ADD2313 Skills for Londoners Capital Fund Technical Cost Due Diligence

Type of decision: 
Assistant Director's decision
Code: 
ADD2313
Date signed: 
08 January 2019
Decision by: 
Debbie Jackson, Assistant Director of Regeneration

Executive summary

This Assistant Directors Decision (ADD) seeks approval for up to £50,000 of revenue expenditure for technical cost due diligence services. This is in support of the assessment of full applications to the Skills for Londoners Capital Fund (SfL) Round 2 programme. The Skills capital due diligence services (cost and building) were procured in September 2015, as approved in DD1307 and under GLA compliant procurement processes. The contracts have since expired in August 2018 and so the LEAP Delivery Team are working with TfL Procurement to Single Source the same consultant; Arup, to carry out the necessary due diligence on the successful Stage 2 projects. It is important to single source Arup so that all cost due diligence carried out across the SfL funding programme is consistent and thus fair for all shortlisted applicants. The budget for this round of due diligence services is agreed as part of the £5m revenue funding approved under MD2142. This ADD is sought because previous budgets for due diligence services, as agreed in DD1307 and DD1467 did not include Round 2 of SfL.

Decision

That the Assistant Director of Regeneration and Economic Development approves:

A maximum of £50,000 spend on technical cost due diligence services to assess shortlisted applications at stage 2 of the Skills for Londoners Capital fund.

Part 1: Non-confidential facts and advice

Introduction and background

£114million Growth Deal funding has been made available for investment in the estate and equipment of skills providers over the period 2017/18 to 2020/21 through the Skills for Londoners Capital Fund (the Fund). This funding has been awarded to the London Economic Action Partnership (LEAP) to deliver a programme of capital expenditure on infrastructure which will support the facilitation of delivery of skills services in London and does not amount to the funding of education services. The main capital Fund has been broken down into rounds allocating £25.7million of the £47million available in the first tranche of funding. A second funding round was launched in summer this year with a refreshed prospectus and developed to align with priorities emerging from the new London Skills Strategy. Stage 1 of this round has been completed and 29 projects have been invited to Stage 2 to submit a detailed application totalling £142m. From experience, we know that projects fall away and/or de-scope in size and so have overprogrammed for this stage.

The Skills for Londoners Capital Fund programme is the next iteration of, and builds on the successes and lessons learned from, the Further Education Capital Fund programme. Both programmes capture Growth Deal funding allocations from Central Government for capital investment in vocational skills projects. As such, the Skills for Londoners Capital fund Round 1 continued to utilise the technical due diligence services procured in February 2015 under DD1307. The contracts have since expired in August 2018 and thus for Skills for Londoners R2 we are working with TfL to single source procure the same contractors to carry out the due diligence on the shortlisted projects at Stage 2 of R2 SfL to ensure consistency and fairness for the Skills for Londoners Capital funding programme.

A new budget of up to £50,000 is now required for the Skills for Londoners Capital Fund Round 2 assessment process.

The Skills for Londoners Capital Funds, provided by Government, are capital only and, as such, there is a revenue requirement to support delivery of the programme. MD 2142 approved a process of swapping up to 10% of the Growth Deal capital funding receipt for revenue funding. The total capital to revenue swap as described in MD2142 amounts to £5m and a total of £300,000 of this amount has been profiled for technical due diligence support in assessing applications to the Skills for Londoners Capital programme. Within the £300,000, a total of up to £100,000 was programmed for spend on technical due diligence in 2017/18. £50,000 is now being requested to spend on the cost technical due diligence required for the shortlisted stage 2 SfL Round 2 projects.

The provider of the cost technical due diligence has provided an estimate of £48,000 to complete the due diligence services on up to twelve Skills for Londoners Capital Fund applications (including Mayors Construction Academy (MCA) projects and combined SfL and MCA projects). This ADD seeks approval for up to £50,000 to allow for any unforeseen costs in completing the assessments for Round 2 of the Skills for Londoners Capital Fund.

Objectives and expected outcomes

Cost due diligence advice is required to provide the GLA with appraisal and due diligence of the cost of and building/construction works proposed for individual project applications. This will enable the GLA to provide adequate assurance that proposed projects are affordable, viable and deliverable and inform the decision made by the GLA and LEAP to fund these projects.

Equality comments

The Skills for Londoners Capital Fund seeks to address issues of modernisation and rationalisation of further education and skills providers’ estate. In doing so, specific equality benefits include;

• Increase in accessibility of college estate (measured in m²);
• Increase in opportunity for learners with Special Educational Needs and Disabilities to be engaged and retained in vocational and academic study;
• Increase in course provision, enabling more learners per annum; and
• Increase in apprenticeships and traineeships, allowing students from deprived areas an economic incentive when obtaining a qualification.

The original contracts were procured using a fair and competitive process. The received bids were evaluated by three independent Officers. As mentioned previously, the original contracts expired in August 2018 and to ensure a fair and consistent due diligence approach is maintained across the Skills for Londoners Capital fund programme, a single source tender procurement process is being carried out for the two consultants. This procurement is not expected to demonstrate an effect on equality requirements.

Other considerations

Risks around projects which are not deliverable. There is a risk that without the technical due diligence advice, proposed projects would not be affordable or deliverable. Any queries resulting from due diligence will be raised with the project and a resolution or mitigation will be required before the project is offered funding and / or before a funding agreement is entered with the delivery partner.

There is a risk that using a single source procurement process will be challenged, however we are confident of our rationale in ensuring that the programme is fair and consistent. We also commit to run a competitive procurement process for any future funding streams.

In the event of a conflict of interest, i.e. the consultant is acting for both the GLA and a funding recipient on a current project, the consultant is required to advise GLA of the details in writing and propose suitable and acceptable measures to ensure objectivity and non-collusion. We also reserve the right to not instruct them in certain circumstances if we feel it’s necessary.

There is a risk that single sourcing is not successful, and the original consultants do not wish to continue their work with the GLA. To mitigate against this risk, a GLA Officer has liaised with the consultants to gain confirmation of their interest.

Financial comments

The cost of up to £50,000 for this proposal will be funded from within the £5m revenue funding earmarked for the Skills for Londoners Programme as per MD2142. As noted within the main body of this report, £300,000 of the £5m revenue funding for this programme has been allocated towards due diligence costs that arise during the duration of the programme.

Planned delivery approach and next steps

The cost due diligence services will be procured via TfL using a single source tender process and the services required will be appropriate to the scale, complexity and risk associated with each project. The procurement of the original contracts was approved in DD1307.

Ove Arup Ltd will be single sourced to carry out the cost technical due diligence.

Activity table

Activity

Timeline

Single Source Procurement of contracts

January 2019

Delivery start date for due diligence

February/March 2019

Delivery end date for this due diligence

March 2019

Contract End Date

January 2020

 Start of Competitive Procurement of new Due Diligence contracts for future funding rounds.

Summer 2019