19 September 2013
In June this year, FM World reported that Amey had been awarded a £150 million, 10-year FM contract to service three London councils.
The deal saw Amey combining FM services at Westminster City Council, the Royal Borough of Kensington and Chelsea and the London Borough of Hammersmith & Fulham.
It was expected that each council would save over £2 million annually. Included in the arrangement were building security services, maintenance, catering, landscaping, cleaning and environmental management.
Justin Mendelle and Tim Farr of Sharpe Pritchard Solicitors advised the Tri-Borough authorities on this project, and have advised local government and public authorities on a wide range of FM contracts.
Based on their experience of 'the good, the bad and ugly' tenders from FM contractors over the years, Mendelle and Farr highlight four areas where bidders could improve their chances of success, particularly in relation to long-term, strategic facilities management projects. In the context of these four issues, they also outline some of the interesting features of the Tri-Borough contract.
1) Demonstrate that you have understood the objectives
Read the documentation that the authority makes available to you. Do not assume that you only have to provide the standard information that you have supplied before for similar tenders. There are few things that are guaranteed to alienate your potential clients as quickly or effectively as failing to properly understand their key objectives.
In a well-structured procurement, the project objectives will be clear. It may simply be a case of reiterating those, with a brief statement of how you intend to address each of them. In more challenging procurements, there is a real opportunity for bidders with initiative to shine - if you are able to distil a complex set of requirements into a straight-forward, coherent and easily intelligible set of objectives, you will edge ahead of the competition.
Practically, you may choose to include a stand-alone summary of the objectives. Wherever possible and sensible, your responses to the individual questions asked by the authority should be linked back to those objectives.
For example, in the Tri-Borough project, one of the key points in the proposals was the guarantee that each council would retain its sovereignty to shape shared services to local needs. This had to be safeguarded through mandates that set
out the specific services that shared teams would deliver across each borough.
This was achieved through a structure for inter-authority arrangements which created a single client interface for the contractor, while ensuring that sovereignty remained within the three separate boroughs - in other words one estate but three councils.
2) Make best use of information published by the contracting authority
Having got to grips with what the authority wants to achieve, take the time to comprehensively review the information that has been published. Sometimes, it can be difficult to distinguish between important materials and 'filler'.
At the very least, you should read everything that has been made available to you and the other bidders during the course of the procurement.
Analyse the information, then raise intelligent queries. The authority is seeking the best outcome from its procurement and you should not assume that the information that it gives you is the complete picture.
In the same way as your solution will develop over the course of the procurement, so the information emanating from the authority can improve and assist you in optimising your offering.
If you receive information that is incomplete or simply cannot be ready in time for your submission (information relating to TUPE and transferring employees is often notoriously difficult to obtain), make clear to the authority what your assumptions are when you submit your bid. Be transparent (but avoid being critical) about the quality of the information that you have received.
Mendelle and Farr managed the procurement process on behalf of the Tri-Borough team via the competitive dialogue process. Some authorities have tended to shy away from competitive dialogue due to its reputation for being resource-intensive, expensive and long-winded.
However, when used for the right project and if dialogue is focused, it is possible to achieve benefits, such as, savings and ongoing innovation, which would be difficult to achieve through other procurement routes.
There were two key features in keeping the Tri-Borough process on track and moving forward. First, the project was planned thoroughly before the formal procurement process began. Secondly, a set of clear internal and external communication policies were introduced to keep all parties informed of progress.
3) Incentivise improvement
This is your opportunity to think creatively, to adopt an approach that neither the authority nor, perhaps, other bidders have considered. Although each procurement exercise has its own unique features, useful levers to consider for incentivising on-going improvements include:
- Monetary benefits - direct financial incentives related to performance, either to or from the authority;
- Non-cash benefits - such as investment in improvement schemes that are related to the procurement but do not form part of the key service delivery; or
- Mutually binding commitments - such as placing obligations on the authority to facilitate the improvements, thus ensuring their 'buy-in' to your proposals.
No matter what you propose, it is also vitally important to maintain credibility. Do not make outlandish offers if you cannot back them up with hard evidence. Do not stretch yourself so thin as to compromise on the core quality of your services.
Having achieved cost savings as part of the procurement process, the 10-year Tri-Borough outsourcing arrangement also ensures that the three boroughs and Amey will innovate and seek to add value over the course of the contract, through shared governance arrangements.
Mendelle said, "We examined the traditional customer-contractor relationship and identified that moving from a polarised, reactive model to one of proactive collaboration and service delivery could unlock savings. In addition, while Amey was able to offer significant incentives for on-going improvements, the councils needed to be satisfied that these were credible and sustainable. This was achieved through an open and transparent exchange of views and information during the whole life of the procurement."
4) Structure your proposal effectively
Do not be tempted to pull a model answer off the shelf. If you have understood the project objectives, made best use of the information available and have a compelling offer to make, do not stumble at the final hurdle by submitting your proposal in a confused or haphazard fashion.
Draw out the key elements in an executive summary. Read the questions, then re-read the questions and then re-read the questions again - all too often, we see bidders providing responses to questions that have not actually been asked or failing to tell the authority what it actually needs to know.
Put yourself in the shoes of the authority and ask whether you have provided them with everything that they have requested. Far too often, bidders have a pre-conceived idea about what it is that they are being asked to provide and this has a negative impact on their proposal.
Review your final proposal in the cold light of day - best of all, give that task to someone in your organisation who has not had any involvement in the procurement. They can usually tell whether the proposal is clear, logical and well-structured. A fresh pair of eyes will identify whether it is difficult to follow or muddled.
If you have been provided with details of the evaluation criteria and scoring, ask your independent reviewer how easy it is to mark your proposals against the set criteria. This can be very enlightening.
The key challenge in structuring any shared services arrangement over different local authorities is how to balance each authority's requirement to maintain their local sovereignty, while creating a single efficient structure for decision-making and management. Within the Tri-borough project, it was important to find a way to bring together three diverse estates and establish levels of services that would be acceptable to all three councils.
The outsourcing of the total FM contract covered around 20 services from reprographics to reception services, from fire-risk management to flag-flying and from energy management to electoral services.
Key practicalities which needed to be addressed in such a large contract included issues such as property ownership and access issues, TUPE (one of the first on the agenda, but often the last to be agreed), IT infrastructure (to ensure the systems talk to each other), KPIs and performance monitoring, and indemnities. This was achieved by a transparent and clear sharing of information, with a contractor who clearly understood what the councils required and client who was able to respond intelligently and effectively to the demands of the procurement.
"We were keen that the signing of the contract documents should not be the end of this, but the beginning, and that it should continue through the life of the contract," explains Mendelle.
"It was important to ensure that there is a partnership approach to the whole project and that a "them and us" situation does not evolve.
To this end, the governance structure of the contract ensures regular top level meetings between the FM contractor and the authorities to plan strategy, iron out any wrinkles along the way, and look at ways of innovating and adding value in the future."
When a long-term, strategic facilities management project works well, the prize for the FM contractor will be substantial. Alongside the main contract, a framework agreement has also been set up which is already generating significant interest.
This opens the door for any of the other London boroughs, the City of London and maintained schools in those areas to join in and benefit from the economies of scale achieved by the Tri-Borough agreement.
Such bids require a major investment of time and resources on the part of a contractor, and it is worth exploring any way in which it is possible to give proposals that winning competitive edge.