which forms the
bulk of the cost of the project
11. Pricing within the Re:Fit
Framework is based on a fixed cost for surveys
up to IGP Stage with an open book process through
installation based on
tendered construction/installation costs plus a pre-agreed
margin. Work
completed by Asset Plus through the programme (design,
project
management, training, handover etc) is based on pre-agreed labour rates
assessed during the competition.
12. Asset Plus offered a zero cost survey and IGP stage
with competitive
labour rates and margins. As such, they were appointed as
the supplier
for surveys and IGP services under the Re:Fit Framework..
13. Asset Plus provides a cost and savings performance
guarantee. Costs are
guaranteed after the final contractor procurement stage
described below
(14) whilst savings in kWh are guaranteed at a 90% of
predicted
performance level adjusted for weather, site use variations
etc. The
guarantees will operate at a project portfolio level rather
than at a site
specific level and will be subject to the Council reporting
significant
changes of use within the buildings.
14. The project will be delivered in stages with a design
phase followed by
procurement through Asset Plus’ established supply
chain. These
contractors have a track record of delivery of this type of
equipment. At
least 3 quotes for each site will be gathered by Asset Plus
with the award
being made to the most economically advantageous offer. The
selection
will be by Asset Plus within the Re:Fit Framework working with Council
Officers with judgements made on price, quality, programme
and social
value. If possible, local contractors or those using local
subcontractors will
be favoured but it should be noted that these installations
involve specialised technical equipment and experience in
successful delivery
must be paramount.
15. The procurement of contractors for the project will be
split according to
technology with the 3 GSHP sites awarded to one contractor
and the 5
ASHP contracts awarded to another. This reflects the
different types of
technology and the different timescales for delivery
following the
permitting stage required for GSHP.
16. Grid upgrades are expected only on one site (London
Fields Lido) and will
be coordinated with the project working to install the new
teaching pool to
minimise cost and site disruption. The project teams have
been
coordinating for the last 9 months on this approach. All
sites will be
reviewed with the Distribution Network Operator, UK Power
Networks
(UKPN) and, where required for capacity or for technical
reasons such as
harmonics, the supply will be upgraded. As the local
statutory monopoly
supplier, these upgrade contracts will be awarded to UKPN
under their
terms and conditions including pre-payment.
17. Following the installations, the Council is required to
monitor and report on
savings to the Funder with a more detailed International
Performance
Measurement and Verification Protocol (IPMVP) based process
available
from Asset Plus at extra cost should this be required. This
level of detail is
not required by Salix as the funder.
 
Alternative Options (Considered and Rejected)
 
Alternative options considered include:
? Do nothing. All of the buildings identified have fossil
fuel heating
systems that are at or nearing their end of life and will
need
replacing. Therefore doing nothing will result in
emergency
replacements after failure which could occur at any stage.
In some
sites, especially Leisure Centres, the costs of emergency
works are
increased by loss of revenue if heating systems fail as the
sites often
have to close due to no hot water, inadequately heated
swimming
facilities etc). Doing nothing
is not considered a viable option.
? Like for Like Replacement. Replacement of boilers would
cost
substantially less overall but would not attract external
funding and
would not achieve carbon savings of any magnitude. Given
the
impact of the grant where the Council contribution is
largely defined
by the like for life replacement costs, the grant makes the
full project
cost only a little more than the full Low Carbon
project
recommended.
? ASHP throughout. It would be possible to deliver the
projects using
ASHP rather than GSHP which are substantially more
expensive.
ASHP would have been difficult to progress at Clissold due to noise
concerns and at London Lido due to planning requirements
for the
size of equipment required. GSHP attracts larger grants due
to the
increased carbon savings and the systems will provide
extra
capacity to be used in future heat network projects making
the ASHP
option less attractive.
? Re-procure a different principal contractor. Asset Plus
were
appointed following a procurement exercise within the terms
of the
Re:Fit Framework which therefore meets
the regulatory and
governance requirements.
2. Insourcing was not considered a viable option due to the
specialised
nature of the equipment to be installed. As the market
matures and more
qualified and experienced staff become available in the
market this option
may be able to be reconsidered for maintenance and for
future
installations and replacements.