ADD2316 SfL Capital Fund Technical Building Due Diligence

Type of decision: 
Assistant Director's decision
Code: 
ADD2316
Date signed: 
19 February 2019
Decision by: 
Patrick Dubeck, Head of Regeneration

Executive summary

This Assistant Director’s Decision (ADD) seeks approval for up to £50,000 of revenue expenditure for technical building due diligence services. This will form part of the assessment of applications to the Skills for Londoners Capital Fund (the Fund) Round 2 programme.

Skills capital due diligence services (cost and building) were procured in September 2015, as approved in DD1307. The contracts expired in August 2018 and so the LEAP Delivery Team are working with TfL Procurement to Single Source the same consultant; WSP, to carry out the necessary due diligence on the successful Stage 2 projects. It is important to single source WSP so that all building due diligence carried out across the Fund programme is consistent and fair for all shortlisted applicants. The budget envelope for this round of due diligence services was agreed through Mayor Decision (MD)2142, which approved £5m of revenue funding to support the administration of the Fund. This ADD is sought because previous approvals for due diligence services, as agreed in DD1307 and DD1467, did not include Round 2 of the Fund.

Decision

That the Assistant Director of Regeneration and Economic Development approves:

1. Up to £50,000 spend on technical building due diligence services to assess shortlisted applications at stage 2 of the Skills for Londoners Capital Fund; and

2. An exemption from the GLA’s Contracts and Funding Code so that WSP can be appointed without a competitive tender.

Part 1: Non-confidential facts and advice

Introduction and background

£114million Growth Deal funding (provides funding to local enterprise partnerships; partnerships between local authorities and businesses) 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 Fund programme is the next iteration of, and builds on thesuccesses 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 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 Fund programme.

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

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 Fund 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 building technical due diligence required for the shortlisted stage 2 Fund Round 2 projects.

The provider of the building technical due diligence has provided an estimate of £30,650 (excluding VAT) to complete the due diligence services on up to twelve 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 Fund. WSP is being contracted via a single source procurement process as consistency is key in ensuring that all applicants are given a fair chance when being appraised for funding. It would not be fair to change the due diligence consultant at this stage in the funding programme. Once this round of funding is completed and the funding programme concludes, the LEAP Delivery Team will carry out a competitive procurement process for any future funding which may become available from Central Government.

Objectives and expected outcomes

The building surveyor provides the GLA (for individual project applications which have been shortlisted to receive LEAP funding) an appraisal of building/property issues including technical, legal, environmental, building regulation and restoration matter. This will enable the GLA to provide adequate assurance that proposed projects are deliverable and to inform the decision made by the GLA and LEAP to fund these projects.

Equality comments

Under section 149 of the Equality Act 2010, in making these decisions “due regard” must be had to the need to eliminate unlawful discrimination, harassment and victimisation as well as to advance equality of opportunity and foster good relations between people who have a protected characteristic and those who do not. Protected characteristics include age, disability, gender reassignment, pregnancy and maternity, race, religion or belief, gender, sexual orientation (and marriage or civil partnership status for the purpose of the duty to eliminate unlawful discrimination only). This duty has been taken into account, but no additional equality impact assessments are required beyond those considered in the relevant planning documentation for the Mayor to make these decisions.

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 building 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.

WSP will be single sourced to carry out the building technical due diligence and will sub contract this work, as done previously, to Currie Brown.

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


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