Appointment of consultants to support the outsource services re-tendering programme and the procurement business process improvement programme

Report: 19
Date: 10 July 2003
By: Commissioner

Summary

The aim of this document is to inform the Committee of the results of the competitive tendering exercise to appoint external consultants to assist with the outsource services re-tendering programme and to seek approval for the award of contracts to the consultants recommended for appointment.

A. Recommendations

Members are asked to authorise the award of contracts to the companies specified in the associated exempt report for the supply of consultancy services to support delivery of the outsource services re-tendering programme.

B. Supporting information

1. The proposal to seek consultancy support for the MPS’s outsource services re-tendering programme and the procurement business process improvement programme was approved by the MPA Finance Committee on 24 October 2002. An OJEC notice was issued during November 2002 as a result of which 87 expressions of interest were received from companies.

2. In January 2003, a review was undertaken by Procurement Services to assess each company’s financial stability and their capability to handle the amount of work involved in such a contract.

3. An invitation to tender (ITT) was issued to the 21 companies who had passed the initial review. The statement of requirement contained within the ITT was consolidated into 9 distinct packages of work, namely:

• Lot 1 Financial Consultancy Services.
• Lot 2 Legal Consultancy Services.
• Lot 3 Human Resources Consultancy Services.
• Lot 4 Procurement Consultancy Services.
• Lot 5 Technical Consultancy Services (Vehicle Repair and Maintenance and Vehicle Equip for Service).
• Lot 6 Technical Consultancy Services (Pay and Pensions).
• Lot 7 Technical Consultancy Services (Information and Communication Technology).
• Lot 8 Technical Consultancy Services (Facilities Management and Direct Labour).
• Lot 9 Procurement Business Process Improvement Consultancy Services.

4. A technical questionnaire for use in evaluating lots one to eight was created by a team comprising members of all the relevant MPS Directorates and Departments and issued as part of the ITT for all bidders. The aim of the questionnaire was to enable an evaluation on an individual lot basis of individual bidders against agreed criteria.

5. In addition, the technical evaluation team created an agreed scoring methodology that included a finalised appropriate weighting mechanism for each criterion.

6. The responsibility for the evaluation of each individual lot was allocated to a senior manager of the appropriate Directorate/Department and each evaluation was subject to independent validation.

7. Individual ITT responses from bidders were received on 14 March 2003 and were evaluated during the period 28 March to 31 April 2003

Evaluation of the technical responses

8. A total of sixty-six individual lot bids were received from 21 bidders with all lots receiving an adequate number of bids for comparison purposes with the exception of lot 5 Technical Consultancy Services (Vehicle Repair and Maintenance and Vehicle Equip for Service) which only received a single bid.

9. Only one company bid for all nine lots.

10. The overall impression of the bids received was unsatisfactory with 60% of the bids being rejected as a result of unsatisfactory technical evaluations and commercial responses that clearly indicated the bidder did not comprehend the nature, scope and range of the work required in the individual lots (contained as Appendix 1 of the exempt report). There were consistent faults found within the bids namely:

• A lack of adequate technical detail given.
• The omission of and/or failure to answer elements of the technical questionnaire.
• Inconsistency of style and approach.
• The inappropriateness of case studies offered.
• The paucity of consultancy resource offered in terms of skills and numbers.

11. A wide range of commercial bids were submitted. For example in lot 4, the differential between the lowest bid and the highest bid equated to approximately £5.6 million alone. The bid costs were converted into consultant days by division of these costs by a blended daily rate. Using this method those bids that were unrealistically low in the resources estimated to fulfil the work were excluded, as were those that were totally excessive.

12. As a further check, members of the evaluation team examined the daily rates offered by bidders, for commercial soundness and realism.

Outcome of the review

13. Lot 5, Technical Consultancy Services (Vehicle Repair and Maintenance and Vehicle Equip for Service) had only one bid which failed the technical evaluation.

14. Lot 2, Legal Consultancy Services - 3 companies passed the commercial and technical evaluations. The 3 companies did not bid for any of the other lots.

15. Lot 8, Technical Consultancy Services (Facilities Management & Direct Labour) had only one bid which satisfied the commercial and technical evaluations. This bidder did bid for other lots but none of those bids satisfied the commercial and technical evaluations.

16. Lot 9, Procurement Business Process Improvement Consultancy Services had only one bid which satisfied the commercial and technical evaluations. However, the quoted costs were at the very highest level of the estimated range and the resources offered did not provide clarity and re-assurance on who would actually carry out the work.

17. Only one bidder satisfied the commercial and technical evaluations for all the remaining lots. There were other bidders who satisfied the review in terms of one lot or more.

Working recommendations of the Evaluation Team

18. Based on the initial review and consolidated evaluation, the evaluation team proposed the following next steps:

• to limit the award of work to lots 1-8;
• to limit the number of consultancy firms used within the re-tendering programme to a maximum of three if possible namely:
  • a legal consultancy company;
  • a technical facilities management and direct labour consultancy company; and
  • a consultancy company for the remaining lots together with lead responsibility for the re-tendering programme as a whole.

This was felt to be a practical and realistic number of consultancy companies to have in terms of the re-tendering programme.

19. Clarification discussions were proposed with each of these three companies and the Director of Procurement Services would seek to acquire separately the services required under lot 9 of this tender, Procurement Business Improvement.

20. Clarification meetings would cover technical/commercial/contractual queries raised as a result of evaluations and the provision of technical consultancy support for lot 5 Technical Consultancy Services (Vehicle Repair and Maintenance and Vehicle Equip for Service).

21. It was clear that these clarification discussions would not be concluded by Friday 23 May 2003 (the date by which papers for the June MPA Finance Committee had to be submitted). To reduce any significant slippage in the appointment of the consultants, the evaluation team obtained approval from the Outsourcing Contracts Steering Group to implement the working recommendations above and for the Director of Procurement to obtain MPA approval at the July Finance Committee meeting. A briefing paper was also provided for the MPA Clerk and Treasurer in order that that they were aware of the approach being adopted.

Clarification process

22. The clarification process took place between 15 May and 18 June 2003.

23. The clarification process with regard to lot 2 (Legal Consultancy Services) concentrated on the following main points

• how the bid offered was calculated and the assumptions that the bidder had made with regard to the approach and methodology of the differing bids.
• clarification that the bidder had sufficient legal expertise and experience in working with tenders for the goods and services covered in lots 5 to 8.
• the level of possible duplication of work across tenders that may have been included in the original bid.
• true estimate of costs for the duration of the project.

24. The clarification process with regard to lot 8 Technical Consultancy Services (Facilities Management and Direct Labour) concentrated on the following main points

• how the bid offered was calculated and the assumptions that the bidder had made with regard to the approach and methodology of the differing bids.
• confirmation of the key deliverables associated with this lot.
• clarity with regard to base information and strategy requirements bidder would require.
• cost control mechanisms within the life of the project.

25. The clarification process with regard to the remaining lots concentrated on the following main points.

• the technical ability and expertise of the proposed subcontractor for lot 5, Transport Services.
• how the bid offered was calculated and the assumptions that the bidder had made with regard to the approach and methodology of the differing bids.
• cost control mechanisms within the life of the project.
• the level of possible duplication of work across tenders that may have been included in the original bid.
• clarity of roles and responsibilities with those being provided under lot 8- Property Services.
• the level of expertise, experience and seniority of the resource offered for use in lot 7- ICT technical consultancy.
• the affect that the current estimated increased length of the overall project might have on the commercial bid received.
• the total indicative commercial cost of the individual lots offered and the cumulative total costs for these lots- Bid quotation quoted costs for an initial two-year period.
• identify those areas that the company can train appropriate MPS resource to take over activities in the future.

Outcome of clarification process

26. A comparison of the initial commercial positions and the final commercial positions is contained within Appendix 2 of the exempt report. It is difficult to ascertain a true comparison between the initial costs received in the bids and the current costs arrived at through the clarification process. This is due to the following factors

• the lack of a commercial bid for lot 5 Technical Consultancy Services (Vehicle Repair and Maintenance and Vehicle Equip for Service)
• costs received during the initial bid stage were only for the first two years and not the full duration of the programme.
• one initial cost estimate will include costs for lot 9 Procurement Business Improvement that has subsequently been withdrawn.

27. In order to obtain an overall estimate, assumptions were made the details of which are contained in the exempt report.

28. All costs quoted both initially and through the clarification process are based on a number of assumptions. These include the number of re-tendering exercises to be supported; the procurement approach to be taken; and an approximate programme plan indicating when key activities will occur. Given the length of the programme and our inability to finalise information such as number of re-tendering exercises required until strategic and market reviews have been completed, the bidders are unwilling to enter full fixed term pricing agreements. It is also for these reasons difficult to give a guaranteed cost for the consultancy services required and contractually commit to bidders without a review element being an integral part of any contract. Individual assumptions for each bidder and contractual controls are listed below. As a result of this clarification process, a more reliable indicator of consultancy costs for the duration of the programme has been developed.

29. With regard to lot 2 Legal Consultancy Services, the company have offered a maximum ceiling price for their services over the period of the project. This ceiling price is based on the following key assumptions

• a total of twelve (increased from original assumption of ten) contracts will be tendered during the life of the project.
• MPS seeks to use, where possible and appropriate, common proforma documents such as ITTs, ITNs and PQQs
• a set number of bidders per contract are allowed through to the negotiation/preferred bidder phase.

30. With regard to lot 8 Technical Consultancy Services (Facilities Management and Direct Labour) the company have offered a spilt contract consisting of a fixed fee covering the period up-to the commencement of the procurement process and a maximum ceiling cost to cover the whole procurement process for all PSD owned and required contracts. This is based on an assumption that between five and eight PSD contracts will be tendered in a phased manner.

31. There were, in total, six meetings held between the MPS evaluation team and the third company (and/or their proposed sub-contractor). These meetings examined in detail the points noted previously under ‘Clarification Process’ – para. 4.of this document. The main points of the clarified offer are as follows:

• prices will be fixed for a period of two years with a review of the indicative costs given undertaken for the period post two years
• indicative costs for the programme have been reduced as a result of clarification of work required
• the company has assumed that:
  • the MPS has undertaken certain contractual extension activity
  • there are no more than 2 contracts to be tendered in any technical area.
  • the MPS will assume responsibility for programme management at a date to be finalised ( likely to be end of 2004).
  • the final re-tendered contract to be awarded will be for the provision of services in 2007.
• a specialist senior partner, vetted by PS/DOI senior management, will be responsible for the management of the consultancy support and will be a member of the MPS Outsource Contracts Steering Group.

32. In order to facilitate the provision and planning of internal and external resources, a high- level project plan has been drawn up for the re-tendering programme. This plan is attached as Appendix 1 of this document. This plan is based upon the use of standardised estimated timescales for tasks and a generic procurement approach to the requirements of individual areas, current knowledge of existing contractual arrangements and any MPA approved extensions or potential extensions, This plan will be likely to be significantly revised or amended to reflect the detailed strategic work to be jointly carried out during the initial stages of the project by the MPS and the above consultants. In particular this plan will be subjected to review to reflect timescales and implications of other projects such as C3i that have a direct linkage to the provision of services covered within the outsourced contracts.

33. An estimated budget for expenditure on consultancy support for the re-tendering programme for the next four years based on the above plan is detailed in the exempt report..

C. Equality and diversity implications

Before any recommendation for a contract to be awarded is made to the Authority, the equal opportunity and diversity policies of the prospective contractor are rigorously examined to ensure transparency and that the promotion of equality of opportunity is evident.

D. Financial implications

The financial implications for expenditure on consultancy support for the re-tendering programme for the next four years is detailed in the exempt paper.

E. Background papers

• MPA Finance Committee – 24 October 2002 – Exempt paper entitled “Programme for Re-tendering the Services Delivered Through the Current Outsource Contracts”.

F. Contact details

Report author: Paul Andrae, Deputy Director Procurement Services

For more information contact:

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

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