Agenda item

To consider the call-in of the cabinet decision of 15 October 2024 in relation to the Gateway 1 Housing – Procurement Support and Supply Chain Management System.

Councillor Irina von Wiese and Councillor Sam Foster set out the grounds for call-in of the decision.

 

Councillor von Wiese explained that the reasons behind the call-in was that there had been a lack of consultation with residents, and very limited consultation with the unions who would be affected. That there was a high risk that the fees that the company (Plentific Ltd) would be charging for their services may be increasing, and that the company was currently making considerable losses, and that represented further risk to residents if the company folded.  Councillor von Wiese stressed that some of these risks were also identified in advice from officers contained in the report recommending the procurement. In light of unproved efficiencies, obligations of the council in public procurement decisions to consider best value for money on behalf of residents, huge inefficiencies and inflated costs in repair works, the requesters of the call-in believed that the decision should be reconsidered by the cabinet.

 

Councillor Foster lead spokesperson for the second request for call-in of the decision, highlighted that their concerns of the requesters for the call-in were around value for money, strategic planning, and the relationship between the council and Plentific Ltd in the long term. He felt that in addressing urgently a very real issue that the council has in relation to its contracts, that it will ultimately be an expensive solution that did not serve the council as best as it could.  In addition, Councillor Foster referenced the risks around the governance of introducing this new framework, it not being clear whether the back-office function required to deliver the service was going to be sufficient, or whether it would generate extra costs that had not been accounted for. He recognised that it was meant to be a short to medium term solution, as it was for an unspecified amount of time this raised questions around the long-term strategy which was not as clear as it should be.

 

The committee then heard from Neil Tasker, Southwark Unite Union Branch Secretary.

 

Neil endorsed the comments of Councillor von Wiese and Councillor Foster in respect of the reasons for call-in of the decision. He felt that the decision was a risky undertaking [gamble], and that residents had not been consulted, which he felt was important. He considered that the proposal was a very significant change to the way the council does business, which exposed residents to potentially hundreds of contractors, and many of the residents were vulnerable members of the community.

 

Neil referenced the officer report which stated that residents would get better value for money and higher levels of satisfaction, but he felt the report did not give reassurance or demonstrate how this would be achieved. In the main he felt the proposals were largely speculative, particularly in respect of costs, as the charges to sub-contractors would be variable, and subject to change. Neil felt the true costs were unknown to the council, and to residents. Neil also made reference to the strategic director of resources, and the director of exchequers comments set out in the officer report.

 

Neil queried works that were outside of the contract (bolt-ons that could be purchased – the report did not make clear what works this referred to), and referenced voids, communal work and to what degree these would be included. Neil also mentioned back-office costs for managing the contract and resulting back-office savings – he felt this was contrary to what was mentioned on the Plentific Website which indicated that the company had created a large team to support the Plentific platform.

 

Neil drew members attention to the London and Quadrants tenants’ satisfaction measures in relation to their repairs service, which indicated that satisfaction of the overall repairs services was 61%, and satisfaction with time taken to complete repair, 56%. Neil also drew members attention to the Head of Procurements comments in the report which stated that there were no social value commitments, and queried how Plentific Ltd would collect data on employment status of any sub-contracted operatives for purposes of confirmation of payment of London Living Wage.

 

Neil also raised concern around the following:

 

·  No mention of the risk of demand outweighing supply – when this happens contractors often put up their prices and may be more selective about the type of work they do.

·  Putting out contracts that the council currently use on to the platform – contractors could prioritise work in neighbouring authorities and pick and choose the work they do.

·  True cost for managing the system not represented in the report.

·  No viability testing, (no pilot project).

·  Question mark around the number of small to medium enterprises (SME’s) in the locality

·  climate emergency implications of report – referencing provision for utilising public transport (Neil felt this was not taking climate change seriously).

 

Neil felt that much more work could be done on upscaling the council’s direct labour organisation (DLO) to meet the demand and deliver much more work in house.

 

The chair opened the meeting up to questions. Questions and discussion were held around the following areas:

 

·  Discussions between the union and cabinet member for council homes

·  The impact on the DLO, and next generation of workers

·  Trade union membership of workers hired through the Plentific platform

·  Parameters of works undertaken through Plentific procurement, and impact on DLO (paragraphs 19 and 21 of the cabinet report)

 

The committee then heard from Councillor Sarah King, Cabinet Member for Council Homes, Hakeem Osinaike, Strategic Director of Housing, Marc Cook, Continuous Improvement Manager, Cem Savas, CEO of Plentific Ltd, and Henrik von Bahr, Plentific Ltd Vice President of Sales.

 

Councillor King stressed that the Housing Department needed to improve for the benefit of tenants and that an urgent set of decisions needed to be made to deliver a far more effective service.

 

In terms of information contained in the cabinet report, Councillor King acknowledged that the report could have been stronger, in particular around the position the council was currently operating in relation to contracts for works undertaken in relation to repairs. Councillor King explained that contracts [for repair work] had or were all coming to an end which meant that the council could not have confidence in how much money it was spending, value for money or its procuring values.

 

Councillor King further explained that the proposed new system of procurement did not relate to the work of the in-house team and did not change the work they were undertaking. Councillor King referred to the meeting she had with the Unite branch secretary and reported that she found the meeting valuable in terms of understanding the challenges the DLO were facing from their perspective. She stated that she did fell that the council should be investing in skills, and did find it unexplainable  why there were no apprentices within the DLO – however the investment in the DLO would take time to invest in and develop, and the urgency of the procurement situation within the housing repair service required urgent resolution. 

 

Councillor King accepted that the Plentific proposal was not the perfect solution, but felt it was a balanced way forward. She clarified that this was not intended to be a long-term solution, the long-term solution of which would be putting together the council’s own framework with contractors so that council achieved value for money and ensured that all the council’s fairer future commitment were fulfilled. This would happen in the long term and would happen simultaneously. It would also fit alongside looking at how the council could invest in the DLO and how the council can have a workforce strategy.

 

Hakeem Osinaike, Strategic Director of Housing stressed that the procuring of the Plentific platform was not an attempt to outsource the repairs service. He stated that the council was completely focused on making sure that the DLO continues to exist, and very productive and effective in delivering for residents. The use of Plentific did not stop the council from expanding its own workforce, but it was not economical to have 100% of the repair service delivered by the council’s own workforce, and there was no DLO in the country that delivered 100% of repairs. The normal position was for contractors to deliver between 35% to 65% of those works.

 

Hakeem set out the current position – he explained that the repairs service being delivered, was currently delivered by invisible contractors, due to subcontracting out of contracts by the contractor the council was engaged with. With Plentific the council would be contracting directly with the contractors who were going to be delivering the works. This meant that when residents gave feedback on how the contractor performed, it would be feedback on the contractor that did the work. This meant that if negative feedback were received, the council could immediately stop using that contractor, this would give the council visibility which it currently did not have. Hakeem further explained that because contractors can bid for work, it also created a market where value for money can be obtained. There would be a set of criteria that the contractors would have to meet before they could obtain contracts – this would ensure that the contractor could deliver to the standards the council set. It would also enable the council to undertake proper contract management, the council would know who it was paying and would be putting money directly into the hands of the people doing the jobs, which was not what was happening currently. Hakeem reported that Plentific Ltd had confirmed that they had hundreds of local contractors on their platform, which meant that when the council employed contractors, they were like to be people who were resident and operating in the borough.

 

The procurement created an opportunity for the council to be a lot more efficient. There would be peak periods where the council’s DLO would be busy, and rather than delaying repairs, there would be the opportunity to go to the marketplace [Plentific] to get those works done.

 

Hakeem informed the committee of a new law coming into force which gave strict timescales on how the council dealt with disrepair. At the moment the disrepair workload was significant, and the reality was that no matter how good the council’s DLO was, it could not deal with the workload for disrepair. By having Plentific in place it would mean that the council has confidence that it will always be able to deliver to the statutory timescales, which would not be possible without the Plentific procurement.

 

The contract would enable direct monitoring of satisfaction of tenants, which was not currently possible. Hakeem considered that tenant feedback was the best way of knowing whether or not the council was delivering a good service, and having the ability to feedback on the performance of contractors, and the council having the ability to easily access this information, to inform decisions of whether a contractor should continue to be used was an opportunity that could not be missed.  The Plentific Platform enabled analysis of how contractors were performing, cost, what other works they identify during a repair visit to a tenant’s home, how many times and types of variations were asked for – all this information could inform the strategic director to make the right decisions politically going forward. This was a procurement to improve what the council had, and to make the council a good landlord.

 

The committee then heard from Cem Savas, CEO of Plentific Ltd. Mr Savas sought to address some of the earlier comments made around the risk of the procurement.  He informed the committee that the company had been in the housing sector for quite a few years. The company covered 1.6m properties on the Plentific platform, and went to approximately 3m residents in the country, and was exclusively focussed on social housing in the UK. The company had many large clients that were accounting for Plentific for their processes as an innovation and digital partner. Plentific supported these clients in improving their services along any delivery models they have currently. So in terms of risks and gambles, Mr Savas felt that the sector was really at a point where change needs to happen by improving services, looking at data, regulatory pressures, and supply chain challenges in the sector which were real, and how Plentific Ltd can support its clients with better technology solutions.  Plentific was a technology business, its clients decide where jobs should go and how the job should be delivered. One of their most recent clients was a company called Anchor, the largest senior living provider in the country with approximately 53,000 properties. Plentific was the platform that integrated all their contract relationships, making sure that the entire experience from residents to supply chain was streamlined and efficient. The significant operational improvements would help Anchor to offer a much better resident experience, and also enable their contractors to really fulfil the capacity they can fulfil, because the platform would support them with additional resources if needed.

 

Plentific had many clients with in-house teams such as London & Quadrant, and Guiness housing -  the question was never about replacing the in-house team, it was about what the promise was to residents and how should that be delivered, and what resources were available and in place to deliver at the right time and at the right quality.  Across the 5,000 contractor relationships Plentific had, it ran a localised solution with meant that the way jobs got allocated was local, so a job could not be sent to a different area. Plentific had social housing relevant compliance systems in place for all its clients. Access to those contractors meant, the council would get access to the same local contractors that organisations such as Notting Hill and Peabody were using. Contractors were getting reviewed every day by residents, by their housing officers, peers, on their performance on other homes. This enabled a real time review of housing repairs experience of contractors on the Plentific platform, and any additional requirements a local council might have can be implemented into the platform to fulfil a particular requirement.

 

Mr Savas also informed the committee that the company supported women in trade and had launched it with approximately one hundred organisations across the country. Plentific had also recently launched a building skills trade research report with G15 members [London’s leading housing associations] which was around research on how to attract and get more apprenticeships into the sector. Plentific were part of trying to solve the issues to create better systems that can help residents, and their clients and contractors fulfil what was a difficult position at the moment – they were seeing lots of backlogs, increase in disrepair claims, and mould issues. Mr Savas stressed that continuing to do the same thing would not bring about the solution needed, and that clients relied on their support.

 

The company had been going for 10 years, had won many awards across the housing sector - best technology provider, best professional service provider across ‘inside housing’, ‘housing digital’ and also other awards. The were one of the fastest growing property technology companies in the country and were very focused on growth related software development into the sector. They had recently held an innovation day with forty different organisations in housing, which included a council of councils and housing associations, and contractors to discuss strategic asset management and AI automations. They were very focussed on creating solutions for the sector.

 

Mr Savas advised that the company had invested a significant amount of money in the beginning to build product solutions for their clients and explained that this was the way that technology companies were built. The company helped clients with change management, professional services, and integrations with existing systems and the continued investment had been very much funded by investors, and business planning. With a significant amount of housing associations now on board, it was up to Plentific, how they used the funds and grow the business going forwards.

 

Mr Savas advised that Plentific could help in the short term and take some of the pressure points off what was a struggle across the UK housing sector, and support as much or as little as needed.

 

In response to a question around a pilot project, Mr Savas expressed that this procurement was almost like a pilot for Plentific, as it would be Plentific supporting the council with something which for them was relatively small, and seeing if that works for the council. In context the Anchor deal, referenced earlier was not a pilot as Anchor had signed a 10 year contract with Plentific which was a contract to go in with all the solutions Plentific had to integrate all the contractors into the platform – Anchor were using all their solutions, compliance, flat maintenance, inspections, capital programmes, which this council was not contemplating to do at the beginning. 

 

The chair then opened the meeting for questions. Questions and discussion were held around the following:

 

·  How the council manages its commitments to pay and conditions for the people being employed via the Plentific platform, the environment, and employing local people.

·  Impact on the council’s repairs service if Plentific Ltd became bankrupt.

·  Feedback from Southwark housing association tenants who have experienced repairs via the Plentific platform.

·  How many of Plentific’s contractors are based in Southwark / Southeast London.

·  How Southwark can recover finances from a loss-making company should anything go wrong.

·  Consultation with residents.

·  Alternatives to proposed procurement route.

·  Implications of work being procured/undertaken where contracts have expired.

·  Procedures and guidelines in place (setting out how work is to be undertaken) for contractors who work through the Plentific platform.

·  Option of awarding new contracts to existing suppliers.

·  The feasibility of establishing new framework for contractors in the timeframe set out in the report (18 to 24 months stated).

·  Protection of residents in relation to works/workers procured outside of a contract.

·  Current amount spent on repairs, and amount to be spent through proposed procurement (percentage of expenditure on actual repairs).

·  Specialisms of contractors on the Plentific platform

·  Whether contractors on the Plentific platform reflect the diversity of the Southwark population.

·  Alignment with council policies such as Southwark Stands Together.

·  Timeframe for investing in the DLO.

·  Intended long term solution.

·  Relationship and access to contractors when Plentific contract comes to an end.

 

The committee then considered the options available to it in respect of call-ins.

 

Following discussion, it was moved, seconded and,

 

RESOLVED:

 

That the decision not be referred back to cabinet for reconsideration, but a subsequent review (detail to be determined) be undertaken.