DMFD172 Legal costs on respiratory protective equipment reprocurement

1.1 As part of the decision to reprocure the London Fire Commissioner’s (LFC’s) respiratory protective equipment (RPE) contract, the Deputy Mayor for Fire and Resilience gave prior authority to incur legal costs as follows: “Commit to expenditure of further external legal costs of up to £52,000 [£40,000 plus 30 per cent contingency] in the reprocurement of the RPE.” This was agreed in Deputy Mayor for Fire and Resilience Decision 124 (DMFD124), which is appended to this decision for information (Part 1).

1.2 Subsequent updates to the Deputy Mayor for Fire and Resilience set out that the approved amount of expenditure on legal costs for the reprocurement was likely to be exceeded. In order to help prevent any delay to the procurement process, the Deputy Mayor for Fire and Resilience therefore agreed to waive approval requirements under the LFC Governance Direction 2018, until such time as the anticipated total amount of additional legal costs was known, at which point formal approval would be sought.

1.3 Under the Mayor’s LFC Governance Direction 2018, the LFC is required to obtain approval from the Deputy Mayor for Fire and Resilience for expenditure above £150,000. Although the costs discussed in this decision form are below this threshold, DMFD124 consisted of a number of different types of expenditure, meaning that any increase in legal costs will lead to the approved amount given in DMFD124 being exceeded.

2.1. On 15 July 2022, the LFC’s General Counsel provided an estimate for the total amount of additional legal costs, noting that the matter was at that point largely concluded.

2.2. The revised estimate for legal costs for the reprocurement was £75,639.90; approval is therefore sought for this amount.

2.3. It is also proposed that an additional 20 per cent be approved, amounting to £15,127.98, in the event that there are other, minor matters requiring legal advice relating to the procurement exercise, the cost of which needs to be met by the LFC.

3.1. This report recommends that retrospective approval is agreed for revenue expenditure of £75,639.90 for the legal costs in relation to the RPE reprocurement, and an additional 20 per cent contingency (£15,127.98). Of this cost, £4,345.50 was incurred in the 2021-22 financial year and contained within existing budgets, with the remainder to be incurred in the 2022-23 financial year and funded from the budget flexibility reserve. The budget flexibility reserve has a forecasted balance of £29.3m at the end of the 2022-23 financial year. If this proposal is accepted, the forecast balance of the budget flexibility reserve will reduce to £29.2m by the end of the 2022-23 financial year; this revised forecast will be used within all future DMFDs as appropriate.

4.1. Under section 9 of the Policing and Crime Act 2017, the LFC is established as a corporation sole with the Mayor appointing the occupant of that office. Under section 327D of the GLA Act 1999, as amended by the Policing and Crime Act 2017, the Mayor may issue to the LFC specific or general directions as to the manner in which the holder of that office is to exercise his or her functions.

4.2. By direction dated 1 April 2018, the Mayor set out those matters, for which the LFC would require the prior approval of either the Mayor or the Deputy Mayor for Fire and Resilience.

4.3. Paragraph (b) of Part 2 of the said direction requires the LFC to seek the prior approval of the Deputy Mayor for Fire and Resilience before “[a] commitment to expenditure (capital or revenue) of £150,000 or above as identified in accordance with normal accounting practices…”. Therefore, prior approval of the Deputy Mayor for Fire and Resilience is required prior to settling this claim.

Deputy Mayor for Fire and Resilience Decision 124 (Part 1)