DELEGATED POWERS REPORT NO.

Control sheet

1452

SUBJECT: Community Advice Service award of contract 2012 - 2014 All of the following actions MUST be completed at each stage of the process and the signed and dated report MUST be passed to Governance Service for publishing
All reports 1. Governance Service receive draft report Name of GO Date 2. Governance Service cleared draft report as being constitutionally appropriate 3. Finance clearance obtained (report author to complete) 4. Staff and other resources issues clearance obtained (report author to complete) Name of GO Date Name of Fin. officer Date Name of Res. officer Date Name of TU rep. Date Name of Legal officer Date Name of P&P officer Date Name of officer Date Name Date Name of GO Date Name of GO Date Name of GO Date Philomena Jemide 14 October 2011 Andrew Nathan 29 September 2011 Julie Pal 29 September 2011 Julie Taylor 6 October 2011 Chidilim Agada 27 October 2011 Chidilim Agada 27 October 2011 Chidilim Agada 28 September 2011 Andrew Charlwood 13 October 2011 Debbie Edwards 11 October 2011 Mick Stokes (Commercial) 5 October 2011 Not applicable

5. Trade Union response received (Staffing issues only) 6. Legal clearance obtained from (report author to complete) Policy & Partnerships clearance obtained (report author to complete) Equalities & Diversity clearance obtained (report author to complete) The above process has been checked and verified by Director, Head of Service or Deputy (report author to complete)

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10. Signed & dated report, scanned or hard copy received by Governance Service for publishing 11. Report published by Governance Service to website Officer reports: 12. Head of Service informed report is published and can be implemented. Cabinet Member reports: 13. Expiry of call-in period 14. Report circulated for call-in purposes to BMOSC members & copied to Cabinet & Head of Service

Chidilim Agada 27 October 2011 3 November 2011 Chidilim Agada 27 October 2011

Date Name of GO Date

ACTION TAKEN BY CABINET MEMBER(S) UNDER DELEGATED POWERS (EXECUTIVE FUNCTION)

Subject: Cabinet Member(s) Date of decision Date decision comes into effect
Summary

Community Advice Service award of contract 2012 - 2014 Leader of the Council 27 October 2011 3 November 2011
To approve the award of a three-year contract for community advice services to Barnet Citizens Advice Bureau, and waiver of Contract Procedure Rules Julian Mauger Commissioning Manager Public All Appendix A Risk Assessment Not applicable

Officer Contributors Status (public or exempt) Wards affected Enclosures Reason for exemption from call-in (if appropriate)

Contact for further information: Julian Mauger 020 8359 7026 julian.mauger@barnet.gov.uk

Serial No. 1452

1. 1.1

RELEVANT PREVIOUS DECISIONS Cabinet Resources Committee, 29 March 2011 (Decision item 6) That the previous authority to tender a new community advice service (CRC, 30 July 2009) be renewed in order that a procurement process may be carried out to identify a provider of advice services as set out in this report. Council 1 March 2011 - approval of Council budget including the corporate grants budget for 2011/12. Cabinet, 14 February 2011 (Decision item 5E, including addendum) - Budget, Council Tax & Medium-Term Financial Strategy 2011/12 - 2013/14 Cabinet Resources Committee, 30 July 2009 (Decision item 7) Authorisation of the procurement of a community advice service. CORPORATE PRIORITIES AND POLICY CONSIDERATIONS The councils Corporate Plan 2011-13 includes as one of our three corporate priorities, Sharing opportunities, sharing responsibilities under which it states: We recognise that some people need more support than others. The Community Advice Service contributes to providing that support. The new specification is designed to target resources on those who need support most and conversely to enable those who can help themselves to do so. RISK MANAGEMENT ISSUES A risk of awarding a contract in such a weak market is that we are tied into a contract in times of rapid change and cannot take advantage of developments. The case for doing so is set out in the Background section below. In line with Contract Procedure Rules (revised May 2011), Paragraph 10.3.7.2, officers carried out a risk assessment as to whether to take a surety bond in relation to the contract. It was decided that the overall risk of circumstances arising such that there is a need to invoke the performance bond is low. In seeking officers clearance for this report, the attention of the Assistant Chief Executive (as director of the commissioning service), the Chief Finance Officer and the Head of Legal was drawn to the intention to seek a waiver of the requirement for a performance bond in relation to this contract, on the basis of the risk assessment at Appendix A. The councils own financial evaluation concluded that Barnet Citizens Advice Bureau (Barnet CAB) is a financially viable company; and it was rated as low risk by an external agent. However, the contract value would represent greater than 25% of the organisations turnover. Financial Regulations (Revised May 2011), Part 2 - Financial Administration state at 12.1: With respect to third party organisations, suppliers should not be awarded business in excess of 25% of their turnover. And at 12.2: Where it is in the interests of the Council, this threshold may be waived by the service director in consultation with the relevant Cabinet Member and Chief Financial Officer. The latter paragraph was inserted following the approval of the Third Sector

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Commissioning Framework in 2008, expressly to allow acceptance of tenders from smaller organisations, particularly third sector organisations, where this is in the councils interests. This tender is exactly the situation that 12.2 was introduced to deal with, not least a market consisting predominantly of smaller, not-for-profit suppliers. In view of the financial standing of Barnet CAB noted in 3.3 above, it is recommended that the threshold be waived, allowing acceptance of their tender. In seeking officers clearance, the attention of the Assistant Chief Executive (as service director), Chief Financial and Cabinet Member for Customer Access and Partnerships was drawn to this recommendation. 3.6 Operationally, the tender includes a very significant increase in some of the annual outputs over the life of the contract. This is in part due to attribution of some of these to the contract funding where they were previously supported by project funding from another source. To some extent, the cost of these will already have been absorbed by the tenderer by the time the contract commences. However, despite assurances from the tenderer that these can be delivered, this should nonetheless be considered a risk which should be monitored. I do not consider the issues involved are likely to raise significant levels of public concern or give rise to policy considerations as it is in the interest of the community and consistent with current policy for the contract award to be made. EQUALITIES AND DIVERSITY ISSUES To ensure we have due regard to our statutory equalities duties, a number of actions were built into the commissioning cycle. These include the following. The independent needs assessment included a separate equalities report looking at how proposed changes would affect people with protected characteristics. This was translated into an Equalities Impact Assessment which was presented as part of the report to Cabinet on Budget, Council Tax & Medium-Term Financial Strategy 2011/12 - 2013/14 (14 February 2011); and it informed the specification for the new Community Advice Service. Conditions of Contract require the Contractor to comply with all relevant equalities legislation, taking all reasonable steps to secure its observance. The proposed contractor has given assurance that they understand and can meet all obligations under equalities legislation in carrying out the service on our behalf. Tenderers were asked to build in to their tenders, as far as possible, mitigation of the equalities impacts that were noted in the Impact Assessment. In practice, the tender response responds to equalities impacts built into the specification but does not explicitly go beyond that. The Contactor will be required to carry out client monitoring in relation to the protected characteristics set out in equalities legislation. In addition, they will be required to submit an Improvement Plan each year. We will use the client data analysis, contract monitoring and the on-going dialogue that will feed into the Improvement Plan to identify and address equalities issues. The proposed contractor has a good track record of doing this. USE OF RESOURCES IMPLICATIONS (Finance, Procurement, Performance & Value for Money, Staffing, IT, Property, Sustainability)

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Following consultation, the Council on 1 March 2011, on the recommendation of Cabinet, approved budgets as follows, and these are the basis of the indicative contract values included in the tender documentation. As the contract will run into 2014/15, the tender documentation assumed the 2014/15 budget would remain at the 2013/14 level. The price of the tender recommended here falls within these limits. 000 Community Advice 2010/11 () 506,000 2011/12 () 481,000 2012/13 () 417,000 2013/14 () 360,000 3-year change -28.7%

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The contract price in Barnet CABs tender is 1,188,585.90 Should there be any change to the budgets for 2012/13 or 2013/14 requiring a change to the service required under the contract, this can be effected through the provision on Modifications within the Conditions of Contact. The waiver of the requirement relating to the maximum 25% ratio of contract value to turnover is noted in section 3 above. Despite receiving eight requests for tender packs, only one supplier submitted a tender. The tender does not meet all the councils aspirations. However, it is recommended that the tender is accepted for the reasons set out in the background section. LEGAL ISSUES As stated at paragraph 3.1 above, the Council will be tied into the contract for the contract period of three years. The contract does not provide for its early termination, however, the termination provision contains a list of termination triggers, covering contractual right of termination for material or persistent breach; bankruptcy or insolvency of the contractor. CONSTITUTIONAL POWERS Financial Regulations (Revised May 2011), Part 2 - Financial Administration as referred to in paragraph 3.4 Contract Procedure Rules (within Paragraph 5.5, Table 5.1 - Acceptance Thresholds for Works, Supplies and Services) state that Cabinet Member authorisation is required for contracts of 500,000 and over, where (a) the tender is the lowest or (b) where the tender represents value for money and is the best available option for the council and the tender value is no more than 25% above the lowest priced tender. Being the only tender available, the Barnet CAB tender cannot fulfil these requirements and the proposed award would ordinarily be referred to Cabinet Resources Committee for decision. Contract Procedure Rules (Paragraph 10.3.7.2) as referred to in paragraph 3.2 require that a sufficient surety (e.g. a bond) shall be taken for due performance in the conditions that apply here, unless the Director/Head of Service, the Chief

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Finance Officer and the Head of Legal so direct following the completion of a risk assessment, for which see Appendix A. 7.4 Reference of the proposed contract to the Cabinet Resources Committee would, at the time of writing, delay the decision by a further 25 days. As the decision being requested is a key decision (as defined in paragraph 15.4 of the Overview and Scrutiny Procedure Rules), it will be eligible to be called-in by a Member of the Business Management Overview and Scrutiny Committee. Following the overview and scrutiny committee call-in period, and provided that the matter is not referred back for reconsideration, the proposed award will then be subject to the Standstill Period pursuant to the Public Contracts Regulations (the Regulations). Under the Regulations a contracting authority must inform all participating providers of its decision to award the contract, and whether they have been successful or unsuccessful. The Standstill Period obliges contracting authorities to wait for a minimum of ten to fifteen calendar days (depending on the method by which the letter is communicated) between the date of despatch of the award notice to all tenderers and the date for contract conclusion. This is designed to give unsuccessful bidders an opportunity to challenge the award if they believe there has been a breach of the procurement rules. In the event that a legal challenge is commenced during the Standstill Period, the contracting authority should delay the conclusion of the contract until the outcome of the application has been decided. Following the call-in period and the Standstill period and allowing reasonable time to mobilise the contact, it is expected that the contract would not start until some time in early 2012 if a decision were to be taken by the Cabinet Resources Committee. Given that the original intention was to start the contract on 1 October 2011 and that this was delayed in order to ensure a suitable and compliant tender was in place; and given that as a consequence the existing grant arrangement has already been extended once, it is in the interests of residents that this matter is resolved speedily. In the interest of expediency, the Leader of the Council has taken a decision on the acceptance of the contract in accordance with the powers vested in him by the Councils Constitution (Part 3 Responsibility for Functions paragraph 3.2) which provides that the Leader may discharge any function of the Executive. Exemption from call-in period has not been sought. BACKGROUND INFORMATION The primary aim of the Community Advice Service is to support people in being independent by enabling them to deal with their civil legal, financial and other problems by providing high quality social welfare advice and informing them of their legal rights and responsibilities. This is to be done through providing a high quality advice, centred on welfare benefits and debt, but also other social welfare issues; and a second tier service to support other frontline workers in assisting their clients and act as the local expert adviser on welfare benefits and debt. The background to this tender is contained in the reports of October 2009 and March 2011 to Cabinet Resources Committee. In October 2009, the Committee approved the procurement of a single Community Advice Service. Market conditions have until now militated against tendering. The intervening period was used to test various aspects of the specification with suppliers; also to commission

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an independent assessment of local needs and equalities impacts of intended changes to the service to be commissioned. Authority to procure was re-affirmed by the Committee in March 2011. The Council has ended all but one grant funding agreements with community advice providers and replaced them with the budget for this new Community Advice Service, which is about 1.18 million over three years. 8.3 A Prior Information Notice placed in OJEU in January 2011 suggested the market was still relatively weak, but that a tender has a reasonable prospect of success. A case was made on that basis to tender a three-year contract (with an option to extend for up to one year) A one-stage, open procurement process was undertaken, with advertisements placed in the usual on-line locations. In addition the advertisement was circulated by the largest national umbrella organisation for advice providers. Despite receiving eight requests for tender packs, only one supplier submitted a tender. There is only one substantive tenderer, namely Barnet Citizens Advice Bureau (CAB) with Barnet Law Service as subcontractor. The tentative conclusion is that this is because the market is already weak; suppliers who expressed an interest and who may otherwise have bid were put off by the relatively small size of the contract compared with others tendered nationally; and critically for some of those eight suppliers who did express an interest, the costs of implementing the TUPE transfer and particularly the redundancy costs as budgets fall over three years were, in the final analysis, considered to be prohibitive. It is also likely that, if the contract were to be re-tendered, the TUPE costs may be less of an issue, but only one funding has stabilised. Given that the annual budget falls each year through to 2013/14, this will not be for some time. Tenderers were required to submit a separate and clearly marked Operational Plan as an integral part of their tender, which showed how the Tenderer intends to deliver the Councils Operational Requirements as set out in the Tender document. The Operational Requirements, together with the successful tender submission incorporating the Operational Plan will together form part of the Contract. The evaluation process first concentrated on compliance with the conditions of tendering, including that all the required documents had been correctly completed and delivered; and the checking of tenders for arithmetical error. Evaluation of the financial standings of the tenderer was carried out. As well as price, the tender process enabled officers to assess various elements grouped together under the headings below.
totals Strategic 1 - Strategic Planning The Core Service 2 General 3 Meeting Local Needs 4 Access to Services 5 Access for clients with special needs / vulnerability 10% 5% 6% 6% 6% 10%

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6 Customer Standards 7 Quality Assurance Second tier advice and training 8 - Second tier advice and training Experience & delivery Commercial Questionnaire 9 Human Resources 10 General Management 11 - Performance Management and Evaluation Framework Product (Outputs) + Appendix C2 (Outcomes) Cost Cost (as per the evaluation given in Appendix C1)
TOTAL

5% 6% 6% 5% 2% 2% 2% 14% 25%

34% 6%

11% 14% 25% 100%

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Prices and quality were then assessed with scrutiny of any supporting documentation submitted by the tenderer, including clarifications. They were evaluated against a scoring matrix, with results as per the table below. As the service was commissioned against a fixed budget, the weighting for Price was relatively low. Tenderers Quality (75%) Price (25%) Total scores A. Barnet Citizens Advice Bureau 47.5 12.5 * 60 Maximum possible score 75 25 * 100 * Note that the price score is based on the average of the tender prices which, in the case of a single tender, results in a score of 12.5 out of 25. Hence the maximum score of 25 is not achievable.

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Barnet CABs tender does not meet all the councils aspirations in terms of future development. However, it is recommended that Barnet CABs tender is accepted for the following reasons, taken together. It is a strong tender for the basics requirements of the core and second tier service. The proposed supplier has a track record for providing high quality services and is trusted by the public with high brand recognition. They are also well-established locally and hence set-up is not a significant issue. There is sharp contraction nationally in the availability of legal aid for clients to obtain social welfare law advice which will result in increased pressure on local advice services. In addition, major changes to the UK benefits system will run throughout the period of the contract. It is therefore in the interests of residents that there is an experienced contractor in place which can forward plan in both operational and financial terms over a three year period. Relative certainty of funding understandably tends to increase the suppliers commitment to delivery of the service. Taking account of feedback as to why other potential suppliers did not bid, there is no guarantee that a second tender in, say, twelve months time would produce any better result. Moreover, local advice services have taken part in detailed market testing and there is no indication of any local competition to the current

tenderer. The time and cost of re-tendering would be disproportionate to the likely, additional benefit achieved If we do not award a contract, there is a small risk (with high impact) of a break in continuity of service if agreement cannot be reached with Barnet CAB and Barnet Law Service as to on-going grant funding, while a decision is taken on the future of the service. Awarding a contract as opposed to continuing grant funding increases the ability to manage the suppliers performance and, in a worst case scenario, still allows termination of the contract pursuant to the termination provision. The counter argument is that awarding a contract on such a weak field ties us into a contract in times of rapid change, meaning we will not be able to take advantage of any developments. In mitigation, our proposed supplier has some track record for effecting change, both proactively and when initiated by the council. On balance, it is felt the greater risk lies in not awarding a contract. 8.10 Residents will see some changes from the current operations, the most noticeable of which are the following. A clearer focus on welfare benefits and debt as the primary issues to be handled Barnet CAB will deliver the contract through one office based in the west of the Borough, with three outreach points. This is consistent with the lower level of funding available for the contract period and with the specification which was drawn up to take this into account. The trend towards increased use of cheaper access channels such as telephone, e-mail and web-based services. This is consistent with the councils policy on customer access and the specification was developed with this in mind. All customers will be triaged through one of these channels or face to face. Support will be targeted at those who need it most. Conversely clients who have the ability to self-help will be encouraged to do so. The second tier service will support frontline workers such as social workers (and not other community advice providers as previously) 8.11 Assuming, there is no substantive challenge during the standstill period, a precontract meeting will take place with Barnet CAB and Barnet Law Service as subcontractor as soon as possible to confirm protocols for working; to ensure continuity of service to users; and to finalise details of their Operational Plan. The contract will run for three years from 1 January 2012 with an option for the council to extend for one year. Management of the contract will be undertaken by the Chief Executives Service. Authority was given to the Cabinet Member for Customer Access and Partnerships by Cabinet Resources Committee (29 March 2011) to extend grant funding to the existing supplier (also Barnet CAB) for a short period if the contract start date is delayed for any reason. In view of the difficulty in finding a compliant tender response and the consequent delay to the tender exercise, this authority was exercised by the Cabinet Member in order to ensure continuity of service.

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LIST OF BACKGROUND PAPERS Tender documentation MBARC needs analysis and equalities report Equalities Impact Assessment, updated 9 February 2011 Anyone wishing to inspect the background papers should telephone 020 8359 7026. DECISION OF THE LEADER OF THE COUNCIL I authorise the following action:

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That subject to the completion of all necessary legal and other documents, Barnet Citizens Advice Bureau be appointed to undertake the provision of the Community Advice Service for a period of 3 years from 1 January 2012. That a surety (performance) bond need not be taken in relation to this contract. The waiver of the requirement relating to the maximum 25% ratio of contract value to turnover as referred to in section 3 above.

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Signed

Councillor Richard Cornelius Leader of the Council 27 October 2011

Date

Appendix A - Risk assessment in relation to performance bond Our Contract Procedure Rules (revised May 2011) require at 10.3.7.2 that, given that the contract value is over 300,000, a sufficient surety bond (in this case a performance bond) shall be taken for due performance unless the Director / Head of Service, Chief Finance Officer and Head of Legal agree to waive the requirement, following the completion of a risk assessment. At our request, Barnet CAB has supplied the cost of the surety for 10% of the contract value, the cost being either 16,044.75; or 6,983 plus a cash deposit of 35,000 differential outputs and pricing depending on whether the bond is required or not. Without the cost of a surety (performance bond) factored into the contract price, the contract price remains the same (variation = 0.002%) but their outputs can be increased as follows, with a notable improvement in the number of clients who can be triaged (i.e. sign-posted, enabled to self-help, etc, without substantive advice being given): 3-year outputs with bond without bond % increase Core service Triage 20042 21800 8.8% Generalist 8542 8600 0.7% Specialist 475 475 0% 2nd tier Telephone advice 720 749 4.0% Training sessions 3 6 100% The risks involved in not taking a surety bond are assessed as in the table below. Note that impacts will by nature be rated high as they all relate to the position where the performance bond would be invoked, which happens only with failure in ability to deliver the contract (actual or impending). It should be noted that contract payments are quarterly in advance so that, in the worst scenario, three months payments are lost. Risk Contractor becomes insolvent or otherwise unable to trade. Contractor is unable to deliver its proposed Operating Plan. Contractor senior management / board priorities change, such that performance dips to the point of needing to invoke the performance bond Comment The proposed contractor is evaluated as having a strong financial position. The proposed contractor has a strong track record in relation to the content of its proposed Operating Plan. The likelihood of performance being so far below target that the performance bond is invoked is low. Barnet CAB is set up to deliver services to LBB residents. The LBB contract is central to its work and is likely to remain so, forming as it does such a large proportion of the organisations turnover. Likelihood Impact Low High

Low

High

Low

High

Contractor-Council relationships deteriorate, affecting performance to the point that there is a need to invoke the performance bond.

The proposed contractor has a strong track record of working with the council.

Low

High