MD2480 Future procurement and investment in city simulation technology

1.1.    City simulation technology is built on a methodology known as ‘system dynamics’. It provides an effective and proven decision support tool for strategic authorities such as the GLA, enabling the integrated assessment of strategic investment options and policy choices at the city-wide and local scale, which can be tested against a range of specified scenarios. 

1.2.    Such an approach to modelling characterises the city in terms of its ‘whole system’, rather than other existing models that tend to focus on discrete aspects, like the economy, environment, air quality, carbon emissions or population. The unique qualities of such an approach include:

•    The number and range of high-level data modelled independently and within an integrated system;
•    The faithful reproduction of the statistical record of London’s evolution over time, as recorded across many datasets over the last twenty years;
•    The capacity to assess counterfactuals;
•    The capacity to test a range of policies and investments in combination under different conditions and show results across the whole range of data; and
•    The combination of all the above in a single model.

1.3.    The GLA Group has developed a system dynamics-based London simulator over the last few years, contracting with Greenwood Strategic Advisors to create the technology underpinning it.  The work programme included preparation of ‘Mind the Gap’, a report released in July 2018 that examined how London responds (in socioeconomic, fiscal and environmental ways) to a range of investment decisions including Crossrail 2 and the Bakerloo Line Extension.  In late 2018 the Mayor approved, under cover of MD2393, further development of the technology through Phase 2 development of the ‘London Simulator’ to enable new investment projects and policy issues to be assessed and results split between inner and outer London. See Annex 1 for a summary of the results of scenario analysis conducted in Phase 2. In addition, outputs from the simulator are being leveraged to examine opportunities for new financing arrangements for infrastructure. These include innovative approaches for linking financing to the fiscal uplift that projects are predicted to generate in the future, as modelled by the London simulator.

1.4.    Project simulation technology, built on the same system dynamics principles, is a proven technique for tracking and predicting the progress of complex projects. It has been applied by private companies and governments in sectors such as energy, manufacturing, infrastructure and defence. The GLA Group sees the potential benefits of project simulation technology for improving the delivery of large public infrastructure projects in London. Combined, the simulation both of projects’ performance and their impacts on the city offers potentially significant benefits for the GLA as a strategic authority. Other technologies and approaches will continue to be used to examine other strategic questions facing London.

1.5.    A range of third-party organisations have expressed interest in applying the system dynamics approach employed in the London simulator to their own initiatives, but the complications and cost of procuring this specialist technology from scratch can prevent them from following through. By establishing a procurement framework to cover these types of services, the GLA can ease the ability of aligned third-party organisations to employ this innovative technology and maximise the value of our investment-to-date in developing the simulator. For instance, this might involve adapting the London simulator model to a specific part of London to allow for tailored analysis by a local authority or proponents of a particular infrastructure scheme.
 

2.1.    The future procurement and entering into a four-year contract arrangement with a suitable supplier(s) will enable this work programme to continue until 2023/24. Expected outcomes include:

-    Undertaking new scenario analyses using the technology to understand the impacts of future proposed investment options and inform policy evaluation and investment appraisal related to these proposals.

-    Undertaking new scenario analyses to form the basis of future government lobbying initiatives – e.g. requests for devolved fiscal powers, or government grants for infrastructure projects.

-    Undertaking new scenario analyses to meet the needs and objectives of potential external funders – for example developers looking to understand social, economic and fiscal impacts of large developments, or not-for-profits seeking to evaluate government-led policy reforms.

-    The application of project simulation tools to new or ongoing public infrastructure projects to assess their potential for improving delivery.

-    The possible integration of city simulator technology with innovative financing approaches that rely on the credible prediction and monitoring of the socioeconomic impacts of a given infrastructure project.

-    A programme of continuous improvement of the procured technology and associated training materials, to ensure the accuracy and accessibility of outputs to relevant GLA and TfL policy teams, as well as potential external stakeholders.

2.2.    The Growth, Infrastructure & Connectivity Unit has prepared a specification for this contract, consulting with relevant GLA teams and will be working with TfL’s Commercial team to procure the same. As the GLA’s (and to the extent applicable any third party funders’) development needs may evolve over the life of the contract it is proposed that a term contract be let under which the supplier(s) provides services on an instruction by instruction basis. It is also proposed to hold two (or more) rounds of procurement to cover a) well-defined immediate needs and b) broader needs that fall within the remit of this MD and are defined in more detail over time.
 

3.1.    Under Section 149 of the Equality Act 2010, as a public authority, the Mayor must have ‘due regard’ 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.

3.2    In line with the policies of the Mayor, city simulation tools can assess the degree to which investment choices and policies can improve aspects of London related to equality, including the availability of jobs and housing for different income levels. Results from these tools will be used only to inform investment choices and policy options and will not supplant decision-making as other critical aspects of equality are not yet modelled within the simulator. These tools model investment and policy options that will be required also to consider equality. Among the data potentially simulated are ones relevant particularly to income equality in London including: unemployment rate; housing availability to low income residents; the number of low income households; the proportion of low income jobs relative to total jobs; in/out migration; workforce relative to jobs for low income earners; social housing and private housing (for low income and other income levels) – the stock, additions and demolitions; and housing capacity relative to population (at different income levels).
 

a)    Risks and issues analysis

b)    Links to Mayoral Strategies

5.1.    It is proposed to set a budget envelope of £3,000,000 for this programme of work. Funding will be sourced from a combination of GLA Group and external sources, including TfL and boroughs and potentially other third-party groups, such as developers, not for profits and institutional investors.  Internal funding from the GLA will be set through standard budget setting processes within budgets already agreed and approval for this funding is not sought under this Mayoral Decision. 

5.2.    The £3,000,000 envelope is intended to enable flexibility around the GLA’s future expansion of, and engagement around, dynamic simulation and other technologies with a range of third-party funders, not to convey available upfront funding or the probable total expenditure.

5.3    The value of contract(s) awarded and the phasing of expenditure up to September 2023 will be dependent on the amount of confirmed funding agreed (external and via GLA budgets) by the time the procurement process has been concluded and will be subject to separate approval via the Authority’s decision-making process. 
 

6.1    The foregoing sections of this report indicate that the activity in respect of which approval is sought may be considered to be facilitative of and conducive to enabling the exercise of the GLA’s general powers and officers have complied with the GLA’s related statutory duties to:

(a)    pay due regard to the principle that there should be equality of opportunity for all people;

(b)    consider how those proposals will promote the improvement of health of persons, health inequalities between persons and to contribute towards the achievement of sustainable development in the United Kingdom; and

(c)    consult with appropriate bodies.

6.2    The services required must be procured in accordance with the GLA’s Contracts and Funding Code, in liaison with TfL Commercial who will determine the procurement strategy and officers must ensure that appropriate contract documentation is put in place and executed by the successful bidder(s) and the GLA before the commencement of the services. 

6.3    In seeking third party funding as contribution to its costs of the services to be procured officers must ensure, to the extent that such funding is to be secured by way of: 

6.3.1    sponsorship income (pursuant to its power to charge third parties for discretionary services under section 93 of the Local Government Act 2003 provided that the charges levied do not exceed the costs of provision), that such sums are sought in accordance with the GLA’s Sponsorship policy and legally binding agreements are put in place between and executed by the GLA and such sponsors before placing reliance upon the same;      

6.3.2    grant from functional bodies such as, for example, TfL, that the Mayor approves such grants in accordance with section 120 (capital)/121 (revenue), as applicable, of the Greater London Authority Act 1999; and          

6.3.3    other third party contributions, that legally binding agreements are put in place between and executed by the GLA and such contributors before placing reliance upon the same.  

6.4    In taking the decisions requested, the Mayor must have due regard to the Public Sector Equality Duty; namely the need to eliminate discrimination, harassment, victimisation and any other conduct prohibited by the Equality Act 2010, and to advance equality of opportunity and foster good relations between persons who share a relevant protected characteristic (race, disability, gender, age, sexual orientation, religion or belief, pregnancy and maternity and gender reassignment) and persons who do not share it (section 149 of the Equality Act 2010). To this end, the Mayor should have particular regard to section 3 (above) of this report.

6.5    Officers must ensure that any contracts entered into are on terms which do not fetter the discretion of the Mayor, in light of the GLA elections being held prior in May 2020, in particular taking this into account when issuing any instructions provided to contractors.