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 Selected story in full
27 February 2013
Libraries outsourcing: the facts

Following an announcement about the status of the Libraries Outsourcing contract, made by Cllr Tim Pollard at a meeting of the full council in Croydon on 26th February, there have been a number of wholly misleading reports put about by Labour and its supporters on what the situation really is.

So if Labour is misleading people, what is the real situation on the libraries outsourcing contract? It is this. Back in November our Corporate Services Committee, which is the council body which reviews larger contracts, recommended to the Cabinet Member responsible for finance (Cllr Steve O’Connell) that he should grant 'preferred bidder' status to John Laing Integrated Services, following the procurement exercise jointly undertaken with the London Borough of Wandsworth.

Preferred bidder status means that the organisation chosen has come top of the bidders in terms of their quality and price, with the exact balance between those two having been set when the contract was advertised – we let all bidders know the framework within which their bid will be evaluated so that they can have the best possible chance of understanding how they must structure their bid in order to win.

So JLIS were the highest scoring bidder in the final bid stage and went into the ‘final straight’ of letting the contract where all the final arrangements for transfer should be confirmed. If you like, this is the little details, the variance of which could not have changed to whom the contract was let.

Normally when we go through this process nothing is put forward for change which is of sufficient significance to mean that, had we known it at final bid stage, there is any possibility that it might have changed the decision on who the preferred bidder was to be. But when that happens, or when there is room for doubt about whether the change is sufficient, we have to follow a particular process before we can go forward. That process is that we have to roll the procurement back to before the preferred bidder was announced. In practice this means that all bidders can re-submit their final bid, making any changes they want to in the light of the material change we are considering.

The change that JLIS wanted to make related to the upper limit to which they might have to increase the pension contributions they make for the libraries employees. Many of our library staff are in the local authority pension scheme and when staff are transferred as part of an outsourcing they usually retain the right to continue in that scheme, the new employer taking on the responsibility for paying employers’ contributions. The employer is obliged to raise its pensions contributions if the council does for its direct employees and it was this which JLIS wished to cap, albeit at a level which is much higher than that pertaining now and in the foreseeable future.

Whilst this may not sound like much of a change to their bid, it is sufficient to take us into that process of having to go back one stage.

It does not, as some blog sites have suggested, mean that they are walking away from the deal. We understand that they do wish to re-submit their bid, with this minor amendment. What it does mean, though, is that the unsuccessful bidders have the right to resubmit their bids too. They may decide to resubmit the same bid or they could decide to change it completely (subject to any commitments they made in the previous stages and to the rules of the procurement process they signed up to). That’s a risk that JLIS are taking – they could be undercut by another bidder who had previously scored lower than them when the bids were assessed the last time.

Labour claims that this procurement process is in chaos. They are quite wrong about this. This is a setback, but nothing more than the normal trials and tribulations of letting contracts within the EU frameworks we are bound by. The net outcome of this should not be any worse that the deal we previously preferred and could actually be significantly better.

It is frustrating that a change which would have delivered significant savings, whilst simultaneously developing the library service, is now going to occur a little later. But the most important thing is that we get the process right and it is worth a little inconvenience to make that happen.

The full text of Councillor Pollard’s statement is reproduced below:

I thought I should update the chamber on the latest position with regards to our finalisation of a new library services contract.

Members will recall that in November 2012, on the recommendation of Corporate Services Committee it was agreed that John Laing Integrated Services should be appointed as preferred bidder for our Libraries Management contract, their solution scoring the highest score on the price and quality criteria we had set. Preferred bidder status enables the bidder and the council to confirm commitments in the run up to the formal signing of a contract. However, during the process of clarifying these final terms with our preferred bidder, they unexpectedly introduced a late amendment relating to capping possible future pensions contributions.

Although there is only a very small chance of this impacting on future costs, it does change the risk profile and commercial position. When changes of this kind are put forward we have to follow EU procurement rules and act accordingly. As a result, to ensure fairness to all of the bidders, we have to take a step back in the process to allow all the final bidders time to consider this change and propose any amendments they wish to their original proposals. It is important for Council to understand that all bidders are at liberty to adjust their final bid in any way they choose, subject to the procurement rules, and can adjust bid elements completely unrelated to the material change which triggered this reopening of the bidding stage if they want to.

Two of the three shortlisted bidders have confirmed that they will be re-entering the procurement dialogue which is likely to lead to the resubmission of their final bids. Those final bids, including any changes made, will be evaluated against our original criteria and we will move forward again to the preferred bidder stage with the highest scoring tenderer. This does not have to be the same bidder as was previously confirmed as the preferred bidder.

Although this does mean a short delay before the contract can be agreed and signed, it is necessary in the circumstances. The council is committed to keeping all branches of our libraries open and we are determined to secure best value for local taxpayers through all of our financial negotiations.

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