Bidding for BSF All you need to know

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Bidding for BSF All you need to know
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Setting the Scene

• Stephen Crowne
• Director of School Resources, DfES

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BSF Recap

• Key objectives
• Strategic national investment programme with 15
  year horizon
• 2.2bn of investment in 2005-06, sustained
  subject to future public spending decisions
• All secondary schools to 21st century standards
• Enable maximum impact on educational achievement

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BSF Recap

• This translates to
• Strategic local investment programmes
• Long term, large in scale, complex in range of
  services and types of contracts
• PFI, design build, lifecycle maintenance ICT
• Need to bring together the resources and
  capacities of public and private sectors with a
  focus on educational outcomes
• Previous approaches not appropriate to deliver on
  this scale and scope
• Hence the need for PfS

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BSF contributing to DfES wider capital agenda

• Devolved formula funding
• Academies
• VA sector
• Good design
• Efficiency agenda
• PfS
• Good progress to date
• Needs other partners to grasp opportunity
• Private Sector
• Local Authorities

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Bidding for BSF All you need to know
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Securing Education Transformation through BSF

• Brenda Bignold
• Education Director, PfS

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Building Schools for the Future

• BSF is about transforming secondary education
• It is not just another building project
• The Education Vision is critical throughout
• BSF and Partnerships for Schools
• National programme
• Local support
• Public Private Partnerships

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Transforming Secondary Education

• Significantly improving education outcomes
• Attainment
• Achievement
• What do we know will make a difference?
• Leadership
• Collaboration
• Community links
• Childrens Services
• Quality teaching and learning
• Personalised learning
• 14 - 19
• ICT

• Learning environment
• Safe and secure
• Inclusive
• Valuing

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Education Vision and Strategy

• The local view on transformation
• Securing the optimum learning environment at
  authority, area and school levels
• The BSF contribution
• The Education Vision is critical
• Shaping the project
• Informing the design
• Identifying ICT requirements
• Prioritising when times get tough

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Education Vision - Process

• What are the overall educational ambitions?
• What are the intended outcomes for education
  achievement?
• What is the evidence of innovation?
• Who owns and champions the vision?
• What is the process of consultation and sign up?
• How will the vision be secured through the
  project?
• How will you know you have succeeded in
  transforming secondary education?

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Education Vision - Content

• Addressing underperformance
• Curriculum innovation
• Inclusion
• Childrens services, extended schools
• Behaviour
• 14-19
• School organisation
• Specialist schools
• Academies
• ICT

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Education Vision - Innovation

• School Organisation

Inclusion
Extended Schools
Personalised Learning
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Engagement
BSF is about TRANSFORMING secondary education
Vision Engagement Real partnership working
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Partnerships to Deliver

• BSF is new and large
• Delivery will require joined up working across
  all sectors
• Education and learning will need to be at the
  centre at all stages
• Vision
• Strategy
• Project management
• Project delivery

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Bidding for BSF All you need to know
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LEP Progress Standard Documentation

• Andrew Robertson
• Finance Commercial Director, PfS
• Akshay Kaul
• Standardisation Manager, PfS
• Andrew Fraiser
• Allen Overy

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The Evolution of PPPs
Joint Ventures Strategic Partnerships
Frameworks, PFI contracts
Design build, OM contracts
LEPs
Outsourcing

Outcome-orientation
Input-orientation
Output-orientation

Cost
Value

Operational Focus
Strategic Focus
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The LEP Proposition

• Private Sector brings
• Innovation in school design and technology
• Development capital and expertise
• Supply chain management skills
• Continuous Improvement
• Economies of scale
• Faster delivery

• Public Sector offers
• Exclusivity over a large volume of work
• Repeat business with a single client
• High reward to bidding cost ratio

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The Process Why Standardise

• 3,500 Schools
• 150 Local Authorities
• Requirement for national management
• Skill shortages at local level
• Reduce time
• Reduce cost
• Create and make the partnership deliverable

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Standardisation Commercial Impact

• Focus can now be on the project specifics
• Common terms for all
• Delivery of new Projects cookie cutting
• Will reduce cost in future
• To get the value out
• Will force partnership on both sides
• Behaviour will change
• But not at the expense of real innovation
• Open minded to changes for demonstrable real
  value

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Standardisation Will it be enforced?

• Acceptance of terms from all consortia members -
  bidding requirement
• That includes funder due diligence providers
• Historic Education Sector PB bag of lies
  approach
• Quickest route, on national basis, to the
  objective
• Not at expense of value or genuine structural
  issues
• But engage centrally now
• Must recognise local needs
• Core role of PfS

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The Process What have we standardised?

• Anticipated legal structure
• Standard suite of legal documents
• On the PFI - PfS schools version of SoPC3 will
  rule
• Standard Suite of non-legal commercial documents
• Partnering services
• Output specifications
• ICT
• Design Build
• Procurement and bidding documents

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The Standard Documents Legal/Commercial

• Strategic Partnering Agreement (SPA) Partnering
  services
• Shareholders Agreement (SHA)
• PFI Project Agreement (PFI)
• Output specification
• Payment mechanism
• Project agreement
• Direct agreement
• Design and Build contract (DB)
• Output specification
• Conventional FM services (FM)
• ICT Managed Services (ICT) - Output specification

Latest BSF Documentation NOW AVAILABLE from
www.p4s.org.uk
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The Standard Documents - Procurement

• Procurement Documentation
• OJEU advert
• Prequalification documentation
• Pre-ITN
• Invitation To Negotiate

Latest BSF Documentation NOW AVAILABLE from
www.p4s.org.uk
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The LEP Structure for Project Delivery
LEA
Partnerships for Schools (PfS)
Private Sector Partner
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10
80
Local Education Partnership (LEP)
PFI Agreement
ICT Contract
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The Standard Structure Delivery-PFI
Local Education Partnership
PfS
Initial min 51 holding Can reduce over time to
10
Build Co
Project SPV1
Equity Investors
FM Co
ICT Co
Standard PFI Suite of Docs.
Senior Funders
Local Authority
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Consultation on the Standard Documents Real or
Lip Service

• Consider the stakeholders
• Local Authorities
• DfES
• HMT
• PUK
• Public Sector - advisers
• Private Sector - sponsors/debt/equity/supply
  chain
• Private Sector - advisers
• Too many meetings to count

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Sanity Check Process

• Legal
• Allen Overy - appointed to do review
• Gleeds - appointed to do review as if for Funders
• Marsh - appointed to do review
• Structure
• Gone around again - group of lender/equity/adviser
  /sponsor
• Central message confirmed
• Not another batching idea
• Desire to moderate behaviour all side
• Focus is Education, not bricks and mortar

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Funding Initiatives

• Too big to ignore concepts such as Framework
  Funding
• Not underestimating the power of the market
• Encourage Lenders to get there before the Centre
• Better returns for less effort
• Deliver in competition
• We will recognise in competition
• Will begin talking to market for Wave 2
• Will not be a return to PfCS

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So will it work?
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AO Involvement

• Not advisers to PfS
• Provided detailed comments on SPA, SHA and
  Project Agreement
• Met with PfS on 5 occasions
• Assignment completed

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Key Issues that have changed

• Our understanding of LEP related changes
• Equity ownership of PFI SPV
• Removal of duplicate protections for the public
  sector
• Right to remove exclusivity when 2 Project
  Agreements terminate has been tempered
• Our understanding of Project Agreement related
  changes
• Removed links to SPA
• Vandalism

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Other Issues

• Interface issues
• Majority ownership in construction phase v rights
  of LEP as a minority shareholder
• Detail (e.g. of supply chain integration)

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On Balance

• Greatly improved
• Balanced, but balanced in favour of the public
  sector
• Builds on NHS LIFT
• Biddable proposition for equity and funders

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Bidding for BSF All you need to know
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What we expect from Bidders

• Paul Higgins
• Operations Director, PfS

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Why is BSF different from what has gone before?

• Where have we come from ?
• DB / FM / ICT / PFI / Frameworks /
  Partnerships / LIFT individual merits
• But whats good for BSF?
• Lowest costs?
• Built to time and costs?
• Design awards?
• Local resources used?
• Minimal disruption?

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Cont...

• BSF success is linked to benchmarking cost
  reduction / efficiencies over the programme AND
• Improved education outcomes
• Delivering only shiny new boxes BUT the same or
  worse outcomes is not tenable

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What are we looking for in a LEP Supply Chain?

• Recognition that you have understood the size and
  nature of the opportunity
• Not stop start procurement but a long term
  programme
• Predictable customer base
• Predictable timetable
• Opportunities for regional manufacture / sourcing
• Conversely global sourcing may drive benefits

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Cont

• Standardisation
• High volume bulk purchase
• Shorter supply chains
• Simpler distribution / logistics
• Lower entry costs
• Off site construction?

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Cont

• How you are melding
• Individual local Educational Visions
• Curriculum analysis
• Creative use of ICT
• New teaching and learning options
• Timetable flexibility
• Making optimal use of space and design
• Creating buildings that teachers and learners
  will use to best effect

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Some Thoughts About the Supply Chains
Wave 1 circa 150 000 place schools, equating
to
How are these going to be manufactured and
supplied and what cost and time savings can we
reasonably expect?
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Questions we will ask the Bidder

• How strong is the Education / ICT focus and
  influence in your consortium?
• How will this be able to affect design and
  building configuration and use?
• How can your design proposals adapt to a changing
  education offer over the medium to long term?
• Is your supply chain fully in place?
• How was it selected?

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Cont...

• What is the relationship between the parties
  really like?
• Is the consortium competitive / robust and can
  its offer stand up to rigorous benchmarking?
• What is your attitude to the standard
  documentation
• Can you deliver cost and time efficiencies over
  time and drive out continuous improvements?
• Where is the supply chain weak, loose or broken?

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Cont

• What are the supply failure contingencies?
• What risk has been passed down the supply chain
  and can the suppliers manage this?
• How have you priced sample schemes and where does
  the risk sit in the supply chain?
• What are your continuous improvement long term
  cost and efficiency savings plans?
• How will you deal with projects beyond the first
  procurement samples?

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What is the broad package of complimentary
support available?

• Local Authorities are not alone
• PfS provides
• National programme support
• Learning and sharing between each of the BSF
  waves
• Each Wave 1 Authority will have access to - as a
  minimum
• PfS Project Director
• PfS nominated Education Adviser

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Cont...

• PfS nominated ICT Adviser
• DfES Contact Officer
• 4Ps Senior Executive
• CABE Enabler
• Client Design Adviser
• PfS national frameworks for technical / legal /
  financial / programme
  management /communications / education / team and
  partnership
• Individual access to the PfS information portal
• Benchmarking and performance management system

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Support Package Available to Local Authorities
Induction to BSF Programme
Financial Close LEP Set Up
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Progress Chart
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Bidding for BSF All you need to know
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Pre-Qualification

• Mike Coleman
• Project Director, PfS
• James Dunmore
• Commercial Team, PfS

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Function of the PQQ and PITN

• Purpose of PQQ
• Demonstrate overall viability of a consortium is
  it financially robust and able to deliver?
• Provide supporting evidence from previous
  projects
• Explain the interface between partners
• Purpose of PITN
• Confirm strength of partners relationships
• Confirm consortiums ability to deliver in
  partnership
• Confirm understanding of BSFs commercial
  framework

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Pre Qualification Questionnaire

• Whats your bid strategy?
• Its the economy stupid!
• We needed to do what?

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Pre Qualification Questionnaire

• Getting high marks and moving onto the PITN
• Financial Experience
• Partnership Working

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The Strength of Your Partnership

• Partnership or dictatorship?
• Building programme or transforming education?
• Integrated solution or crazy paving?
• Design, education and ICT ornaments or core
  components?
• Brief Encounter or From Here to Eternity?

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Delivering in Partnership

• Partnerships is in our blood so prove it
• Who do you think your client is? Because divide
  and rule is not an option
• How will each component part add value to the
  whole?
• Who else are you bidding for?
• Making a virtue of weakness

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The Commercial Framework

• What will you offer in return for exclusivity?
• So what is a Local Education Partnership?
• Where are the funders?
• Is that Big New Idea really adding value?
• Standardisation we mean it, do you?
• Show us what you know

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Summary

• PQQ is your first chance to shine
• PQQ/PITN process tests extent of genuine
  partnership between constituent parts
• Build or education solution? First chance for a
  consortium to prove it understands BSF
• How does previous experience demonstrate ability
  to deliver BSF? This is not Schools PFI
• Integration, integration, integration should
  deliver better VfM and quality educational
  outcomes

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Bidding for BSF All you need to know
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Ensuring Value for Money

• Justin Slater
• Policy Director, PfS

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Partnerships for Schools

• PfS is a national delivery vehicle for BSF
• Support local educational vision and strategy
• Delivery model, with standard procurement and
  contractual documentation
• Team to provide local transaction
• Support National programme management and
  efficiencies

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Programme Prioritisation
Attainment (GCSE)
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Deprivation (FSM)
W6
64
(No Transcript)
65
871
699
286
413
543
157
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The Programme
Number of LAs (LEP exists)
CAPEX
45bn
35(14)
52(21)
13(3)
10
2.4 bn
170
16
WAVES (15)
67
Benefits of Exclusivity
Kent 1.8bn
Kent F
Kent GD
Kent CB
Kent A
160m
Kent E
B
C
D
E
W3
Time
68
Benefits of Market Concentration but not
Collusion
Consortium A
Consortium B
Market most efficiently sustains 5-7 consortiums
per Wave?
Average W1 value is 153m
W1
W2
W3
Waves
69
The LEP is essential to the strategy of achieving
efficiencies

• Why not a strategic partner?
• SP contractually more cumbersome and does not
  encourage the development of an efficient Supply
  Chain
• A corporate JV has the following advantages
• Marriage over the long term, delivering
  innovation
• Transparency of working
• Ability to maintain procurement
• Potential for cross border partnering
• Standard agreements in place.
• Brings together local and national programme with
  delivery partner
• Incentivises problem solving

70
Efficiencies

• Procurement and contract standardisation
• Removal of repeated bidding (for public and
  private)
• Estate rationalisation
• Building efficiencies, including impact of ICT on
  educational delivery
• Off-site and modular construction
• Lifecycle and service delivery efficiencies

71
General Bid Evaluation Criteria

• Scoring Matrix

72
General Bid Evaluation Criteria

• The LEP Partnering Scoring

73
Supply Chain Proposals

• Proposals should demonstrate how
• Long term VfM will be assured
• The commitment of each SC member to the provision
  of high quality education facilities will be
  established and maintained
• Bidders anticipate risk (including but not
  limited to cost overrun and delay) will be passed
  to the SC
• Principles outlined in the Egan report will be
  developed within the SC and how those benefits
  will flow through to the Local Authority
• It is planned to meet wider government policy
  objectives on SMEs and Sustainability

74
Integration

• Bidders need to explain
• How they intend to manage the integration of
  services
• How they will interface with existing services
  provided by the Local Authority
• How the building and ICT Services will be
  integrated so to maximise the impact on
  educational transformational objectives

75
Continuous Improvement

• Bidders are required to provide measurable and
  specific targets for continuous improvement, for
  example
• Disruption to teaching and learning
• Improvement in design quality
• Reduction in average construction costs
• Reduction in construction waste
• Maximising economies of scale

76
Cont

• Faster timescales from approval (stage 1) to
  service commencement
• Improved performance
• PFI drop in aggregate payment reduction as of
  total UC across all operational PFI contracts
• DB greater continuity on cost overrun (eg fall
  in difference between actual and target cost
• Maximise efficiencies through portfolio approach
• Financing, bidding, lifecycle maintenance,
  management, design and construction, insurance

77
Long-term VfM

• Bidders should indicate (and understand)
• How regularly they intend to market test services
  (noting the SPA specifies a minimum frequency)
• How actual data will be gathered in order to
  support
• VfM assessment at a local level and
• the National Benchmarking Methodology

78
VfM at a Local Level

• Providing comfort to the Local Authority on the
  VfM of future schemes to be based on
• Local cost benchmarks driven from sample scheme
  information
• Application of Continuous Improvement Targets at
  a local level
• Burden of VfM proof at local level is on the LEP
  
• No automatic requirement to meet national
  benchmarks and no recourse to national data
  except in the case of disputes
• Elemental costs collected locally for
  establishing national funding parameters
• On an exceptional basis, to resolve disputes
  between LEPs and Local Authorities

79
National Benchmarking

• Looks to encouraging Best Practice across LEPs in
  terms of how well is my LEP performing against
  other LEPs?
• Focus will be on track record KPIs and Continuous
  Improvement Plans to drive through best practice
  and innovation
• The collation of data will be made available to
  LEAs and LEPs
• Encouraging Best Practice is not about driving
  down solutions to the lowest cost common
  denominator at the expense of quality
• Director involvement at LEP Board level to keep
  pressure on stretching Continuous Improvement
  Performance

80
Cont Sample Size
81
Time Cost Quality Trade Offs
1080m2
15 Wave
BREEAM very good
82
Conclusions

• A very significant opportunity for the private
  sector both in scale and through exclusivity
• Procurement / supply chain efficiencies and
  partnership effectiveness best gained through the
  LEP model
• The private sector is expected to raise its game
  and significantly improve on time, cost and
  quality
• Benchmarking will keep everyone honest

83
Bidding for BSF All you need to know
84
Fulfilling the Expectation of both the Public and
Private Sectors.

• David Goldstone
• Chief Executive, PfS

85
What did Bidders want from Schools Investment?

• Commitment to longer term programme
• More certainty of deal flow
• Long term client relationships
• Lower bid costs (or less bidding)
• Ability to get involved in projects at earlier
  stage development role

86
Recap from Today

• BSF as an educationally-driven investment
  programme
• Commitment to all schools, over 15 years, 2bn
  pa
• What we expect from bidders
• Partnership
• Development and integration
• PFI conventional
• Buildings ICT
• Value and scale of standardisation
• Local Authorities expectations
• Ensuring VfM and real efficiencies

87
The BSF Proposition

• Public Sector offers
• Long term programme of investment
• Move away from ad hoc projects
• National programme planning
• Local area programmes
• Long term client relationships
• Development role

• Private Sector needs to bring
• Commitment to partnership
• Investment in understanding and resource
• Bidding response that meet BSF requirements
• Solutions that deliver real value from the
  programme

88
The LEP Proposition

• Public Sector offers
• Exclusivity over a large volume of work
• Repeat business with a single client
• High reward to bidding cost ratio

• Private Sector brings
• Innovation in school design and technology
• Development capital and expertise
• Supply Chain management skills
• Continuous improvement
• Economies of scale
• iIntegration of contracts and services (PFI, DB,
  ICT, FM)
• Faster delivery

89
So deal flow is key.

• Pathfinders now through PRG or in market
• Wave 1 starting to flow
• Rest of Wave 1 flow through Spring into Summer
• We are now working with Wave 2
• Flow of projects to procurement from Autumn
• We start work with Wave 3 in the Autumn

90
Conclusion

• Weve listened!
• Offering what you have been looking for
• Unprecedented commitment by Government
• Unprecedented local opportunities
• We need you to respond and meet the challenge!

91
Bidding for BSF All you need to know
92
Panel Discussion

• David Goldstone Chief Executive
• Brenda Bignold Education Director
• Paul Higgins Operations Director
• Andrew Robertson Commercial and Financial
  Director
• Justin Slater Policy Director

93
Bidding for BSF All you need to know