South East Private Finance Initiative (PFI) update on personal issues

Report: 6
Date: 18 January 2001
By: Commissioner

Summary

Since 1998, the Metropolitan Police Service (MPS) has been pursuing the provision of new operational buildings at Bromley, Lewisham and Sutton by means of the Private Finance Initiative (PFI). In addition to the Design, Build, Fund and Operation, which includes catering, it is proposed that the PFI supplier is responsible for the supply of staff and delivery of a limited range of police support services.

This paper provides an update on the personnel issues connected with the South East London PFI and sets out the background and progress to date, as well as issues, which have recently been highlighted.

A. Supporting information

Background

1. In September 1998, Management Board took a decision to permit contractors to bid for the provision of additional services in the PFI contract to be let on former 4 Area (now South East London). Agreement was also given to former 4 Area acting as a pilot site for investigating the contracting out of local services across an operational Area. The additional services to be included are:

• Station Reception Officers
• Civilian Gaolers
• Property Store Officers
• Typists
• Tape Summarisers

Currently the number of staff involved, including catering staff, is 86. In addition some staff may transfer from PSD outsourced contractors under second generation TUPE (Transfer of Undertakings (Protection of Employment Regulations 1981).

2. In order to define the extent to which bidders would be given the opportunity to be innovative over the methods by which services are delivered, PA Consulting Group were asked to carry out a scoping study. This was carried out in consultation with all portfolio Assistant Commissioners, the former 4 Area Assistant Commissioner and the OCU Commanders and their senior management teams.

3. Having considered the PA recommendations, it was decided to include, out of a total of 23 identified for inclusion, the five activities listed above.

4. In November 1999 the Director, Property Services Department, submitted a report to Management Board evaluating the bids for the PFI. Management Board agreed to invite Laing Hyder to become Preferred Bidder. Laing Hyder's bid included the support services referred to earlier. They would take on existing staff with a tailored training package. It was noted in the paper to Management Board that there were issues concerning pensions and TUPE that would need to be clarified and resolved during the final stage of negotiation but that it should be possible to achieve an acceptable solution with efficiency benefits. The Government Actuary's Department subsequently approved Laing Hyder's pension arrangements and the TUPE issues are the subject of continuous discussion.

Progress report

5. In accordance with corporate policy, day to day responsibility for dealing with personnel issues arising from PFIs were handled by the former 4 Area Business Manager, supported by the Grade 8 in the Area Business Support Unit, thus ensuring local policing and staffing considerations were taken into account.

6. Personnel Department provided a representative from the Corporate Change Team at the consultative meetings with the Trades Union Side (TUS) chaired by the Business Manager on the former 4 Area. The Corporate Change Team representative advises on corporate personnel policy issues, ensuring fairness implications are addressed and that the legal requirements are followed.

7. In addition, Personnel Department has been represented on the Project Board since November 2000.

Consultation process

8. Borough Commanders have been extensively involved in the consultation process and in the evaluation of the bidders' proposals.

9. On 5 February 1999 the former 4 Area Business Manager sent a letter to the staff concerned on the Borough advising them of the decision and giving them other relevant information. Other staff on the Borough were informed via a Borough newsletter. In mid-1999 an update on the PFI was published in The Job. In November 1999, the Acting Business Manager sent a further letter informing staff of the appointment of the preferred bidder.

10. Previous information had been given to MPS staff through an 'Inside Job' article, which announced the PFI projects.

11. In July 1999, as part of the Invitation to Tender (ITT) response, the two shortlisted bidders were required to make a presentation to staff and afford them the opportunity for questions and answers. Area staffing rotas were altered to allow the staff involved time away from work. Transport to and from the Briefing Room, New Scotland Yard, was provided. Over 90 per cent of staff attended.

12. The TUS has been consulted on a regular basis. Meetings, chaired by the 4 Area Business Manager, and involving representatives from Trade Union Side, 4 Area, Property Services Department and the Corporate Change Team were set up for this purpose. In addition, the TUS also meets bi-monthly with Property Services Department. As part of the ITT response, both bidders attended a meeting with the TUS to discuss their policies and specific proposals for TUPE arrangements. The TUS also attended the bidder presentations to staff in July 1999.

13. Resulting from the discussions between the MPS and the TUS a paper was provided on 16 July 1999 by the PFI Project Team setting out the implications for management of the transfer of the additional services to a private contractor. A copy is attached at Appendix 1.

14. The Police Federation has been kept abreast of developments through correspondence from the Business Manager 4 Area.

15. The Metropolitan Police Committee was kept informed of developments through papers submitted by the Director, Property Services Department.

16. Representatives from the TUS, the Police Federation and the Superintendents' Association attended the evaluation workshop held in October 1999 to consider the Best and Final Officers (BAFO) when they were able to contribute and comment on the bids.

Issues arising

17. During the past year the MPS has gone through a substantial restructuring process and the Area structure disbanded. Those responsible for managing the personnel issues locally have changed.

18. Meetings were held during October and November 2000 when a number of concerns were restated. A particular concern, which might impact on communication, is the lack of local personnel management involvement brought about by the restructuring. Previously the former 4 Area Business Manager led on the personnel issues and following the disbanding of that Area, this role was taken over by the Finance and Resource Manager on SE Area who has been liaising with the personnel managers on the Borough. Consequently, the local Senior Personnel Adviser will take a lead on these matters.

19. To assist with answering and dealing with some continuing concerns raised locally, the Corporate Change Team representative initiated a meeting with the Chief Superintendent at Sutton. At their meeting on 5 December 2000 it was explained that decisions taken about multi-skilling of staff will take account of the present terms and conditions of the civil staff as TUPE applies; the Borough Personnel Manager will lead on the staffing and personnel issues and will report to the Borough Commanders. The Corporate Change Team will continue to be involved in an advisory capacity on Personnel Issues.

Personnel implications

20. The local concerns covered:

• how the contractor will be made aware of the complexity of police business
• the skills needed for the posts be drawn up in consultation with police managers
• how they will recruit and train staff
• line management issues
• accountability issues
• complaints/discipline/under performance of staff
• staff resilience – backfilling of posts
• multi-skilling of staff – there are concerns that civilian gaolers and station
• reception officers are to be multi-skilled
• penalties against the contractor for police officers covering absences
• mobility of staff – TUPE issues

21. These issues are to some extent answered in the paper produced as a result of the discussions with the TUS (Appendix 1 refers). Other matters have been recognised and will be dealt with through performance criteria, which place financial incentives on the contractor as part of the overall PFI contract.

22. There are other emerging areas of concern:

• the recruitment and retention of staff to fill vacancies leading up to the contracting out. There is a period of two/three years before any contractor will take over the support services and already it is difficult to find staff who are willing to transfer to any of the locations included in the PFI. Externally recruited staff may be disinclined to take up employment knowing that they will be transferred to another employer;
• existing staff are worried about their jobs and some do not wish to be outsourced. This could and has resulted in staff applying for other posts inside and outside the MPS;
• there is a perception that contracting out staff may affect the flexibility of the MPS by reducing the potential for transfer, lateral development and promotion.

23. However, these concerns must be balanced against the need to maintain an effective and efficient organisation and arrangements have been made within the Contract to ensure that there is flexibility in maintaining adequate staffing levels. This flexibility may also provide greater resilience in these services due to the multi-skilling and deployability of the contractor's staff.

Implications of not proceeding with contracting out support services

24. Property Services Department advises that should the support services be omitted from the PFI at this stage, the procurement process may need to revert to the Invitation to Negotiate (ITN) stage. This will mean four bidders being given the opportunity to submit new bids against a revised specification resulting in a nine months' delay. It may also result in a more expensive accommodation project and compare less favourably with the public sector comparator.

25. A further consequence would be the MPS may have to face a significant cost claim with the preferred bidder and other bidders who responded to the ITN and ITT stages could also make claims if the procurement process has been substantially altered. The impact on the credibility of the MPS with future PFI projects would also need to be considered in such a situation.

B. Recommendation

Members note the current position.

C. Financial implications

There are no financial implications arising from this paper.

D. Review arrangements

A meeting between the Borough Personnel Manager and the Corporate Change Team has been arranged for the morning of 10 January 2001.

The situation will be reviewed at the next meeting of the Project Board, which will be held on the afternoon of 10 January 2001.

E. Background papers

The following is a statutory list of background papers (under the Local Government Act 1972 S.100 D) which disclose facts or matters on which the report is based and which have been relied on to a material extent in preparing this report. They are available on request to either the contact officer listed above or to the Clerk to the Police Authority at the address indicated on the agenda.

• Minutes of Policy Board Seminar 3-4 September 1998
• Executive Summary of 4 Area Scoping Study of Non-Accommodation Services in Police Stations
• Minutes of Management Board 24 November 1999
• Paper by Director of Property Services to Management Board re Land and Building Private Finance Initiative: South East London Services and Accommodation Project

F. Contact details

The author of this report is Michael Shurety.

For information contact:

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

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