Hampshire County Council

Buildings, Land and Contracts Panel Item 16

9 December 2003

Executive Member - Policy and Resources

11 December 2003

Procurement and Project Initiatives

Report by the Director of Property, Business and Regulatory Services

1

Summary

1.1

This report provides an update on current procurement and project initiatives and also seeks approval to a number of further procurement proposals for specific projects. In addition this report outlines the work that is being undertaken to evaluate the benefits of electronic tendering (e-tendering) processes.

2.

Procurement Proposals

2.1

The attached summary in appendix 1 details all the new proposals since the last report to the Executive Member for Policy and Resources for which approval is sought.

2.2

Electronic Tendering

Appendix 2 summarises the purpose of electronic tendering as part of our e-Government Strategy.

2.3

Appendix 3 summarises a range of current project issues requiring consideration by the Panel.

Recommendations

1.

That the Buildings, Land and Contracts Panel note that an e-tendering pilot will be undertaken by County Supplies using up to six tenders across a broad spectrum of contract types and values.

2.

That the Buildings Land and Contracts Panel advise the Executive Member for Policy and Resources that approval be given to:

1. The following procurement proposals as set out in appendix 1:

· the negotiation of further work at Rookwood School and approval to £333,000 from capital repairs towards the work.

· Park Primary School, Aldershot - Early Years Centre.

· Priestlands Secondary School, music/drama facility and extension to dining facilities.

· Eggars School, Alton - new IT classroom block and sports hall.


· Electrical Installation Testing and Inspection Programme


· Alton Day Services

· Hamble Community College - replacement Youth Building and re-roofing/refurbishment of newbold block

· the appointment of Butler and Young as Approved Inspector

· Serles House - phase II and approval of £200,000 from landlord's minor works to fund the work.

2. The e-tendering pilot proceeding on the basis that an assessment of the potential impact on Contract Standing Orders is included in an evaluation of the pilot.

3. The pilot e-tendering evaluation report is presented to a future meeting of the Buildings, Land and Contracts Panel.

4. The following specific project issues as detailed in appendix 3:

· Winchester and Eastleigh Special Schools - that the financial position for the project at Lankhills/Osborne School will be dependent on the resolution of final negotiations on the development site and on the settlement of the final account with the building contractor.

· Gosport Discovery Centre - the siting of temporary buildings on the Gosport Museum site during the conversion works at Gosport Library (subject to planning approval).

· Beneficial Foundation, Leigh Park Nursery - health and safety work.


· Landlords contribution to schools - to note that infrastructure costs, particularly in secondary schools will be funded by the landlord and referred to in the relevant project appraisal.

· Treadgolds Museum - to note the position relating to temporary closure notices.

· Headquarter office accommodation. The taking of a ten year lease at Regency House, 13 St Clement Street, Winchester and Athelstan House, St Clement Street, Winchester and that the Director of Property, Business and Regulatory Services (Head of Estates Practice) be authorised to settle the detailed terms and conditions.

· Former Intech Building - conversion and redevelopment.

· Capital repairs - to complete NDS conversion funded scheme and preparatory work associated with the programme of capital repairs as a priority, and to carry forward to 2004/2005 the uncommitted element of capital repairs to enable delivery of the approved capital programme.

· Sprinkler systems - to note the on-going arrangements associated with the installation of sprinkler systems.

Electronic Tendering Pilot

The County Council's Corporate Procurement Strategy includes an action under `e-procurement, information technology and modernisation' that the County Council will undertake an e-tendering pilot during 2003/04. To achieve this it is proposed that County Supplies run an e-tendering pilot for six months starting in December 2003. The pilot will be evaluated to identify whether e-tendering will provide benefit to, and added value for, the County Council and whether or not it should be extended to other areas of the County Council, and the relative priority of such work.

E-tendering provides automation of the tendering process, by using secure electronic email and internet facilities for the exchange of tender documentation and questions and answers between the County Council and tenderers. There are also facilities for assisting in the automatic evaluation of basic selection and award criteria.

There are a number of potential suppliers of e-tendering systems and a recent tendering exercise has selected a preferred supplier to run the pilot at County Supplies for a very reasonable cost of up to £6,000. This supplier has good experience of the working with other local authorities and universities.

E-tendering is promoted in the National Procurement Strategy for Local Government and forms part of the Implementing Electronic Government 2005 targets. E-tendering is also part of the National e-Procurement Project (NePP), which is run by local authorities and funded by the ODPM. The use of e-tendering is seen as a means of reducing transaction costs in procurement, streamlining, and reducing the time taken to complete, the tendering process. The Office of Government Commerce (OGC) is actively promoting the use of e-tendering in central government and has issued best practice guidance on its use. The new EU procurement directives, which are expected to be adopted next year, also makes provision for e-tendering.

Scope and Impact of E-Tendering

The pilot will be used to tender up to six contracts managed by County Supplies. The specific contracts have not yet been identified but are expected to cover a broad range of supplies, services and contract values to ensure that the pilot is as meaningful and useful as possible. The pilot is overseen by a project team with representatives from County Supplies, Legal Practice, Audit and IT Services.

It is expected that we will not be able, at this stage, to insist that all potential tenderers will use the e-tendering facility for the pilot contracts and that there may be a dual process of using both electronic and paper based tendering.

The e-tendering system which has been chosen is expected to be able to comply in the most part with the County Council's existing contract standing orders. It is a fully secure system with specific roles and responsibilities of individuals, date stamped submissions, no ability to amend documents, a full audit trail, secure in-trays which can only be opened and viewed by specified individuals and at a specified time and has a facility to operate a tender `opening procedure' where appropriate.

It is, however, not possible to fully assess the impact on the County Council's contract standing orders until the pilot is underway. We expect that there will be an issue with not being able to accommodate manual signatures, but this will be addressed during the pilot. One of the outcomes of the pilot is to assess whether it will be necessary to amend contract standing orders if the County Council believes it will be of benefit to implement e-tendering on a wider basis.

Conclusion

The Government, through a number of bodies and guidance, is expecting local authorities to exploit the potential benefits of electronic tendering. The County Council will undertake a pilot project to assess the benefits and impact of e-tendering to meet one of the actions contained within its Corporate Procurement Strategy.

Whilst it is not yet possible to ascertain whether the e-tendering system will be fully compliant with standing orders, the risks are considered to be minimal at the present time and will be managed by a project team comprising a number of representatives from County Council departments. Following an evaluation of the pilot a further report will be presented to the Buildings, Land and Contracts Panel.

Project Issues

1

Winchester and Eastleigh Special Schools

1.1

Initial bids for the land receipt at Lankhills were reported to the Executive Member Policy & Resources on 11 September 2003. Since that time, officers have been undertaking further work to assess the financial implications of the infrastructure and associated statutory and planning requirements that would be a charge to the gross offers. Members should be aware also that there have been infrastructure costs incurred to date that would also be a call on this money, including highway infrastructure, demolitions and archaeological investigations. The project cost limit is defined by the capital receipt. As with the recently completed John Hanson Secondary School at Andover, the scope of the works has been determined by forecasts of the likely receipt.

1.2

The negotiations with the preferred bidder and statutory authorities are not yet complete but an assessment has been undertaken recently on the potential impact to and range of the available receipt.

1.3

The building projects are now complete and occupied by the Schools. There have been some additional costs that have occurred since the contract was let and were unavoidable. The first of these was the discovery of unknown basements at the Lankhills site, previously reported to the Executive Member Education as part of regular Major Projects Reports. However, the full financial implications were not known until near the end of the project. The cost of this additional work, including the contractor's management costs as a result of significant delay, is in the order of £300,000, which can be offset against the capital receipt. Secondly, it was anticipated at the time of tender that savings would be made during the contract to bring the cost back in line with the available funding at the time. However, due to market pressures, including sub-contractor inflation costs, a 3% premium has been incurred on the contract sum and agreed with the contractor. The cost of these items has been factored into the current financial reconciliation assessment.

1.4

Members should note that the current estimated financial position is dependent upon the resolution of final negotiations on both the development site and on the settlement of the final account with the building contractor.

1.5

After having completed a financial assessment, the estimate of capital receipt remaining ranges between £650,000 and £1,150,000 after deduction of all costs incurred on the building project.

1.6

There are other costs (e.g. furniture) that also need to be considered as potential calls against the final assessment.

2

Gosport Discovery Centre

2.1

The Director of Recreation and Heritage has identified Gosport Library as a suitable location for a Discovery Centre. The project necessitates complete reconfiguration of the existing premises and it is intended to commence work on site in March 2004. In view of the level of disruption, the library will be closed for approximately 13 months from this date.

2.2

The Estates Practice has been instructed to secure temporary accommodation in Gosport Town Centre to enable a library service to operate whilst the building work is taking place. In view of a distinct lack of available premises to let, it is proposed to site three temporary portacabins providing 50 sqm of space in the car park of Gosport Museum. This land is in the freehold ownership of the County Council. It is envisaged that the portacabins, together with some available space in the adjacent Gosport Gallery, will provide sufficient capacity to offer a temporary library facility in the town centre. This solution is considered to be the most cost effective.

2.3

A full project appraisal for the establishment of the Discovery Centre will be reported to Members in January 2004. In the meantime and to avoid delays in the anticipated programme, it is necessary to apply for planning consent for the temporary portacabins at this time. Approval is sought therefore for the planning application to be made and for the units to be installed, the latter being subject to Members endorsement of the full project appraisal in January.

3

Beneficial Foundation, Leigh Park Nursery

3.1

The Beneficial Foundation, a charity providing horticultural training to people with learning difficulties, lease a building and a number of glasshouses from the County Council. (The Landlord's responsibility has recently transferred to the County Council from Portsmouth City Council)

3.2

The Beneficial Foundation have been in discussion with the County Council over the extension of their lease at the Sir George Staunton Country Park. They have also indicated if the terms of the extension are not satisfactory they would serve notice to quit. In the meantime, there remain what appear to be some long standing health and safety issues relating to the buildings which were acquired at the same time as the Country Park. Rather than continue what could be protracted and lengthy negotiations about responsibility, the Director of Property, Business and Regulatory Services has instructed any immediate health and safety work to be dealt with, principally the removal of asbestos from boiler houses. Other works are also planned which could cost up to the value of some £75,000.

4.

Treadgolds Museum

4.1

Members are asked to note the Property Services Department of the County Council has put a temporary closure notice on two of the buildings that make up the Treadgolds Museum complex in Portsmouth.

4.2

The Treadgolds Museum comprises of three buildings (main Museum, Warehouse and Mitre Court) located in Bishops Street, Portsmouth, which is a residential area close to the Portsmouth Naval dockyards. The ownership of the buildings was retained by the County Council at the time of Local Government review in 1997.

4.3

Whilst the buildings retain much of their original features and characteristics, their condition and design is such that they would not meet modern day standards for buildings with public access. For some time the buildings have been monitored as part of the structural inspection programme and have been the subject of various structural repairs instructions over recent years.

4.4

The Warehouse building is currently propped up with an extensive internal grillage of scaffolding. The buildings have been regularly inspected and to some extent, not surprisingly, the latest inspection noted evidence of further deterioration, such that a temporary closure notice has had to be put on the main Museum and Warehouse buildings pending further review and analysis of their structural condition.

5

Landlord's contributions to schools

5.1

As indicated in the report to the Panel in March on NDS priorities, it is apparent at a large number of schools, particularly in the secondary sector, that expansion and enlargement is stretching services and other infrastructures to the limit. The development of major capital schemes at secondary schools will also require other infrastructure from the landlord to be replaced or reviewed. Specific allocations and timing will be contained in the relevant Project Appraisals.

6

Headquarters Office Accommodation

6.1

Office accommodation in the County Council's Corporate headquarters has been under increasing pressure since Local Government Reorganisation in 1997. Immediately after the reorganisation, the offices were occupied by approximately 1900 staff, however since then, the average occupancy rate has increased by some 100 employees a year and there are now around 2600 staff in central Headquarters buildings.

6.2

Last year, the County Council acquired the freehold of Aquitaine House in St Clement Street, which now accommodates 70 staff. Even with this additional space, there is still mounting demand for office space and the predicated levels of recruitment in Social Services, County Treasurers Department, Chief Executive's Department and others, coupled with the review of the Council's Personnel function, means that it is now necessary to search for additional accommodation. This approach, combined with other measures aimed at maximising the use of our existing space, should serve to restore a reasonable balance between the effective use of space and excess pressure on resources. Two properties have been identified as being capable of providing additional office space to meet this increasing demand. Both properties are within close proximity to the Council's main headquarters:

6.3

(i) Regency House, 13 St Clement Street

6.3.1

This property is situated on the corner of Southgate Street and St Clement Street and provides 444 sq m (4785 sq ft) of office space, split over the first and second floors, with the ground floor being occupied by a third party. The property has the benefit of four car parking spaces and is in good decorative order. It is considered that the property is capable of accommodating up to 45 members of staff. Regency House is available by way of a sub-lease for a term of 10 years at an annual rent of £62,500 per annum.

6.4

(ii) Athelstan House, St Clement Street

6.4.1

Athelstan House is situated immediately opposite Aquitaine House. The property is owned by Winchester City Council and extends over three floors, with the total accommodation amounting to 790 sq m (8500sq.ft). The City Council intends to occupy one floor, but it is understood that the ground floor and probably also the first floor may be made available, amounting to 510 sq m (5,500 sq ft). The space is open plan and is considered to be capable of providing accommodation for up to 50 members of staff. The property has the benefit of 12 car parking spaces.

6.4.2

6.4.3

Athelstan House is expected to be made available by way of a lease for a term of ten years. On the assumption that the two floors are made available, Winchester City Council has proposed an annual rent of £88,000; however this is considered to be excessive and it is proposed that negotiations are entered into, in order that a more satisfactory rental may be agreed.

In light of the continuing growth in staff numbers in Winchester, it is recommended that both of these leaseholds be acquired by the County Council. These buildings would together cost in the order of £230,000 per annum in rent and running costs. The corporate office accommodation budget is not able to absorb this cost. Given the number of departments potentially benefiting from this exercise and the corporate nature of the issue, it is proposed that a means be found within the budget rules to fund the revenue consequences of taking additional space.

7

Former Intech Building, Monarch Way, Winchester

7.1

Following the relocation of Intech to new premises at Morn Hill, various proposals have been considered for making effective use of the vacated space which extends to approximately 650 sq m on two floors in this former school building.

7.2

With the need for major repairs to its roof structure and for major internal refurbishment, consideration has been given to the possibility of demolition and replacement/redevelopment. On balance, it is considered that the refurbishment of the building will offer the most effective solution and it is proposed that it be converted and refurbished for office use in order to accommodate the Education Department Personnel Unit and part of Regulatory Services, which would be a major step towards relinquishing leased accommodation elsewhere in Hampshire.

7.3

The Education Department's personnel unit and Regulatory Services occupy a leased building at Fareham at an annual cost of £199,100 p.a. the lease would come to an end in March 2007. It would make sense if the County Council could vacate the lease property at Fareham and use the former Intech building hence avoiding the renewal of another major lease. The detail of the cost of this needs to be worked out, but on the assumption that the pay back period was no more than two to three years this would seem to represent best value for the County Council. Detailed proposals on this option will be worked up for further report to the Panel.

8

Health and Safety

8.1

8.2

The Panel is asked to note that the recent prosecution brought by the Health and Safety Executive against the County Council was settled in Winchester Crown Court with the County Council being found guilty on two counts in relation to hot surfaces. While all the hot surface work has been done in residential homes, discussions are now ongoing with the Director of Social Services about the relative risk and what other measures might need to be taken in other parts of the Social Services estate. Some work is also being carried out in special and nursery schools and discussions are ongoing with the County Education Officer with regard to further works. The outcome of the prosecutions was disappointing.

The Corporate Risk Assessment will be updated in the Spring of next year. It will remain a challenge for the County Council to balance all the competing priorities that it has with regard to health and safety alongside a limited but expanded health and safety budget. While physical measure will always be available and help enormously to reduce the hazard it is inevitable that local risk assessment and action by local managers remains one of the most effective ways to produce short term improvements in the removal of hazards.

9

Capital Repairs

9.1

The NDS Condition Fund allocation for 2003/4 is £15.07m and £7.4m is available for Capital Repairs (both these figures include an allowance for fees). Programmes of work have been approved for both categories of work. It is a condition of the NDS funding that all work must be completed and paid for by 31 August 2004. As a consequence, NDS funded schemes need to be given higher priority to ensure that the County Council makes maximum use of the resources available to it. The intention is therefore to concentrate on the completion of those projects and on the preparatory work associated with the programme of capital repairs. The impact of this is that it will be necessary to carry forward to 2004/5 the uncommitted element of capital repairs to enable delivery of the approved programme. As in previous years, there will also be a requirement to formally carry forward the uncommitted NDS schemes to ensure the County Council benefits fully from the allocation from Central Government.

10

Sprinkler Systems

10.1

Earlier this year the County Council agreed a policy for the installation of sprinkler systems where appropriate in County Council facilities. The scale of the County Council's Capital Programme is such that when the Policy was implemented there were a large number of schemes already designed at tender and awaiting start on site. The implementation of the policy has now caught up with the implementation of the programme, and in the last few months the department has begun to design the first group of projects where sprinkler systems will be installed. Since the County Council's decision earlier in the year the following have been implemented:

a) detailed research on the nature of sprinkler systems, their design and

use;

b) the implications and impact of installing sprinkler systems in County

Council buildings;

c) the financial implications of the policy; and

d) a systematic review of sprinklers with the Hampshire Fire and Rescue

Service.

10.2

Several project appraisals will be coming before the Education, Buildings Advisory Group and the Buildings, Land and Contracts Panel with recommendations to install sprinkler systems. A number of schemes will be coming forward where the recommendation, after a risk assessment, is not to install the relevant sprinkler system. It should be remembered that notwithstanding the decision to implement sprinkler solutions, the County Council's new facilities are being designed to meet current building and fire regulations without any relaxation which would often be the case where sprinkler systems are installed. The County Council's policy is being developed as a complementary measure, rather in substitution for any other structural fire precautions.

10.3

Detailed discussions with Hampshire Fire and Rescue Service have proved helpful and rewarding. A workshop with the key personnel from the Fire and Rescue Service and the department is planned for early in December. Detailed discussions between senior staff have also proved helpful and the Chief Fire Officer is making available a full time secondment of a senior fire officer to the department, to work on the development of the sprinkler and related fire issues. The first two contracts involved in sprinklers and residential accommodation are now in the market for tender and with the imminent release on to the market of the nursing care projects, there will be coming forward a series of recommendations to install sprinkler systems particularly in residential type accommodation.

10.4

The actual detailed design, type and operation of the sprinkler systems could vary. This work is currently being done. It could be anticipated that within the next few months we could commit £2-3 million on sprinkler systems on major capital projects. No financial provision exists in the Capital Programme for this work and the funding of the schemes is currently being considered.