TO : CABINET : 5th March, 2003
JOINT REPORT OF THE DIRECTORS OF CORPORATE SERVICES AND
PERSONNEL AND PERFORMANCE
STRATEGIC PARTNERSHIP PROJECT THE NEXT STEPS
1.
PURPOSE OF REPORT
The purpose of this report is to:
a)
Provide a summary of the work done on the Strategic Partnership
Project since the last meeting of the Project Board held on 13th
November
b)
Raise with Cabinet some of the issues which have been considered by
the Senior Management Groups for the relevant services and the
Project Team/Board during this period; and
c)
Make recommendations as to the next steps to be taken with this
Project.
2.
RECOMMENDATIONS (requiring decision today)
Cabinet is asked to provide strategic direction by approving (as
appropriate) the following recommendations:(i)
Agree in principle with the concept of further exploring
appropriate partnering approaches for some or all of the
services provided by Corporate Services and Personnel
and Performance, and to critically analyse responses to
ascertain if they would add real value.
(ii)
That our primary goals and objectives in pursuing this
initiative, are as follows:-
a.
b.
To improve quality and add value to services
To speed up the pace of improvement by providing
additional investment
To achieve better value for money by reducing transaction
costs
To exploit our existing skills and expertise
To preserve and enhance staff employment security
c.
d.
e.
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f.
To provide regeneration/inward investment and better local
job opportunities
g.
To safeguard and enhance democratic accountability in
the delivery of our services
h.
To strengthen strategic capacity to enable achievement in
the priority areas
(iii) Consideration be given to ascribing particular weightings to the
agreed objectives, e.g., if regeneration is the primary goal then
this would impact onto the type of preferred contract model.
(iv) That this initiative run separately to that being undertaken by
colleagues in Development Services (who are at a more advanced
stage and which will ensure that good practice lessons can be
shared without unduly hindering progress).
(v)
Agree that any advertisement should emphasise that we are
seeking genuinely innovative solutions and that we would
expect any potential partner to ensure that staff be employed on
no less favourable terms and conditions than those which they
currently enjoy, in line with our previously agreed “Statement of
Intent”.
(vi) That the form of any advertisement makes clear that this is initial
soft market testing rather than a formal invitation to submit
tenders.
3.
PROGRESS MADE TO DATE
Gathering Intelligence
Work has been continuing to gather intelligence regarding the experiences
of other local authorities, which have gone down the strategic partnership
route for the provision of some of their services. Visits have been made by
small groups of staff representing the majority of the services being
considered for partnership to a number of sites as follows:






Blackburn with Darwen
Westminster
Liverpool
Middlesborough
Durham
Cumbria
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These visits have been useful in both gathering some technical information
about the nature of the contracts entered into, which has fed into the work
done by Manchester Business School (more of which later), and to enable
staff representatives to ask their own questions about employment/
development/pension matters. Whilst all authorities had entered into
partnership arrangements, there was no consistency as to the model
adopted. In addition, contact has been made with ODPM’s (Office of the
Deputy Prime Minister) Strategic Partnering Taskforce, which is producing
guidance on the subject through its work with strategic partnering pathfinder
authorities.
The Manchester Business School (MBS) Report
Peter Kawalek, author of the MBS report attended the last meeting of the
Project Board to present his findings. Cabinet had access to a summarized
version of the report or could have requested a full copy according to their
own choice. For ease of access, a copy of the summary is attached at
Appendix A.
Whilst this report could not do full justice to Peter’s findings, there follows a
brief guide to some of the issues he has raised, and will no doubt further
explore at the meeting.

Terminology – what do we mean by the words “partnership” and
“outsourcing”? Partnership is often used to describe outsourced
arrangements because it has a “kinder/softer” ring to it.

Which decision making strategy does Salford wish to pursue? Cost
based decisions are termed “tactical”. Raising the capabilities or
standards of the organization leads to a “strategic” model, whereas the
next dimension, where the decisions are based upon levering
additional value added outcomes for the area rather than just service
specific gains for the organization, is known as the “comprehensive”
model. How do these definitions fit with Salford’s desired outcomes?

Which models are out there? They can be put into four categories:
Fee for service contract
Buy – in contract
Strategic collaboration
Preferred supplier
These models can be implemented in a variety of ways, e.g.,
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Joint ventures
Public/private partnerships
Public/public partnerships
Externalizations

Change control mechanisms in contracts – how would we ensure the
correct degree of flexibility to negotiate and agree service
developments in the future?

Salford’s Viewpoint – is there a case for an external relationship and if
so, what kind of relationship? Results of this initial analysis suggest
that all but one service sub units might potentially benefit from some
sort of external relationship, and the most common model is suggested
to be the strategic collaboration.

The Way Forward –
Clarify the big strategic goals of any potential partnership
Develop an initial set of targets to be delivered by such a partnership
Further review and development of the analysis of suitability of
services for partnership
Development of a communication plan
Taking a view on long term issues such as staff/Trades Union views
and TUPE, handling negotiations, understanding the contractor,
capacity to manage external relationships, exit and termination
strategies, etc.
4.
DELIBERATIONS OF SENIOR MANAGEMENT GROUPS
The Senior Management Groups for Corporate Services and Personnel and
Performance have both met to consider the findings of the MBS report and
to think about the next steps for the Project. After revisiting the objectives of
the Project and considering their linkages to the six pledges and the
Council’s overall vision for the City of Salford, the Groups then discussed
the initial findings of the MBS evaluation of the suitability of services for
partnership. The MBS results were accepted by Service Heads as being a
firm enough basis upon which to proceed with further work on the Project.
However, it was felt to be too early in the process to assess the relative
merits of particular contract vehicles, and that to do so may unduly fetter
innovative approaches from the market. Service Heads did give some
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thought though to the areas of service improvement/development which
they would wish to see delivered as a result of entering into a partnership
with another service provider, and these would form part of an evaluation
framework which could be developed should expressions of interest be
sought from the market. It was felt that the main operational drivers are:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Improving delivery of services
Levering in additional investment
Responding to the e-government agenda
Addressing skills gaps in certain areas
Recruitment and retention difficulties in certain areas
Responding to external criticisms of the Council as a whole
Improving best value and management performance indicators and the
improvement in performance associated with this
Exploiting our own skills and expertise within a wider market
It was accepted that there was sufficient evidence to proceed to place an
advertisement seeking expressions of interest from the market to ascertain
whether a partner(s) could “add value” to current service delivery, and to the
achievement of our corporate pledges. Further, it was agreed that all of the
services, which fall under the umbrella of Corporate Services and Personnel and
Performance, ought to be included within such an advertisement.
These conclusions were then considered by the Project Team at its meetings
held on 29th January and 4th February. During the course of these discussions a
number of issues were raised which were referred to the Project Board on the
13th February.
Issues requiring decisions of Cabinet
The Advertisement
Earlier in this report mention has been made of the possibility of placing an
advertisement seeking expressions of interest from the market. A draft is
attached at Appendix B for the Cabinet’s consideration. This includes all
services within Corporate Services and Personnel and Performance and is
intended to test what the market has to offer. No preferred contract models have
been identified at this stage.
It is interesting to note that Tameside Borough Council have recently placed an
advertisement in the Municipal Journal seeking “Innovative Proposals for Joint
Partnerships”, a copy of which is attached at Appendix C. The main differences
between the two are as follows:
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

Tameside have included a greater number of services i.e., those which are
currently grouped under Development Services in Salford as well as Trading
Standards and Facilities Management.
Tameside are “seeking ideas for new partnership structures” which implies
that they may consider a number of smaller contract packages.
Similarities include:




Exploitation of good services by doing work for others.
Additional investment and/or expertise is sought to improve and grow the
business.
Building a secure and growing employment base.
Improving the quality of services.
At the time of writing it is not yet clear whether Tameside have placed a PIN in
OJEC as well as the advertisement in the local government press.
Should Cabinet decide to proceed it will also need to consider whether the
advertisement should become a PIN (Prior Indicative Notice) and therefore be
placed in OJEC (The Official European Journal) as well as other publications
such as Municipal Journal and Local Government Chronicle. The pros and cons
of such a course of action are illustrated below.

PIN – Placing a PIN notice would give notice to potential partners that the
City Council intends to place a formal invitation to tender/negotiate during
the course of the next 12 months. In doing so, the City Council can still
protect its position by stipulating that in the event of tenders being
unsuitable; it will not be obliged to enter into any contract. The advantage
of placing a PIN notice is that it reassures potential partners that we are
serious about seeking an appropriate strategic partnership. If we were not
fully committed to this course of action in principle, then placing a PIN would
be inappropriate.

Soft market testing – This is a process of talking to the market in order to
ascertain whether potential partners may be able to help us to achieve our
objectives. The advantage of this approach is that it can be undertaken
without any firm commitment and provides an opportunity to further explore
the business case. The disadvantage, is that it may indicate to the market
that we are not convinced about pursuing this strategy and it could be
perceived as paying “lip service” to the concept of partnership working.
The feeling of the Project Board was that we should soft market test rather than
place a PIN notice.
Cabinet will also be aware of the parallel soft market testing work, currently being
undertaken by Development Services seeking a partner for the future delivery of
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those built environment, planning, design, road safety, management and
maintenance services within Salford.
Development Services is at a more advanced stage than this project, having
already undergone the model consultation and evaluation process. They are
currently carrying out a detailed investigation of a preferred model.
Development Services have expressed a preference to continue to progress on a
directorate basis for the following reasons:
1. They are seeking to progress as quickly as possible in order to obtain
access to new markets which would secure the employment of their staff
as a result of the increasingly volatile markets and budgets they are now
experiencing.
2. Very few of the companies who have expressed an interest have
experience or expertise of the services covered by the Directorates of
Corporate Services and Personnel and Performance. It is therefore
considered that there are a very limited number of companies who are
able to deliver the combined objectives of the Directors of Development
Services, Corporate Services and Personnel and Performance
3. To take advantage of the excellent level of market interest which has been
obtained from companies who specialise in Development Services’ range
of integrated services and who are likely to be most able to achieve their
objectives.
4. Market research shows that at least 4 companies would be prepared to
submit bids using Development Services preferred model. Five further
companies have requested further discussion
5. Staff and Unison are fully supportive of the approach being adopted by
Development Services (and the preferred model being explored), and are
showing strong commitment to the appointment of a partner.
6. To maintain the momentum which has been achieved to date
Once research and an assessment of the level of market interest into the
preferred model has been completed by Development Services it is anticipated
that the Cabinet will be approached for approval to place a formal contract notice
inviting tenders in OJEC.
Implications for other Directorates
In considering the next steps for this project, Cabinet must be fully aware that
any decisions to pursue a partner(s) for the delivery of Corporate Services and
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Personnel and Performance services will have implications for the other
Directorates of the Council. For example: other Directorates employ their own
support staff who interface with the staff affected by a partnership. How far does
a potential partnership extend within the Council’s support staff? Service Level
Agreements would need to be drawn up between the partnership and
Directorates. Any deviation from those agreements will require a negotiated
variation to the contract and may increase Directorates’ costs if demand
substantially exceeds agreed service levels. A substantial number of staff are
currently outstationed within Directorates and a decision will be required as to
how this arrangement would be treated under a partnership. For these reasons,
if directors are projecting significant changes in demand for services (from
Corporate Services and Personnel and Performance) this information needs to
be shared with the Project Team as soon as possible. The introduction of a
contractual dimension to these relationships will also demand a focused
approach to the application of corporate processes and procedures across the
Authority, for example: the Customer Services strategy and the full utilization of
the SAP system. Such questions, and many more which have yet to surface will
need to be discussed with our customers in Directorates.
Staff and Trades Union views
All staff have been kept fully in touch with progress via staff newsletters and team
leader forum meetings. Understandably the staff and trades unions are cautious
of these developments and concerned about job security, pay and conditions as
well as intellectual/philosophical arguments about compromising the public sector
ethos of service delivery at the expense of private sector profits. Equally,
however, there is an understanding of the difficulties local authorities are faced
with and recognition of the need to explore these opportunities.
At the Project Team and Board meetings, the Unison Branch view opposed any
outsourcing of services that are currently provided in-house. The
recommendation to Cabinet however is to proceed to undertake soft market
testing on the basis of compliance with our agreed “Statement of Intent” and that
staff be employed on no less favourable terms and conditions of employment.
What kind of partnering arrangements should be considered?
A clear definition must be drawn between the types of partner Salford might
choose. Many of the latest partnerships have been tagged as being “strategic” in
nature. Does Salford seek a partner(s) with whom it will determine its future
strategic direction, or is it merely seeking partner(s) with whom to explore
operational/technical benefits and developments? The answer to this question is
a crucial step at this stage of the Project. It will determine the way in which
contract(s) are drawn up and services are packaged. For example: the “big
bang” approach where all services are placed together in one package has the
advantage of possibly attracting the type of investment which could meet the
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regeneration agenda and will require smaller scale contract administration,
whereas bespoke contracts may deliver improved operational effectiveness but
not the economies of scale required to meet the Council’s regeneration needs.
Of course, all these questions are unanswered, as we have not yet asked the
market to demonstrate how innovative it can be. However, it serves to
demonstrate just how important it is to have complete clarity of objectives from
very early on in the Project.
Risk Assessment
An initial risk assessment has been conducted to provide a “feel” for the kind of
risks involved should we proceed into the next phase of the Project. Further,
more detailed work must be done in order to build contingency plans to meet
those risks, and this would form part of the Project Team’s programme of work.
Currently, the Council is not exposed to any of those risks, and would not
become so were it to decide to place an advertisement as no commitment to
enter into a partnership arrangement has been given at this stage.
Impact on current service delivery
Clearly, a project of this size and scale cannot be undertaken without considering
the effects upon current service delivery. There are tremendous resource
implications in the successful delivery of such a project, from the core team who
are seconded in to work full time on the project, to the operational staff who are
also called upon to provide information about costs, volumes, resources etc., to
feed the information requirements of prospective partners. Much work remains
to be done to be fully prepared to respond to the demands of the market should
an advertisement be placed, e.g.,



Development of a communications plan encouraging consultation and the
involvement of staff, trades unions, customers and other stakeholders.
Development of a website and information pack including service profiles
etc.
Development of a set of evaluation criteria for vetting and evaluating
potential approaches
5.
RECOMMENDATIONS (requiring decision today)
Cabinet is asked to provide strategic direction by approving (as appropriate)
the following recommendations:(i)
Agree in principle with the concept of further exploring
appropriate partnering approaches for some or all of the
services provided by Corporate Services and Personnel
and Performance, and to critically analyse responses to
ascertain if they would add real value.
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(ii)
That our primary goals and objectives in pursuing this
initiative, are as follows:-
a.
b.
To improve quality and add value to services
To speed up the pace of improvement by providing
additional investment
c.
To achieve better value for money by reducing transaction
costs
d.
To exploit our existing skills and expertise
i. To preserve and enhance staff employment security
j. To provide regeneration/inward investment and better local
job opportunities
k. To safeguard and enhance democratic accountability in the
delivery of our services
l. To strengthen strategic capacity to enable achievement in the
priority areas
(iii) Consideration be given to ascribing particular weightings to the
agreed objectives, e.g., if regeneration is the primary goal then
this would impact onto the type of preferred contract model.
(iv) That this initiative run separately to that being undertaken by
colleagues in Development Services (who are at a more advanced
stage and which will ensure that good practice lessons can be
shared without unduly hindering progress).
(v)
Agree that any advertisement should emphasise that we are
seeking genuinely innovative solutions and that we would
expect any potential partner to ensure that staff be employed on
no less favourable terms and conditions than those which they
currently enjoy, in line with our previously agreed “Statement of
Intent”.
(vi) That the form of any advertisement makes clear that this is initial
soft market testing rather than a formal invitation to submit
tenders.
Issues for future consideration
(vii) Should any other services be included within the advertisement, or are
any that are currently within the scope to be excluded?
(viii) Consideration of whether there are any issues which customerdirectorates feel is critical to the evaluation of potential partners.
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(ix) Does Cabinet have any preferred contract model, e.g., Joint Venture
Company, with a minority, influenced or controlling stake;
Outsourcing/Externalisation; and is there a preference for smaller
discrete packaging arrangements with the accent on improving
operational effectiveness as opposed to a collection of services in one
all-embracing contract?
(x)
Should any contract contain requirements to improve
BVPIs/Management PIs and contain profit sharing mechanisms?
our
(xi) How would pursuing this initiative affect our programme of best value
reviews and at what stage (if any) do we need to undertake a full
options appraisal?
6.
TIMETABLE
Should Cabinet decide to recommend that an advertisement be placed, the
timetable would be as follows:
Cabinet Briefing – 25th February
Cabinet – 5th March
Advertisement placed by second week in March
There will be a joint meeting of all team leaders from both Corporate
Services and Personnel and Performance to be held on 27th February to
keep staff up to date with developments. In addition, a further newsletter will
be released to staff to coincide with the above decisions.
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