Agenda item

(Director of Communities) To consider the attached report (CHB-013-2015/16).

(1)        That for Phase 3 of the Council Housebuilding Programme the Council adopts an alternative procurement strategy and breaks down the 8 sites making up Phase 3 into 7 separate contracts, with a mixture of Design and Build contracts and traditional fully-designed contracts, and tenders them in accordance with the Council’s Contract Standing Orders;

(2)        That the additional costs associated with the design, management and supervision of 7 separate contracts be met from the existing HRA Capital Programme budget for house-building; and

(3)        That a separate Portfolio Holder Decision be agreed when the costs associated with the Consultant’s design, management and supervision of the 7 separate contracts are available.

The Assistant Director (Housing, Property & Development) presented a report to the Cabinet Committee. He advised that there was a lack of interest from larger contractors on the East Thames Framework to undertake Phase 3 of the Council’s house-building programme as a whole, due to the complications and difficulties managing small dispersed sites. It was therefore, necessary to look at alternative procurement methods. Soft market testing suggested that a better approach would be to let the works through a mixture of smaller contracts using different contract types.

The Assistant Director reported that Pellings LLP had undertaken a soft market test with other contractors outside of the East Thames Framework, some of whom were local small contractors, to gauge their interest or otherwise in tendering for the 8 sites that make up Phase 3. The feedback from this exercise had resulted in a mixed response as detailed below:

·         some were interested in a design and build approach only;

·         some in a fully designed approach;

·         some if the tender was based on a two stage approach (initial enquiry and then negotiated pricing);

·         some were interested in only a small number of units; and

·         from some, there was no interest at all.

One common theme was that they would not be interested in the whole package due to the geographical remoteness of each site.

From the outcome of the soft market testing it was recommended that the Council broke down the 8 sites making up Phase 3 into 7 separate contracts with a mixture of Design and Build contracts and traditional fully designed contracts, all in accordance with the Council’s Contract Standing Orders. Although not the reason for taking this approach, it was noted that this would mean that each contract would be below the OJEU Thresholds and it would also reflect the varying preferences of the contractors approached through the soft market testing. The suggested contracts were as follows:

Contract A:   Springfield Site C and Centre Avenue, Epping - 8no. units using design and build.

Contract B:   Stewards Green Road, Epping - 4no. units using a traditional procurement.

Contract C:   Parklands. Coopersale - 4no. units using design and build.

Contract D:   Queens Road, North Weald  - 12no. units using design and build.

Contract E:   Bluemens End, North Weald - 4no. units using design and build.

Contract F:    Centre Drive, Epping - 1no. unit using a traditional procurement.

Contract G:   London Road, Stapleford Abbots - 1no. unit using a traditional procurement.

It was noted that by having 7 separate contracts there would be additional costs associated with supervising 7 contracts instead of 1 contract. In addition, there would be additional up-front costs associated with fully designing the schemes that are to be let using a traditional procurement. These additional costs were not available ate the meeting, but would be available soon after.

It was noted that, in terms of the risks associated with adopting this approach, although there was more likelihood of something going wrong, the impact of anything going wrong would be considerably lower.

Decision:

(1)        That, for Phase 3 of the Council Housebuilding Programme the Council adopts an alternative procurement strategy and breaks down the 8 sites making up Phase 3 into 7 separate contracts, with a mixture of Design and Build contracts and traditional fully-designed contracts, and tenders them  in accordance with the Council’s Contract Standing Orders;

(2)        That the additional costs associated with the design, management and supervision of 7 separate contracts be met from the existing HRA Capital Programme budget for house-building; and

(3)        That, if required a separate Portfolio Holder Decision be agreed when the costs associated with the Consultant’s design, management and supervision of the 7 separate contracts were available.

Reasons for Decision:

The Cabinet Committee had already agreed a Procurement Strategy for its house-building programme, which made use of the East Thames Group EU-compliant Framework of Contractors. However, based on lessons learnt from Phase 1, and through discussions held with a number of Contractors, this report explores a number of other options.

Other Options Considered and Rejected:

To undertake a separate EU procurement exercise, specific to just the Council’s House-building Programme. This would be time consuming, costly and would not guarantee interest from any other Contractors.