New model contract scores a hat-trick

1 Sep 16

How the Met Police achieved savings, improved services and hired more smaller firms by handling facilities management contracts differently

Government procurement and contract management have changed dramatically in recent years. Officials have moved away from dependence on a few big suppliers and made contracts more flexible so changes don’t incur big fees. They’ve sharpened up contract management, simplified the procurement process, and tried to buy more from small and medium-sized enterprises (SMEs).

Achieving all these goals is difficult, particularly when they are in conflict. If you support SMEs with smaller contracts, you lose economies of scale and increase the pressure on contract staff. If you ask prime contractors to subcontract more work to SMEs, there’s a cost in terms of transparency. If you bear down on headline prices, suppliers may give less ground on amendment fees.

In the field of IT, under the tower model – service integration and management – suppliers bring in expertise, while another company manages their work. However, in other areas, public bodies haven’t found a straightforward way of realising their goals while overcoming the tensions between them. Until now.

In 2013, the Metropolitan Police signed a facilities management contract with KBR, covering services such as cleaning, maintenance and security. The goal was to save 9% on total spending – just under £5m a year.

Three years on, the Met is saving £10m a year, while service satisfaction has improved and the number of SMEs involved has leapt by 40%. If these savings are maintained for the 10-year contract, the total will reach £100m – a 20% fall in spending – and the Met will also have made significant savings in management time and staff costs.

The Met has developed a unique service delivery model, which has been advanced by KBR – the service integrator (SI).

Under the SI, KBR sits alongside the client as an adviser and delivery partner: we draw up contracts with specialist suppliers, then oversee them and provide a one-stop-shop troubleshooting operation. So the client can enjoy the advantages of contracting directly with specialist, expert local suppliers – greatly increasing procurement from SMEs – while accessing market-leading procurement and contract management expertise and delivering a single, integrated service to staff across the organisation.

KBR’s National Integrated Service Centre, covering all managed services, is available to the client’s teams. Our customer service teams ensure suppliers provide a responsive, high-quality service, while referring any emerging problems to the oversight team, which contains people from both the client and KBR. The customer service centre saves a huge amount of time for staff who no longer need to coordinate the work of contractors and suppliers. Senior staff are freed up to focus on strategic goals.

Sometimes, organisational change involves major reforms to office support services; here, too, the SI system brings big advantages. Decision-makers benefit from much-improved management information, providing consistent, comparable cost and performance data across the whole business. Because our contracts permit clients to alter their services without paying punitive fees, services can be amended, for example as organisations reduce their property portfolios.

KBR is paid on a fee basis, rather than taking its cut from the contract values – so there’s no mark-up, and any savings go to the client. This also means that if other organisations join the contract, all of them benefit from greater economies of scale and diluted management costs; we’ve just delivered this for the Metropolitan Police, as the London Fire Brigade is joining the Met’s FM contract.

We’ve found a way to achieve contract objectives – and the Metropolitan Police and London Fire Brigade are realising the benefits. Now we want to show other public bodies what we can do; we’re confident they’ll see a system that delivers savings, higher quality services and public policy goals. And it’s not often that public servants find a way to deliver on all three fronts at once.

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