{meta} Decision - Request for Approval to Award a Contract for SAP Licenses by Salford City Council on behalf of Liverpool City Council with SAP UK Limited

Decision details

Decision status: Recommendations Approved

Is Key decision?: No

Is subject to call in?: Yes

Decision:

Salford City Council - Record of Decision

 

I Councillor Hinds, Lead Member for Finance and Support Services and chairman of the Procurement Board, in exercise of the powers contained within the Council Constitution do hereby approve an exception to Contractual Standing Orders as permitted within the City Council Constitution for the reason(s) highlighted in the table below and the award of the Contract for SAP licences for Liverpool City Council as detailed in the table below:

 

Detail required

Answers

Title/Description of Contracted Service/Supply/Project

SAP Licenses for Liverpool City Council

Name of Successful Contractor

SAP UK Limited

Supplier Registration Number

(to be supplied by Corporate Procurement)

02152073

Type of organisation

(to be supplied by Corporate Procurement)

Private Limited Company

Status of Organisation

(to be supplied by Corporate Procurement)

Non-SME

Contract Value

£530k

Full Project

Contract Duration

24 Months

Contract Start Date

01/04/2021

Contract End Date

31/03/2023

Optional Extension Period 1

Optional Extension Period 2

Who will approve each Extension Period?

Choose an item.

Contact Officer (Name & number)

Rob Langford rob.langford@salford.gov.uk

+441615138715

Lead Service Group

Service Reform & Development

Reason for CSO Exception

(select all that apply)

The goods / services / works are only obtainable from one provider and there is no other provider available to allow genuine competition

The execution of works or the supply of goods or services is controlled by a statutory body

Delivers Best Value to the Council

Special education, health or social care contracts, if it is considered in the Council’s best interests and to meet the Council’s obligations under relevant legislation

The execution of works or the supply of goods and services is required so urgently as not to permit compliance with the requirements of competition

Security works where the publication of documents or details in the tendering process could prejudice the security of SCC and Salford residents

Procurements made through, or on behalf of, any consortium, local authority, statutory or similar body, provided that tenders or quotations are invited and contracts placed in accordance with national or EU legislation.

Funding Source

Revenue Budget

Ethical Contractor

Mayor’s Employment Charter

Committed to sign up to the Charter

 

Accredited Living Wage Employer

 

 

The reasons are

It gives Liverpool City Council more time to select an alternative supplier should one be identified

Liverpool City Council is deciding its ERP strategy, this gives them more time to consider its options.

It allows DDAT to continue to resell its services and offset some of its costs.

Both parties can continue to benefit from collaboration

This approach ensures better value for money for the wider public purse, economies of scale and better license terms.

 

Options considered and rejected were

 

Liverpool considered purchasing its own licenses but initial enquiries identified that SAP would see them as a new customer. This in turn would have increased capital costs and annual license fees considerably.

Liverpool County Council is yet to determine its wider ERP strategy other approaches would have rushed that decision.

 

 

Assessment of risk

 

Salford city Council must ensure that it purchases the SAP licenses in compliant way

 

The source of funding is

Revenue Budget

 

Legal advice obtained

 

Supplied by: Tony Hatton, Principal Solicitor

When commissioning contracts for the procurement of goods, services or the execution of works, the Council must comply with the Public Contracts Regulations 2015 (PCR) and its own Contractual Standing Orders (CSO’s), failing which a contract may be subject to legal challenge from an aggrieved provider.

 

Whilst exceptions to CSO’s may be authorised by a decision notice from Procurement Board, as detailed in the Constitution there is still a risk of challenge from aggrieved providers if the usual tender process has not been followed. The risk of challenge increases in tandem with the value and proposed length of the extension. In this instance the Council is not commissioning a service which may be readily provided by a number of suppliers in the marketplace, if indeed any, and SAP are in a unique position to provide the services to the Council to realise the benefits set out in the report.

 

Also PCR permits direct awards of contracts to be made in limited circumstances, set out at regulation 32 of the PCR (“Negotiated procedure without prior publication”) such that reg 32 (2)(b)(ii) confirms use of the procedure:

“…where the works, supplies or services can be supplied only by a particular economic operator for any of the following reasons:

 (ii)  competition is absent for technical reasons,

 but only….where no reasonable alternative or substitute exists and the absence of competition is not the result of an artificial narrowing down of the parameters of the procurement;”

 

Another option would be for the Council to issue a voluntary ex-ante transparency (VEAT) notice, which, whilst not without risk, would (subject to challenge within a 10 day period of its publication) permit the award of the licenses.

 

The publication of such a notice also starts the 30 day ‘challenge period’ in relation to procurement exercises. The risk in using this procedure would be that an interested party could respond to the VEAT notice and so the Council would have potentially encouraged a challenge that may not otherwise have arisen. The Council would then need to justify its reasons for not undertaking a fully compliant process and issuing an OJEU notice, but if the Council is confident that other suppliers and the market generally is not yet ready to deliver the package of products/services, all of which are compatible with existing platforms etc, that risk would be assessed as very low.

Legal Services drafted the exiting collaboration agreement with Liverpool City Council and is working with ICT colleagues to draft an agreement for a transitional period to allow the Council and Liverpool City Council to dissolve the existing partnership whilst protecting the Council’s interests, and the SAP licenses are required to cover provision of services during that period.

 

 

 

Financial advice obtained

 

Contact officer and telephone number: Jo Garvin, Finance Officer, Ext 2873

The costs will be coded to the Delivery Service Reform revenue budget on code C4207 5742, these costs will then be recharged back in full by invoice to Liverpool City Council.

 

Procurement advice obtained

 

Supplied by: Emma Heyes, Category Manager, The Corporate Procurement Team

There is always the risk of challenge when directly awarding contracts without prior competition from an aggrieved supplier, on the basis that it should have been openly advertised.  This risk increases with the value and term of the contract and cannot be eliminated.

The risk in this instance is deemed to be low, as there are no other economic operators who can sell SAP licences, and therefore they are only available from SAP directly.

In addition, the Council can try and mitigate some of risk of challenge from the market, by issuing a Voluntary Ex-Ante Transparency notice, and giving a period of 10 days for anyone to challenge the decision before entering the contract.

 

 

 

HR advice obtained

N/A

 

Climate change implications obtained

None

 

Documents used

 

None

 

Contact details

Contact Officer:  Nick Wright

Telephone number: 0161 793 2891

 

 

·       This matter is also subject to separate advance consideration by myself as the Lead Member for Finance and Support Services

·       The appropriate Scrutiny Committee to call-in the decision is the Overview and Scrutiny Board.

 

 

 

Signed: COUNCILLOR BILL HINDS       Dated: 17th February 2021

                    Lead Member

 

 

*         This decision was published on 17th February 2021

*         This decision will come in force at 4.00 p.m. on 24th February 2021 unless it is called-in in accordance with the Decision Making Process Rules.

 

Publication date: 17/02/2021

Date of decision: 17/02/2021

Decided at meeting: 17/02/2021 - Procurement Board

Effective from: 25/02/2021

Accompanying Documents: