[ad_1]
This is the full business case (FBC) that relates to the outline business case (OBC) approved on 27 September 2022.
It is normal practice for accounting officers to scrutinise significant policy proposals or plans to start or vary major projects, and then assess whether they measure up to the standards set out in managing public money. From April 2017, the government has committed to make a summary of the key points from these assessments available to Parliament when an accounting officer has agreed an assessment of projects within the Government’s Major Projects Portfolio (GMPP).
This Workplace and Facilities Management (WP&FM) Project falls within the scope of the GMPP and will therefore be published as part of the GMPP reporting.
Background and context
The purpose of this project is to design, procure and implement an appropriately designed delivery model for WP&FM services. This is to be done by April 2024 to cover service provision over the period from that date to the end of the financial year 2031. This is a necessary intervention because two major WP&FM contracts which cover the majority of the Defra estate are expiring by March 2024. Any extension would be subject to highly challenging procurement and commercial restrictions.
WP&FM services make it possible for Defra Group to operate its extensive property portfolio (over 300 properties across all regions of England) for 27,000 colleagues. These essential services include:
- asset maintenance in line with health and safety requirements and bio-security regulations
- cleaning
- security
- reception
Without these services, the estate (including offices and other sites which underpin statutory functions such as science laboratories and flood depots) would be unsafe and unable to operate. This would have severe consequences for the UK economy and environment given the frontline nature of much of Defra Group’s activity.
Defra’s total WP&FM spend across the two contracts (including Intelligent Client Function (ICF) and retained services) is £74.4 million per year in current terms. Under this project’s new contract, total lifetime costs of the do-minimum option’s 10-year life cycle (including inflation) is £854.7 million. This project is requesting funding for the preferred option at a total cost of £855.0 million, which equates to an additional £0.3 million over the financial year 2021 to 2022, to financial year 2030 to 2031 compared to the do-minimum option.
This funding will be used to procure a new WP&FM contract and any additional spend to run the new contract. This is designed to:
- improve safety standards to the required level
- deliver an improved quality of services
- enable the transformation of Defra Group Property (DgP) portfolio management
An accounting officer assessment has been made at the OBC stage in November 2021 by Tamara Finkelstein, the Accounting Officer for the Department for Environment, Food and Rural Affairs. This accounting officer letter seeks renewed approval at the FBC stage (March 2023) by Tamara Finkelstein.
Assessment against the Accounting Officer tests
Regularity
In this case, we rely on common law powers to enter into the arrangements with contractors to provide workplace and facilities management services following a procurement process under the Public Contract Regulations 2015. These services have been confirmed to be covered under the ‘Other Departmental Administration and non-Cash Costs’ section of the estimates.
This opinion has been confirmed by legal and project leads.
Overall assessment: this test has been met.
Propriety
The FBC and funding requirements have been developed in line with the principles and controls set out in Managing Public Money. The preferred options will be funded for the period through to the financial year 2024 to 2025 via the Spending Review 2021 (SR21) through the Defra internal business planning round. For the period financial year 2025 to 2026, to financial year 2030 to 2031 funding will be sought via the Spending Review 2025 (SR25) and is therefore not yet confirmed. However, given the spend is non-discretionary it is highly likely that funding will be granted. No external funding is expected to be sought for the Project. The Project has followed the necessary Defra, Cabinet Office, Facilities Management Controls and His Majesty’s Treasury approvals.
Compliance and accountability will continue to be monitored by:
- Defra
- the Infrastructure Planning Authority and HM Treasury
- the National Audit Office
Overall assessment: this test has been met.
Value for money
In line with HMT Green Book Guidance (2020), the shortlisted options have been analysed in the FBC’s economic case to assess for the period 2021 and 2022 to 2030 and 2031 the social, environmental and economic costs. This assessment has been used to identify the ‘preferred option’.
The net present social value (NSPV) – the key performance indicator for programmes that must be assessed based on social as well as economic impact – of the project is estimated to be £84.7 million over 10 years. It should be noted that the benefits not quantified in this NSPV are likely to be highly material, as they include:
- the protection of the UK against harmful animal pathogens and disease outbreaks (a major outbreak of BSE in the 1980s cost the UK more than £8 billion)
- the ability to trade internationally products of animal origin (this is not possible without APHA’s science capability)
- the UK’s world leading science capability which drives growth and bolsters animal and human health resilience
The value for money from the preferred options remains compelling despite the minor increases in costs compared to the current contract. The benefits not captured in the NPSV include:
- legal and health and safety requirements including minimising estate-related incidents and health and bolstering safety regulatory compliance
- indirect monetary savings (non-cash releasing benefits), such as improvements in colleague turnover and improved workplace experience for staff; better service delivery from an improved ICF
- public value benefits supporting the UK to maintain a global position in science research. Enabling the economic activity of agriculture marine and food sectors. Bolstering food security and driving towards net zero
This opinion has been confirmed by both finance and economist leads.
Overall assessment: this test has been met.
Feasibility
The project has been resourced by a project team and supported by expert external support. Key stakeholders from across Defra and its arm’s length bodies have also been engaged throughout the project and will continue to do so through to project delivery. Progress since the OBC has meant that the project team is now resourced with the required expertise to deliver, augmented by an external transformation partner with considerable experience in the facilities management industry.
The development of the FBC and wider project transformational work has been supplemented by further consulting experts, and change specialists to provide specialist assistance and knowledge around:
- cost consultancy
- finance
- facilities management
- procurement
- valuation
- project delivery
External consultants and contractor supply chain partners are directly managed and coordinated by the project director. This ensures the continuity of services and that the relevant expertise is allocated and assigned optimally.
Throughout the procurement process, Defra has had continual engagement with Crown Commercial Service (CCS) who have been aware of the project and status. The process has utilised CCS frameworks where possible, minimising the contracting risks posed to Defra and ensuring that advantageous terms under CCS have been agreed with suppliers. A preferred supplier has been chosen and is progressing through the governance approvals process, having scored highest on both technical and price assessments. This was from a list of 3 bidders that successfully submitted final bids. A highly competitive procurement process has enabled Defra to obtain a high-quality service provision at lowest cost, despite a challenging macro-economic environment.
This project has used Defra’s mandated project portal for reporting risks. It has its own core governance structure, reporting to the Defra Investment Committee and to HMT. As such, the project has established protocols and checks for spending decisions to ensure that all expenditure is proper and auditable.
A risk management strategy is in place providing a framework for:
- risk identification
- reporting
- development of mitigations
Risk has been factored into financial costings through the inclusion of specific provisions, and contingency management plans are in place should operational risks be realised.
Fraud risks, both those arising from procurement and from operational activities, are being managed through the department’s risk management framework. The project has captured such risks and put necessary controls in place to mitigate them. The project regularly reviews and updates risk registers and will consult with the counter-fraud team for advice on fraud risk and any necessary steps to strengthen controls where needed.
Project benefits are being managed in accordance with Defra’s benefits management framework and will be tracked and reported on through the life of the project. They will then be transferred to the business for post-transition management.
It is the Project’s view that the proposed delivery schedule can be implemented effectively and credibly, in line with its intent to design, procure and implement an appropriately designed delivery model for workplace and facilities management.
Overall assessment: this test has been met.
Affordability
The funding needs of the project up to the financial year 2025 remain affordable under the approved funding provided at SR21. Funding is secured for the financial year 2023 to 2024 and subject to internal planning for the financial year 2025. It is anticipated that funding needs will be met given the non-discretionary nature of the current contract. For the financial year 2026 to 2031 funding is expected to be secured via SR25, which is not yet confirmed but is again deemed close to certain given the nature of this contract and the services it provides.
The total lifetime costs for these preferred options are estimated at £855 million. This is made up of:
- £604.3 million for the wider Defra Group
- £171.3 million for Weybridge
There is an additional £79.5 million in provisions that represents residual risks that are deemed likely to materialise. This represents an increase in cost of £0.3 million over the 10-years life cycle relative to choosing the do minimum option. The total cost of £855.0 million is made up of:
- £741.4 million resource departmental expenditure limits spend
- £113.6 million capital departmental expenditure limits spend
The preferred option represents an uplift of £39.6 million in cost across the 10-year life cycle against the current contract’s modelled run rate of £815.4 million. This uplift is regarded as affordable but may require minor reprioritisation of existing Defra Group Property funding if additional budget is not awarded at SR25.
Overall assessment: this test has been met.
Conclusion
We have completed an assessment of the compliance of proposed spend on the project against the accounting officer tests.
The accounting officer tests described above have assessed:
- regularity
- propriety
- feasibility
- value for money
- affordability
Overall, my assessment is that these tests have been met.
As the accounting officer for the project, I have considered this assessment and approved it on 15 August 2023.
I have prepared this summary to set out the key points which have informed my decision. If any of these factors change materially during the lifetime of this project, I undertake to prepare a revised summary, setting out my assessment of them.
Copies of this assessment will be deposited in the Library of the House of Commons and sent to the Comptroller and Auditor General and Treasury Officer of Accounts.
Tamara Finkelstein, Permanent Secretary
15 August 2023
[ad_2]
Source link