Purpose

Cabinet is recommended to agree
the preferred procurement route to for the Council’s Energy
services from 2025 to 2029.
 

Content

Cabinet:

(1)           
agreed to enter a bridging contract for 6 months for all gas
supplies to align the current contract to financial years. This
covers the period October 2024 to March 2025,through FTS compliant
flexible frameworks Y22008 and Y22009, procured by
Kent County Council (LASER);

(2)           
agreed that the Council then enters into rolling 2-year (2025-27
and 2027-29) contracts for the flexible purchasing of energy (gas
and electricity) for the qualifying supplies over the 4-year period
from April 2025 to March 2029 through FTS compliant flexible
frameworks Y22008 and Y22009 procured by Kent County
Council (LASER); and

(3)           
delegated authority to the Strategic Director of
Place (or their nominee), in consultation with the Deputy Leader
and Portfolio Holder for Housing and Regeneration and the Strategic
Director of Resources, topurchase gas and
electricity from the number one ranked
suppliers on each respective framework for
the duration of the period 2024-29.

 

Options & Alternatives Considered

The London Energy Procurement Partnership (LEPP) made up of several
London Boroughs was set up in 2020 to collaborate on an options
appraisal process to establish market reviews, procurement options
and best practice opportunities for future public sector
procurement best practise.

To achieve this goal, the LEPP appointed
Cornwall Insight (an independent energy market specialist) to
function as an expert, independent organisation to conduct the
options appraisal and provide a recommendation for each council
based upon their individual requirements. The full report provided
by Cornwall Insight is attached as Appendix 1, with the findings
summarised below:

Recommended – Direct Award via LASER Framework –
LASER’s service proposition is most closely aligned to the
Council’s requirements. The fully-managed service attracts
higher fees than their procurement only support, but most closely
reflects the requirements of the Council. Where other Public Buying
Organisations (PBOs) offer similar services, no overall packages
were identified that would be likely to offer a material benefit to
Local Authorities already being served by LASER.

Not Recommended – Do Nothing - The option of
doing nothing - and thereby maintaining the status quo - would
expose the Council to potential challenge for failure to comply
with the Public Contracts Regulations 2015. This would also leave
the Council subject to variable, out of contract prices, resulting
in significant increases in energy costs.

Not Recommended – -Individual Authority
Tenders/Mini-Competition - The option of an individual authority
conducting its own tender or mini-competition is not recommended
because of the risks and costs of tender, including use of staff
resources to write service specifications and conduct the tender
exercise are not commensurate with the potential benefits of
retailer service efficiencies and savings. Local authorities have
very few bespoke or unique business/service requirements and
retailers are unlikely to offer as attractive a price, service or
enhancements for individuals as for the group. Furthermore, the
market options have shrunk with many suppliers leaving the market
or reducing their client base to focus on smaller portfolio
arrangements.

A direct award is the preferred route via the Framework, with the
majority of LASER’s customer base comprised of approximately
200 public bodies and purchasing on behalf of £1.5 billion,
accessing this procurement route. The economies of scale available
to the Council via a direct award is preferred to a
mini-competition, as this would require additional resources and
expertise in-house that the Council does not currently have.

Not Recommended – Alternative Framework Provider (e.g., CCS)
– Crown Commercial Services (CCS) is the UK’s largest
procurement organisation and principal buyer for the UK Government.
Historically dominant for energy purchasing, CCS offers a
simplified service compared to LASER’s fully managed service.
Additional internal resource would be necessary to meet energy
requirements if the contract moved from a fully managed service to
procurement only.

Not Recommended – Purchasing through an Energy Broker –
Public sector entities contracting with a private
sector Third Party Intermediary is a well-established practice,
provided that the company in question can demonstrate its
compliance with public procurement legislation. The volumes that
each Energy Broker procures may be significantly less than those
purchasing through frameworks, resulting in less purchasing power.
As Energy Brokers are not directly regulated, this can raise
concerns around transparency of costs as well.