Purpose

Background Information
 

1.           
The Government's Department for Business,
Energy & Industrial Strategy (BEIS) now known as Department for
Energy Security and Net Zero (DESNZ) announced in 2022 that they
were going to release further funding for their Social Housing
Decarbonisation Fund (SHDF) and provided more information later in
the year. 
 

2.           
SHDF was launched to support energy
efficiency improvements in the social rented sector with a timeline
of applications to be submitted by way of competition to apply for
funding with a competition deadline of 18 November
2022. 
 

3.           
Eligible organisations were able to bid
for funding on their own or as the lead of a Consortium, however
required a minimum of 100 properties to meet the criteria for the
application.
 

4.           
Due to the timing of this announcement
the Council were not in a position with housing stock information /
data to support a full application of 100 properties or more on
their own so reached out to their neighbouring authority Sutton
Housing. The London Borough of Sutton (hereinafter referred to as
“Sutton” below) advised the Council that they too were
not in a position to support an application on their own so sought
other authorities and housing associations that may be willing to
join them to bid as a consortium. Raven Housing Trust accepted
Sutton’s offer and between them started the process of
developing an application. It was at this time the Council reached
out to Sutton who informed the Council of this Consortium and
discussions took place regarding the Council's interest to
join. 
 

5.           
The understanding at the time was, should
the funding application result in a successful outcome, an
agreement outlining key roles and responsibilities for each member
would be drafted, with all parties’ legal teams playing part
in drafting the agreement and providing advice on any contractual
arrangements and understanding of risks and appropriate
mitigation. 
 

6.           
With the above in mind, with
consideration of the timeline and criteria for SHDF applications to
be submitted, the Council joined to form a consortium with Raven
Housing Trust and Sutton for an application to seek funding from
the SHDF.
 

7.           
The aim of this Commission is to upgrade
homes to meet an EPC B and C standard through a worst-first,
fabric-first approach using measures such as external wall, loft,
cavity wall, and underfloor insulation. Some properties will also
receive renewable technologies such as solar photovoltaic panels or
air source heat pumps, moving away from reliance on fossil fuels to
power and heat buildings. This is a key stepping stone to achieving
the Council’s 2030 and 2038 targets.
 

8.           
The arrangement formed between Raven
Housing Trust, the Council and Sutton Housing Partnership will see
to an ongoing commitment to achieving net zero carbon emissions.
Combined, the three social housing providers own and manage over
18,000 homes across the South East of England, many of which were
built in the 1960’s and 70’s. The successful
application of the grant will enable the Consortium to carry out
retrofit works to 178 properties combined, to improve energy
efficiency measures to each social housing property only, helping
each organisation deliver their commitments to net zero carbon and
provide significant energy cost savings for residents. Properties
selected have poor EPC ratings of D or below and the intention
behind this scheme is to ensure the end result will bring these
homes up to EPC rating of B or beyond.
 

9.           
The consortium makes provision to combine
capabilities and resources to feed into suitable tender
documentation to allow for a procurement of appropriate
contractors, to carry out retrofit measures to properties within
each borough. The primary driver of this arrangement allows for
greater economies of scale, efficiency and effectiveness of
specialist skills and contractors needed to carry out the works, as
well as ensuring the criteria for a minimum number of properties is
satisfied with the Council having 66 properties proposed,
Sutton putting forward 62 and Raven 50, totalling
178 properties for the application.
 

10.        
The Lead Applicant, Raven Housing Trust,
will ensure projects are carried out to strict safety standards and
that all work conducted will be compliant with all specifications
and requirements set out in PAS 2030/35 (British standard that
creates a recognisable quality standard for the retrofit and energy
efficiency sector for housing) and appropriate safety and
construction standards, including Construction, Design and
Management (CDM) regulations and any statutory requirements for
Principal Designer. 
 

11.        
Each of the consortium members agreed to
sign a binding agreement known as the Collaboration Agreement that
provides the framework for working together to deliver this
project, including the agreement for the value of the Funds
Transfer. The works were tendered in two phases due to the
complications of External Wall Insulation that requires more
detailed designs currently taking longer to finalise than those
proposed for Phase 1, which will see some properties (9 from the
Council) benefit from Solar Panels only. Phase 1 and Phase 2 were
tendered in October 2023 and March 2024 respectively.
 
Financial Considerations
 

12.        
There is an adequate capital budget in
the HRA capital programme over the next two years to cover the
costs of the scheme. 
 

13.        
The £343k cost of Phase 1, which
was awarded to Contractor A in February
2024, commenced in 2023/24. Phase 2, which is the subject of this
report, is due to start in 2024/25 and utilises the remaining DESNZ
funding, as well as HRA borrowing to fund the remainder of the
scheme.
 

14.        
The figures in the table below are the
Council’s elements of the bid rather than the overall bid
amounts of the consortium co-ordinated by Raven Housing
Trust.
 

15.        
Summary of Project Costs:
 

2023/24
£’000

2024/25
£’000

2025/26
£’000

Total 
£’000

Capital Budget available

120

2,300

2,000

4,420

Proposed Gross Contract Costs

343

1,799

0

2,142

Difference

223

(501)

(2,000)

(2,278)

Funding - Grant

343

243

0

586

Funding - HRA Borrowing

0

1,556

0

1,556

Total Funding

343

1,799

0

2,142

 
The Tender Process 
 

16.        
The tender process was released to the
Procurement Assist DPS via the Delta E-Sourcing platform on 25
March 2024 at 1pm, with a closing date of 29 April 2024 at
1pm.
 

17.        
There were a number of key
factors: 

·        
60% Quality and 40% Cost Award Criteria
Split 

·        
Works must be completed by March 2025, in
accordance with funding regulations.

·        
Single Contractor required to deliver the
works
 

18.        
The evaluation criterion is split for the
tender exercise at 60% for quality and 40% for price. A DPS
drawdown exercise (like the traditional framework drawdown
mini-competition method) was conducted, and 31 eligible Service
Providers were invited, and two submissions were received and
evaluated - Contactor A and Contractor B as set out in EXEMPT
Annex 1. 
 

19.        
Each submission was checked and deemed to
be bona fide. The bona fide checks consisted of ensuring that the
bidder passed the mandatory Pass / Fail criterion and provided the
information requested in the tender pack, such as relevant in date
insurances at the requested levels, 3 years
worth of company accounts and any certifications and
accreditations requested. Additionally the checks ensured that the
bidder responded to all quality questions and provided a complete
pricing document. 
 

20.        
The pricing submissions were evaluated by
Procurement Assist and Ridge Partnership. The quality submissions
were evaluated by authorised officers from each of the consortium
members. 
 

21.        
During the evaluation stage, a number of
post tender price clarifications were raised with both
bidders.
 
Conclusions and Recommendations from
Tender
 

22.        
Following the Post Tender Clarifications,
it is recommended that the contract is awarded to the named
supplier in the EXEMPT Annex 1 on the basis of
achieving the highest total score in accordance with the published
tender criteria.
 

23.        
Commercially sensitive information
relating to the tender is provided in EXEMPT Annex
1.
 
Equalities Implications
 

24.        
A full Equalities Impact Assessment
(EQIA) has been undertaken. To view the EQIA please click
here.
 

25.        
A key summary from the EQIA is as
follows:
(i)         There
will be no negative or disproportionate impact or unlawful
discrimination as a result of this service
re-procurement. 
(ii)        The successful
Service Provider will be using the data from the Council’s
new Housing Management System (CB440) approved in May 2023. This
will underpin the service and have a dynamic update capability
(where the supplier identifies updated contact data or other
special requirements) to ensure the Council retains the current
master data. 
(iii)       In accordance with
the new Contract, the successful Service Provider is obligated to
comply with the Equality Act and ensure adherence to CDM 2015
regulations (Construction Design Management 201
 
Reason for Urgency
 

26.        
This is an urgent decision as works will
be required to be delivered by March 2025 to claim down the
Council's SHDF grant funding for the programme. This is time
critical and the delivery of the programme and mobilisation of the
contractor will need to start as soon as possible. A further need
for urgency is that there are three partners involved in the SHDF
programme (Raven Housing Trust, Sutton Housing Trust and the
Council). It is vital that each partner achieves its programme by
the end of March 2025 or it will affect the grant distribution for
all. In terms of timing, it will not be possible for the contract
award to be considered at the rescheduled Place Committee meeting
on 17 July 2024, as additional time is required for legal works on
the contract and mobilisation so that work onsite can start in
September 2024 for completion by March 2025.
 

Content

The contract for
Phase 2 of Social Housing Decarbonisation Fund works at
57 properties within the Borough be awarded to the successful
bidder named in EXEMPT Annex 1
(exempt from publication) for the sum of £1,786,107.77 for a contract
period of 8 months with a 12 month latent defect period, following
a competitive tender process.