The Cabinet Member for Finance and Reform has decided to award a 7-year contract to Capita Business Services Ltd for essential services, sparking potential controversy over outsourcing and service quality.

URL: https://democracy.lbhf.gov.uk/ieDecisionDetails.aspx?ID=4989

Decision Maker: Cabinet Member for Finance and Reform

Outcome:

Is Key Decision?: Yes

Is Callable In?: Yes

Purpose: A Key Decision report, effective from 27 September 2024, was made to continue participating in the Joint Out of Hours (OOH) Partnership with Ealing Council as the Lead Authority. This decision involved evaluating tenders for a contract for an Out of Hours Joint Telephone Handling Service. A comprehensive competitive dialogue procurement process was conducted, examining all commercial and technical aspects.

Content: To award a contract of up to 7 years (5+1+1) to the preferred supplier, Capita Business Services Ltd, following the conclusion of a detailed and thorough competitive dialogue procurement, which investigated all commercial and technical aspects, at a total cost to the Council over the 7-year term estimated at £1,102,500. (£147,000 per annum paid to the supplier, plus, £10,500 cost per annum paid to the Lead Authority).   Due to the success of the service, all the participating organisations wish to continue with a similar arrangement.   Standard Selection Questionnaires (SQ) with capability questions were received from six suppliers.   No SQs were rejected although one supplier had to “self- clean”. As per the published evaluation scheme, the four highest scoring submissions were invited to participate in dialogue.   Four suppliers were shortlisted for an invitation to participate in the dialogue process. Two suppliers withdrew before the dialogue commenced, and one supplier withdrew after the first week of dialogue. Capita successfully completed the dialogue and submitted a tender, which was evaluated as included in Appendix 1.   Insourcing   1.     If the Council or another Participating Organisation wanted to insource the service, it would likely split the arrangement as each public body aims to show social value locally. This is challenging due to Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) potentially applying to current home-working staff, and home working being the future approach (most staff currently reside near Sheffield).A split in the arrangements would drastically reduce efficiency. Currently, 38 staff (about 17 to 18 Full Time Equivalents (FTE)) work for Capita Business Services. Capita is contractually obligated to pay the National Living Wage. Although these workers are not based in Ealing or London, the joint service supports skilled employment for a fair wage.   2.     Any division in the arrangements would significantly lower efficiency. At historic prices, an OOH service provided individually in-house could cost approximately £700,000 per year, compared to up to £250,000 per year for a typical Participating Organisation under the current outsourced joint arrangement, depending on call volumes.The costs associated with the comprehensive IT support service would become impractical without being shared.   3.     Given that the services provided are crucial for the support and welfare of residents, it is not feasible to compromise on the quality of operations (such as by not utilising the software or reducing performance) in order to achieve cost savings.   Framework Agreement   4.     This option would be restricted to a four-year term, and establishing a framework with the current arrangements involving Participating Organisations would pose significant challenges.   5.     A framework agreement allows user organisations to access services flexibly, joining or leaving as they choose. This contrasts with the partnership's goal of a stable, long-term arrangement with many participating organisations sharing costs equitably. While additional legal drafting could address some risks, the current joint arrangement meets business needs. Moreover, the Public Contracts Regulations 2015 (under which this procurement was undertaken, due to the opportunity being published prior to Monday, 24th February 2025) limit framework agreements to 4 years unless capital investment is planned, which is uncertain at this time.   Dynamic Purchasing System (DPS)   6.     Dynamic purchasing systems can last over 4 years, but they are challenging to set up, similar to framework options. Additionally, DPSs rely on periodic re-pricing of consumables rather than a long-term service model. Due to high setup costs, a DPS wouldn't enable the strategic supplier to recover their fixed expenses.   Do Nothing   7.     It is imperative to renew the contract to ensure the continuance of this essential service. Therefore, a "do nothing" option is not viable in this scenario.   Procurement by Ealing Council as a central purchasing body and lead authority   8.     This option is the most suitable for the arrangements as it allows a term of 5 years with an option to extend for an additional 2 years. It also accommodates new participants, which can result in reduced costs and increased efficiencies for all involved parties.   9.     There is significant potential to expand the service in the following areas which will enable cost reductions and service efficiency through: Expanding the take-up of the OOH service by public sector organisations across the UK. The development and enhancement of the service itself, for example by improved use of technology. Enable more joiners nationally.   10.  The procurement document includes bid back discounts for calls if volumes exceed two thresholds. There is no proposal to extend the service to daytime call handling. However, it will be used for backup and business continuity purposes.  

Date of Decision: July 9, 2025