Agenda item

Background:

The report sought permission to commence the procurement of a Development Partner and their estimated investment of £120,000,000 for Innovation Park Medway North (IPM N), and agreement to the proposed Head of Terms that would form part of the tender pack and form the basis of the future contract with the development partner.

Exempt Appendices 1- 4 to the report provided the financial analysis, procurement strategy, soft market testing results and a draft Heads of Terms.

Reasons:

This exercise will be procured under the Procurement Act 2023 (PA23) which offers a choice of two procedures:

The open procedure: a single stage tender procedure whereby any interested party can submit a tender and the Council would decide, on the basis of the published award criteria, to whom to award the contract. It is not possible under this procedure to shortlist / limit the number of suppliers who would receive the tender documents. This process maximises the number of suppliers that tender but is used for more straightforward purchases.

Weaknesses of open procedure:

(a)      single stage approach means that bidders must prepare tenders without knowledge of the number of other bids/bidders, this can mean that bidders are unlikely to invest time and resource into the bid as the prospect of success is unknown resulting in no or poor quality bids;

(b)      the specification issued with the tender pack at the commencement of the process must be sufficiently clear and simple from the outset to allow bids to be submitted on a comparable basis. For major regeneration projects such as this Project, this is exceedingly difficult/impossible to achieve; and

(c)      there is extremely limited opportunity for dialogue with bidders during the tender process, there is no opportunity for the Council to help shape proposals to ensure it receives tenders which best meet its needs.

The competitive flexible procedure can be a multi-staged process and does allow for a shortlisting stage (pre-qualification/pre-selection) to limit the number of suppliers receiving a tender. The procedure can be adapted to the Council's requirements so long as it complies with the basic requirements of the Procurement Act 2023. The Cabinet Office Guidance suggests that this procedure is most appropriate for more complex requirements. We consider that the Project falls within the definition of a complex requirement.

Advantages of the competitive flexible procedure:

(a)      a multi-stage approach means bidders can be quickly sifted to a shortlist of parties who best meet the Council's objectives. The shortlisted bidders are incentivised to invest time and resource into their bids given a better percentage prospect of success;

(b)      as a complex regeneration project, the tender specification for the Project can be developed and refined throughout the procurement, with input from bidders; and

(c)      there is opportunity for dialogue with bidders, allowing the Council to refine its requirements during the process and for bidders to test and develop their understanding of the Council's requirements, resulting in higher quality bids.

Given the nature of the Project and the key differences between procedures described above then it is recommended that the competitive flexible procedure is used.

Good progress has been made regarding the soft market testing, however, to move towards the more formal tender exercise it is necessary to have the Heads of Terms setting out the development agreement approach.