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Report 9 of the 20 October 2005 meeting of the Finance Committee and seeks the committees approval to award two new contracts to provide the MPS with high quality outsourced transport support services over the next decade.

Warning: This is archived material and may be out of date. The Metropolitan Police Authority has been replaced by the Mayor's Office for Policing and Crime (MOPC).

See the MOPC website for further information.

Approval to award contracts for the provision of outsourced transport services

Report: 09
Date: 20 October 2005
By: Commissioner

Summary

This report seeks the Committee approval to award two new contracts to provide the MPS with high quality outsourced transport support services over the next decade. The first contract for vehicle equipping for service is to be awarded to S MacNeillie & Son; and the second for vehicle and specialist equipment repair and maintenance, vehicle collision damage repair and vehicle hire is to be awarded to Lex Transfleet. Both contracts will be for 10 years starting in April 2006. Overall contract costs are approximately £226.4M (Net Present Cost (NPC)) over 10 years.

A. Recommendation

That

  1. the Committee approves the award of contracts to:
    • S MacNeillie & Son for the provision of vehicle equipping for service for 10 years to start in April 2006; and
    • Lex Transfleet for the provision of vehicle and specialist equipment repair and maintenance, vehicle collision damage repair and vehicle hire for 10 years to start in April 2006.

B. Supporting information

Introduction

1. Transport Services plays a key support role in providing and sustaining a safe and available police vehicle fleet for the Metropolitan Police Service (MPS). Many of the transport support tasks are contracted out and the MPS depends on its commercial partners to deliver resilient, flexible and value for money services. In this second round of Transport Services’ outsourcing, it will be important to build on over six years of experience of the first generation arrangements to establish successful, harmonious, long-term working relationships with our future support contractors that can also offer opportunities for continuing improvement.

2. The outsourced vehicle support services concerned are equip for service, repair and maintenance and vehicle hire. Reflecting general automotive industry trends, MPS vehicles are becoming more reliable but, because they are mobile policing systems rather than just means of transport, they are also increasing in complexity and specialist police fits for many vehicles now include mobile data, image processing and digital communications equipment. When this factor and the very demanding police usage patterns are taken into account, equipping for service and repair and maintenance continue to be ever more technically demanding tasks.

3. As part of the MPS’s initial outsourcing of key support services in 1999, two contracts were awarded for vehicle equip for service and repair and maintenance to S MacNeillie & Son (MacNeillie) and Venson Public Sector Ltd (Venson) respectively. A third contract has also since been put in place for vehicle hire with Vanguard Rental (UK) Ltd (Vanguard). All three contracts are due to expire between March and April 2006.

4. In 2002, the MPA Finance Committee approved the establishment of the MPS Outsource Services Programme (OSP) to manage the re-tendering of these contracts together with those in the three other work streams: Information and Communications Technology (ICT), Pay and Pensions and Property.

Procurement process

5. The procurement route adopted for re-tendering these services was the standard European Union negotiated route. The Transport competition was advertised in the Official Journal of the European Union on 30 March 2004; 59 companies requested the information pack and 47 sent representatives to the Bidders Conference the following month. Companies were encouraged to find more cost effective and flexible ways of delivering the reliable, resilient and quality services that the MPS needs; innovative approaches were particularly sought. Twenty companies subsequently submitted initial applications with 77 bids being received across the eight lots of business then on offer. Eleven companies were invited to submit Invitation to Negotiate (ITN) proposals and seven responded by the January 2005 deadline. Six of these were then invited to proceed to negotiations that took place between the following April and June. All six submitted Best and Final Offers (BAFOs) in early August 2005.

6. The eight Lots on offer covered the following areas of work:

  • Lot 1: Equip for Service of overt vehicles.
  • Lot 2: Equip for Service of covert vehicles.
  • Lot 3: Repair and Maintenance of specially equipped vehicles.
  • Lot 4: Repair and Maintenance of unequipped general purpose vehicles.
  • Lot 5: Vehicle Hire.
  • Lot 6: Collision Damage Repair of overt vehicles.
  • Lot 6A: Collision Damage Repair of covert vehicles.
  • Lot 7: Repair & Maintenance of specialist vehicle equipment.

7. Subsequently as part of the outsourcing process, it was decided to retain Lot 6A in house and also, as a result of the ITN proposals, to combine Lots 3 and 4 as Lot 3+ during the negotiation phase.

8. Two companies were taken through to the negotiation stage of the procurement for Lots 1 & 2, and Lot 7. Three were taken through to the negotiation stage for Lots 3+ & 6 and a further three for Lot 5. Evaluation of these bidders’ initial ITN responses highlighted a number of quality, commercial and contractual issues that needed to be addressed during the negotiation period.

9. Following receipt of the bidders’ BAFOs, the submissions were assessed and evaluated by teams drawn from Transport Services, Human Resources, Procurement Services, Finance Services, Corporate Risk Management and the MPS’s legal advisors. Separate teams conducted the various elements of the Quality and the Price Assessments independently and only after completion of these processes were the assessment scores brought together.

10. The final assessment of the solutions offered concluded that the following companies should be offered the lots as listed below:

  • Lot 1: MacNeillie.
  • Lot 2: MacNeillie.
  • Lots 3+ & 6: Lex.
  • Lot 5: Lex
  • Lot 7: Lex

Further detail on the assessment process is contained in the Exempt Appendix. These companies were subsequently appointed as Preferred Bidders and the MPS then entered final negotiations with them. All the outstanding issues have been successfully resolved during the final negotiations which have now been completed.

C. Legal implications

1. It is confirmed that the matter for decision complies with procurement regulations and all relevant EU and UK Government Directives.

2. It is confirmed that the proposal is within the powers of the MPA. The terms and conditions of contracts (“the Contracts”) were prepared and approved specifically for the outsourcing of the transport services. During the course of the negotiations with the preferred bidder, these terms and conditions were amended to address commercially agreed issues. However, it is believed that the terms and conditions as amended, still adequately protect the MPA in that they do not expose the MPA to any significant risks and are not unduly onerous in terms of the MPA’s responsibilities. Further minor changes to the contract may be made during final negotiations.

3. MPS Finance Services has carried out a due diligence exercise to assess the preferred bidders’ financial risk and their ability to perform the contract. While such steps have been taken to protect the MPA’s position, there can be no guarantee that issues will not arise in relation to the Contract post Contract award.

D. Race and equality impact

1. The procurement process required bidders to declare their existing policies and initiatives and future actions with regard to promoting a working environment that actively encourages equal opportunities and non-discrimination on the grounds of race, gender, disability, sexual orientation, religion or belief and age. They were also required to respond to the six questions prescribed by the Secretary of State and endorsed by the Commission for Racial Equality.

2. The equality and diversity record of the Preferred Bidders is of a calibre commensurate with the MPS/MPA requirements, aspirations and reputation. The draft contract ensures compliance with all equality and diversity related matters and includes setting up a mechanism to monitor performance in respect of equal opportunities and diversity throughout the lifetime of the contract.

3. During the procurement process, the Outsource Services Programme Director and Human Resources (HR) representative have held bi-monthly meetings with Trade Union representatives to update them on general progress.

4. Under TUPE regulations, consultation with affected employees is the legal responsibility of the existing employer and the incoming contractor. The key activities in respect of on-going consultation and communication will relate to transition arrangements. The MPS will facilitate the meeting of the relevant HR contacts in each of the organisations to enable them to undertake the key transition activities, ensure that they fulfil their obligations under TUPE and affect a smooth transition of employees.

E. Financial implications

1. The prices of the individual lots were carefully considered as part of the BAFO assessment process that led to the selection of the most economically advantageous bid for each lot. Subsequently, the combined prices and affordability were compared for the recommended lot packages.

2. The current projected cost for the 10-year period of these contracts is approximately £226.4M (Net Present Cost (NPC)), which is just below the Affordability level (the estimate of the forward budget provision) and significantly below the Cost Comparator (the projected forward expenditure if the current arrangements were rolled on). Further detail on the prices, cost comparators and affordability are contained in the Exempt Appendix.

F. Background papers

G. Contact details

Report author: Stuart Middleton – Director of Transport Services.

For more information contact:

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

Appendix 1

This appendix is exempt.

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