Agenda item

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 the award of the contract as outlined in the table below:

The Reasons for the tender are that the buildings require a best in class approach to management to secure the best covenant of occupier for the building to ensure the property is a success. The management of Grade A office space is a specialist area and is provided by a small number of consultants within the property market.

Options considered and rejected were:

1.     Extend the current arrangements

The buildings are currently managed by Knight Frank ( 1 & 2 New Bailey) under an existing 3 year appointment which has now reached the end of its term and CBRE 100 Embankment, under a temporary appointment that was made prior to the practical completion of the building. Both these arrangements no longer meet procurement rules and as such have been re tendered.

2.     Bring the management in house

The management of Grade A office space is a specialist area and SCC do not have the in-house capability to deliver this service. Further more the appointment of an external manging agent reduces the costs and risks associated with these services to SCC

Assessment of Risk

The financial risk to the Council is mitigated by the fee for the property management services being recoverable from the occupiers of the two buildings as part of the building service charge.  Over 65% of the costs of the management fee for 2 New Bailey Square are already covered as a result of the lettings which have taken place in that building to date.  As yet, no occupiers are confirmed for 100 Embankment so all the running costs are payable by the Council.  However, as the building does not have tenants, the full suite of services is not being provided so the running costs will be reduced until tenants take occupation.

The level of running costs for the building will be kept under review with the managing agent.  This is both to ensure unnecessary expenditure is minimized as far as possible but also to ensure that the service charge level remains competitive with other similar buildings.  The overall costs of occupation are high on the list of criteria considered by potential building occupiers so the day to day management has a direct effect on the attractiveness of the building.

The source of funding

The appointments will be funded initially through the building service charges with the Council, as landlord, paying a proportion based on the vacant areas within each building.

As part of the original 2017 approval for the Council to be involved with both buildings, model cashflow projections were prepared which included annual revenue sums for the running costs of both buildings.  These were based on cautious, realistic and optimistic scenarios.  Both buildings are currently either in line with or bettering the realistic forecast scenarios.

Legal Advice obtainedSupplied 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 provisions of the Public Contracts Regulations 2015 as well as its own Contractual Standing Orders (CSO’s), Financial Regulations and the duties of Best and Social Value. In addition, the PCR require that contracting authorities treat candidates equally and in a non-discriminatory way and act in a transparent manner, failing which the award of a contract may be subject to legal challenge.

The procurement procedure undertaken in this matter including publication on the Chest portal appears robust and compliant with the requirements of CSO’s and PCR. The appointment of the provider for the Property Management Services at 100 Embankment and 2 New Bailey Square follows an open tender process which is outlined within the body of the report, with bidders being evaluated on the most economically advantageous tender, resulting in the proposed award of the contract to Knight Frank LLP.

Having undertaken the open tender exercise process set out in the report, the Council may take comfort that value for money has been obtained and periodically tested, with open competition maintained.

Financial Advice obtained:  Chris Mee Strategic Finance Manager Ext 0434

The appointments will be funded initially through the building service charges with the Council, as landlord, paying a proportion based on the vacant areas within each building.

Provision for these costs was built into Business Case projected cashflows at the time the schemes were approved by members, including provision for potential council liability on vacant areas, which will be met from a combination of rental income generated and resources set aside within the New Bailey reserve.

Procurement Advice obtained - Heather Stanton, Category Manager, ext 4241

This contract was advertised as an open tender on the Chest ensuring an open and transparent procurement in accordance with SCC Contractual Standing Orders under the Council’s Constitution governing contract procurement.

HR Advice obtained

There are no HR implications arising from this report.

Climate Change Implications obtained

There are no climate change implications arising from this report

The following documents have been used to assist the decision process

Salford 2025, a Modern Global City

Creating prosperity in Salford

Contact Officer: James Kington

Telephone number: 07855 146 516

This matter is not subject to consideration by another Lead Member.

The appropriate Scrutiny Committee to call-in the decision is the Growth and Prosperity Panel.

*         This decision was published on 7^th April 2021

*         This decision will come in force at 4.00 p.m. on 14^th April 2021 unless it is called-in in accordance with the Decision Making Process Rules.