The Resources and Performance Select Committee met to discuss the Land and Property Maintenance Contract and the Surrey Property Group's business plan. Much of the discussion on both topics was held in private due to the commercially sensitive nature of the information. The committee also reviewed the forward work programme and recommendation tracker.

Land and Property Maintenance Contract

The committee reviewed the details of the facilities management contracts awarded to Mace Operate Limited in November 2023. The report provided covered the original reasons for the change, the efficiency assumptions, procurement, contract mechanisms and included the current performance of the contracts and the priority areas for development.

The committee noted the current delivery position of the facilities management and the priority improvement areas to ensure the contract performance meets the council's expectations. They also agreed that a further update be brought back to the Resources and Performance Select Committee at an agreed interval.

The transformation of the service across the Facilities Management Contracts has not delivered the profiled efficiency savings stated in the original business case. According to the Land and Property Maintenance Contract report, improvements continue, however developments and mitigations need to demonstrate value for money from the contracts for the council and residents.

The report noted that in March 2022, the cabinet approved the transformation of how the council's revenue funded facilities management¹ and capital funded forward maintenance contracts were delivered. The aim was to improve delivery and generate efficiencies. A review of the original facilities management supply chain found that services were delivered through an extensive network of contracts with an array of subcontractors. The management of the supply chain did not prioritise a customer-orientated or commercial approach and lacked performance information to demonstrate value for money and risk identification.

By consolidating the supply chain, the council aimed to streamline the large in-house team, change the culture of how the council manages its customer and commercial relationships, commission an audit of all assets and services, consolidate contracts, embed the council's climate change objectives.

The council proceeded to procure four contracts: hard facilities management, soft facilities management, capital forward maintenance, and a managing agent. One strategic partner was the successful bidder across contracts 1 and 2 Hard and Soft FM.

From November 2023, there were four phases of contract implementation across Hard and Soft FM, involving considerable mobilisation activity up until business as usual on 1 January 2025, 13 months in total.

Issues during the mobilisation phase included:

• Planning and Preparation: Developing and testing plans and processes between the council and the strategic partner proved resource intensive.
• Hard FM (Managing Agent phase): Existing contracts were 'running down' from November 2023 to full handover to the Strategic Partner in July 2024, the suppliers became disinterested with little recourse.
• Training and induction: Staff turnover was high leading to a loss of knowledge and business continuity.
• Stakeholder engagement and communications: The intranet platform providing access to the Service Helpdesk took longer to develop than anticipated.
• Customer experience: Customer Experience Interviews during 2024 resulted in a score that was still short of the council's expectations.
• Service Desk: Schools: 'Buy Back' FM service users experienced limited functionality and an inability to access to budget information following the transfer to the Strategic Partner's system.
• Service Quality: Challenges remain, particularly in achieving consistent service quality and tracking project progress.
• Asset Validation: The Hard FM validation exercise was the most extensive ever undertaken across the council estate, covering 18,054 assets and involving over 20,000 spreadsheet entries, multiple software systems, physical site visits, and supplier data reconciliation.
• System implementation: All work orders, approvals and reporting with subcontractors involve multiple systems.
• Performance management: A significant review of KPIs[^2] and OPIs[^3] is underway. [^2]: Key Performance Indicators [^3]: Operational Performance Indicators
• Condition Surveys and Life Cycle assessments: The surveys were delayed (in-part due to the Reinforced Autoclaved Aerated Concrete (RAAC) surveys required mid mobilisation).

Since January 2025, the council has been working to improve the service, including weekly commercial meetings, prioritisation of building compliance, a finance efficiency group, a utilities task force, and changes to the service desk.

Due to the reactive works (Helpdesk) overspend during 2024/25, the council removed the delegated authority. The delegated authority is due to return on 30 June 2025 with a review each month at the application for payment stage.

The report concluded that the rationale for transforming the way the council operated its FM contracts was underpinned by the need to improve delivery, customer service and commercial awareness through a new model to deliver efficiencies and value for money through the supply chain.

Surrey Property Group Business Plan

The Resources and Performance Select Committee reviewed the annual business plan of Surrey Property Group (SPG), which was approved at the Strategic Investment Board (SIB) on 16 June 2025.

[Natalie Bramhall, Cabinet Member for Property, Waste and Infrastructure] noted that when [Councillor Oliver, Leader of the Council] took up his post in 2018, she worked directly for him with responsibility for property, along with [Mel Few, former finance portfolio holder]. They went through the asset portfolio and decided to stop purchasing properties for income, as the existing portfolio was already very diverse and spread across the country, which they felt was not sustainable.

The SPG purchased 17 commercial property assets between November 2015 and December 2018, for the purpose of leasing to tenants to generate rental income. The portfolio consists of assets in a balance of sectors and is geographically spread across England. The portfolio remained unchanged up until May 2023 when it disposed of one its assets.

The strategy set out in 2023 for Surrey Property Group remains applicable. The key aspects are to retain existing assets that are forecast to deliver long term and secure income with minimum volatility. If necessary, underperforming assets are to be divested to maximise optimum portfolio performance.

During the year, it is anticipated that one of the council's directly owned investment properties, an office building in Guildford called Ranger House, will be transferred to SPG. This transaction has been approved by SIB and is intended to place the asset in the council's specialist investment property subsidiary in advance of refurbishment and re-letting. It will also mitigate the impact of any short-term fluctuations in net rental income on the council's General Fund.

Extensive redevelopment works have been completed at the former Debenhams in Winchester. The ground floor is now fully let to three tenants: Nando's, Pizza Express, and Five Guys. Marketing of the upper floors has recently commenced, and good interest has been received from several leisure operators.

The council's various loans to Halsey Garton Property Ltd (HGP), the holding company for SPG, are due to expire between 2025/26 and 2027/28. The council is working with the board of SPG to prepare options for refinancing the company.

Forward Work Programme and Recommendation Tracker

[Nick Darby, Councillor] raised a question about scrutiny of the forthcoming budget for next year. He was informed that there would be a briefing in October, and discussion in the chair and vice chair's group.

[Councillor Bob Hughes, Chair of the Council] noted that some of the answers in the Actions and Recommendations Tracker dated back to October 2024.