DMFD230 Compliance and Audit contract (update)

1.1    The London Fire Commissioner (LFC) granted approval (LFC23-040) to commit expenditure of £909,977 over four years for the provision of compliance and audit services which will assist the LFC in ensuring its estate is safe and statutorily compliant. This decision was approved in Deputy Mayor for Fire and Resilience Decision (DMFD) 201.
1.2    Following a procurement exercise, tenders received exceeded the approved amount. To mitigate the impact of the increased costs, clarifications were raised with the bidders to better understand costs and find efficiencies. The specification of services included was also reviewed to reduce the services required and the associated costs.
1.3    The reduction in scope relates to statutory compliance monitoring and restriction to certificate auditing to the major service elements only. This reduces the level of independent assurance being delivered with the remaining certificates being spot-checked by LFB staff.
1.4    The contract price was subsequently reduced however it remains in excessive of the approved financial provision within LFC 23-040 and DMFD210. The additional cost of implementation, which is set out in the Part Two report, will be funded from within the existing LFB Property budget.

2.1    The objectives and outcomes of the proposed expenditure are as set out in DMFD201, with further information provided in the appended LFC report. 

3.1    The LFC and the Deputy Mayor for Fire and Resilience are required to have due regard to the Public Sector Equality Duty (section 149 of the Equality Act 2010) when taking decisions. This in broad terms involves understanding the potential impact of policy and decisions on different people, taking this into account and then evidencing how decisions were reached.
3.2    It is important to note that consideration of the Public Sector Equality Duty is not a one-off task. The duty must be fulfilled before taking a decision, at the time of taking a decision, and after the decision has been taken.
3.3    The protected characteristics are age, disability, gender reassignment, pregnancy and maternity, marriage and civil partnership (but only in respect of the requirements to have due regard to the need to eliminate discrimination), race (ethnic or national origins, colour or nationality), religion or belief (including lack of belief), sex, and sexual orientation.
3.4    The Public Sector Equality Duty requires decision-takers in the exercise of all their functions, to have due regard to the need to:
•     eliminate discrimination, harassment and victimisation and other prohibited conduct
•    advance equality of opportunity between people who share a relevant protected characteristic and persons who do not share it
•    foster good relations between people who share a relevant protected characteristic and persons who do not share it.
3.5    Having due regard to the need to advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it involves having due regard, in particular, to the need to:
•    remove or minimise disadvantages suffered by persons who share a relevant protected characteristic where those disadvantages are connected to that characteristic
•    take steps to meet the needs of persons who share a relevant protected characteristic that are different from the needs of persons who do not share it
•    encourage persons who share a relevant protected characteristic to participate in public life or in any other activity in which participation by such persons is disproportionately low.
3.6    The steps involved in meeting the needs of disabled persons that are different from the  needs of persons who are not disabled include, in particular, steps to take account of disabled persons’ disabilities.
3.7    Having due regard to the need to foster good relations between persons who share a relevant protected characteristic and persons who do not share it involves having due regard, in particular, to the need to:
•    tackle prejudice 
•    promote understanding.
3.8    Equality comments addressing the specific proposal are as set out in DMFD201, with further information provided in the appended LFC report. There are no new equality implications arising from the revised proposal.
 

4.1    Workforce and sustainability comments are as set out in DMFD201, with further information provided in the appended LFC report. There are no new workforce or sustainability comments arising from the revised proposal. 
4.2    The tender exercise was conducted in line with procurement regulations. The amended specification was communicated to suppliers on a secure platform ensuring fairness and transparency and revised bids were sealed and opened at the same time.                .
Conflicts of interest
4.3    There are no conflicts of interest to declare from those involved in the drafting or clearance of this decision.
 

5.1    This report requests approval for LFC to commit expenditure for provision of a compliance and audit contract within a budget of an amount set out in Part Two of this report.
5.2    Should it become necessary, it is expected any annual inflationary increases within the procurement period will be based around the Retail Price Index (RPI). It is expected that the contingency would be utilised to account for any inflationary increases. 
5.3    All LFC contractual inflationary increases are reviewed on an annual basis. The LFC budgets for inflation on an item-by-item basis, and the LFC will review those assumptions as part of its future budget planning process. If inflation rates are above current assumptions a resulting budget increase will need to be submitted as part of LFC’s annual submission to the Mayor’s GLA Group budget process and/or the contract will need to be reviewed to assess whether it is possible to reduce the annual cost via a reduction in service. If inflationary increases result in in-year financial pressures, this will be reported on as part of regular financial reporting and met through the use of the Budget Flexibility Reserve.  
5.4    LFC standard terms and conditions include clauses on indexation and termination that can be utilised if inflationary pressures affect the performance of the contract. If a contract is no longer viable then LFC will seek to terminate it on this basis or work with suppliers to pause delivery and/or renegotiate what is being delivered. This is preferable to inserting a break clause for inflation as such pressures apply across the market so it is unlikely that benefits will be gained from terminating a contract in order to go back out for competition.
5.5    There are no direct financial implications for the GLA. 
 

6.1    This report seeks approval of expenditure for the provision of a compliance and audit contract, set out in more detail in this report and Part Two.  
6.2    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 Commissioner specific or general directions as to the manner in which the holder of that office is to exercise his or her functions.
6.3    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 (the "Deputy Mayor").  Paragraph (b) of Part 2 of that direction requires the LFC to seek the prior approval of the Deputy Mayor before “[a] commitment to expenditure (capital or revenue) of £150,000 or above as identified in accordance with normal accounting practices…”. Accordingly, the expenditure identified for the compliance and audit contract, set out in more detail in Part 2, requires prior approval.
6.4    The statutory basis for the actions proposed in this report and the ECIP is provided by sections 7 and 5A of the Fire and Rescue Services Act 2004 (“FRSA 2004”). Section 7 (2)(a) FRSA 2014 the LFC has the power to secure the provision of personnel, services and equipment necessary to efficiently meet all normal requirements for firefighting and section 5A allows the LFC to procure personnel, services and equipment they consider appropriate for purposes incidental or indirectly incidental to their functional purposes.
6.5    LFC officers have confirmed that tender (including the reductions to the original scope) has been conducted in accordance with the Public Contracts Regulations 2015 (“the Regulations”) and the LFC’s Scheme of Governance (Part 3 Standing Orders Relating To Procurement). 
6.6    These comments have been adopted from those provided by the LFC’s General Counsel Department in report LFC23-040 to the LFC. 

DMFD230 - Part 1 - Appendix 1 - LFC-23-124