Decision Maker: Chief Housing Officer
Decision status: Recommendations Approved
Is Key decision?: No
Is subject to call in?: No
The TAM contract is currently in year 9 of a
10-year contract and is due to end on the 30th June 2024. With just
under 14 months remaining on the contract, the Council have
appointed Altair Ltd to support the Council with the commissioning
element for the replacement contract.
Even though the commissioning process is progressing well, the current project plan will not allow for a thorough commissioning and procurement process to be completed in time for the 1st July 2024. To provide the Council with the required flexibility to undertake a comprehensive process, the current contract will need to be extended by at least 12 months.
Whilst progressing with the commissioning process, we also need to ensure that the current TAM contract delivers the level of service expected by our tenants and leaseholders. However, we are operating in unprecedented times due, in part, to Brexit, the COVID-19 pandemic and now the war in Ukraine. This has led to rising construction prices in the housing sector with repairs and maintenance costs surging over 2021 and 2022.
The above factors have led to the current schedule of rates in the TAM contract falling below market rates, which led to the Council commissioning Ark Consultancy to review the contract rates against the rates in the market. This identified that a number of the rates in the contract are significantly below market rates, which is having a significant impact on OPSL’s ability to attract the required supply chain to deliver the contract to the required level.
This independent review was provided to OPSL for them to propose new rates to the Council prior to entering into a negotiation. The commercial negotiation has led to a number of rates in the contract being increased.
It is important to note that the rates agreed with Osborne in negotiations were below the average market rates identified in the ARK Benchmarking review and thus continue to represent good value for money.
As part of the negotiation process, OPSL have also agreed to the implementation of an improvement plan, which will be led by the Contract And Commissioning Consultant and supported by the Head of Commercial Housing Contracts. This will look at a number of areas across the client and contractor side of the contract, focusing on:
•OPSL proposed overhead and delivery model linked to new rates and determine suitability to deliver services for the remainder of the contract period.
•Targeting specific problem areas/themes within the contract.
•The Council’s processes regarding operational management of the contract.
•Carry out a review / audit of the current OPSL systems and processes and then work with OPSL to develop a targeted annual efficiency saving plan by Osborne for 23/24 and 24/25.
•Undertake comprehensive review of current TAM performance measures to include re-defining appropriate KPIs, the contract affordability, data collection criteria, data sample criteria
1)To approve the extension of the Total Asset
Management (TAM) contract with Osborne Property Services Limited
(OPSL) for a further 12 months until 31st June 2025.
2)To approve an increase on the target contract rates in the TAM contract following a commercial negotiation with OPSL.
The alternative to extending the contract is
to bring in new contractors to cover the bridging period between
the end of the current and start of the new contract. This approach
would however have little interest from the market due to the
mobilisation costs and the short contract period.
In terms of the rates, we could just provide OPSL with the inflationary CPI increase as per the contract, however, cost increases within the industry are outstripping inflation meaning the contract rates would fall further behind market rates. This would impact OPSL ability to bring in good quality sub-contractors as well as making it difficult to hold OPSL to account for the service they are providing to tenants and leaseholders.
Publication date: 02/06/2023
Date of decision: 25/05/2023