HAMPSHIRE COUNTY COUNCIL Decision Report Decision Maker: Executive Member for Adult Social Care Date: 16 March 2017 Title: Approval of novations and delegation of authority to approve Reference: 8137 Report From: Contact name: Director of Adults Health and Care Kevin Ingram Tel: 01962 845966 Email: kevin.ingram@hants.gov.uk 1. Executive Summary 1.1. The purpose of this paper is to request that the Executive Member for Adult Social Care delegates authority to the Head of Law and Governance and Monitoring Officer to approve the use of the modification process for novation of public contracts for adult social care which have a modification value in excess of 1million in circumstances where there is no change in the financial impact to the County Council. This would cover novations where there has been or proposes to be universal or partial succession, including takeover, merger, acquisition or insolvency, both following internal corporate restructuring and where there has been or proposes to be novations to an unconnected organisation. 1.2. This paper is also seeking permission from the Executive Member for Adult Social Care to approve novation requests already received by the County Council. For the purposes of contract standing orders, these novations represent a modification to existing contracts of a value which is greater than 1 million and as such require approval from the Executive Member for Adult Social Care. These are; 1.2.1 The novation of a number of existing contracts and a Framework Agreement with Alexander Care and Support Agency and Mr & Mrs L Alexander to three new limited companies Alexander s Care and Support Limited, Alexander s Mental Health Limited and Alexander s Supported Living Limited. These represent novations within an existing organisation, following a restructure of that organisation. 1.3. If approval to the modification of contracts is given, then consent to the assignment of rights and novation of obligations under the contract(s) to Alexander s Care and Support Limited, Alexander s Mental Health Limited and Alexander s Supported Living Limited as detailed in paragraph 1.2.1 would be provided.
2. Contextual information 2.1.These requests are being made in the context of the County Council s Contract Standing Orders and The Public Contract Regulations 2015 ( the Regulations ). Clause 9.5 of Contract Standing Orders states; Any proposed modifications to existing contracts which have not been provided for in the initial procurement documents in clear, precise and unequivocal review clauses shall be approved by the Head of Law and Governance and Monitoring Officer where the value of the modification is less than 1 million and by the Executive where the value of the modification is 1 million or greater prior to agreement of such modification. 2.2. Under Regulation 72 (1) (d) (ii) of the Public Contract Regulations 2015 a public contract may be modified without a new procurement procedure where a new contractor replaces the one to which the contracting authority had initially awarded the contract as a consequence of universal or partial succession into the position of the initial contractor, following corporate restructuring, including takeover, merger, acquisition or insolvency, of another economic operator that fulfils the criteria for qualitative selection initially established, provided that this does not entail other substantial modifications to the contract and is not aimed at circumventing the application of this Part. 2.3.Consequently, in circumstances where a public contract with a remaining value of over 1 million is proposed to be novated in accordance with Regulation 72 (1) (d) (ii), this shall be treated as a modification requiring approval from the Executive Member. 2.4.To make sure all future novations of public contracts are dealt with in a timely manner, to minimise the impact on payment to suppliers and to ensure the quality of the services are maintained, it is recommended that authority to approve use of the modification procedure in these circumstances is delegated to the Head of Law and Governance and Monitoring Officer Services. 2.5.Currently there are novations to three organisations which require approval under the current system. These are to Alexander s Care and Support Limited, Alexander s Supported Living Limited and Alexander s Mental Health Limited. Alexander s Care and Support Limited, Alexander s Supported Living Limited and Alexander s Mental Health Limited 2.6. In November 2016 Hampshire County Council received notification from the Park Group which includes Alexander s Care and Support Agency and Mr & Mrs L Alexander, that they were incorporating and would be transferring all of their trade and assets from Alexander s Care and Support Agency and Mr & Mrs L Alexander to three new limited companies; Alexander s Care and Support Limited, Alexander s Supported Living Limited, and Alexander s Mental Health Limited. The final approval date for this incorporation will be the 28 February 2017.
2.7. Spend for Alexander s Care and Support Agency and Mr & Mrs L Alexander to deliver these services is already in place; the novation involves transferring existing contracts to another legal entity. 2.8. Alexander s Care and Support Agency have three extra care contracts, two Reablement and Assessment of Care Team (REACT) contracts and a Hampshire Framework for Shared Living and Learning Disability Support Agreement; the extra care and REACT contracts are subject to Hampshire County Council s Adult Services Standard Terms and Conditions and the Hampshire Framework for Shared Living and Learning Disability Support is subject to the Framework Agreement. 2.9. The three extra care contracts currently held by Alexander's Care and Support Agency were awarded after an open tender. They commenced on the 1 October 2016 with the initial term ending on the 30 September 2020, and options to extend them until 30 September 2023. These would be transferring to Alexander s Care and Support Limited. 2.10. The two REACT contracts currently held by Alexander's Care and Support Agency were awarded after a restricted tender. They commenced on the 14 June 2014 and the 8 November 2014 and are scheduled to end on the 13 June 2017 with an option to extend until the 13 June 2018. These would be transferring to Alexander s Care and Support Limited. 2.11. The Hampshire Framework for Shared Living and Learning Disability Support agreement currently held by Alexander's Care and Support Agency was awarded after a restricted tender. This commenced on the 1 October 14 and is scheduled to end 30 September 18. This will be transferring to Alexander s Supported Living Limited. 2.12. The value of the contracts with Alexander s Care and Support Agency under the maximum period of the contracts is: Extra care (6 years 7 months) REACT (16 months) Hampshire Framework for Shared Living and Learning Disability Support agreement 13 million 0.5 million Zero value 2.13. The contracts which Mr & Mrs L Alexander currently hold are for Park View Residential and Nursing Home and Park Avenue Residential and Nursing Home in Farnborough. 2.14. The estimated spend over the next 48 months based upon current monthly spend is 1.4 million for Park View and 0.69 million for Park Avenue. 2.15. Payments to Alexander s Care and Support Agency and Mr & Mrs L Alexander are continuing until the novations are agreed to ensure that they can continue to provide services.
3. Evaluation of Novation Applications 3.1. In order to satisfy the requirements of the regulations the organisation the contracts are novating to need to satisfy the qualitative selection criteria initially established. These checks have been carried out in respect of all contracts detailed in section 2 and the providers have satisfied all the qualitative selection criteria and requirements for each service. 4. Proposals 4.1. In order to ensure that novations are processed in a timely manner it is recommended that the Executive Member for Adult Social Care delegates authority to the Head of Law and Governance and Monitoring Officer. This would be following consideration by the Departmental Management Team, a written request with reasons would then be sent to Legal Services. It would be for approval for the use of the modification process for novation of public contracts for adult social care which have a modification value in excess of 1million in circumstances where there is no change in the financial impact to the County Council. This would cover novations where there has been or proposes to be universal or partial succession, including takeover, merger, acquisition or insolvency, both following internal corporate restructuring and where there has been or proposes to be novations to an unconnected organisation. 4.2. In order to meet the County Council s statutory duties to ensure safe delivery of care for clients, and to ensure there is no disruption to paying the provider, it is proposed that the contracts listed in paragraphs 2.11, 2.12 and 2.13 currently provided by Alexander s Care and Support Agency and Mr & Mrs L Alexander are novated to Alexander s Care and Support Limited, Alexander s Supported Living Limited and Alexander s Mental Health Limited. 5. Financial Implications 5.1. There are no financial implications of these proposals; the novations would not involve any additional spend or change to the duration of the contracts. 6. HR implications 6.1. As the services that are referred to in this report will continue to be provided by an independent Service Provider there are no Hampshire County Council staff issues involved with this process. 7. Legal implications 7.1. Any proposed novations of public contracts under Regulation 72 (1) (d) (ii), where the incoming provider fulfils the criteria for qualitative selection initially established and this does not entail other substantial modifications to the contract, will be a permitted modification under the Public Contract Regulations 2015.
7.2. For the proposed novations set out in this report it has been evidenced that the qualitative selection criteria has been met and therefore these are permitted modifications under the Regulations. 7.3. All novations will be made in writing requiring the parties consent to the novation. 7.4. In exercising its functions an authority must have due regard to the need to: Eliminate discrimination, harassment, victimisation and any other conduct prohibited under the Equalities Act and advance equality of opportunity and foster good relations between persons who share a relevant protected characteristic and persons who do not share it. 8. Equalities impact assessment 8.1. Given that these proposals would have no impact on either people who use these services or the staff working in the services an Equalities Impact Assessment has not been carried out. 9. Recommendations 9.1. That the Executive Member for Adult Social Care delegates authority to the Head of Law and Governance and Monitoring Officer Services to approve the use of the modification process for the novation of public contracts for adult social care which have a modification value in excess of 1million in circumstances where there is no change in financial impact on the County Council as set out in paragraph 4.1 of the report. 9.2. That the Executive Member for Adult Social Care approves the novation of the contracts, as set out in the report, from Alexander s Care and Support Agency and Mr & Mrs L Alexander to Alexander s Care and Support Limited and Alexander s Mental Health Limited and the Framework Agreement for Alexander s Care and Support Agency to Alexander s Supported Living Limited.
Integral Appendix A CORPORATE OR LEGAL INFORMATION: Links to the Corporate Strategy Hampshire safer and more secure for all: Maximising well-being: Enhancing our quality of place: yes yes no Other Significant Links Links to previous Member decisions: Title Reference Date Support to Stay at Home Category Management Strategy 5468 24.01.14 Delivering Older Persons Extra-Care in Hampshire County Council 7287 22.03.16 REACT - permission to tender for the Reablement and Assessment of Care Team service 5104 20.09.13 Direct links to specific legislation or Government Directives Title Date Section 100 D - Local Government Act 1972 - background documents The following documents discuss facts or matters on which this report, or an important part of it, is based and have been relied upon to a material extent in the preparation of this report. (NB: the list excludes published works and any documents which disclose exempt or confidential information as defined in the Act.) Document None Location
IMPACT ASSESSMENTS: Integral Appendix B 1. Equality Duty 1.1. The County Council has a duty under Section 149 of the Equality Act 2010 ( the Act ) to have due regard in the exercise of its functions to the need to: Eliminate discrimination, harassment and victimisation and any other conduct prohibited under the Act; Advance equality of opportunity between persons who share a relevant protected characteristic (age, disability, gender reassignment, pregnancy and maternity, race, religion or belief, gender and sexual orientation) and those who do not share it; Foster good relations between persons who share a relevant protected characteristic and persons who do not share it. Due regard in this context involves having due regard in particular to: a) The need to remove or minimise disadvantages suffered by persons sharing a relevant characteristic connected to that characteristic; b) Take steps to meet the needs of persons sharing a relevant protected characteristic different from the needs of persons who do not share it; c) Encourage persons sharing a relevant protected characteristic to participate in public life or in any other activity which participation by such persons is disproportionally low. 1.2 Equalities Impact Assessment: The paper is concerned with novating existing contracts. There would be no impact on groups with protected characteristics through a novation. The impact on groups with protected characteristics would be considered when the original proposal for the service being novated was made. 2. Impact on Crime and Disorder: 2.1. No impact has been identified. 3. Climate Change: 3.1. How does what is being proposed impact on our carbon footprint / energy consumption? There is no impact on our carbon footprint/energy consumption from these proposals 3.2. How does what is being proposed consider the need to adapt to climate change, and be resilient to its longer term impacts? This would be considered when the services being novated were originally awarded.