Saturday, 29 April 2017

Working together

A client and contractor share their experiences of competitive dialogue during the procurement process

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Basildon Council and Morgan Sindall after the contract was awarded

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Basildon Council covers the areas of Basildon, Billericay and Wickford and is responsible for about 13,000 homes.

In 2014 the council took the decision to review its asset management delivery model to achieve a more holistic approach. It enlisted echelon Consultancy to assist with the procurement of a service provider for what turned out to be a major contract, with an estimated total value of £336.7m over 15 years.

The works in the contract were procured against the following lots:

Lot 1: Responsive repairs and planned works - delivery of responsive repairs and all planned works to the whole of Basildon Council’s stock.

Lot 2: Gas services - all gas servicing, breakdowns and boiler replacements.

Lot 3: Integrated asset management - delivery of responsive repairs, planned works and gas servicing, breakdowns and boiler replacements to the whole of Basildon Council’s stock. This is the delivery of all works detailed in Lots 1 and 2.

The new arrangements for delivering the service are built around the principles of best practice in service delivery, with the ultimate goal of delivering a service that provides maximum value for money for Basildon Council.

With so many moving parts, the contract proved to be complex. Recent policy changes, such as the 1% rent cut, also affected the nature of the contract, and as a result, Basildon Council and echelon opted to procure the service provider through a competitive dialogue process.

Differing from other conventional procurement methods, competitive dialogue is a procedure whereby an institution is able to conduct dialogue with bidders directly with the aim of developing one or more suitable alternative solutions to meet its requirements.

After the robust procurement process, the contract was awarded to Morgan Sindall Property Services, with a July 2016 start date for the works.

What we present below are the experiences of both the client and contractor of working through the competitive dialogue process on this project.

The client’s view

In order to develop an optimum procurement model for Basildon, echelon undertook an initial scoping exercise to gain a clear understanding of the council’s primary objectives and aspirations for the new service.

Together, Basildon and echelon held several stakeholder workshops in early 2015 to pinpoint the strengths and weaknesses with the current service and to identify aspirations for future delivery. This included sessions with residents and the existing service providers to ascertain areas for improvement.

Tenants played an important part in the scoping works and determining what was included in the tender, says James Henderson, property business services manager at Basildon Council.

“We sat [the residents] down and asked them what they wanted to see in the new contract. We listed those aspirations and, where appropriate, we included them in the tenant brief.

“As an example, we got a strong response from our sheltered housing tenants who said they wanted a handyperson service that they could call to fit a shelf or some flat-pack furniture together. This went into the bid, and so now Morgan Sindall has to provide two handypeople as part of the tender.”

The development of the tender proceeded smoothly until chancellor George Osborne’s July 2015 Budget, which announced the introduction of a 1% rent cut per year for four years for social landlords. It went down like a “lead balloon” at the council, Mr Henderson says.

However, rather than rip up the work on the tender that had already been completed, Basildon and echelon saw an opportunity to instead thrash out some of the finer details with the bidding contractors. This was the stage at which competitive dialogue was introduced into the procurement process.

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Council staff engage in a stakeholder workshop to identify what it wanted from the contract

The competitive dialogue sessions, which spanned approximately three weeks, helped to improve tender submissions from all bidders concerned, explains Mr Henderson.

Social value was pivotal to the service delivery and highly detailed requirements for providing social value were included in the tender.

“[Competitive dialogue] allowed us to bottom out what the contractor was actually offering with regard to the quality side with social value. Of course, that enhanced their bid, so that gave us a better outcome on the quality side as well,” says Mr Henderson.

It also added an extra level of transparency that really benefited the council.

“We had the opportunity with the competitive dialogue to question why they were planning to charge a certain amount, and they will say it is because we didn’t know X, Y and Z,” he says.

“That allowed us to refine the terms, brief and specifications so it was much clearer and reduced risk for the tenderers. For me, that’s the real benefit of competitive dialogue.”

The contractor’s view

Morgan Sindall Property Services was the eventual winner of the bid to become Basildon Council’s new maintenance service provider.

Paul Reader, director at Morgan Sindall Property Services, says the decision to implement competitive dialogue on the tender made a lot of sense, given the scale of change that was happening in the sector at the time.

“I don’t think anyone knew what impact [the rent cut] would have on services at that time,” he explains.

“But the dialogue process does allow you to have those conversations and for the client to explain the position they are in and how it could potentially affect the services they carry out.”

Morgan Sindall Property Services is supportive of the use of competitive dialogue during the tender process, according to Mr Reader.

“We prefer it as a route because I think it gives us a better opportunity to understand the client and to gain an insight into what they’re actually intending with the documents, but also for us to test ideas as well,” he says.

“We may think we have got a great idea, and if that is what the client wants, we can put it in the document. But if, during the dialogue and through testing our ideas, they are not received well by the client, then we can rework them, or scrap them entirely because of that talk.”

Mr Reader says that competitive dialogue benefits both contractors and clients because it helps to reduce risk on both sides.

“Our price will be keener after a competitive dialogue because we will have removed some of those risks through discussion and clarifying things around the technical specification,” he notes.

Despite the benefits, competitive dialogue is still a largely under-used method for procurement departments, according to Mr Reader.

“Out of the many tenders we do each year, only two or three end up as competitive dialogue,” he comments.

Although it may require a greater time commitment than conventional methods of procurement, Mr Reader says the extra time and effort involved with competitive dialogue is definitely worth it.

“Bidding is an expensive process anyway and I’m much more confident at the end of a competitive dialogue. I would prefer to do fewer tenders and more competitive dialogues, as I believe you have better quality tenders and better results at the end of it,” he concludes.

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