Guidance SUPPLIER AND CONTRACTOR HANDOVER

Transcription

1 SUPPLIER AND CONTRACTOR HANDOVER Published by the British Institute of Facilities Management April 2018

2 Contents Definitions 3 Introduction 3 The Need for Planning 4 Consultation 4 Policy 5 Legislation 5 Safeguarding Contract Award While Protecting Business Relationships 5 Public Sector Requirements of the Procurement Process 6 Private Sector - Requirements of the Procurement Process 6 Debriefing Unsuccessful Bidders 6 TUPE (Transfer of Undertakings (Protection of Employment) Regulations) 7 Assigning Skilled Resources to Deliver Contract Management 8 Preparations: Developing the Plan to Mobilise Delivery of Benefits 9 Stage 1 Identifying the Client s needs within the commencement of the Contract 9 Stage 2 Planning demobilisation of existing services/ or the continued availability of resources 10 Stage 3 Contract lead-in 11 Mobilising & Managingt the Contract 12 Key Measures for Success 13 Key Performance Indicators 13 Contractor / Supplier Relationship Management (SRM) 14 Technology 14 Concluding Summary 15 Further Reading 15 Comment /Feedback 15 Disclaimer This document is for guidance only and is designed to give an overview of the process by which a Client organisation may plan and operate the hand-over of responsibility for supply, of goods/services/works, to a Contractor. It aims to provide a helpful explanation of some of the potential challenges for FM/Procurement Managers who either do not know about the subject because they are new to it, or who may want some reminders of the main topics involved. 2

3 Definitions Introduction The following definitions further explain some of the terms/headings used within this document: Benefits The goods/services/works and associated warranties as specified and procured by the Client organisation, to achieve its business objectives. Client The party letting a Contract for the supply of Benefits (whereas a Procurement agent may be used, it s assumed for this document, the procurer is the Client.) Bidder A party submitting an offer to supply the Benefits under Contract to the Client. This may be a formal tender submitted against defined procedures and/or regulations and the Bidder may be an incumbent e.g. looking to supply catering where they are already providing this under a preceding contract arrangement. Offer Any formal offer to provide the Benefits to the Client under Contract. Contract The agreement between the Contractor and Client, stating the Benefits to be provided and the consideration due, and/or giving a process by which the parties will further specify and agree any components of the Benefits to be supplied and consideration due, throughout the duration of the Contract. This Guidance Note outlines how a new contract arrangement providing goods/services/works can be suitably implemented in collaboration with a successful Contractor. It aims to support the preparation of an appropriate plan of actions to facilitate this change. It also mentions areas where specialist input may be needed to transfer aspects of FM delivery to a new Contractor, or enable an optimum operating position e.g. through information and communications technology (ICT). The Guidance Note includes some of the matters to consider in closing any existing arrangements for that which a Contractor is now being engaged to provide. It does not, however, explain how to terminate the new Contract, if required, or give detailed advice on contracts management. Information on these matters may be may be found in BIFM s current publications. 1 Contractor The party awarded and accepting the Contract. 3

4 The Need for Planning Consultation For any new FM Contract, the Client must provide focused planning. This will include completion of, potentially, a wide range of activities to enable, initiate and manage satisfactory supply. The objective is always to ensure the Client organisation: has the understanding of all requirements to be satisfied by a Contract and the skills needed to manage the transition; is content with timescales in which the relevant resources are confidently committing to complete the transition; has a plan supported by; integrated governance, quality assurance and consultation activities, which ensures compliance with prevailing policy and law as required by the executive of both the Client and the incoming Contractor. Later in this document, the section Mobilising & Managing the Contract provides more detail on steps to achieve a suitable start to delivery against a new Contract. Whether providing, goods, services or works, mobilising a Contract will have different dynamics depending on the Client. Whilst some factors, e.g. the duration of the Contract, may not always influence mobilisation, the Client is advised to develop a plan of actions tailored to their established needs and capabilities. In this document it is assumed that the Contractor has already been selected, but a tender de-brief process is mentioned as this may, in some circumstances, complicate mobilisation, if ignored. In order to reduce the risks of poor contract performance, definitions of the requirements of the intended supply are essential. These should be prepared by experts or stakeholders who are skilled in explaining the needs of the Client. The use of consultations to assemble requirements, agree removal of conflicting elements and secure adequate approvals of the wording and performance indicators to be included in any new Contract, is vital. Planned consultation should also include actions to ensure relevant stakeholders are suitably informed of changes to be achieved by the Contract. This may include securing agreement on a process by which any human resources or equipment resources are to be transferred to the incoming Contractor, or any changes made to existing Client facilities. A specific communications plan may be required to set out periods of time needed to conclude staged elements of consultation. In summary, elements of consultation are vital to assist completion of many things including, but not limited to: Preparing Contract specifications Developing value for money Key Performance Indicators (KPIs) to measure success of the new Contract and Client s supporting actions Debriefing unsuccessful bidders Identifying and insuring risks Agreeing the transfer of staff to an incoming Contractor Implementing use of new ICT Agreeing changes to existing facilities to accommodate the Contractor 1 Please refer to Further Reading as given at the end of this GN 4

5 Policy Legislation Most Client organisations will operate subject to written policies, describing the spirit in which activities are to be completed or excluded. A review of policy must occur before any planning is completed. 2 2 Whether operating in the public sector or otherwise, use of a soft landings process may be a Policy requirement for the delivery of substantial new assets. Safeguarding Contract Award While Protecting Business Relationships Mobilising any new Contract for supply will usually necessitate use of carefully planned evaluations and written communications: Your exercise to evaluate Offers will have been designed to give you a clear result and you should make the Contract award accordingly; Communicating evaluation results to all concerned should be geared to maintain credibility of the Client, in being fair and reasonable. (Depending on a number of factors, giving feedback to unsuccessful Bidders can include bid prices and tender evaluation scores, but it is often advisable only to provide information to a Bidder about the evaluation of its specific Offer). In every case planning for any debrief must ensure that commercially sensitive information is not shared with any party other than its creator, unless an earlier agreement permits this. It is essential that the process of communications used to award a Contract does not lead unsuccessful Bidders to claim the requirements of relevant regulations/laws have not been met ie: Public Sector Requirements of the Procurement Process In the Public Sector there is specific legislation to follow when letting Contracts (as above) set financial values: In England, Wales and Northern Ireland; The Public Contracts Regulations 2015 In Scotland; The Procurement (Scotland) Regulations 2016 When applicable, a period of a set number of working days is needed between notifying Bidders of the successful Contractor and the intended date of awarding a Contract, (often referred to as the Alcatel period). This period is provided to allow challenges from unsuccessful Bidders and can lead to a Contract award being delayed or withdrawn if the Client s procurement does not comply with the relevant regulations. 5

6 Legislation (continued...) Private Sector Requirements of the Procurement Process The private sector may operate procurement with minimal restrictions, including not being required to limit the duration of any Contract to a pre-set number of years. This does not mean however that existing supplier relationships do not have to be protected, or non-compliance with commercial law is acceptable. The laws of the United Kingdom still require evaluation of competitive tenders to meet certain conditions and delivering a debrief may also be part of this in some situations; i.e. when an earlier agreement between the parties requires the Client organisation to deliver this. Debriefing Unsuccessful Bidders A range of other factors will substantiate the use of Client resources in debriefing unsuccessful Bidders, potentially: Legislation / regulations applicable to public bodies (as given above) Any commitment given in the tender invitation documents to debrief unsuccessful Bidders The value of expenditure The duration of the Contract The need to maintain good relations with unsuccessful Bidders, who are already supplying the Client s organisation or linked organisations The need to maintain good relations with Bidders who may be important in supplying the Client s organisation in the future The need to maintain good relations with any incumbent contractor who can significantly influence the success of handing over the responsibility for Benefits delivery, to the incoming Contractor Depending on a number of factors, giving feedback can include giving bid prices and tender evaluation scores, but it is advisable to only provide information to a Bidder about the evaluation of its specific Offer. In every case planning for any debrief must ensure that commercially sensitive tender information is not shared with any party other than the supplier of it, unless an earlier formal agreement permits this. If correctly planned and delivered, debriefing unsuccessful Bidders will maintain vital business relationships and enhance the reputations of the Client. Not all unsuccessful Bidders will take up the option of a debrief. It remains, however, a key opportunity for both the Client and Bidders to understand each other s businesses, drivers and assumptions, ideally resulting in more competitive Offers in the future. 6

7 TUPE (Transfer of Undertakings (Protection of Employment) Regulations) Nearly all service Contracts that include people working at the Client s premises may at some point, be subject to TUPE Regulations. TUPE may apply if a Contractor takes over existing activities from: the Client a current provider of services to the Client The new Contractor should undertake due diligence in advance of mobilising services and be satisfied that they have fully accommodated and costed the obligations (including pension liabilities of staff transferring to their employ). Transferring staff requires the operation of a formal communications process involving employees (their representatives and trade unions) and involvement of human resource (HR) professionals. This is to ensure that the rights of all parties including the transferring employees, are maintained. When TUPE applies, employees are automatically eligible to become employees of the incoming Contractor, and the terms and conditions of preexisting employment are usually protected. TUPE can also apply to operatives of specialist plant when the plant itself is moved from one party to another to continue the use of that equipment, for a specific Client. ACAS (The Advisory, Conciliation and Arbitration Service) provides impartial information and advice to employers and employees on TUPE. Their definition of TUPE is as follows: TUPE refers to the "Transfer of Undertakings (Protection of Employment) Regulations 2006" as amended by the "Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014". The TUPE rules apply to organisations of all sizes and protects employees' rights when the organisation or service they work for transfers to a new employer. 7

8 Assigning Skilled Resources to Deliver Contract Management Good contract management takes time and effort and so adequate resources must therefore be assigned to its delivery. For long-term Contracts, transferring significantly high risks to a Contractor, there may need to be a formal Contract management process to implement and follow. This can involve scheduled reporting to the Client s representative on the exact nature of the delivery occurring, along with any adverse risk and issues arising. It is vital for the Client to assign a suitably trained and experienced facilities manager or commercial manager to deliver contract management. There can only be one Contract Manager. Their role is to manage the business relationship and quality of supply with the Contractor and ensure that the on-going delivery of the new Contract meets the Client s organisational needs. Any necessary changes that become apparent over time must be agreed by the Contract Manager, working in a timely and effective manner. For Contracts giving rise to many risks during mobilisation, you may need to secure professional project management expertise. A project management function can be used to oversee and manage the relationship with the Contractor and all stakeholders during both of the following stages: Implementation phase (letting the Contract and creating a position whereby all requirements of supply and any of the Client s supporting inputs/management actions are fully understood by the Contractor). mobilisation phase (initiating Contractor s delivery, and often further tuning this in collaboration with the Contractor to integrate supply within with Client s operations). The cost of resources required to manage a major contract has been estimated at 3% of the contract value, but this can increase to as high as 10 % for more complex Contracts. 8

9 Preparations: Developing the Plan to Mobilise Delivery of Benefits The following outlines three stages of planning activity to facilitate the Contract handover. Stage 1 Identifying the Client s needs within the commencement of the Contract It is not uncommon for vital elements of the required Benefits to be unintentionally omitted from the Contract, potentially causing a range of losses for all concerned. A simple example could be a Contractor supplying a safe, which users later find they are unable to open. The Contractor s action in leaving a User Manual may have satisfied the Contract for supply, but this does not guarantee the Client secures a Benefit, if untrained in opening complex safes. The Sale of Goods Act and Supply of Goods and Services Act will require/imply specific levels of conduct by a Contractor but cannot cover every eventuality. A primary action for the Client, before issue of a Contract, is to identify how the Contractor will receive adequate direction as to the minimum content, quality and the timing of the supply of Benefits, as may be required. The timing of Contract payments and any other consideration to be provided by the Client, in return for the Benefits, must also be clear. In summary, the requirements of the Contract can be communicated through: Legislation, unless excluded by the Contract Content specifying Benefits, their content, timing of supply and quality Content describing any required constraints on the Contractor s activities Content describing any required constraints on the Client s responsibilities Content allowing the Benefits and/or constraints to be further specified during the Contract Content describing essential milestones of mobilisation and delivery In the case of the aforementioned contract for a Safe, the Client s Contract needed to specify when and where its staff are to be trained by the Contractor, or how a training plan is to be agreed, as part of the Benefits. 9

10 Preparations: Developing the Plan to Mobilise Delivery of Benefits (continued...) Stage 2 planning demobilisation of existing services/ or the continued availability of resources Depending on the exact nature of the Benefits being procured, and any previous arrangements for the provision of the same, the success of the Client may be dependent upon: demobilising existing services documenting/retaining data on a range of things, to assist the incoming Contractor. An example could be, a cleaning contractor taking over a service where existing specialist cleaning plant, as provided by the Client, has to be the subject of safety checks and confirmed maintenance history, before being accepted by the Contractor, as safe to use. transferring resources to the Contractor As a general guide, the resources to be transferred will be determined by: what the Client has already specified it will supply during mobilisation (i.e. in the earlier tender invitation documents) the staff both eligible and wanting to transfer to the new Contractor, if TUPE applies 3 (TUPE regulations may require the Contactor to offer employment to persons currently providing the activities it has now been engaged to deliver. Staff are not obliged to transfer employment to the Contractor and therefore a plan of action has to include identifying those who are unwilling to transfer and giving time for the Contractor to recruit others where transfer is declined). new resources, which for whatever reason only the Client could provide for the Contractor 4 Depending on the Benefits being provided under the new Contract, the movement of resources in which the Client participates may need to include: plant and equipment licences to operate some special elements of FM at the Client s site certificates confirming the current condition of facilities/compliance with statutory inspections electronic data files, potentially concerning operations delivered by the Client /other contractors 5 records of the design/construction of facilities staff Having identified the Client's resources or those of any of its previous contractors that are to be passed on to any incoming Contractor, then a plan giving adequate time for both the assembly and quality 6 checking of these resources is required before the Contractor is required to commence delivery. The timing of transfers will be determined in part, by the exit plan of the incumbent Contractor. Together they will directly influence any new Contractor s mobilisation plan. Only when the timescales to demobilise existing services and preparations for transfers of resources are known, can work commence deciding the timescales within which the new Contractor might commence and complete mobilisation of Benefits delivery. 3 See the section 'Further Reading' - for Transfer of Undertakings (Protection of Employment) Regulations Resources provided where security and other prevailing conditions demand the Client makes them available 5 See the GN section Technology 6 This may also include safety checks whereby relevant parties are content that the resources being transferred can be put into use 10

11 Preparations: Developing the Plan to Mobilise Delivery of Benefits (continued...) Stage 3 Contract lead-in Having identified all elements of historical data, current operating systems, staff and other resources to be provided to the incoming Contractor along with the timescales within which these can be assembled (in compliance with Legislation e.g. TUPE), then the precise lead-in to the commencement of supply/service delivery can be decided. By this stage, the Contractor should have been notified by the Client of its intention to award the Contract and a mobilisation plan can be agreed and included in the Contract subsequently issued. The lead-in to commencement of service delivery may be dependent on additional matters for the Client and Contractor, for example: The Client s requirement for a specific commencement date as required by shareholders The need for parallel running with any outgoing organisation, to reduce risks and up skill incoming Contractor s operatives Time needed for procurement of specific items of equipment to enable the delivery of Benefits Improving and making Client s facilities available to the new Contractor Implementation of ICT used by the Contractor, including potentially new shared interfaces with the Client (and all associated user training). 11

12 Mobilising & Managing The Contract Mobilisation should occur according to a set of actions and their timing, given in the Contract, or according to a further developed schedule of activity as agreed between the parties after Contract award. In both cases the sequence of actions must enable the Contractor s supply to commence and be verified by the Client, at reasonable cost. If the Contract is for a one-off supply of goods, services or works, its duration will likely be short, completing with receipt of successful delivery and approval for payment of the invoice. Unless the lead-in to delivery is complicated by dependence on several integrated actions (eg the Client first modifying its premises to enable the Contractor s new supply), the mobilisation and Contract management actions by the Client and Contractor may represent a minimal number of low risk events. A typical FM services contract of several year s duration will have more complex mobilisation and will likely be subject to a high volume of Contract Management to control the creation of new risks. Eg the Contractor failing to launch the use of computer aided facilities management (CAFM) which then delays opening a help-desk service. If the Contract involves a building being constructed/extended/substantially refurbished, as opposed to a services Contract, the appointed Contractor should have an involvement throughout any handover phase and into live running of the new facility. This process can also form part of a Soft Landings Initiative. 7 More complex Contracts will benefit from the preparation and distribution of a bespoke management manual, which may include: a clear definition of what is to be provided and the requirements to be met an agreed level of service or performance standard Specification or Service Level Agreement (SLA) methods of measuring performance against the agreed standards 8 pricing mechanisms including where appropriate; milestone payments, incentives /rewards, retentions, and, if appropriate, how prices will vary in reaction to inflation an acceptance strategy or test plan sometimes referred to as User Acceptance testing (UAT) clarity about ownership of assets and intellectual property along with permission or licence to use 9 invoicing arrangements premises or locations (where the services/goods/works will be delivered) arrangements governing; Health & Safety, Sustainability, Equality and Diversity, Environmental Management, Economic Regeneration and Community Engagement arrangements governing sub-contractor s procedures a mechanism for feedback on the Client s performance managing the Contractor 7 See the GN section; Further Reading BIM and Soft Landings 8 See this GN section: Key Performance Indicators 9 See this GN section: Technology 12

13 Mobilising & Managing The Contract (continued...) Key Measures for Success Additionally, more complex Contracts may advisably include: a mechanism for managing underperformance a clear allocation of risk between the parties a jointly developed business plan escalation and dispute resolution procedures communication routes, typically at three levels: operational (end users/support staff) business (Contract Managers on both sides) strategic (Senior Management/Board of Directors) a clear statement about the Client s contract manager s responsibilities a change control process using a Change Control Notice (CCN) a detailed exit strategy All substantial and well managed Contracts will have robust and appropriately skilled and resourced supplier relationship management (SRM) in place. 10 Many Contracts are designed to remain the same for their duration, but in a Contract lasting more than six months, it is likely that requirements will change. For this reason, FM Contracts require, three, six or twelve monthly reviews for; premises/locations and scope of services (Benefits) required. Applicable Contract amendments/variations can then be agreed. Complex Contracts may contain a formal Change Control Process that ensures changes are recorded and can be audited when the people who agreed them have moved on. It is important that both the Client and the Contractor understand this process and that it is used effectively from the start. Whether part of a current continuous improvement initiative or a new strategic action, the measurements used to evaluate success and how to obtain the data on these measurements, must be decided before any new Contractors supply is mobilised. Key Performance Indicators (KPI) may be implemented, if supported by the conditions of contract which the Client and Contractor have agreed to in the Contract document. A key performance indicator might be maintaining availability of materials to answer any Client s reactive request for an immediate delivery of a specified Benefit. Key Performance Indicators KPIs are often misunderstood, and the crucial word is KEY as KPIs should have no more than 8 criteria. The performance measures should have been set out in the Client s Request for Quotation (RFQ) or tender invitation documents, so that Bidders understood how they will be measured, before developing their Offer and Contract prices. Whilst a Facilities Manager may often decide the KPIs, these may need to be the subject of a separate impact analysis to ensure they do not create excessive costs or delay around the Contractor s delivery. 10 See this GN section: Further Reading Supply Chain Relationship Management Guidance Note 13

14 Contractor / Supplier Relationship Management (SRM) Technology Guidance Managing a Contract is primarily about relationships between individuals who represent the parties concerned. It is important to recognise this and to remove any personality issues. Managing the Contract should be based on fact, and those managers who control them should deal with tactical issues promptly. Under no circumstances should minor operational issues be allowed to fester until the next formal Contract meeting. For more complex Contracts, both Client and Contractor should carefully consider the merits of co-locating (sharing the premises management accommodation), which assists in resolving minor issues very quickly. It is always advisable for any long-term contract, providing Benefits vital to the overall success of the Client s organisation, to be the subject of Supplier Relationship Management (SRM). Ideally this includes a specific programme of scheduled monitoring and reporting activities as led by a senior Client manager and this could be a Project Manager until the point delivery commences. If not earlier, a Client s Contract Manager will always begin work when delivery successfully commences. Any SRM for long term Contracts should include the Client leading an annual review meeting between both Client and Contractor s senior management, potentially at director level, to shape and maintain a strategically advantageous arrangement. The Client should study relevant markets and seek to understand, where and how the Contractor is seeking to develop its business. Further information is given the BIFM Guidance Supply Chain Relationship Management. (Information and communications technology ICT) Computer software for both the Client and Contractor will often be used for: FM operations service coordination management reporting maintaining statutory compliance records asset management records filing processing of billing and remuneration. Any new Contract requires a review of the software to be employed, checking thoroughly that its compatibility prevents loss, confused data and stalled communications. Many Contracts will require both parties to use integrated software solutions and whereas the work of providing data can be shared, each party may still require separate software licences to correctly make use of a shared computer system. The Client must ensure that: licences permit access to all parties who need it if the Client expects software to be updated, as it may become available from Licensors during the Contract, the party responsible for supplying this is stated in the Contract if unique software used by the Contractor is vital to service delivery/the Benefit being sought by the Client, the Client has an ESCROW 11 agreement by which it can get full access to the same, in the event of the unexpected demise of the software provider. Only by these checks can the full and actual cost of software and associated risks of use, be confirmed and this must be addressed prior to mobilising delivery against the Contract. 11 An escrow agreement is a formal arrangement by which one party deposits an asset with a third person (called an escrow agent), who in turn, will make a delivery of this to another party if and when a specified event occurs- this right of transfer being integral with the prevailing conditions of the Contract. 14

15 Concluding Summary Further Reading Managing the mobilisation of a new Contract arrangement may be a simple action, although the potential need to manage a wide range of risks, will require that it is carefully planned. Productive and good relations need to be maintained with the incoming and outgoing contractors and any staff being transferred. The Client s use of skilled management resources from the outset, is always advisable. The incoming Contractor can be asked to advise on matters of service mobilisation, often with the cost of this being waived. It remains that the Client organisation must always finalise the measurement criteria to be used and monitor this at regular stages to ensure the intended Benefits from any new Contract arrangement are being delivered. The use of information and communication technology (ICT) should always be considered as, potentially, a vital component in obtaining Benefits. Adequate planning and testing of ICT must operate to remove the risk of reduced service levels and higher costs when put into use. This may otherwise occur if all aspects of reliability, viability in operation and licensing of software, have not been fully checked before designing and implementing any long-term procurement Contract to be extensively supported by ICT. The Client's management of larger contracts concerning multi-site operations may need to be assigned to a team of relevant and focused Contract Management resources and/or Project Management resources. In all cases, if Contract handover has been successfully delivered, the certainty of later strategic gains will have been significantly increased. The following documents were available online at the time of the first publication of this Guidance Note: 1. Selecting FM Software BIFM - Selecting FM Software 2. FM Procurement BIFM - FM Procurement 3. BIFM Supply Chain Relationship Management BIFM - BIFM Guidance Notes 4. BIM and Soft Landings BIFM - BIM and Soft Landings 5. Handling TUPE transfers: the Acas guide Handling TUPE transfers: the Acas guide Acas Comment / Feedback The BIFM always welcomes feedback from FM professionals on the use and potential development of further guidance. Whilst this document is issued to provide a guide rather than a detailed explanation of activities needed to implement and manage a new contract arrangement, we look forward to seeing any feedback submitted to procurement@bifm.org.uk This document was produced by the British Institute of Facilities Management (BIFM) alongside the BIFM Procurement Special Interest Group (SIG). Further information on the Procurement Special Interest Group can be found at: *While all due care is taken in writing and producing this guidance note, BIFM does not accept any liability for the accuracy of the contents or any opinions expressed herein. 15

16 About BIFM The British Institute of Facilities Management (BIFM) is the professional body for Facilities Management (FM). Founded in 1993, we promote excellence in facilities management for the benefit of practitioners, the economy and society. Supporting and representing over 17,000 members around the world, both individual FM professionals and organisations, and thousands more through qualifications and training. We promote and embed professional standards in facilities management. Committed to advancing the facilities management profession we provide a suite of membership, qualifications, training and networking services designed to support facilities management practitioners in performing to the best of their ability. British Institute of Facilities Management Charringtons House 1st Floor South The Causeway Bishop s Stortford Hertfordshire CM23 2ER T: +44(0) E: info@bifm.org.uk