Sandwell Council & Interserve - Part 2 - Because We Can!

This is, unfortunately, a detailed note showing how Sandwell Council (SMBC) have skewed their procurement process to avoid open competition and tendering in many areas and to funnel millions to Interserve and its related companies away from public scrutiny for up to 25 years!. What follows may be a bit heavy but you will realise how important this is when you see the amounts of public money involved.

In 2007, SMBC decided to enter the horrendously expensive Building Schools for the Future ("BSF") programme and, in accordance with EU procurement law, published a Notice in the Official Journal of the EU. This signalled the commencement of a search for a private company to join with them as a Local Education Partnership ("LEP"). Eventually, two companies were left in the tendering process, Balfour Beatty & Interserve. As far as one can tell, all was "above board", and Interserve hit the jackpot.

It seems quite clear from SMBC documentation that the INTENTION at the time was for this procurement to apply simply to the BSF programme and for that alone. For example, this from the full Council agenda of 3rd March, 2009 (unless they were just lying, of course):

"1.4 Sandwell is in two waves of the National Programme Wave 3 and Wave
5, subject to future public spending decisions, which will enable a
continuous programme of investment across the whole secondary estate.

1.5 An OJEU notice was published on 9th August 2007, which signalled the
commencement of the procurement process for a Local Education Partner
to deliver Sandwell’s BSF programme. Sandwell’s procurement will follow
the competitive dialogue procurement procedures in line with EU
Regulations and use the standard documentation produced by
Partnerships for Schools (PfS), the national body responsible for the
delivery of BSF.
1.6 The BSF programme covers four key contracts;
• The Strategic Partnering Agreement for the LEP which is a 10 year
arrangement with an option to extend for a further 5 years
• The PFI Contract for a 25 year period
• The ICT Contract for an initial 5 years with an option to extend a
further 5 years
• The Facilities Management Contract for 25 years with an option to
break in respect of soft FM at years 10, 15 and 20."

And:

"2.2 That the Council confirm the continued pursuit of Building Schools for the
Future as its strategic direction for the transformation, rebuilding and
renewal of its secondary education provision in Sandwell."

But then SMBC wanted to broadened the remit so that the LEP could also handle other Government programmes and other school/educational projects, thus from the same agenda document:

"6.9 At the ITCD stage of the process, the two consortia were required to 

provide responses to various documents that SMBC issued. Bidders had 

to supply details of how they will establish and work with SMBC in a Local 

Education Partnership (LEP) to transform education in Sandwell, their 

designs and Facilities Management (FM) options for a 25 year PFI 

scheme for Rowley Learning Campus, their designs for the Smethwick 

Learning Campus design and build scheme, FM arrangements for the 

Smethwick Learning Campus, financial models, proposals for a managed 

ICT service in secondary schools in the BSF programme, including a 

learning platform, data centre, building management systems integration 

and transformation, additional services (including the Primary Capital 

Programme, professional construction related and property services and 

learning platform, equipment, software, technical support and consultancy 

and management information systems offered to non-BSF schools 

including primary schools and academies) and comments on draft 

contracts and payment mechanisms. The same documents were 

submitted for Final Bid stage but they reflected discussions that had taken 

place during the dialogue period." 

And let us look at the the Deputy Leader, Eling's, "Corporate Procurement Strategy" of January, 2010 - prepared shortly AFTER the LEP was formed:

"4.5 Building Schools for the Future 

The Council has recently appointed a private sector partner, 

Environments for Learning (E4L) following a rigorous 

Competitive Dialogue process, which in turn equates to a formal 

Local Education Partnership (LEP). 

The outcome of this is a partnership who will “take Sandwell 

secondary schools into the 21st century” and the appointment of 

145 craft apprentice places supported by the Council’s “Think 

Local Construction”."

(As an aside, the very next paragraph trumpeted another great SMBC deal - Transform Sandwell - a financial disaster now prematurely ended!)

But whilst the LEP was clearly intended to be used for the BSF and ancillary schemes the lawyers had been to work and broadened the remit still further so that the LEP could (allegedly) involve itself way beyond the educational remit and provide services as disparate as the "construction of office blocks" to, and I kid you not, the "construction of crematoria" and "restaurants". Here is the full list, if you don't believe me, from the EU contract history 2009/S 149-217829

• 45000000 - Construction work  
• 45111000 - Demolition, site preparation and clearance work  
• 45210000 - Building construction work  
• 45211000 - Construction work for multi-dwelling buildings and individual houses  
• 45212000 - Construction work for buildings relating to leisure, sports, culture, lodging and restaurants  
• 45213150 - Office block construction work  
• 45214000 - Construction work for buildings relating to education and research  
• 45214200 - Construction work for school buildings  
• 45215000 - Construction work for buildings relating to health and social services, for crematoriums and public conveniences  
• 45314000 - Installation of telecommunications equipment  
• 45453100 - Refurbishment work  
• 50700000 - Repair and maintenance services of building installations  
• 51610000 - Installation services of computers and information-processing equipment  
• 55524000 - School catering services  
• 60170000 - Hire of passenger transport vehicles with driver  
• 70000000 - Real estate services  
• 71000000 - Architectural, construction, engineering and inspection services  
• 71315000 - Building services  
• 71541000 - Construction project management services  
• 72000000 - IT services: consulting, software development, Internet and support  
• 72514300 - Facilities management services for computer systems maintenance 
• 75200000 - Provision of services to the community  
• 77314000 - Grounds maintenance services  
• 77320000 - Sports fields maintenance services  
• 79410000 - Business and management consultancy services  
• 79411000 - General management consultancy services  
• 79418000 - Procurement consultancy services  
• 79420000 - Management-related services  
• 79710000 - Security services  
• 79993000 - Building and facilities management services  
• 80000000 - Education and training services  
• 90911200 - Building-cleaning services  
• 92610000 - Sports facilities operation services  
• 98341140 - Caretaker services  

(Just as an aside again, one has to wonder, given that SMBC argue that they can effectively do what they like under this "contract", and that the above includes "construction for buildings related to leisure, sports etc", why the contract for Wednesbury Leisure Centre was put out to separate tender although, happily, Interserve won it! It may also explain why money has been flowing to Sandwell Futures Limited (Interserve) from SMBC budgets which have no apparent connection with education eg "Street Scene". Also, SMBC are just about to expend large sums of taxpayers' money on their crematoria (nearly £1m) and it will be interesting to see if Interserve have "won" the work for that too. Don't forget - this is all under the spurious heading of "Building for Schools"!)

Now have a look at this further detail from the EU Notice:

"Original Text CONTRACT AWARD NOTICE SECTION II: OBJECT OF THE CONTRACT II.1) DESCRIPTION II.1.1) Title attributed to the contract by the contracting authority: Sandwell Schools for the Future Programme. II.1.2) Type of contract and location of works, place of delivery or of performance: Services. Service category: No 11. Main place of performance: The Borough of Sandwell and adjacent areas. NUTS code UKG34. II.1.3) The notice involves: The conclusion of a framework agreement. II.1.4) Short description of the contract or purchase(s): The contracting Authorities were seeking an innovative private sector partner or partners to particiapte and invest in a new Public Private partnership vehicle (a "Local Education Partnership" or "LEP") to be established jointly with some or all of the contracting authorities. The LEP will provide (or arrange the provision of) "Partnering Services", which will include (but not be limited to) the development of a strategic investment programme for: a) Educational Facilities (including the secondary school estate of the Borough Council of Sandwell with the potential to extend this to primary schools, childrens centres, Academies and other educational facilities); b) there is also the potential to include other community facilities to be co-located on schools sites including community centres, libraries and health facilities; together the "Relevant Facilities")in the contracting authorities' area. These Partnering Services may also comprise of the following services: a) strategy advisory services; b) programme management services; c) project development services; d) procurement consultancy services; e) procurement and delivery of all services required to deliver the strategic investment programme for the Relevant Facilities (including through the provision, integration and management of supply chain arrangements). It is anticipated that such services may include: i) architectural services; ii) engineering services; iii) construction services; iv) technical services; v) building services; vi) hard facilites management services; vii) soft facilities management services; viii) information communication and technology ("ICT") services; ix) transportation services; x) educational support services; xi) educational programme development services; xii) educational strategy services; xiii) professioanl construction related/property services and operational asset management services (these services may also be required in respect of facilities other than the Relevant Facilities but which are within the overall estate of the Borough Council of Sandwell which, for the avoidance of doubt, includes housing stock managed by Sandwell Homes Limited). Operational asset management services may include but not be restricted to facilities management services; for a period of up to 15 years. The ICT services provided by the LEP may extend beyond the Relevant Facilities to the wider estate of the Borough Council of Sandwell and to other users of ICT services which are provided by or through the Borough Council of Sandwell. Where professional construction related/property services and operational asset management services are required by Sandwell Homes Limited, the LEP may be required to contract directly with Sandwell Homes Limited or Sandwell Homes Limited may purchase the LEP's services from or through the Borough Council of Sandwell. The relevant facilities or other facilities provided by the LEP, which may be a mixture of new build, remodelled and refurbished facilities, will be delivered under the Private Finance Initiative (PFI) and/or design and build arrangements. This may include the delivery of the Relevant Facilities (or other facilities) through separate Special Purpose Vehicles (SPVs) established by the LEP. Where an SPV is established, the shareholders in such SPV may include the LEP, third party equity providers and supply chain members. The contracting authorities may contract with the LEP or, where an SPV is established, directly with the SPV. The LEP may also be required to provide for, or arrange for the provision (through supply chain arrangements) of, the management and/or integration of the Partnering Services, design and build construction contracts, facilities management services, support services and ICT services (this list is not exhaustive) where the contracting authorities' existing arrangements are either transferred or expire. SECTION V: AWARD OF CONTRACT TITLE: Sandwell Schools for the Future Programme. V.1) DATE OF CONTRACT AWARD: 31.7.2009. V.2) NUMBER OF OFFERS RECEIVED: 2. V.3) NAME AND ADDRESS OF ECONOMIC OPERATOR TO WHOM THE CONTRACT HAS BEEN AWARDED: Environments for Learning Limited, 395 George Road, Erdington, UK-Birmingham B23 7RZ. E-mail: info.projects@interserve.com. Tel. +44 1213444888. URL: www.interserve.com. Fax +44 1213567493. SECTION VI: COMPLEMENTARY INFORMATION VI.1) CONTRACT RELATED TO A PROJECT AND/OR PROGRAMME FINANCED BY COMMUNITY FUNDS: No. VI.4) DATE OF DISPATCH OF THIS NOTICE: 4.8.2009." You will note that the "contract" - the clue is in the first three letters - has been extended still further so that such matters as "housing" can be included in the, er, Building Schools scheme! Indeed, it has been re-named to just the "provision of services" which it seems, according to SMBC, means they can effectively do what they like. The other question that arises, is who polices these multi-million pound "deals" once they have started to ensure that the taxpayer is getting good value for money? One has to wonder whether SMBC was hoodwinked into drafting the contract so widely or whether it did so deliberately. In any event, they rely on it to maintain secrecy surrounding these multi-million pound contracts. As a mere amateur lay-person, it is impossible to pick out what money is going where although you will see from, for example, my blogpost of 9th January, 2014 "Interserve and Sandwell Council" that the sums are very large indeed. The SMBC budget for 2014/15 makes just a passing reference to £98m (excluding other contracts and ancillary costs) wrapped up in PFI deals & finance leases alone but no breakdown is provided. As long as I can keep going and as long as SMBC refuses to give voluntary disclosure, this will, unfortunately, lead to a string of Freedom of Information requests although SMBC will still try and maintain secrecy by hiding behind confidentiality clauses which, in many cases, their OWN lawyers have drawn up to thwart public disclosure! Open democracy Sandwell "Socialist"-style! Of course, not all the money is coming from the long-suffering Sandwell taxpayer (though a lot IS) but it is coming from us as taxpayers nationally and from what SMBC calls "prudential borrowing" (which has to be repaid via the taxpayer). Under BSF, for example, large sums were paid by the Government but, again, there is no publicly-available breakdown. Since 2010 the BSF scheme has been stopped and whilst some other schemes continue, eg the Priority Schools Building Programme, Sandwell seems to be increasingly ploughing its own furrow under its misguided "leadership". By using redacted information in Council minutes, awarding bizarre contracts like The Public to Interserve without tender, and then by relying on "confidentiality" clauses to prevent FOI disclosure The Turdmeister & Co can put two fingers up to us mere scum and tell us it is none or our business! In the specific case of The Public, the so-called "Fundamental Review" that went to the "cabinet" has never been publicly-disclosed and the only available version is heavily redacted. SMBC have purported to award Interserve a contract worth around £6.7m without open tender under the above "LEP" scheme and it HAS contested release of the contractual information via FOI requests. Not bad since they have "spun" the yarn that this nonsense somehow constitutes a "great" deal for Sandwell! For some peculiar reason Sandwell Futures Limited (Interserve) is specifically named as the "LEP" in The Public "deal" whereas in the EU Journal the LEP is a different Interserve company, Environments for Learning Limited. All very odd and something to be investigated further (again I invite SMBC to voluntarily disclose information to avoid the necessity of further FOI requests). I should also mention here that the main officer of SMBC in charge of the team setting-up the above, incredibly widely-drawn "contract", was a SMBC Director called Melanie Dudley. She is still not only a highly-paid employee of SMBC but also a Director of Sandwell Futures Limited. One other SMBC employee is also a Director. Sandwell Futures Limited is said to be a "partnership" but SMBC have only a 10% shareholding. The main shareholders are the socialist (not!) Interserve and Dalmore Capital (in place of Barclays Bank). Whilst it is difficult to follow these weird contracts here is detail from the latest accounts which shows who money is going OUT of Sandwell Futures to: Year End 30/09/13 To Agilysis & Cambridge Education £6.6 MILLION To Dalmore Capital & Barclays Bank £527,000 To Sandwell Council £135,000 (yes, thousand) To Interserve & related companies £38.3 MILLION (some "partnership"!) Further, there is the Medium-Term Finance Strategy 2014-2017 attached to SMBC's budget. Strangely, the reference to The Public is not contained in a reference to the LEP but in respect of a so-called "strategic partnership" with Sandwell College. The reference to the LEP is, despite the above, just in respect of educational facilities. SMBC will receive (from the national taxpayer) large sums via grants and payments under the Primary Capital Programme and such like schemes but will also "prudentially borrow" to fund part of the programme or even, it seems, pursue further PFI schemes! It appears that for years to come this AND other works will not have to be put out to tender but simply gifted to Interserve. This is the throwaway line from the strategy document: "The LEP was formed in spring 2009 and will assist the Council in transformational change to be brought about in learning through the support of £370 million in new school facilities." Serious money! Three hundred and seventy million - and mostly to Interserve! No wonder they were so anxious to "help-out" with the destruction of The Public! It remains to be seen how SMBC will continue to try to enjoy the secrecy surrounding these deals and whether people will get well and truly shafted - as with The Public and like the unfortunate SMBC women employees in respect of "equal pay" - via good old Sandwell Labour. Just because you can do something doesn't mean you should - but that doesn't seem to apply in Sandwell! THE SANDWELL SKIDDER - A COMMUNITY BLOG NEW CONFIDENTIAL PHONE NUMBER FOR INFORMATION CONCERNING SANDWELL COUNCIL, SANDWELL COLLEGE AND INTERSERVE: 07599 983737 7am to 8pm 7 days e the sandwellskidder@gmail.com t @bcrover (Vernon Grant)