Agenda item

Report of the Deputy Chief Executive (People)

The Cabinet considered a report of the Deputy Chief Executive (People), which sought approval of an extension to the existing Pertemps managed service provider solution and a re-procurement exercise.

The Council currently had a contract for the supply of temporary agency workers, which acted as support contract if the Council’s first choice sourcing routes of employment from the casual working pool or fixed term appointments were unsuccessful in fulfilling temporary staffing vacancies.  The current provider of the contract was Pertemps, who delivered a managed service provider (MSP) solution, which involved supplying their own temporary workers as well as workers from a 2^nd tier of suppliers that Pertemps managed on behalf of the Council.

The Cabinet noted that investigations had been completed in the past about the possibility of removing the contract and the Council potentially establishing its own ‘agency’.  The idea was raised following another West Midlands Authority establishing an in-house agency, removing the need for a MSP contract.  This arrangement and the potential costs of establishing an in-house provision had been investigated and it was found that the implementation and ongoing costs would be significant and would not eliminate the need for agencies, particularly in specialised markets such as social care.  For these reasons the Council establishing its own in-house agency to replace a MSP service was not recommended.

Over its 4 year life, the contract had seen fluctuating demand with spikes over the last few years to support sickness, fundamental service reviews and increases in demand.  Spend through the existing contract had fallen in the first quarter in 2017-18 by £920k compared to the same quarter in 2016-17.  Some of the fall could be attributed to successful internal recruitment campaigns, to fulfil roles where agency workers had been heavily used before. 

Solihull Metropolitan Borough Council (SMBC) led the procurement process for the existing contract on behalf of Coventry City Council and Warwickshire County Council (WCC) through Eastern Shires Purchasing Organisation (ESPO’s) Managed Services for Temporary Agency Resource framework (MSTAR).  The objective at the time was to aggregate spend for the three councils to achieve greater savings and efficiencies, by driving down prices and by resourcing one tender process instead of three.  The contract was due to expire on the 1st December 2017 and had no contractual extensions available.  Due to the value of spend the Council must follow the Public Contract Regulations 2015 and compliantly procure a new contract. 

It had been agreed between SMBC and CCC that Coventry will now lead the re-procurement of the new contract.  Warwickshire County Council were yet to confirm that they would continue to collaborate on the contract.

All three Councils investigated the possibility of direct awarding a new contract and it was noted that, to do this, an established framework set up for public sector use by a purchasing organisation would need to be used.  The frameworks provide a compliant route to contract as well as requiring a less resource / time intensive process than the Council procuring its own contract.  The frameworks also aggregate public sector spend to support reductions in cost.  There were two established frameworks that offer a suitable procurement route and following a benchmarking exercise for both ESPO’s MSTAR2 and Yorkshire Purchasing Organisation’s (YPO) HR Solutions frameworks, it became clear the Council would be unable to direct award a new contract without significant risk.  For this reason, the Council needed to complete a tender process and due to the level of interest, size of the market and amount of resource required, it would not be efficient for the Council to complete a European tender process itself.  Further benchmarking on MSTAR2 and YPO was therefore undertaken to identify which framework would offer best value for completing a further competition tender process under, to award a new contract.  An analysis of the benchmarking between the two frameworks was detailed within the report and indicated that MSTAR2 offered the best value to the Council, based on twelve months data for previous spend.

The benchmarking and cost of change exercise proved to be more complex than expected, meaning it took more time to complete and reach the agreed outcome.  Due to this and with the current contract expiring on the 1st December 2017, there was little time to procure the new contract and implement this at the Council without severe disruption.  It was therefore proposed to continue transacting with Pertemps for a further 6 month period following the expiration of the contract until the 31st May 2018.  The Council would continue working under the expiring contracts terms and conditions, enabling it to avoid rushing the new procurement and to give a suitable implementation period for the new contract.

RESOLVED that the Cabinet:-

1.  Authorise the procurement of a new three year contract with the option to extend for one further year for a managed service provider for temporary agency workers to commence from the 1st June 2018 and expire on the 31st May 2022 (if extension is taken).

2.  Authorise the continuation of Pertemps as the Council’s MSP for a further 6 months following the contract expiration until the 31st May 2018, to maintain the existing service whilst we procure and implement the new contract.