Decision Maker: Cabinet Procurement and Insourcing Committee

Outcome: Implemented

Is Key Decision?: Yes

Is Callable In?: Yes

Date of Decision: July 7, 2025

Purpose: This report sets out to achieve approval for a procurement strategy to deliver compliant and effective contracts for the provision of a range of Mechanical and Electrical contracts across PAM.

Content: RESOLVED to approve:   1.  A1. Establishment of an M&E Framework of Contractors across 9 Lots, with a value of up to £80m ex VAT. The contract term will be up to 6 years (4+2).   B1.  Procurement of three Specialist M&E works contracts , to establish strategic long term agreement for up to 5 years (3+1+1), with a combined value of up to £9,343,250 ex VAT. The three contracts will be for the following requirements; ·  Door Entry Systems ·  Aerials ·  Lightning Systems    B.2. Procurement of two Specialist M&E works contracts to establish Tactical 1 year Direct Award contracts via Public Framework, with a combined total value of up to £1.45m ex VAT. The tactical contracts will provide an interim arrangement while the strategic contracts are procured. These two contracts will be for the following requirements; ·  Door Entry Systems ·  Aerials   C. Procurement of up to three Consultancy support professional services contracts, to provide specialist advice for the development of the framework. The estimated combined value will be up to £60k ex VAT. These contracts will provide specialist advice for; ·  Consultancy - Heat Recovery Units & Air Source Heat Pumps ·  Consultancy - Communal Ventilation ·  Consultancy - Wet/Dry Risers & Sprinkler Systems   2.  To delegate the contract award for the Framework Agreement to the Group Director, Climate Homes and Economy, following consultation with the Group Director, Finance and Corporate Resources,  This is to allow sufficient time frames for due diligence in ITT evaluation and commencement and management of the Leaseholder consultation process to commence as soon as practically possible.    3.  To note that where the Group Director has signed off on the report on the contract awards for these works and services, this will subsequently be reported to the Cabinet Procurement and Insourcing Committee (CPIC) by the Group Director   Reasons For Decision   1. A new procurement strategy has been developed to drive improvements, provide a step change, and secure compliant and effective contracts for the provision of a range of Mechanical and Electrical contracts across PAM. The primary goals and objectives are to deliver M&E contracts that achieve the following: ·  Compliant procurement processes ·  Agreed rates to allow for forecasting and planning ·  Ensure Value for Money across M&E spend portfolio ·  Address Section 20 requirements in most effective and efficient way ·  Secure suitably experienced and skilled Supply Chain, and build effective working relationships  to drive continuous improvement through performance management and reporting ·  Effective management of Maintenance and compliance to statutory requirement, including provision of support for DLO ·  as well as Options to deliver capital investment to help in reduction of maintenance costs, and improve services for residents ·  Opportunity for added value through delivery of improved social value and sustainability within M&E contracts   Proposed Approach   2. It is proposed to run a number of tender  processes in order to establish the M&E Framework and specialist contracts;   Following an analysis of the M&E contract, 4 categories were identified;   Electrical Contracts where multiple suppliers would be needed   Mechanical Contracts were multiple suppliers would be needed   Specialist M&E contracts where only one supplier would be needed   Consultancy support contracts, where internal resources for specialist M&E requirements are unavailable Following careful consideration, it was agreed that contracts falling within categories 1 and 2 would require one supplier to deliver the day-to-day repair and maintenance requirements. Should any further capital investment programmes of work and/or new installations be identified (subject to budget), additional suppliers will be required to deliver these, and/or provide back up to the DLO.   As a result the proposed approach identified is summarised as follows:   A. M&E Framework ·  An M&E framework with 9 lots (two electrical and 7 mechanical), as listed within Appendix 1. Each lot would deliver both repair & maintenance as well as new installations. ·  The top three scoring bidders would be appointed to the framework, for each lot. ·  Each first place bidder would be awarded the repair and maintenance contract for the lot. ·  Mini competitions would be run between all lot specific framework suppliers to identify the most economically advantageous supplier to deliver specific programmes of work (as and when budget was available).   B1. Specialist Contracts ·  Specialist contracts only require one supplier for delivery ·  As such there is no benefit for this to be part of the framework agreement ·  Three separate procurement processes would be undertaken to deliver these specialist contracts, to secure 5 year Measured Term Contracts; ·  Door Entry ·  Aerial/Digital TV ·  Lightning System   B2. Tactical Contracts ·  Tactical contracts are interim contractual arrangements that are required to ensure continuity of service. ·  There are current contracts in place that have or will shortly expire before the longer term specialist contracts are awarded. ·  Therefore 12 month direct award contracts will be established via a public framework to allow sufficient time for the tender process to deliver the strategic contracts. ·  Two separate procurement processes would be undertaken to deliver these tactical contracts, to secure 12 month Measured Term Contracts; ·  Door Entry  ·  Aerial/Digital TV   C. Consultancy Support ·  Consultancy support contracts are needed to provide the necessary technical advice and competencies to specialist lots on the framework. ·  There are currently no internal resources with the knowledge and competencies necessary for these specialist lots. ·  The consultant will be required to provide advice and guidance for pre tender actions, including drafting the specification and technical evaluation questions for tender. This may also include evaluation of bids where necessary. ·  Therefore a tender process will be undertaken to establish up to 12 month contract for the following disciplines; o  Consultancy - Heat Recovery Units & Air Source Heat Pumps o  Consultancy - Communal Ventilation o  Consultancy -  Wet/Dry Risers & Sprinkler Systems   See attached Exempt Appendix 1 for further details.       Alternative Options Considered and Rejected   The following alternative options were considered;   Insourcing The execution of the M&E works would necessitate the deployment of technical resources that possess highly specialised qualifications. The time available to scale up and recruit such a team is extremely limited, and it is unclear whether this would be feasible or beneficial to the Council.   The specialist nature of the repair, maintenance and upgrade works would also require the council to establish new supply chains for parts and materials, with sufficient capacity to cover the wide range of works involved. This is likely to be prohibitive and presents a very significant risk to successful investment in any upgrade programme of work.   A further barrier pertains to the fact that it is not possible to consult with leaseholders on the appointment of the DLO. Consequently, works subject to a Section 20 notice (above £250/unit) would not be fully rechargeable without additional procurement work, or a dispensation from the First Tier Tribunal (which is improbable). It is evident that this would result in a substantial financial loss for the council, which would not be feasible to recuperate.   The council would also be taking on full responsibility for any design work and for the health and safety of operatives if this option was selected. This would be a significant risk for the council.   This option was rejected   Individual Contracts To date, individual contracts have been placed for each of the contract requirements within the framework. This has resulted in short-term agreements and previous reliance on STAs and external frameworks to reactively secure a supply chain in response to expiring contracts and urgent compliance work.   Due to the number of contracts required, there would also be an extended timeframe to deliver all 10 contracts within the necessary timeframe for current expiration. This approach would ensure the continued reliance on reactive measures to secure short-term contracts with relevant markets and suppliers. A significant change is required in the strategic approach to PAM establishment of contract agreements, with the objective of driving continuous improvements and avoiding reliance on STAs and external frameworks.   This option was rejected.   Using an existing External Framework While this does form part of the procurement strategy to award tactical and consultant contracts, the option of an M&E Framework Agreement is intended to move LBH away from a reactive approach to contract agreement and towards formation of a LBH Framework. The utilisation of external frameworks is a valid approach within the context of LBH. Nevertheless, an overreliance on a procurement strategy can incur significant costs and present numerous disadvantages.   Due to the requirement for leasehold engagement and recovery of leasehold costs, the strategic nature, value of the contract and specialist area, an external framework is not deemed to be a suitable option for this requirement. After careful consideration, it was determined that this option was not as viable as the others that were identified and, as such, it was rejected for the framework and strategic contracts.