Report for: ACTION Item Number: Contains Confidential or Exempt Information YES (Part) Appendices 1 and 2 Exempt information pursuant to Paragraph 3 of part 1 of Schedule 12A to the Local Government Act 1972 [Access to Information Procedure Rules, section 10] Title Award of Contract – Provision of Information Communication and Technology Services Responsible Officer(s) Anthony Kemp -- Director of ICT and Facilities [email protected]Tel: 020 8825 7581 Author(s) Kevin Petty -- Strategic Project Manager [email protected]Tel: 020 8825 7209 Portfolio(s) Councillor Jason Stacey, Councillor David Scott For Consideration By Cabinet Date to be Considered 27 February 2007 Implementation Date if Not Called In 12 March 2007 Affected Wards All Area Committees Keywords/Index Provision, Information Communication and Technology Services, Award 1
Transcript
Report for:ACTION
Item Number:
Contains Confidential or Exempt Information
YES (Part) Appendices 1 and 2Exempt information pursuant to Paragraph 3 of part 1 of Schedule 12A to the Local Government Act 1972[Access to Information Procedure Rules, section 10]
Title Award of Contract – Provision of Information Communication and Technology Services
Responsible Officer(s) Anthony Kemp -- Director of ICT and [email protected]: 020 8825 7581
Portfolio(s) Councillor Jason Stacey, Councillor David ScottFor Consideration By CabinetDate to be Considered 27 February 2007Implementation Date if Not Called In
12 March 2007
Affected Wards AllArea CommitteesKeywords/Index Provision, Information Communication and
Technology Services, Award
Purpose of Report:
The report seeks approval to award the contract for the Provision of Information Communication and Technology Services (ICT Services).
1. RecommendationsIt is recommended that Cabinet:
1.1 Appoint Serco Limited as the Council’s preferred bidder for the Provision of Information and Communication Technology Services contract for a period of ten years at an overall price of approximately £30.0 Million and authorises the Director ICT and Facilities to continue to negotiate to finalise the contract for commercial close;
1.2 Delegates authority to the Director ICT and Facilities, in consultation with the portfolio holder, to award the contract at the conclusion of negotiations.
2. Reason for Decision and Options Considered2.1 To procure the provision of information and communication
technology support services on the expiry of the current contract in June 2007.
3. Key Implications3.1 On 17th January 2006 Cabinet resolved to authorise the Executive
Director for Response to procure a support contract for ICT to commence in June 2007, to include the ICT infrastructure support, telephony and Sun hardware support services encompassed in the three existing contracts.
3.2 A contract notice was published in the Official Journal of the European Union on 10th July 2006. Twelve suppliers responded. Following an initial evaluation of pre-qualification questionnaires, those suppliers who met the criteria fully were invited to submit a full bid.
3.3 Invitation to Negotiate (ITN) documentation was sent to six companies on 29th September 2006. Three Bid submissions were received on the 8th of November 2006.
3.4 Following the evaluation of all bid submissions, all three companies were shortlisted to enter the negotiation phase of the procurement process and then subsequently to provide Best and Final Offers (BAFOs).
3.5 The negotiations have proved very successful and the BAFO presented by Serco provides the most economically advantageous terms and best value for the Council. Further information on the evaluation process and the financial appraisal are included in the confidential Appendices 1 and 2 to this report.
3.6 It is intended that the new contract will commence on 1st June 2007. Any delay in the award of contract will impact on the current contracts, which expire on 31st May 2007 and 4th June 2007.
3.7 The background to the tendering of this contract is detailed in the Cabinet Report presented on 17th January 2006.
3.8 The tendering exercise has been developed to ensure that the resulting contract will enable ICT to be a collaborative ICT organisation, admired as a valuable business partner by the Council, that supplies seamless services to users. The contract will meet the ICT Strategy 2007-2010 principles:
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focus on customer services, providing value to residents; maximise the value from the Council’s ICT assets; provide innovative services to enable access and inclusion to
residents; develop a solid delivery capability with everyone who interacts
with ICT services; deliver value for money to the Council and the taxpayer; enable information sharing with other organisations and the
general public; exploit and maximise the benefits of technology services; improve ways of working and engagement with business to
drive and sustain efficiencies; innovate and provide services that enable the Council to do
more for the Council and its citizens, effectively; provide real time information to support rapid decision making
and effective management; and be ambitious in all activities and services provided.
3.9The contract has been developed to encompass the following high level scope of Services:
OverviewThe services required by Ealing are divided into five parts:(a) the provision of a Service Desk(b) the provision of Application Support Services;(c) the provision of Desktop Services;(d) the provision of Data Wide Area Network (WAN) Services;
and(e) the provision of Telephony (Fixed and Mobile) Services.
The Tenderer is expected to provide a full range of services covering the following areas defined by the Information Technology Infrastructure Library (ITIL) standards:(a) Service Delivery processes
service level management; capacity management; availability management; financial management; IT service continuity management, (disaster recovery);
and project-based design and implementation services.
(b) Service Support processes Service Desk (2nd level co-ordinating with Primary
Service Desks); incident management; problem management; change management; release management; and configuration management.
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3.10 Evaluation, Comparison and Negotiation of Bid Submissions
General3.10.1 The primary objective of the new contract is to enter into a fully
integrated partnership model between Ealing and the supplier (“Service Ealing” working title), delivering guaranteed savings and value for money to the Council over the life of the contract. Along side this the partnership will have the prime objective to focus on the delivery of the Council’s manifesto commitments, Community Strategy and Corporate Plan. Therefore, in accordance with these the partnership will be vigorously measured on Value For Money (VFM), Cleaner Streets and Safer Communities.
3.10.2 Service Ealing will be constructed by using individuals from the supplier and the Ealing side to create a single delivery structure, ensuring the minimum in overlap of roles and hence reduced operating costs and improved service delivery.
3.10.3 There will be substantial financial savings arising from this more flexible approach and the more competitive nature of the technology market. Complementary to this is securing added value and service quality.
3.10.4 The evaluation of the Bid and the BAFO submission provides confidence that Serco can meet the objectives of providing better value for money, a more flexible, innovative and proactive service which will add value, increase customer access and effective user information.
3.10.5 The approach to the procurement has been rigorous in encompassing commercial, legal and technical evaluations, negotiations, scenario and relationship workshops and site visits. This was supplemented with external industry advice on benchmarking and service standards and has resulted in a comprehensive assessment of the bid for this Service.
3.10.6 The key Critical Success Factors were identified to include: business assurance that the contract represents best value; building the required Partnership relationship between Ealing
and the Contractor in line with the culture and values of Ealing; the ability of the Contractor to understand the complex, diverse
and business critical nature of the service; the technical excellence, ability and experience of the Contractor
in supplying services of this type to organisations like Ealing; the ability of the Contractor to create an effective security policy
and work practices that protect Ealing’s information, assets and staff;
the ability of the Contractor to integrate with the Ealing Service Delivery function and to operate the services and maintain the networks to industry best-practice standards;
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the transition phase of the project, which must be operated so that the current level of service delivery and project implementation is not degraded, and that the Contractor is guaranteed to deliver the required level of service;
the ability of the Contractor to resource and execute the transition; and
having the correct governance and operating model for the partnership (Service Ealing).
3.11 Technical3.11.1 Serco demonstrated the most comprehensive and extensive
knowledge and experience of the four areas of technology (Data/WAN, desktop, voice and applications). Serco also demonstrated awareness and experience of service desk support of the Information and Communications Technologies (ICT). Theirs provided the best overall technical solution to meet the Council’s requirements,
3.11.2 Serco provided ample evidence of their abilities, both in technical terms and in demonstrating organisational fit, in a series of scenario and relationship workshops. This proved technical knowledge, ability to develop solutions and engagement in excellent working relationships with Ealing team members.
3.11.3 Serco particularly demonstrated awareness of the diversity and complexity of the applications estate. Their submission was strong in this area and able to articulate methods and approaches whilst demonstrating team skills and referring to client experience.
3.11.4 Increased lifespan of desktop equipment was identified as an area for cost reduction by bidders through ‘asset sweating’. Serco provided good technical knowledge across the desktop aspects and robust experience; experienced in project management, configuration, installation and support and good data management awareness.
3.11.5 The approach to the provision of service desk facilities was clear - Serco demonstrated awareness and experience of process based customer service.
3.11.6 Serco demonstrated awareness and experience of the breadth of activities associated with transition planning and defined key roles and tasks anticipated.
3.12 Commercial3.12.1 The ITN and subsequent negotiations have defined a core basic
service for the delivery of ICT. The principles of the deal fix the price for the defined core services such that there is predictability and minor changes do not result in increased administrative cost or price variation. The only exception to this is inflation.
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3.12.2 This approach will require the Council to change its culture in respect of its use of technology and commissioning ICT projects. Essentially, the cost of the ICT service will now be more transparent to users and departments will need to budget separately for all expected change in usage and development of systems. This approach will ensure that a more robust business case approach is adopted for ICT spend in the future.
3.12.3 Inflation in the Technology industry has historically run ahead of CPI. The Contract mitigates this risk with the agreement that the first four years of the contract the contractor will absorb the difference between CPI and the true inflation costs for the industry. In years 5 to10 the supplier will absorb the first 2.5% of the gap between CPI and the industry increases as defined by Computer Economics Limited (CEL). Based on current trends risk to the Council would be an increase of £35,000 on the life time costs.
3.12.4 The deal with Serco gives a good level of transparency on major costs, inline with good practice.
3.12.5 Serco’s bid is the lowest over the life of the contract in terms of cash and Net Present Value (NPV) and represents best value for money for the Council.
3.12.6 The Council will adopt a performance mechanism that encourages improvement rather than disincentive, however, there are still secure measures in place to protect the service delivery to the Council through financial measures.
3.13 Governance and Operating Model3.13.1 The creation of a strategic and collaborative partnership (Service
Ealing – working title. Final title to be agreed with Marcomms) is essential for the success of the ICT Strategy 2007/2010.
3.13.2 Key to the success of the Partnership will be the way in which people combine to deliver outcomes. Serco demonstrated a strong ability to interact and work collaboratively in the scenario and relationship workshops which formed part of the evaluation process.
3.13.3 Serco particularly demonstrated their commitment to the strategic partnership approach with a governance regime which would have a joint partnership board as a focal point.
3.13.4 Their identification of a single entity, comprising of Serco and Ealing personnel, to provide a seamless unified identity to the customer, under the working title of “Service Ealing”, will provide a robust strategic partnership working on a risk and reward basis to assist in the transformation of front line services to the community.
3.13.5 Serco share the vision to jointly develop benefits driven solutions, innovation, develop investment opportunities and utilise their wide
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experience in the local government sector was seen as a great strength. Their breadth of skills and capabilities across the wider Serco group, both in the public and private sector, will provide access to experience and knowledge to enhance and develop wider service provision within the Council.
4. Financial4.1Details of the financial appraisal are set out in the confidential Appendix 2.
The price evaluation process, subsequent negotiations and submission of BAFO ensured that the best possible prices were obtained from all the bidders. The bid from Serco, is the lowest cost bid over the life of the contract in terms of cash and NPV. This therefore, represents best value for money for the Council.
4.2 In ICT there has been an overspend on actual expenditure against the budget for a number of years. The new contract and related performance standards mechanism will address this position and provide for enhanced financial control against the contract sum and budget.
4.3The new core contract baseline sum will achieve the majority of the savings identified for ICT in the 2007/2008 Budget cycle. The remainder of the savings will be delivered by internal ICT efficiencies (e.g. applications rationalisation).
4.4The core contract includes a negotiated rate for fixed and mobile telephony costs. However, as fixed and mobile telephony call usage costs are not controllable by ICT these charges are NOT included in the core baseline sum. These will be recharged separately to spending departments.
4.5 Other ICT services will also be subject to separate service level agreement charging to departments including:
Ealing Homes; Managed service charges to Partners (e.g. Primary Care Trust); Moves, changes, additions to the desktop environment and
telephones; Project work; New applications and development of existing applications; IDN telephone line rental; and Ongoing Support and licencing of all the above.
4.6 The arrangements for the recharge of services to support dedicated lines of business applications will continue as currently provided.
4.7 The savings across the life of the contract are based on current prices as a consequence annual inflation will need to be netted off the gross savings year on year.
4.8 It should be noted that the Council will remain liable for the majority of the ICT assets including the refresh of those assets at an appropriate
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point in time. In order to forward plan this activity a ten-year capital plan covering the period 2007/2016 will be produced for Cabinet’s consideration.
4.9 Any additional requirements above the core contract will be subject to business cases and financial appraisal prior to approval. These should be submitted to ICT for evaluation in order to avoid un-budgeted ongoing costs of ownership.
5. Legal5.1 The Procurement of ICT Services was tendered in accordance with
the Public Services Contracts Regulations 2006 and the Council’s Contract Procedure Rules. A competitive negotiated procedure was adopted.
6. Value For Money6.1 The Council sought a provider that:
has the size, experience and strength to provide a long-term service;
is disciplined, organised and efficient; is dynamic, agile and responsive; is focused on results; adds value to the Council; delivers strategic change benefits; supports the Council’s drive to deliver value for money to Council
Tax and Business Rate payers; and works with the Council to enhance its services to its customers
and assists in connecting the Council in enhanced ways with its customers.
6.2 The submission from Serco provided the greatest confidence that the provider will focus consistently on customer service and deliver customer care across the Council’s range of services.
6.3 The proposals suggest that the working relationship will be based on a practical, disciplined, fact-based approach combined with a genuine intention to achieve a long-term, transparent partnership achieving mutual benefit and offering Ealing value for money for the services.
6.4 The submission from Serco gives confidence that the provider will seek new and innovative ways to benefit the Council and will assist the Council in its own innovation and creativity.
6.5 Benchmarking will be carried out biennially using a jointly agreed approach against other comparable councils and the private sector on the core services in the contract. The bidder has agreed to accept the output from this process and to deliver further savings over and above the ten-year plan if the benchmarking indicates that the pricing model is no longer competitive. In addition, annual benchmarking on the non-programme services and commodity items (e.g. PCs, Phone call
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tariffs, day rates, etc.) are included to allow the adjustment of pricing to reflect the current best market prices.
6.6 The commercial aspects of the bid submissions were reviewed by independent external advisers to ensure that value for money was being obtained. They considered the deal being offered for the depth and extent of the service required, the entirety of the agreement and that the terms offered were in the most competitive agreements of this type they have seen. In the public sector these rates can be considered to be the best in class.
6.7 The bid from Serco has guaranteed investment in the Borough including a free of charge proposal to support Ealing’s voluntary sector, support to the proposed apprenticeship scheme and provision of a Business Link office.
7. Risk Management7.1Prior to being invited to bid, Serco successfully completed satisfactory
financial checks as well as checks on competency in the delivery of similar contracts.
7.2Members of the evaluation panel visited several sites operated by the bidders and were satisfied with all aspects of the service.
7.3A risk in all competitive procurement exercises is that the contract cannot be delivered to the required standards. There are performance measures in the contract. An outline of the key principles are shown in the following diagram.
Overall Council Satisfaction of the Service
e.g. user perception, contentment
Quality of Project Management Delivered
e.g. milestones, budgeting
Core Service Metrics
e.g. network availability
KPI ’s
SatisfactionFactor
Project Management
Service Performance Indicators
Overall Council Satisfaction of the Service
e.g. user perception, contentment
Quality of Project Management Delivered
e.g. milestones, budgeting
Core Service Metrics
e.g. network availability
Overall Council Satisfaction of the Service
e.g. user perception, contentment
Quality of Project Management Delivered
e.g. milestones, budgeting
Core Service Metrics
e.g. network availability
KPI ’s
SatisfactionFactor
Project Management
Service Performance Indicators
KPI ’s
SatisfactionFactor
Project Management
Service Performance Indicators
7.4To reflect the varying needs of the Council, the contract includes provision for targets to be set and agreed on an annual basis.
7.5The final contract price will be accepted on the basis that the costs provided are guaranteed sums.
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7.6The final sum is accepted on the basis that the Contractor accepts all risks on expenditure and income.
8. Community SafetyNone.
9. Links to Strategic Objectives9.1 The provision of ICT Services will provide support to meeting all the
Strategic Objectives through its outcomes based approach:
Environment, Housing and CultureTo make Ealing a better place to live. In conjunction with our service providers ICT will promote and develop solutions to speed resolution of environmental problems in the Borough and make performance in this endeavour more visible to the public, through their preferred channel of communication.
SafetyTo make Ealing one of the safest places in London. Working with service departments, government agencies and community organisations, ICT will take a leadership role in the development of solutions aimed at making Ealing a safer place to live and work.
Health and IndependenceTo reduce health inequalities and promote well-being and independence for adults and older people.
EconomyTo ensure that there are opportunities for all people and businesses to prosper.
Children and Young PeopleTo create a great place for every child and young person to grow up. Transform teaching, learning and help to improve outcomes for children, young people, and adults through shared ideas, more exciting lessons and online help for professionals.
Organisational ImprovementBecoming a high performing organisation, focused on the needs of its communities. The ICT Strategy 2007/2010 builds on existing investments, new management structure, a new IT partner contract and a new governance model to deliver real, tangible, financial benefits and service improvements to the Council. Our aim is to be amongst the top ten Councils in terms of value for money as measured by SOCITM benchmarking.
10. Equalities and Community Cohesion10.1 Serco have supplied strong method statements and policies on
equalities. An Equalities Impact Assessment has not been carried out
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at this stage. It will form part of the due diligence of the successful bidder.
11. Staffing/Workforce and Accommodation implications 11.1 There are none.
12. Property and Assets12.1 The current position on asset ownership is:
Communications TechnologyThe equipment, including the main switch, is provided, operated, maintained, managed and owned by Damovo, with the exception of a proportion of the handsets at Perceval House which are owned by the Council.
All the associated Exchange Lines (to/from the Public Telephone Network) and inter-site Private Circuits are provided, under the current contract, by Damovo.
BT provides 5,000 DDI numbers in the range 020 8825 5000–9999. Although this facility is managed by Damovo under the contract, the numbers are ‘owned’ by the Council.
Information TechnologyThe Council will retain ownership of the majority of assets and must be sure that all assets will be fit for purpose throughout the life of the contract. The Council will need to develop an asset technology refresh strategy to ensure that this happens.
The Council has agreed to transfer the Wide Area Network assets to the contractor at a nominal cost. The contractor will provide a fully managed service in return ensuring that the assets are fit for purpose throughout the contract and on handover at the end of the contract.
13. Any Other Implications None.
14. Consultation14.1 Throughout the procurement process there has been extensive
consultation with service users and other stakeholders. The consultation informed the procurement outcomes including the development of the specification for the services.
14.2 The Evaluation and Negotiation Panels have included representatives from Education, Social Services, Customer Services, Strategic Procurement, Legal Services (Contracts), Human Resources, Finance and external expert advisers.
15. Timetable for Implementation15.1 The outline timetable for the implementation of this decision is:
