New Housing Supply Programme - Procurement Report
North Lanarkshire Council · 15 February 2023
Back to Housing Committee — 15 February 2023 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
Page 1
North Lanarkshire Council Report Housing Committee Does this report require to be approved? ☒ Yes ☐ No Ref PH/TM Date 15/02/23 New Housing Supply Programme – Procurement Report From Pamela Humphries, Chief Officer of Place E-mail mallaghant@northlan.gov.uk Telephone Tony Mallaghan, Housing Development Manager, 07970 016251 Executive Summary The purpose of this report is to update the Committee on current procurement activity relating to the new build housing programme and seek approval to progress procurement arrangements as outlined in the report. Recommendations It is recommended that the Committee: 1) Note the award of a call off contract in line with the Scotland Excel New Build Residential Framework for the construction of new build housing to CCG (Scotland) Limited at Brandon Street, Motherwell up to the revised value of £11.527M, including contingency allowance. 2) Approve the change to the procurement route to mini competition via the Scottish Procurement Alliance (SPA) H2 Framework for the projects at King Street, Wishaw, Graham Street, Wishaw and Laburnum Road, Viewpark, if best value cannot be achieved through the current direct award procurement process. The Plan for North Lanarkshire Priority Improve economic opportunities and outcomes Ambition statement (1) Ensure a housing mix that supports social inclusion and economic growth
Page 2
1. Background 1.1 The Council has an approved programme to deliver 5,000 new homes by 2035. The delivery of such a large scale programme presents a number of challenges, not least of which is the procurement of contractors to build the houses to the required standard, within the timescale required and at a competitive cost. In order to increase the pace of delivery, secure best value and minimise risk to the Council, a range of procurement options have been utilised. 1.2 The Council has also participated in the establishment of a new build framework agreement through Scotland Excel, which has been available for use from August 2019. This framework agreement is for the delivery of new build housing projects for Scottish local authorities, housing associations and other public bodies and includes a number of lots covering different geographical areas and different sized developments. 1.3 The Housing and Regeneration Committee on the 25 November 2020 approved the procurement route for the next phase of the new build programme to commence procurement activity with the Scottish Procurement Alliance (SPA) and Scotland Excel New Build Residential framework to deliver the next phase of new build sites approved by the Committee. As reported at the Housing and Regeneration Committee on the 8 September 2021, due to the current capacity issues in the market we intend to utilise the ability in the SPA and Scotland Excel Frameworks to direct award to available contractors, including to contractors who are not highest ranking. Justification for the identification of a contractor can be made by complying with the direct award criteria listed in the respective frameworks, with a contract award being subject to value for money assessment against the framework rates. A benchmarking appraisal was carried out for each project and is identified in each project’s Sourcing Methodology. 2. Report 2.1 The Housing and Regeneration Committee in November 2021 approved the procurement of a call off contract in line with the Scotland Excel New Build Residential Framework for the construction of new build housing by CCG (Scotland) Ltd at Brandon Street, Motherwell (48 units), up to the value of £9.67M, including contingency allowance. CCG (Scotland) Ltd submitted a revised cost of £11.527M, including contingency allowance. The tender cost obtained is considered to represent best value and the rates have been benchmarked against the appropriate framework rates with an allowance for current market conditions, to allow the contract award to be made. The award of a call off contract has been approved under General Contract Standing orders (section 21.3.2). 2.2 Approval has been obtained from previous Committees for a direct award approach for projects at King Street, Wishaw; Graham Street, Wishaw and Laburnum Road, Viewpark. The feasibility costs obtained are not considered to represent best value and a value engineering exercise is currently underway. However, if it is not possible to agree a final tender price to allow the contract awards to proceed, it is proposed to change the procurement to a mini competition via the Scotland Procurement Alliance (SPA) H2 Framework. Next Steps 2.3 The next batch of sites will be reviewed, and a suitable procurement route will be identified to progress these projects to deliver new build housing to align with the Plan for North Lanarkshire.
Page 3
Price Savings / Increases 2.4 There are no cashable savings attributed to the contracts outlined within this report. Price Stability 2.5 The pricing mechanism is a Priced Contract with Activity Schedule offering a good level of cost certainty. Community Benefits 2.6 The Council is committed to maximising the delivery of community benefits. The procurement included a community benefit requirement, this approach is designed to deliver local community benefits where possible. The successful tenderer for contracts recommended for award within this report have committed to delivering a range of community benefits and these are detailed in the table below: Brandon Street, Motherwell OUTCOME No of Mandatory Outcomes New Job for an Apprentice from a Priority group 1 New Job for an Individual from a priority group 2 Work Experience Placement (16+ Years of Age) 5 Educational Visits 4 Financial Support for a Community Project 3 Non Financial Support for a Community Project 3 TOTAL 18 Fair Work Practices 2.7 All contractors appointed to the SPA and Scotland Excel frameworks have evidenced Fair Work Practices within their organisations as part of the procurement procedures to be appointed to the respective frameworks and have further demonstrated how they will promote them in the delivery of Council call-off contracts. Contract Strategy 2.8 Officers from New Supply will be responsible for managing contracts which will be undertaken in accordance with the council’s agreed approach to contract and supplier management.
Page 4
3. Measures of success 3.1 The proposed contract awards detailed within this report will deliver the following outcomes: a) The appointment of Contractors who have the experience and capability to deliver new build social housing; b) The procurement procedure is compliant with the procurement legislation and internal procedures; c) That best value is both demonstrable and achieved; d) That the Contract secures a range of community benefits; e) That the Contract supports payment of the real Living Wage to staff employed in the delivery of the Contract; f) That the Contract performance is proactively managed against a number of Key Performance Indicators. 4. Supporting documentation Appendix 1 Summary of Procurement Procedures Appendix 2 SME Status of all Tenderers Pamela Humphries Chief Officer of Place
Page 5
5. Impacts ( http://connect/report-template-guidance ) 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? The Council’s new build programme helps reduce inequalities through a number of design specifications including: • Housing for Varying Needs; • Secure by Design; • Achieving the Scottish Government requirements for “Greener Homes” to reduce the incidence of fuel Poverty; and • The inclusion of design standards relating to access to internet capabilities including ‘fibre to the property’. If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality- and-fairer-scotland-duty-impact-assessments Yes ☒ No ☐ 5.2 Financial impact Does the report contain any financial impacts? Yes ☒ No ☐ If Yes, have all relevant financial impacts have been discussed and agreed with Finance? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? The funding for all of the projects referred to in this report can be met from the Council’s Housing Revenue Account budget for the New Supply Programme. Grant support is also provided by the Scottish Government. The costs associated with contract delivery will be contained within the New Supply budget. A funding application has been submitted to the Scottish Government Scottish Heat Network Fund to assist with the costs of the Ground Source Heat Pump system at Motherwell YMCA and 303 Brandon Street. 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts have been discussed and agreed with People Resources? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact?
Page 6
5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☐ No ☒ If Yes, have all relevant legal impacts have been discussed and agreed with Legal and Democratic? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☒ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☒ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? Where the impact identifies a requirement for significant technology change, has an assessment been carried out (or is scheduled to be carried out) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☒ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? The proposed award of contracts detailed within this report will ensure that the impact on the Council’s carbon footprint is mitigated. The specifications incorporated within the contract documentation will: deliver reduced energy need; encourage sustainable construction; promote health and wellbeing; reduce waste and resources through effective storage, collection and composting of waste and recyclable materials and; include measures which will reduce CO2 emissions. 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? The implementation and delivery of the New Supply programme will be promoted through the New Supply PR plan and via communications with elected members and local stakeholders
Page 7
5.9 Risk impact Is there a risk impact? Yes ☒ No ☐ If Yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed? Risk associated with the New Supply Programme is managed within the New Supply Risk Register process. The risk register has been updated to reflect the impact of the current national issues affecting the costs and availability of materials and labour along with general high inflation on programme timescales and costs as well as how the risk to the council will be mitigated as far as possible. The tender cost increases over the past 12 months are on average 16% to 20% and this trend of tender price increases will extend into 2023 excluding the additional changes to legislation and meeting Scottish Government energy targets. Comparing similar sized projects the tender costs over past 18 months are on average 25% higher. The council will also undertake detailed ground investigation and other relevant site assessments prior to proceeding with the development of any particular site to help mitigate the risk of unforeseen costs relating to ground conditions, although this risk cannot be eliminated entirely. 5.10 Armed Forces Covenant Duty Does the report require to take due regard of the Armed Forces Covenant Duty (i.e. does it relate to healthcare, housing, or education services for in-Service or ex- Service personnel, or their families, or widow(er)s)? Yes ☐ No ☒ If Yes, please provide a brief summary of the provision which has been made to ensure there has been appropriate consideration of the particular needs of the Armed Forces community to make sure that they do not face disadvantage compared to other citizens in the provision of public services.
Page 8
Appendix 1 Summary of Procurement Procedures Construction of New Build Social Housing at Brandon Street, Motherwell Procurement Title Contractor Design and Construction of New Build Social Housing at Brandon Street, Motherwell Estimated contract start date February 2023 – June 2024 Initial Contract Period 15 months Contract Defects Period 12 months Estimated Total Contract value £11,527,045 (£11,027,045 + £500,000) Contract Reference Number NLC- SLP-22-067 Contract Notice Reference Not Applicable Date Contract Notice Published Not Applicable Governing UK Regulation Public Procurement Regulations (Scotland) 2015 Procurement Procedure Direct Award from a 3rd Party Framework Evaluation approach adopted N/A Interest List – number of Contractors that downloaded the procurement documents from the procurement portal N/A Number of selection stage documents received N/A Number of Contractors invited to tender 1 Number of tenders received 1 Number of non-compliant tenders 0 Number of compliant tenders 1 Number of recommended contractors 1 Basis of contract award Quality 40% Price 60% Evaluation team names and job titles of Evaluators and their role in evaluation New Supply
Page 9
Appendix 2 SME Status of all Tenderers Project Tenderers Name Size of Tendering Organisation (Micro, Small, Medium or Large) Location (Local Authority / Council Area) Brandon Street, Motherwell CCG (Scotland) Ltd Large South Lanarkshire