New Housing Supply Programme - Procurement Report
North Lanarkshire Council · 16 November 2022
Back to Housing Committee — 16 November 2022 and its agenda
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North Lanarkshire Council Report Housing Committee Does this report require to be approved? ☒ Yes ☐ No Ref PH/TM Date 16/11/22 New Housing Supply Programme – Procurement Report From Pamela Humphries, Head of Planning and Regeneration 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 Housing Committee: 1) Approve the procurement of call off contracts in line with the Scotland Excel New Build Residential Framework for: a) the construction of new build housing at Dunnottar Avenue and Burleigh Place, Shawhead, Coatbridge up to the value of £26.50M, including contingency allowance; and; b) the conversion and refurbishment of the former Masonic Hall, Hope Street, Motherwell up to the value of £3.00M, including contingency allowance. 2) Approve the procurement of call off contracts in line with the Scottish Procurement Alliance (SPA) H2 framework agreement conditions for the construction of new build housing at: a) the former St Marys Primary School, Hill Street, Caldercruix up to the value of £6.50M, including contingency allowance. b) the former Thornlie Church halls, Caledonian Road, Wishaw up to the value of £1.50M, including contingency allowance. c) Airdriehill Road, Airdrie up to the value of £16.90M, including contingency allowance. d) The former Cumbernauld village school, Glasgow Road, Cumbernauld up to the value of £2.00M, including contingency allowance.
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1. Background 1.1 The Council has an approved target 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 3) Approve the procurement of call off contracts in line with the Scottish Procurement Alliance (SPA) PB3 framework agreement conditions for the conversion and refurbishment of Old Motherwell Town Hall, Hamilton Road, Motherwell up to the value of £5.500M, including contingency allowance. 4) Approve 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 McTaggart Construction at the former Petersburn PS, Petersburn Road, Airdrie, up to the value of £9.40M, including contingency allowance. 5) 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 Ravenscliff Road, Motherwell up to the revised value of £5.75M, including contingency allowance. 6) 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 McTaggart Construction at Glenacre Drive, Airdrie, up to the value of £3.726M, including contingency allowance. 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
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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 It is proposed to engage with contractors on the Scotland Excel New Build Residential Framework for the following two projects: • Dunnottar Avenue and Burleigh Place, Shawhead, Coatbridge (Up to 102 units) up to the value of £26.50M, including contingency allowance. • Former Masonic Hall, Hope Street, Motherwell (Up to 10 units) up to the value of £3.00M, including contingency allowance. Feasibility costs will be obtained and analysed to ensure best value and, subject to benchmarking against the appropriate framework rates, it is proposed that a final tender price be agreed to allow the contract award. 2.2 It is proposed to engage with contractors on the SPA H2 framework for the following three projects: • Former St Marys Primary School, Hill Street, Caldercruix (Up to 25 units) up to the value of £6.50M, including contingency allowance. • Thornlie Church halls, Caledonian Road, Wishaw (Up to 6 units) up to the value of £1.50M, including contingency allowance. • Airdriehill, Airdriehill Road, Airdrie (Up to 65 units) up to the value of £16.90M, including contingency allowance. • The former Cumbernauld village school, Glasgow Road, Cumbernauld (up to 8 units) up to the value of £2.00M, including contingency allowance. Feasibility costs will be obtained and analysed to ensure best value and, subject to benchmarking against the appropriate framework rates, it is proposed that a final tender price be agreed to allow the contract award. 2.3 It is proposed to engage with contractors on the SPA PB3 framework for the following project: • Old Motherwell Town Hall, Hamilton Road, Motherwell (Up to 20 units) up to the value of £5.500M, including contingency allowance. Feasibility costs will be obtained and analysed to ensure best value and, subject to benchmarking against the appropriate framework rates, it is proposed that a final tender price be agreed to allow the contract award. 2.4 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 McTaggart Construction at the former Petersburn PS site, Petersburn Road, Airdrie, (40 units), up to the value of
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£8,290M, including contingency allowance. McTaggart Construction have submitted a revised cost of £9.40M, including contingency allowance. The tender cost obtained is considered to represent best value and, 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. 2.5 The Housing Committee in August 2022 approved 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 Ravenscliff Road, Motherwell, (24 units), up to the value of £5.40M, including contingency allowance. However due to delays with concluding the site acquisition the tender cost has increased to £5.75M, including contingency allowance. The tender cost obtained is still considered to represent best value and, 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. 2.6 The Housing Committee in August 2022 approved 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 McTaggart Construction at Glenacre Drive, Airdrie, (Up to 16 units), up to the value of £3.555M, including 10% contingency allowance. McTaggart Construction have submitted a revised cost of £3.726M, including contingency allowance. The tender cost obtained was considered to represent best value and, 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. 2.7 The approval to commence procurement for the site at Airdriehill Road, Airdrie is being sought to evaluate the site for the construction of new build housing for up to 65 units. The site is not in council ownership but already has obtained planning approval for approximately 50 units. The evaluation being undertaken is at no risk or cost to the council and will include site suitability and feasibility costs. Should the site be considered a viable option the site will be brought to a future committee to seek approval to progress with site acquisition and tender award. Next Steps 2.8 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. Price Savings / Increases 2.9 There are no cashable savings attributed to the contracts outlined within this report. Price Stability 2.10 The pricing mechanism is a Priced Contract with Activity Schedule offering a good level of cost certainty. Community Benefits 2.11 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.
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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: Petersburn Road, Airdrie OUTCOME No of Mandatory Outcomes New Sustainable Jobs for entrants from Key Priority Groups 3 Work Experience Placement (16+ Years of Age) 8 Careers Event 5 Supply Chain briefing with SMEs 3 Financial Support for a Community Project 2 Non Financial Support for a Community Project 4 TOTAL 25 Fair Work Practices 2.12 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 2.13 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. 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 contracts secures a range of community benefits;
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e) That the contract supports a variety of fair working practices to staff employed in the delivery of the contracts; f) That the performance of contracts are 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 Head of Planning and Regeneration
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5. Impacts 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 Financial Solutions? 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. 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 and Organisational Development? Yes ☒ No ☐ 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 Solutions? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact?
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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 technology, has an assessment been carried out (or scheduled) 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 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?
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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.
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Appendix 1 Summary of Procurement Procedures Construction of New Build Social Housing at Petersburn Road, Airdrie Procurement Title Contractor Design and Construction of New Build Social Housing at Petersburn Road, Airdrie Estimated contract start date January 2023 – April 2024 Initial Contract Period 15 Months Contract Defects Period 12 Months Estimated Total Contract value £9,395,545 (£8,945,545 + £450,000) Contract Reference Number NLC-SLP-22-066. 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 Not Applicable 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
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Appendix 2 SME Status of all Tenderers Project Tenderers Name Size of Tendering Organisation (Micro, Small, Medium or Large) Location (Local Authority / Council Area) Petersburn Road, Airdrie McTaggart Construction Medium North Ayrshire