Purpose

This report sets out a revised procurement strategy for the Council’s Major Works programme, informed by market feedback and regulatory requirements, to ensure the housing capital investment programme can be delivered effectively, at pace and with resilience. It proposes a mixed contractual approach, longer contract durations, and a technical consultancy framework to secure capacity, support SMEs, and strengthen delivery assurance.

Decision

DECISION;

1. Approved the revised procurement strategy for the Capital Investment procurements following feedback received from the preliminary market engagement exercise.

The revisions include having:

•         2 geographically based contractors to cover Decent Homes works with contract durations of 4 years (with extension provision of up to a further 6 years via 3 + 3 year awards (subject to performance).

•         2 geographically based contractors to cover Building Safety works with contract durations of 4 years (with extension provision of up to a further 6 years via 3 + 3 year awards (subject to performance).

•         4 geographically based contractors (aimed at local Small and Medium sized Enterprises (SMEs)) to deliver certain workstreams e.g. street properties, enlargements and adaptations (aka knock throughs), major repairs, decorations etc. Contract durations of 4 years (with extension provision of up to a further 6 years via 3 + 3 year awards (subject to performance).

•         A technical consultancy open framework with a minimum duration of 4years (which may be extended to up to a further 4 years). This will contain up to 8 technical consultants with varying specialities.

1. Approved the revised total value of the whole commission £520m. This includes 8 works contracts (over a maximum duration of 10 years) and a technical consultancy framework (over a maximum period of 8 years).
2. Authorised the Corporate Director Housing and Regeneration in

consultation with the Mayor to award the above contracts in accordance with the results of the relevant tender exercises.

1. Authorised the Corporate Director of Housing and Regeneration to add and or remove participants to the open framework, in consultation with the Mayor and lead member for Housing, following the reopening of the framework in accordance with the relevant legislation.

Reasons for the decision

Previous approval of the procurement strategy for Capital Investment procurements was secured at Cabinet on 11th September 2024.  It was agreed then that a specialist project team would be assembled and a preliminary market engagement (PME) exercise would be undertaken to ensure that the proposed strategy was appropriate and is likely to secure the best outcome for the council. 

Feedback from the PME exercise has given good insight into the current market environment, how contractors are responding to the requirements of the Building Safety Act (BSA) 2022 and how our proposed strategy may be received. 

The feedback received has informed the revised procurement strategy which will enable accelerated investment in our homes to deliver our Decent Homes target and ensure regulatory compliance. 

The implementation of a revised procurement strategy is a critical step in supporting the delivery of our ambitious 30-year HRA Business Plan, which includes significant investment in our housing stock to provide better, safer homes for our residents.

The revisions to the proposed procurement strategy have been developed with the Director of Property and Asset management who was appointed after the PME was completed.

This approach will establish a mixed contractual landscape designed to support the timely and effective delivery of the capital programme. It picks up on the findings of the PME in relation to providing direct opportunities for SMEs. It will ensure capacity and capability of contractors to cover the full range of capital programme workstreams from large repairs to complex issues within HRBs. The potential to extend the contracts beyond the initial term recognises the additional time required to complete the Gateway process for HRBs.

Alternative Options

Option 1 - Do nothing – this is not recommended as this would present a significant risk to the future investment in the council housing stock which may adversely impact the following:

a)     the ability of the council to achieve, and maintain, compliance with

b)     the Decent Homes Standard

c)     the level of damp and mould cases and compliance with

d)     requirements under Awaab’s Law

e)     the level of disrepair litigation cases

f)       the level of complaints received

Option 2 - Use 3rd party frameworks e.g. South Eastern Consortium (SEC) – this option is not recommended as it would not provide agility and flexibility to deliver the capital programme at pace and scale. This is because:

a)                 Whilst the council may have access to numerous 3rd party frameworks, to ensure compliance with Section 20 Leasehold legislation, the council would need to consult with all leaseholders at the point a framework is being set up. This would mean that the council would need to wait until a suitable framework is being setup, which may cause delays and carry similar risks to option 1.

b)                 If adopted, this approach would also require additional administration which, unlike the recommended approach, would not provide the agility and flexibility required to deliver the capital programme at pace and scale.

Option 3 - Proceed with original procurement strategy i.e. appoint contractors only and have contract durations of only 4 years – this option is not recommended as it does not reflect the findings of the PME and would carry a greater risk of not securing the best outcome for the council. This is because:

a)     It would not encourage/support SMEs.

b)     It would provide limited risk mitigation and contingency planning against delays and instances of contractor poor performance.

c)     The duration of the contracts does not recognise the additional time required to complete the Gateway process for HRB works.

Action by:

CORPORATE DIRECTOR FOR RESOURCES (A.KASSIM)