Decision details
CHE S420 Voids Utility Management Provision - Concession Contract
Decision status: Recommendations Approved
Is Key decision?: No
Is subject to call in?: No
Decision:
RESOLVED:
That the Cabinet Procurement and Insourcing Committee approved:
The procurement of a Void Utility Management
provider under a concession contract to provide void utility
management services, at nil cost to the Council.
Options Appraisal And Business Case (Reasons For
Decision)
The Building Maintenance Voids team deals with c. 430 properties per year, updating, decorating and preparing Council properties to be re-let to Hackney residents. The Void co-ordinators spend a disproportionate amount of time ensuring the utility accounts for the previous resident have been closed down and any debt cleared, and then arranging the new supply for the incoming resident.
This activity was previously administered by British Gas up until 2021 before they ceased to provide the service. This has added an administrative burden to the Void team, with the net effect of increasing the length of time that a property is Voided. It is estimated that sourcing a provider for this activity could help return Void properties to market a week earlier.
As part of the service provided, we would expect the provider to ensure that electricity and gas meters are upgraded to the latest Smart Meter technology.
This paper seeks permission to approach the market to find a supplier to provide this service on behalf of the Void team.
Due to the current cost of living crisis, the Building Maintenance service has seen an increase in the number of gas meters that have no credit on them, which prevents gas operatives from performing their annual gas appliance servicing compliance activity. They are then required to “Cap” the gas meter, which means the resident is not able to use any gas appliance (including the boiler), until the gas meter has been “uncapped” and the resident’s appliances serviced.
As part of this procurement we would seek a Void Utility Management provider that will provide support to vulnerable residents, to help reduce the number of gas meters that are being capped within Hackney’s housing portfolio. We would expect the provider to work with the resident who finds themselves in financial difficulty, signposting to relevant support services including the Financial Inclusion team at Hackney Council.
The chosen provider will be in a position to offer their gas & electricity supply product to the resident, benefiting financially from being the chosen provider, hence the reason for this being a concession contract. The resident will still retain the option to contract with a provider of their choice and not the provider that gets awarded this contract. This is a risk that the selected provider will need to contend with.
An initial search of the market place has identified that there are a few providers that offer Void Utility Management services, however it is unclear how many provide additional support to vulnerable residents, which is a key requirement for this procurement exercise.
Preferred Option
Going to market to find a Void Utility provider, who will also provide support for vulnerable residents, is a key requirement to move the Building Maintenance Void service forward. The specialised nature of the activity lends itself to being performed by a dedicated service provider, which would enable the Void team to focus on preparing the Void property so that it can be re-let to a Hackney resident. The Council should see a net benefit from the anticipated reduction in the Void duration. It is anticipated that void properties could be returned to the market a week earlier which could bring in an additional £139.73 per property (£70k per annum).
There is no cost to outsourcing this activity as the provider will be in a position to market their services to the resident moving into the property. It is estimated that the provider will be able to make a profit of £100 per supply at a property, (£200 if both gas and electricity are supplied to the resident). The concessionary value of the contract is calculated based on the provider being referred up to 500 void properties per year, with average annual revenue of £1,690 per property (the average cost of electricity and gas for an average 3 bed property from 01/04/2024). As Void properties will be sent to the provider over the course of a year, it is assumed that this will result in a half year of revenue for the provider for new customers in each year.
Refer to assumptions figures as set out in the main report.
It is expected that the support provided by the concessionaire will mean fewer Hackney residents end up in crisis situations due to them not being able to pay for their gas and electricity supplies.
A provider who will install new smart meters in all void properties will be a huge benefit to helping the Borough to become a greener place to live. It will reduce the number of visits that a service provider will have to make to the property, whilst also giving much more visibility to the resident of their energy usage, which could help them to change their behaviour over time to reduce their energy usage and expenditure.
In order to optimise value for our residents while minimising direct costs to the Council, the adoption of an Open Tender Procedure for this concession contract is paramount. The implementation of an Open procedure aligns with our commitment to transparency, fairness, and competition, thereby ensuring the most advantageous and cost-effective outcome for all stakeholders involved
Alternative Options (Considered and Rejected)
Do Nothing:
This option was rejected as it would prevent the Void service from moving forward, improving the Void turnaround time and providing a better resident experience.
Recruit an additional Void co-ordinator to focus solely on the Utility disconnection and connections process. This option was also rejected as it would not deliver on the secondary objective of sourcing support for vulnerable residents. It would also result in an extra unnecessary step in the upgrading of meters at the property to smart technology. Recruitment of additional staff would also add an additional cost to the service, which contrasts unfavourably with the zero cost of finding an external provider to manage the service at no cost.
Framework Call-off:
An initial search for a compliant framework suitable for this concessions tender yielded no viable options.
Publication date: 07/01/2025
Date of decision: 06/01/2025
Decided at meeting: 06/01/2025 - Cabinet Procurement and Insourcing Committee
Accompanying Documents:
PDF 271 KB