Occupational Health Service Contract - Outsourcing

Reference code: 
PCD 66
Date signed: 
03 October 2016
Authorisation name: 
Sophie Linden, Deputy Mayor, Policing and Crime

Executive summary

This report requests the Deputy Mayor for Policing and Crime (DMPC) approval to outsource the Metropolitan Police Service (MPS) Occupational Health (OH) service at a one-off implementation cost of £3,853,000 plus an annual cost of service of £6,012,000, which is £258,000 below the 16/17 budget.

Recommendation

The DMPC is asked to;

  1. approve the outsourcing of the OH service contract to the supplier identified as offering the best Value for Money option for meeting the investment criteria, at a total annual cost of service of £6,012,000 which is £258,000 below the 16/17 budget,
  2. agree to retain the OH cash budget at the 2016/17 level of £6,270,000,
  3. permit the £258,000 annual savings to be re-allocated to additional discretionary Gold services based on need,
  4. approve the £3,853,000 implementation costs to be funded from the corporate budget pressures or redundancy reserve as appropriate. 

Non-confidential facts and advice to the Deputy Mayor for Policing and Crime (DMPC)

 

Introduction and background

In October 2015, transactional finance, HR and procurement services were outsourced as part of a wider programme, which includes the implementation of Police Standard Operating Platform (PSOP), a new Enterprise Resource Planning (ERP) system.  OH was originally intended to be included as part of this programme, but had to be removed from scope for technical procurement reasons.

The current in-house OH service has a number of vulnerabilities and service gaps and is therefore not well positioned to support the strategic and operational ambitions articulated in the One Met Model and the MPS People Strategy. An outsourced service is expected to overcome these weaknesses, more appropriately manage risk and ensure a fit for purpose OH service for the MPS going forward.

 

Issues for consideration

Two potentially viable options for the transformation and re-provision of the service have been considered – in-house and outsourced.  The out-sourcing option provides the scope to improve service provision, e.g. including hepatitis B and pneumonia vaccinations, improved management information and better clinical governance, and to be more cost effective than the in-house option.  Further detail is in Appendix 1.

 The payment mechanism for the proposed service will be based on activity levels with prices fixed for the term of the contract. 

 

Financial Comments

The payment mechanism is based on activity and there is a risk that if demand increases the cost of the contract will be in excess of the budget.  A retained function will be in place to mitigate this risk.

The outsourced service contract to the supplier identified as offering the best Value for Money option for meeting the investment criteria is at a total annual cost of £6,012,000, which is within the annual budget.

The £258,000 annual savings are to be re-allocated to additional discretionary Gold services based on need.

The £3,853,000 implementation costs to be funded from the corporate budget pressures or redundancy reserve as appropriate.

 

Legal Comments

Advice has been taken both from Procurement Services and external lawyers on this matter to ensure compliance with the relevant procurement requirements.

As the report indicates, the proposal is likely to result in a ‘relevant transfer’ within the meaning of the Transfer of Undertaking (Protection of Employment) Regulations 2006.  Advice should be taken from the Human Resources SME together with an Employment lawyer within DLS to ensure the procedural requirements such as informing and consulting affected personnel is undertaken.

 

Equality Comments

The in-scope staff group will be affected by this change by virtue of the fact they work within OH, rather than because of any diversity-related characteristics they might have.

Overall, the change is not expected to disadvantage affected staff: few, if any, redundancies are anticipated, terms and conditions of employment will not change, and staff will be working for an employer where their professional specialism is the employer’s core business, and where training and development provision and career development opportunities are far better than those available within the MPS.