Highlights:
Three London councils received their FM services through a Total Facilities Management (TFM) shared services initiative. The main driver for the initiative was to reduce costs and protect frontline services. Each council was expected to save over £2m a year (more than 34% saving on their legacy FM costs). This would have equated to a £60m saving over the 10-year life of the agreement. However, poor service levels, which failed to meet basic statutory compliance, were putting Council Officers at risk of criminal proceedings. The TFM initiative had some success in its earlier stages, but levels of service rapidly deteriorated. Evidence of the non-compliance of services was reviewed by independent experts and as a result, the councils promptly sought legal advice. Despite giving the contractor many opportunities to improve service levels, they deteriorated further. Therefore, issues were formally escalated, with the view to bringing forward early contract termination. In view of the size, scale and complexity of the programme of work necessary to remediate this situation, BPG were instructed to assist the lawyers in aligning the legal advice provided with the exit and transition planning and mobilisation of replacement FM services.
The support we provided for early contract terminations is very specialised. Early contract terminations are often highly sensitive, involve high commercial risk and can cause significant damage to reputations. Having dealt with hundreds of complex contractual and service delivery relationships, we fully understand stakeholder sensitivities, which means we are able to ensure that reputations are protected and a safe landing into new services can be secured.
We were initially instructed to provide over-arching, but very specialist consultancy for short-term fire-fighting support and ‘critical friend’ advice. Our support helped to quickly align the legal escalation of the TFM contract with the provision of statutory compliant services by the current contractor. We advised on the practicalities of the termination process and how the contractor’s ‘Duty to Warn’ could help to assert the councils’ contractual position. During the termination and exit negotiation process, we ensured requirements, contract interpretation and outgoing contractor behaviours were appropriately structured into compromise agreements. BPG led on the preparation and undertaking of negotiations to agree safe exit and transition strategies in what could have been a highly contentious situation. We also assisted in the management of contractor behaviours.
After the initial fire-fighting, we provided very focused mentoring and ‘critical friend’ training and support to help the councils get up to speed on the ‘Expert Responsibilities’ and the ‘Duty to Warn’ of both the existing contractor, for the exit and transition process, and the new providers to make sure the appropriate responsibilities they should have were clearly articulated in the contract to ensure the delivery of compliant services.
Due to the reduction in size and capacity of the ICF team over the previous year, the councils were already over-stretched in keeping the contractor to its delivery of BAU services. They did not have the capacity to quickly identify and mobilise the extensive resources required to:
We provided support and training to boost the capabilities of the ICF team to help them successfully manage these short-term requirements, eventually leading on to the re-shaping of their medium-to-longer term expectations. We also supported the emergency framework procurement process to source new FM providers helping to replace the main contractor with a mixed economy of new service contractors to provide and implement statutorily compliant services. BPG supported and led much of the detailed work in the delivery of the procurement process including drafting the FM Requirements/Specification and providing Quality Assurance on existing and new service providers.
The councils were working towards remediating the statutory compliance of services through a contractual ‘step-in’ process, along with early termination of the contract. Unfortunately, the contractor was both resisting and unable to provide a fit-for-purpose exit and transition plan, even though this was their contractual responsibility. Terminating without this plan and assured exit and transition support from the contractor could put the three councils at further material statutory compliance risk. We helped the councils improve collaborative traction to secure a more positive approach from the existing contractor to assure a safe services exit and a safe transition into a mixed economy of new service providers thereby reducing the risk of criminal proceedings being levied against Council Officers.
Our support extended beyond the procurement process to ensure that the new suppliers transitioned well and established the required performance levels to ensure that the contract was on course for success. This work involved:
Our support delivered many benefits to the client, significantly accelerating the exit and transition planning, helping to secure the co-operation of the existing provider, and mobilising the new service providers such that two of the three councils could safely achieve their future operating state much earlier than was otherwise envisaged. Benefits included:
1. £4m increase in the financial settlement from the contractor
2. £1.2m cost avoidance for Exit and Transition support
3. An agreed ‘Future State’ service model across all three councils
4. Securing contractor acknowledgement that early exit was the most effective option thereby accelerating the transition
5. Accelerated Procurement
6. Successful Transition.
Recognising the expertise that we were bringing to this sensitive area of work, BPG delivered far more support to the client than was initially requested in the instruction. Extensive levels of support from BPG involved stakeholder engagement, relationship management, and detailed contract support, some examples included:
Throughout our instruction we worked collaboratively with the clients, their legal, commercial, procurement and delivery teams and their external legal representatives to deliver positive outcomes for all parties: protecting reputations; saving costs/securing appropriate compensation; ensuring safe exit and transition; setting up the new supplier relationship for success through the negotiation of outcome-based contracts and boosting internal capacity/capability to negotiate and manage similarly complex supplier relationships in the future. Our involvement in this sensitive, complex and strategically-critical instruction has seen us win further work with the client as we proved ourselves to be a trusted ‘critical friend’ and expert in our field.
