The new Crown Commercial Services framework for facilities management services has caused concern among some of the service providers at whom it is targeted. FM World investigates.
4 April 2018 | FM World Team
When the revised Crown Commercial Service (CCS) framework was introduced at the end of last year, John Kenny, the CCS deputy director head of workplace, FM & Estates, explained how the process of rewriting the rules had driven "some difficult thinking about how we can make contract terms palatable for smaller operators."
FM World took soundings from service providers concerned about the new framework's viability from their perspective, then boiled these concerns down into seven key themes. Here, John Kenny - CCS deputy director head of workplace, FM & Estates - answered each of them.
1. FM providers have to provide costing upfront when they're unaware of the details of a particular job/contract.
Suppliers won't be forced to tender when they feel their maximum rate is insufficient to deliver the service. There are maximum rates for 55 services out of 125 as some cannot be priced out by unit without a more detailed view of the assets and properties.
The standard building definition went from 15 types of property to two, and the pricing model allows for specific building type pricing for a range of other property types. Moving services from 'mandatory' to 'non-mandatory' allows for bespoke and asset-driven pricing at call-off.
At framework, rates will be sought as maximums for a limited number of services, and these will only be held into call-off competitions where we looked to purchase standard services in standard buildings.
At call-off, all suppliers will assess whether the maximum rates are sustainable and challenge buyers to rethink where they feel the package is not deliverable within a standard service approach.
For small value direct award, we will approach suppliers that score highest on price alone, but they can decline the offer. Suppliers will only be expected to participate in a call-off mini-competition when they are comfortable with the rates they have - assuming the standard rates are used.
2. It's not sustainable for SMEs to deliver contracts with low margins and restrictive contract terms and conditions adherence.
We encourage SMEs to tender and win contracts, but we are unable to operate in an environment that advantages either SMEs or larger operators.
For call-off contracts we emphasise affordability and sustainability of price to discourage suppliers from entering loss-leading deals.
We investigate evidence of under-bidding to ensure the most economically advantageous tender wins. The framework aims at a balanced scorecard approach for social value benefits that form part of the overall qualitative evaluation alongside quality submissions and price competition.
3. Pricing mandatory elements is impossible for single-service providers, so the bigger integrated providers with existing supply chains have more clout.
It is unhelpful to have suppliers on a framework where only a few can deliver the range of bundled services most of our customers need. However, providers bidding for the contract can subcontract services.
This allows suppliers to self-deliver to their own specialism, while tendering for work requiring a smaller need for something they did not ordinarily do.
Operators can provide qualitative examples of previous delivery for a limited number of services. Specialist operators in either hard or soft FM can compete on quality and not have to provide past evidence of all services.
?For this specific framework, CCS is looking for bundled FM suppliers, either via self-delivery, prime and sub, or other partnering approaches. It is not a hard or soft FM framework where we are inviting tenders from suppliers that just deliver one or the other.
This procurement is intended to purchase bundled FM provision across multiple services, but only to price at framework for certain standard service types.
4. Compiling a long list of suppliers from which each stakeholder selects a shorter list to price for specific work accurately means competitive tension in pricing but service providers are protected from blindly bidding.
It's possible but problematic to compete on quality-only basis. Our customers expect CCS to have tested the technical and qualitative competence of suppliers, but also to have considered a range of pricing points to ensure competitiveness.
The Public Procurement regulations under the 'Open' procedure do not allow a medium or short-list approach to call-off competitions from frameworks. All suppliers must be treated equally on the basis of an open and fair competition. Therefore, some assessment of price must take place.
Suppliers also have an obligation to benchmark their rates, which we also moved from six months to 12 as a result of requests from suppliers through the process. We need to understand the original pricing points and that our suppliers have the ability to benchmark their pricing further at a later stage.
5. Businesses will take risks to deliver short-term cost savings but service will rarely be what the stakeholders require resulting in financial loss and reputational damage.
At framework, there is no guarantee of business, nor is there any indication that suppliers will be mandated to tender for work if they believe the rates tendered cannot be exceeded or are unsustainable.
This is a judgement to be made by each supplier at the time of tender, based on the specific contract details. The framework merely allows for a limited set of standard rates, which can be flexed to suit, when the specifics of each portfolio of properties are known.
6. How can the risk be made more commensurate with the reward from a supplier perspective?
We have substantially changed the original risk allocation to assist suppliers. Examples of this have been a reduction from £10 million liability to £5 million for uninsured loss to protection against rises in living wage over the term of both the framework and contracts, from a position where all the risk sat with suppliers.
The latest changes to Terms and Conditions (mid-March) addressed more areas of risk and provided substantial additional protection for suppliers, for example, when transferring staff that have protected public sector pensions.?
7. The whole framework is too complex and rigid.
?We have allowed greater flexibility, but it may not be right for some suppliers. Feedback shows this is an improvement from previous models.
This is the first of a number of new framework agreements within workplace and FM that aim to open up government FM business to more suppliers. CCS must adhere to requirements and regulations when letting frameworks and, on that basis, we accept that it may not be something that all suppliers are able to compete in.