The Metropolitan Police's use of the Sprint II Framework following it's mandation by the Home Secretary

Report: 12
Date: 22 September 2011
By: Director of Resources on behalf of the Commissioner

Summary

This report provides information on the purchase of new commoditised hardware and software through the Buying Solutions mandated single supplier framework, Sprint II, Following its mandation by the Home Secretary.

On the 16 March 2010 Buying Solutions together with the HMRC awarded a 4 year single supplier framework (Sprint II) for commoditised ICT and services with Specialist Computer Centre (SCC). Certain elements of the framework, specifically for new purchases of commoditised hardware and software, were made mandatory by the Home Secretary for use by the Police Service on the 4 March 2011.

In future, where the MPA/MPS do not have existing contracts in place for commoditised hardware and software, the mandated Sprint II framework will be used. Separate and binding contracts which call-off from the Sprint II framework will be entered into, as and when the goods are required, without the need to go through an EU compliant tender process for each contract.

It is estimated that the value of goods which the MPA/MPS will purchase using the Sprint II framework over the next three years is £48 million; about £1m per annum lower than current arrangements. Approximately half of this amount has historically been placed direct with various suppliers. In future these orders will be placed through the Sprint II framework. The remaining amount is at present managed through the Capgemini ICT outsource contract, via the eCatalogue service line, controlled within the MPS via Enterprise Buyer Professional (EBP). The new arrangement using Sprint II will replace the existing second tier catalogue supplier (Computacentre) with SCC. Capgemini will continue to act as the MPS front end agent as this provides MPS benefits in regard to inventory and asset management which are obligations within the ICT outsource contract.

Binding contracts with SCC via Sprint II will not be entered into until the goods are required therefore the MPA is not being asked to agree to any expenditure at this stage. £48 million is the overarching potential value of orders that may be placed in the future which the Members are asked to note. Appendix A and Annex 1 supporting this report are exempt. This paper was ‘noted’ by the MPS Contracts Board (CB) on Tuesday 26 July 2011.

A. Recommendations

That members

1. It is noted that multiple call-off contracts will be awarded to Specialist Computer Centre (SCC) for the provision of commoditised hardware and software via the Home Office mandated, single supplier framework (Sprint II). Capgemini will continue to act as the MPS front end agent for the eCatalogue servicing Catalogue 1 (standard) and Catalogue 2 (non standard) EBP orders.

B. Supporting information

Background

1. The Home Office has committed to achieving greater savings and efficiencies across police authorities with increased collaborative procurement a prime initiative. During the 2010/11 consultation period, the MPS expressed a number of concerns in regard to the mandated use of the single supplier Sprint II framework including: inadequate monitoring; reports of supplier non performance; and, in the absence of competition, value for money.

2. Despite MPS concerns, the Home Office made amendments to the Police Act 1996 (Equipment) Regulations regarding how certain ICT equipment must be purchased. The regulations, which were laid before Parliament on 11th February, and made effective from the 4th March 2011. It was advised that mandatory use of Sprint II would apply where there was no contractual commitment with another organizing in place on the 4th March 2011.

3. Specialist Computer Centre (SCC) is a pan European provider of ICT services. The scope of the Sprint II framework falls into four broad categories: hardware; software; infrastructure (including networks & telecommunications); and services.

4. The scope of mandation in regard to Sprint II however is narrower than that of the entire framework or that of the SCC total service offering. Pre-mandation benchmarking by the NPIA found SCC to be best value for commoditised hardware and commercial “off the shelf” software hence it is these categories of the framework which form the scope of mandation.

5. Routine MPS orders for commoditised hardware, software and peripherals are managed through an eCatalogue; a controlled environment provided for via the ICT Outsource contract. These are commonly known as Catalogue 1 (standard items) or Catalogue 2 (non standard items). Additional Capgemini expenditure occurs outside of the eCatalogue in relation to capital projects or support renewals. Analysis of the MPS spend analysis from 2010/11 Capgemini Purchase Orders has identified a potential value range of £12-£16m per annum. Current Capgemini estimates however are lower at about £8m. The differential is a consequence of variable naming standards at purchase order line description level between MPS, Capgemini and reseller systems. Although work continues to clarify the difference the actual value will only be clearer once new management reporting is developed. For contract value purposes, the current Capgemini figures have been used.

6. The MPS has additional spend outside of the Capgemini contract that has the potential to fall in scope of mandation. Historically the supply of IT equipment which cannot be purchased through the ICT Outsource contract has been, typically, via one off contracts following a mini competition; or continuous contract arrangements such as annual licence arrangements. Suppliers include; Computacenter, Trustmarque, EMC, and SCC at a total contract value range of £5-£8m per annum.

7. The combined 2010/11 figures suggests MPA/MPS expenditure, which will be within the scope of the Sprint II mandated framework to be £13-16m per annum. Since mandation took affect the MPS has complied with the Regulations placing non-eCatalogue related orders direct with SCC under the Sprint II framework. Many of these would have previously been subject to mini competitions. For the March to June quarter, seventeen call-off contract orders have been awarded through the Procurement scheme of delegation to SCC, at a total value of £2.456m.

8. The contract position pre mandation had the MPS, via a TfL framework, enter a contract during the summer of 2009 with ICT reseller Computacenter and Capgemini. The scope covered routine Category 1 and 2 type purchases; effectively the second tier supply contract to service eCatalogue orders. However, arrangements in respect of contract ownership of the ICT outsource contract were not properly understood resulting in what is now regarded as a non-compliant contract position. Contributing factors pre and post have been:

1. The original scope of supply, definitions, roles and responsibilities not being fully defined or understood within the context, provisions or terms of the ICT outsource contract;
2. The eCatalogue and the Capgemini order desk functions are explicit service line obligations on Capgemini. These obligations, however, do not themselves extend responsibility, in this instance, to Capgemini for the procurement of the second tier supply contract.
3. The MPS contracts database (Met Fin) has not identified a current contract of this type since at least the beginning of 2011.
4. Informal price comparisons before mandation had suggested, because of the price differential, that Capgemini were acting as MPS principal. On that basis and because of the contracts database position any supply contract was believed to be the responsibility of Capgemini;
5. Capgemini promote Computacenter as one of their key business partners.

Despite the Computacenter contract expiring in 2010, Capgemini continue to use the original MPS terms in their dealings with Computacenter.

It is now clear the Computacenter contract is the responsibility of the MPS. Accordingly, the current non compliant contract position will be rectified as a consequence transferring the eCatalogue second tier supply contract to SCC.

9. The MPS Enterprise Agreement with Microsoft is a contract with Trustmarque to 2013 at an annual value of c£5m. As an existing contract commitment the arrangement is, as per published mandation guidance, regarded as out of scope. Future arrangements however are likely to fall in scope once the current contract commitment expires.

10. The Outsourced ICT Contract places the onus on Capgemini to manage the MPS eCatalogue, and the performance of respective third party suppliers. In practice Capgemini and the DoI Service Delivery Group (SDG) manage the eCatalogue approvals and product changes; essentially the governance process in regard to new standard product approvals when existing products are end of life. This ensures new products consider matters such as energy efficiency and remain compatible with MPS Infrastructure. This process will need to continue with SCC support as a consequence of mandation.

11. To ensure the Catalogue 1 and 2 EBP orders transition to SCC smoothly current processes and systems may require changes or additional feeds to accommodate that change. This work has commenced already involving all affected stakeholders with full catalogue transfer commencing mid September the full transfer should be completed by mid October.

12. A number of contract monitoring arrangements will continue to apply, with some already existing whilst others will require further development. Regular meetings between SCC, MPS and Capgemini commenced during August not only to support transition but to ensure on going performance and for cost savings to be achieved. The main areas of monitoring include but are not limited to; supplier relationship, performance, standards, value for money and contract management.

13. Buying Solutions are the framework custodian for the Sprint II framework and are responsible for supplier performance, value for money monitoring and management information. For the Police sector, the NPIA have published guidance outlining their oversight role and responsibilities including the proactive monitoring and measurement of supplier performance, value for money and standardisation opportunities. Benchmarking and market testing is further supported by a central NPIA contract team whom all forces may contact in the event value for money or delivery performance issues arise. The NPIA currently present progress and saving updates to all forces at the quarterly ISIS Procurement meeting. In addition, the NPIA have recently published a progress report on all forces use of the framework with spend to date and the estimated savings achieved.

14. For the MPS, a number of existing monitoring practices will continue in regard to the standard items which are controlled through the eCatalogue management process. Non standard product demand will be serviced through existing forward view arrangements between DoI and DoR.

15. Capgemini will continue to support the MPS in regard to the eCatalogue however increased commercial rigour maybe required. Existing processes and management controls in regard to the MPS roadmap and technology standards is expected to continue unchanged. It is likely the MPS may require evidence from SCC directly and / or through Capgemini in regard to demonstrating value for money through regular spend analysis and supplier performance reporting.

16. A variety of saving opportunities exist as a consequence of combining mandation and improved monitoring. The total estimate saving potential, using 2010/11 baseline data are:

Process efficiency - As a consequence of mandation there will be in comparison to 2010/11, a reduced volume of mini competitions. Assuming 36 less competitions per year (c50%), a cross functional efficiency saving per tender is possible saving time per tender by an average of four weeks per event.

Reseller Margin - Winning bids associated with capital related mini competitions were typically at 2.5% margins. As Sprint II margin for supply is 1.95% the benefit differential is 0.55%. At £10m per annum (using the £2.456m SCC contract order value it has the potential to deliver MPS an annual cost avoidance of c£55k.

Mandation - Informal price comparison pre mandation suggested a saving potential for the MPS. Many lines were on a ‘like for like’ basis using the current eCatalogue products to create a sample basket of goods and in some cases substitute OEM brands were offered. Although needing further analysis the formal exercise has proved a saving opportunity exists. MPS expenditure covers both revenue and capital hence benefits will be a mix of both cashable and non cashable savings. Refer to exempt Appendices 1 and 2.

17. All eCatalogue spend made via Sprint II to SCC will be reported to the MPA through the quarterly spend report submitted by the Directorate of Information on behalf of the Commissioner. All non-eCatalogue spend will be reported to the MPA through the quarterly STA report submitted by Procurement Services.

Responsible Procurement

18. There are no sustainability issues or impacts that have been identified as a result of this procurement process.

C. Other organisational and community implications

Equality and Diversity Impact

1. The use of the mandated framework arrangement Sprint II which was competed by Buying Solutions via OJEU means that there are no equality and diversity issues related to this arrangement.

Consideration of Met Forward

2. This report meets the delivery of Met Forward by the delivery of the key outcome of obtaining the MPS better ‘value for money’.

Financial Implications

3. The Sprint II framework is mandated by the Home Office so the MPS does not have any discretion over this. Projected expenditure relating to this contract is up to £48M for the three year period using the 2010/11 EBP purchase order data as a baseline, but there is no commitment to this expenditure. The actual level of future spend will be subject to demand in business as usual activities and project needs with correlation to the MPS Capital Plan.

4. There are some potential savings arising from the framework as identified in paragraph B.16 above, some of which will be cashable, but further work is required to identify how these can be realized. Some benchmarking work has been done by the NPIA and further benchmarking and market testing are planned to monitor and measure supplier performance. It is vital that processes are put in place to ensure that best value is obtained over the period of the contract. It should be noted that, in the absence of mini competitions, it will be impossible to accurately assess the true savings arising from this framework.

Legal Implications

5. The MPA is legally bound to comply with section 53 of the Police Act 1996 as amended by the Police Act 1996 (Equipment) Regulations 2011 ("the 2011 Regulations"). The 2011 Regulations require police forces to purchase IT commoditised hardware and IT commercial-off-the-shelf-software from the sole supplier under the Sprint II framework agreement.

6. Regulation 3 of the 2011 Regulations states that a police force is not required to purchase under the Sprint II Framework Agreement if it has already entered into a contractual commitment to buy the relevant equipment. Therefore, there is no legal requirement to use the Sprint II framework where there was an existing contract in place for the supply of the required goods (as at 4 March 2011). However, once existing contracts have ended the Sprint II framework must be used for the supply of commoditised hardware and software.

7. The Sprint II framework has already undergone an EU compliant procurement process. Call-off contracts must be awarded in accordance with the terms of the Sprint II framework, and the procedures set out in the Public Contract Regulations which relate to call-off contracts to be compliant.

Environmental Implications

8. The table attached at Appendix 3 indicates the expected effect of the recommended option (compared to the ‘do nothing’ option) on the environment.

9. It is recognised that the transfer of a supply contract from one reseller to another does not itself, impact existing policies, strategies or current considerations in regard to using energy efficiency products or our need to generate savings in energy consumption and waste.

10. Current arrangements remain unchanged with DoI at strategic initiative level e.g datacenter consolidation, application rationalisation, messaging as a service and server virtualisation. These strategic initiatives are energy efficient centered and as such define the technologies and standards to be used which are controlled by DoI at roadmap level rather than with any reseller the MPS maybe mandated to use.

Risk (including Health and Safety) Implications

11. Risk will be managed with regular risk reviews against this contract. Risk will also be reviewed as a standing agenda item on supplier meeting over the duration of the contract.

D. Background papers

None

E. Contact details

Report authors: Nick Prebble / Chris Nason, MPS

For more information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

PART 2: EXEMPT SECTION OF THE REPORT

1. The reasons for Appendix A and Appendix 2 are shown as ‘Exempt’ is under Paragraph 3 of the Local Government Act 1972 - which states that information relating to the financial or business affairs of any particular person (including the authority holding that information). It is not considered to be in public interest to disclose the level of detail contained in this report.

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