Home Care Contract Procurement Process Topic Group 28 & 29 August 2008 Item 4(D) - Background

HERTFORDSHIRE COUNTY COUNCIL

HOME CARE CONTRACT PROCUREMENT PROCESS TOPIC GROUP

28 AND 29 AUGUST 2008

BACKGROUND INFORMATION TO ADDRESS THE QUESTIONS SET OUT IN THE SCOPING DOCUMENT

This briefing is provided to address the first threequestions as set out in the scopingdocument in relation to the Home Care Procurement Process, and is divided intothe three separate stages listed below:

Stage 1 – The Tender

Scrutiny question to be addressed:

1. Was the tendering process robust; was a thorough process gone through to select the most appropriate providers and was sufficient evaluation and checking built into the tendering stage?

Stage 2 – From Award to Start

Scrutiny question to be addressed:

1. Did ACS do all it could to facilitate a smooth transfer within the regulations?

Stage 3 – From the Start of the contract and ongoing

Scrutiny question to be addressed:

1. Has ACS taken all appropriate measures to address the issues that have arisen?

STAGE 1 – THE TENDER

(Responsibility of the Contracting Officer (in meaning of HCC Contract Regs)

1. Background (Why did we tender?)

1.1In 2001 ACS introduced a new purchasing strategy for the provision of home care and carried out a tender to reconfigure the way we purchased home care. ACS awarded 16 contracts for the 35 geographical areas to underpin the strategy (the strategy won Hertfordshire the coveted LGC award for best procurement initiative in 2001).

1.2These contracts account for over 70% of the total home care market, with a value of around £24M per annum. The contracts were awarded for fiveyears with a two year extension - an option exercised by ACS in April 2006. Therefore these contracts expired on 31 March 2008.

1.3So why did we re-tender? The Local Authority is governed by the Consolidated Public Procurement Directive, which is implemented through the Public Contract Regulations (2006). As stated above, the contracts with the above providers expired on 31 March 2008. Therefore in line with both legislation and the County Council’s contract regulations we were obliged to carry out a comprehensive tendering exercise in order to re-award these contracts.

2. An outline of the Process (including legal considerations)

2.1It was clear that TUPE (Transfer of Undertakings for the Protection of Employment) would apply to the re-tender of these contracts, and as such the contract areas were re-configured from the original 35 packages into 26 new areas in order to minimise cross boundary issues whichwould have had an impact on any subsequent transfers.

2.2In April 2007 the ACS Contracts Unit set in place the necessary steps to re-tender these contracts. This process included the use of multi-disciplinary steering groups and a general approach to the process which built on the methodology used for the Leonard Cheshire countywide block contract re-tender the previous year. There was commercial input as necessary, provided by Corporate Procurement / Finance colleagues and lawyers from the CountySecretary’s Department, as well as input from strategic commissioning, area teams and user and carer groups.

The different Legal requirements in process between the 2001 and 2007 tenders

2.3It may be useful to consider the changes which occurred in thelegal requirements from the original 2001 tender and the subsequent 2007 re-tender. In 2001 we were able to use what we called a ‘closed’ tender. This meant that we limited invitations to tender to those accredited providers (120) already operating in Hertfordshire. We were able to do this as these services are considered to be‘Part B’ services under the Consolidated Directive 2004 /18 / EC which became the Public Contract Regulations 2006 (then the European Public Procurement Directive for services), and as such there was no legal requirement to advertise in the Official Journal for the European Union(OJEU). In effect this meant that so long as we had sufficient numbers to satisfy competition - as set out under the (then current) Local Government Act and contract regulations - we could use this approach.This meant that in the 2001tender we were able to use the actual track record of provider performance in the evaluation of contracts.

2.4However in 2007 the law, and how it must be applied to tenders,had changed. This was due to twolegal challenges taken to the European Courts in the previous year where public sector organisations had been challenged for not advertising tenders for Part B services, not under the Consolidated Procurement Directive, but under equalities legislation. We were therefore unable to legally limit the tenders to existing providers because this may have been deemed to breach equalities legislation.

2.5What this meant in practice was that we had to advertise nationallyfor expressions of interest. This in turn meant that we would be unable to use the extensive information already held by us on our existing contractors, as we did not have the same information, in the same format, in respect ofnon-Hertfordshire providers. One of the guiding principles in tender evaluation is that you have to compare tenders and the information provided on a ‘like for like’ basis. In 2001, as we were able to run a ‘closed’ tender, we could use the information held on Hertfordshire providers as we monitored all in-county services and held the same monitoring information on each. In 2007,with the need to advertise nationally,we were not able to adopt the same approach.

2.6In going out to tender we decided to undertake a two stage process and evaluate on the following elements:

• Stage 1 Pre Qualification Questionnaire (PQQ) Assessment of:

AOrganisation Identity

BFinancial Information

CInsurance

DAbility, Technical & Resources

EReferences

FQuality Assurance

GHealth and Safety

HEqual Opportunities

IDeclaration

• Stage 2 Tender evaluation consisting of

• Quality (weighted 60% of overall assessment)
• Scored written submission
• Scored Interviews with Officers
• Scored interviews with Users and Carers
• A minimum of two satisfactory references (chosen at random by ACS Officers)
• A satisfactory CSCI inspection report (a minimum level 2 provider (Now 1 star)
• A minimum quality score in each area above

• Price (weighted 40% of overall assessment)
• Based price
• Financial modelling once quality criteria assessed for best mix and best VFM
• Ongoing (and achievable) efficiencies

3. The process in detail

Pre-Qualification Questionnaire Assessment

3.3As stated above a two-stage process was used in order to provide an initial filter (as it was anticipated that the level of interest was going to be very high) before the invitations to tender. The pre-qualification questionnaire (PQQ)together with advert was placed on the County Council’s tender opportunities website on 26 April 2007. An identical advert also appeared in the national Community Care Magazine.

3.4ACS received 67 expressions of interest. Following the initial evaluation of the PQQ, including a comprehensive corporate financial evaluation of company stability, 41 organisations were invited to tender on 24 July 2007. Of these, 34 submitted tenders by the deadline of 31 August 2007.

The evaluation of the written submission

3.5There then followed a comprehensive evaluation of tenders. Initially the written submissions were scored for both quality, as well as price, against a comprehensive100 page evaluation model which covered the following main areas:

Quality Assurance

Staffing &Training

• Management of the Contract / TUPE transfer and Organisational Structure
• Operational Issues
• Pricing Structure
• Efficiencies
• tender prices

The tender evaluation model was constructed to consider the evidence around how a contactor would meet the Council’s contract standards. Questions in the evaluation model were devised, and evidence provided within the written response in answer to how the standard would be met.

The interviews

3.6Following this initial evaluation 33 short-listed organisations were invited to interview with both an officer panel and (separately) a user and carer panel. The remit of these interview panels was to explore in greater detail the tenderresponses and their ability to meet the requirements of the Hertfordshire contract. The officer panel was chaired by the Acting Head of Contracts and included representation from the Area Teams, Finance as well as the Home Care Contracts Manager and Contracts Officers.

3.7Each interview,together with the tenderer’s responses,was scored and the points added to the initial quality score. The interviews also provided an opportunity for any clarification required of the tender. If at interview a response changed our understanding of the written submission and therefore its score, the score was amended to reflect this change.

Further tests applied

3.8We further challenged what was stated in both the written submission and interview through the examination of provider references, CSCI reports and site visits.

References

3.9At the point of tender each organisation provided a complete list of councils to which they provided services, with contact details of referees. We chose two referees at random and compared the references supplied to what the provider had stated. We adjusted the scoring if a reference contradicted the written submission or any statements made at interview.

CSCI reports

3.10We examined random CSCI reports for each short-listed provider. Any provider who had been rated as a level 1 (now zero star) provider was excluded form the process.

Site Visits

3.11Finally, we conducted a random site visit to all providers not already operating in Hertfordshire, to ensure that we could evidence from an actual service site that they could meet our contract standards.

The final award criteria and scoring

3.12Final recommendations for award of contract were based on a 60% weighted quality score and a 40% weighted price score.

3.13It should be noted that when making these final recommendations we obviously based the award on the score achieved via the tendering process (set out above). However we also took into consideration the following, broader principles:

• There would remain a sufficient number of providers operating in a given area;

• The providers’ overallcommercial, operational and financial stability;

• An introduction of a baseline quality score (in respect to both the written submission and the Officer interviews) to ensure that, as much as possible and regardless of price, adequate quality couldbe expected from the contractor;

• Appropriate financial modelling to ensure best value for HCC and achievable longer term efficiencies.

4. Summary of awards and further context

4.1Firstly, I think it would be helpful to include some general context about expectations. It is generally accepted in re-tenders of existing contracts that the incumbent contractors have a significant and real advantage over other tenderers. This is because they know the contract and what is actually expected, and are already providing the services at a competitive price. They also have no issues with having to manage a TUPE transfer (which remainsinherently challenging to any incoming provider whatever the market place). The initial assessment (entered on the risk log) was that our incumbent contractors should do well and there was likely to be little change in the 16 contractors.

4.2For this outcome to be achieved, it was considered that the incumbent contractors really only had to do two things. Firstly prepare a thorough and good quality tender, including evidence of how they (already) provided the service and how they had / and would continue to meet the contract standards. Secondly that they should be able to submit a price at a similar level to their current price (perhaps with an amount added for inflation) to continue providing what were in effect broadly similar services (Please note that this second point was further supported by the corporate financial accountant who carried out the financial evaluation, who confirmed that our incumbent contractors were making a comfortable and very fair living out of the contracts at thecurrent rates).

4.3Taking these factors into account and considering them against the alternative scenario (i.e. what would happen if they were unsuccessful) it was concluded that a competitive tendering process should ensure that incumbent contractorssubmitted an effective tender for both quality and price and therefore we were likely to see little change.

4.4It should be noted that the four incumbent contractors whichadoptedthis approach (Caring Hands, Westminster, Careforce and Community Careline Services) not only retained their contracts, but in the main also extended their footprint in Hertfordshire significantly.

4.5Unfortunately, the majority of our incumbent contractors did not submit sufficiently high quality tenders and / or competitive prices. In many cases we saw an increase in their prices of up to +25%, with an average increase (for non-successful incumbent providers) of +12%. So what did this mean?

5. The final awards

5.1Eleven of our incumbent contractors were unsuccessful. It is important to note that in each case the successful contractor which was awarded the contact has scored higher in all aspects of their objective and like for like quality evaluation (written submission, interview with officers and interview with users and carers) than the unsuccessful outgoing provider.Therefore if you had made the award on quality alone the outcomes would have been the same.

5.2Figure 1 and Figure 2 below are the individual care scoresheets for Supporta Care and Care UKwhich also includes the score for the incumbent provider for the area and their place in the table following evaluation of their submission.

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Item 4d – Background information

Figure 1: Supporta Care score sheet

Domiciliary Care Contract - Final Evaluation
St Albans (SA1)
Max score / 3243 / 985 / 300 / 4528.00 / 60
Provider/Agency Bid / Q score / Panel interview score / Carer / user score / Total Q score / total points awarded / Total Price points awarded / Combined total points / Rank
Supporta Care Ltd / 2449.00 / 856.25 / 292.50 / 3597.75 / 48 / 30 / 78 / 1
2491.00 / 838.75 / 195.00 / 3524.75 / 47 / 28 / 75 / 2
2165.00 / 708.75 / 217.50 / 3091.25 / 41 / 27 / 68 / 3
2072.50 / 867.50 / 300.00 / 3240.00 / 43 / 24 / 67 / 4
2056.00 / 861.25 / 187.50 / 3104.75 / 41 / 13 / 54 / 5
1929.50 / 530.00 / 225.00 / 2684.50 / 36 / 16 / 52 / 6
Sage Care Ltd / 2426.50 / 593.75 / 135.00 / 3155.25 / 42 / 8 / 50 / 7
1976.50 / 478.75 / 142.50 / 2597.75 / 34 / 14 / 48 / 8
Area awarded to Supporta

Figure 2: Care UK Score sheet

Domiciliary Care Contract - Final Evaluation
East Herts (E1)
Max score / 3243 / 985 / 300 / 4528.00 / 60
Provider/Agency Bid / Q score / Panel interview score / Carer / user score / Total Q score / total points awarded / Total Price points awarded / Combined total points / Rank
Care UK Homecare Ltd., / 2203.50 / 872.50 / 250.00 / 3326.00 / 44 / 36 / 80 / 1
2205.50 / 833.75 / 285.00 / 3324.25 / 44 / 28 / 72 / 2
2072.50 / 867.50 / 300.00 / 3240.00 / 43 / 25 / 68 / 3
2165.00 / 708.75 / 217.50 / 3091.25 / 41 / 26 / 67 / 4
2140.50 / 431.25 / 142.50 / 2714.25 / 36 / 29 / 65 / 5
2151.00 / 576.25 / 225.00 / 2952.25 / 39 / 12 / 51 / 6
1929.50 / 530.00 / 225.00 / 2684.50 / 36 / 16 / 51 / 6
1976.50 / 478.75 / 142.50 / 2597.75 / 34 / 11 / 46 / 7
Carewatch East Herts / 2256.00 / 502.50 / 205.00 / 2963.50 / 39 / 6 / 45 / 8
Area awarded to Care UK

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Item 4d – Background information

STAGE 2 (from ‘Award’ of contract to ‘Start’ of contract)

(Responsibility of Contracts Manager (in the meaning of the HCC contract regs))

6. The transfer and brief outline of what happened

6.1The awards of contract were made on 2 January 2008, with the start date of 1 April 2008. The Risk Logidentified the potential major risks facing this re-tender. However, it should also be considered in the context of the expected tender outcomes as set out in 4.1 – 4.3 above.

6.2The risks must also be considered in the context of the required TUPE transfer. TUPE Regulations (Transfer of Undertakings for the Protection of Employment) protects staff when one contract is transferred to another. However, the law and the way the TUPE regulations are drafted provides for inherent problems in the transfer of work from outgoing to incoming providers regardless of the type of service.

6.3The changes in the contracts meant that over 4000 service users would face a change in their care provider. Because of this, and the inherent problems that TUPE transfers can bring, much of the interview stage examined the providers’ ability in managing TUPE transfers of significant size. Both Care UK and Supporta Care have experience of managing TUPE transfers and both had identified transfers that had gone well and not so well.

6.4Following the award (on 2 January 2008) a letter was sent to all service usersaffected by the changes (around 4000) on (3 January 2008) informing them of the change in care provider. To support service users, the Contracts Unit staffed a service user helpline where we were able to discuss individual concerns raised. Between January and mid-April this helpline received 421 calls.This helpline also kept us in touch with how staff were reacting to the changes.

6.5It must be remembered that the transfers under TUPE are between the outgoing and incoming provider and the Council only acts as a facilitator. The Council’s role as facilitator was undertaken correctly, and information about the outgoing staff and their terms and conditions of employment was secured as part of the tender and in line with our contract. This information was then passed to tenderers once requested by them and when they had signed the standard HCC confidentiality agreement.

6.6TUPE requires that the outgoing contractor must ‘inform and consult’ with their staff. It was clear from an early stage that the way in which this requirement was being complied with varied between providers, with various interpretations of what they had to do was being followed by different providers. It should also be remembered that the Council had no rights of access to the outgoing providers’ staff, and therefore had to rely on the outgoing contractor to provide appropriate and timely information. Again this must be considered in the context of an organisation that has just lost the contract and may not feel pre-disposed to going beyond the letter of the TUPE Regulations and its requirements.To minimise the problems the Contracts Teamremained heavily involved in trying to support the transfer process.

6.7The law of TUPE also means that transferring staff have until the actual moment of transfer to make their final decision about whether they wish to transfer or not. Therefore it is accepted that for a transfer to complete smoothly there is a great reliance on the outgoing contractor’s approach. The law, unfortunately, does not provide sufficient protection and enforcement rights to ensure that all transfers are completed in a smoothand trouble-free manner.

6.8Before turning to Care UK and Supporta Care and their experience of the outgoing transfer specifically, it is important to consider the issues facing the 11 unsuccessful contractors and how they behaved under the same situation.

6.9Please note that there was initially resistance from manyoutgoing providers to work with the Council and incoming providers, but the Contracts Team continued to support the process in the attempt to minimise the impact on service users. Although the Contacts Team was able to facilitate a positive working relationship between the outgoing and incoming provider in the majority of cases there still remained five potential TUPE related failuresidentified as at 1 March 2008,where it was felt that the outgoing provider was still not providing the necessary support to ensure a smooth transfer and thereby protect service users (as well as transferring staff). Finally, following increased input and involvement of senior staff, the ACS Contracts Unit was able to broker a satisfactory resolution in all but one situation. It was in this remaining case that the outgoing provider simply refused to provide access or information until far too late in the process (although not necessarily outside of the Law) to support an effective transfer. It was this remaining transfer that affected the smooth transition of work to Supporta Care in theThree Rivers Area.