Agenda of Strategic Procurement Committee

Terms of Reference

Responsibilities

The committee is established to assist the chief executive to undertake the management procedure of ensuring sound procurement processes are followed in relation to procurement of goods and services necessary to deliver on the work programme and operations outlined in the council’s adopted Annual plan.

It will ensure that reasonable purchasing procedures have been followed in awarding contracts and will provide an efficient mechanism for documenting the approvals for those contracts.

Within a framework where contracts are an operational matter delegated to the chief executive, this committee will consider all contracts beyond the chief executive’s financial delegations. The chief executive may refer contracts within his financial delegations which are sensitive or may impact on the reputation of the council.

The chief executive has power to award contracts up to $20 million alone and the power to award contracts up to $22.5 million jointly with the mayor and Finance and Performance Committee chair.

The committee will have responsibility for:

· awarding of contracts of $22.5 million or greater

· awarding of contracts less than $22.5 million which are sensitive or may impact on the reputation of the council if the chief executive refers the matter to the committee

· oversight over the procurement processes and procedures.

From time to time the committee may advise the chief executive and council on changes to the procurement and contracts probity procedures.

Powers

All powers necessary to perform the committee’s responsibilities.

Except:

(a) powers that the Governing Body cannot delegate or has retained to itself (section 2)

(b) where the committee’s responsibility is limited to making a recommendation only

Exclusion of the public – who needs to leave the meeting

Members of the public

All members of the public must leave the meeting when the public are excluded unless a resolution is passed permitting a person to remain because their knowledge will assist the meeting.

Those who are not members of the public

General principles

· Access to confidential information is managed on a “need to know” basis where access to the information is required in order for a person to perform their role.

· Those who are not members of the meeting (see list below) must leave unless it is necessary for them to remain and hear the debate in order to perform their role.

· Those who need to be present for one confidential item can remain only for that item and must leave the room for any other confidential items.

· In any case of doubt, the ruling of the chairperson is final.

Members of the meeting

· The members of the meeting remain (all Governing Body members if the meeting is a Governing Body meeting; all members of the committee if the meeting is a committee meeting).

· However, standing orders require that a councillor who has a pecuniary conflict of interest leave the room.

· All councillors have the right to attend any meeting of a committee and councillors who are not members of a committee may remain, subject to any limitations in standing orders.

Independent Māori Statutory Board

· Members of the Independent Māori Statutory Board who are appointed members of the committee remain.

· Independent Māori Statutory Board members and staff remain if this is necessary in order for them to perform their role.

Staff

· All staff supporting the meeting (administrative, senior management) remain.

· Other staff who need to because of their role may remain.

Local Board members

· Local Board members who need to hear the matter being discussed in order to perform their role may remain. This will usually be if the matter affects, or is relevant to, a particular Local Board area.

Council Controlled Organisations

· Representatives of a Council Controlled Organisation can remain only if required to for discussion of a matter relevant to the Council Controlled Organisation.

1 Apologies

At the close of the agenda no apologies had been received.

2 Declaration of Interest

Members are reminded of the need to be vigilant to stand aside from decision making when a conflict arises between their role as a member and any private or other external interest they might have.

3 Confirmation of Minutes

That the Strategic Procurement Committee:

a) confirm the ordinary minutes of its meeting, held on Wednesday, 2 May 2018, including the confidential section, as a true and correct record.

4 Petitions

At the close of the agenda no requests to present petitions had been received.

5 Public Input

Standing Order 7.7 provides for Public Input. Applications to speak must be made to the Governance Advisor, in writing, no later than one (1) clear working day prior to the meeting and must include the subject matter. The meeting Chairperson has the discretion to decline any application that does not meet the requirements of Standing Orders. A maximum of thirty (30) minutes is allocated to the period for public input with five (5) minutes speaking time for each speaker.

At the close of the agenda no requests for public input had been received.

6 Local Board Input

Standing Order 6.2 provides for Local Board Input. The Chairperson (or nominee of that Chairperson) is entitled to speak for up to five (5) minutes during this time. The Chairperson of the Local Board (or nominee of that Chairperson) shall wherever practical, give one (1) day’s notice of their wish to speak. The meeting Chairperson has the discretion to decline any application that does not meet the requirements of Standing Orders.

This right is in addition to the right under Standing Order 6.1 to speak to matters on the agenda.

At the close of the agenda no requests for local board input had been received.

7 Extraordinary Business

Section 46A(7) of the Local Government Official Information and Meetings Act 1987 (as amended) states:

“An item that is not on the agenda for a meeting may be dealt with at that meeting if-

(a) The local authority by resolution so decides; and

(b) The presiding member explains at the meeting, at a time when it is open to the public,-

(i) The reason why the item is not on the agenda; and

(ii) The reason why the discussion of the item cannot be delayed until a subsequent meeting.”

Section 46A(7A) of the Local Government Official Information and Meetings Act 1987 (as amended) states:

“Where an item is not on the agenda for a meeting,-

(a) That item may be discussed at that meeting if-

(i) That item is a minor matter relating to the general business of the local authority; and

(ii) the presiding member explains at the beginning of the meeting, at a time when it is open to the public, that the item will be discussed at the meeting; but

(b) no resolution, decision or recommendation may be made in respect of that item except to refer that item to a subsequent meeting of the local authority for further discussion.”

8 Notices of Motion

There were no notices of motion.

Strategic Procurement Committee

11 June 2018

ICT Software Category Strategy

File No.: CP2018/08758

Te take mō te pūrongo / Purpose of the report

1. To seek endorsement for the Auckland Council Software Procurement Category Strategy.

Whakarāpopototanga matua / Executive summary

2. Council spent approximately $21 million on Software during the 2016/17 financial year. This category plan outlines a strategic approach to procuring software at Council.

3. This category strategy breaks down software by the service that they provide and aligns with the operation model of councils Information, Communication and Technology (ICT) department.

4. While each of these sub categories have their own market dynamics, at a commercial level they can be divided into three market segments with each requiring a different commercial approach.

5. Those three market segments are:

· Global Strategic Software Suppliers – these are suppliers that form a core part of council’s services and are long standing partners for example SAP and Microsoft.

· Large Indirect Suppliers – these are suppliers who are multinational but do not have a direct commercial relationship with Council for example Cisco and VMware.

· Small Direct Software Suppliers – these are smaller software suppliers that we deal with directly for example Envibe and TimeTarget.

6. At a high level the category strategy outlines the following key considerations to understand when procuring software at Council:

· Focusing on ensuring that council is extracting the maximum value out of its existing software investments. Much of this will rely on supplier relationship management (SRM), as opposed to purchasing new products.

· Making sure that the publisher (the entity that develops the software product) and reseller (the entity selling the software on behalf of the publisher) commercial dynamic is well understood by council.

· Focusing on de- risking the purchase of software. This requires council undertaking due diligence focusing on early engagement with council’s ICT department and clear understanding:

o the software’s capability;

o the suppliers depth of resourcing, presence in the NZ market and cultural fit with council

7. These issues addressed by the introduction of a variety of new procurement approaches that have been developed. Examples of these approaches include competitive dialogue and agile procurement, which are explained in detail in sections below. This will allow council to have a wide range of procurement tools and approaches that will drive better commercial and operational outcomes when purchasing software.

Ngā tūtohunga / Recommendation/s

That the Strategic Procurement Committee:

a) endorse the Auckland Council Software Procurement Category Strategy.

Horopaki / Context

The Auckland Council Software Procurement Category Strategy is made up of five sub-categories:

Operations and Service Management Software

8. The Auckland Council Software Procurement Category Strategy is made up of five sub-categories:

Operations and Service Management Software

9. This software is defined as all software that supports back-end systems including Data Centre Services, Server Operating Systems, Service Desk and Service Management. Within this sub category Microsoft and Service Now, can be classified as Global Strategic Software Suppliers, while the majority of the remainder are classed as Large Indirect Suppliers.

Information and Development Software

10. This software is defined as software that delivers the following functions:

· Geographic Information Systems,

· Business Intelligence,

· Web and Mobile and

· E-commerce and

· Development

11. Nearly all the key suppliers in this category can be classed as Global Strategic Software Suppliers.

Desktop and Office Productivity Software

12. This software is defined as the Microsoft Office Suite, Windows Operating System, Desktop Virtualisation Technologies and Desktop applications that are managed by the end-user. The sub category is made up of a small number of Global Strategic Software Suppliers and Large Indirect Suppliers, with a very large number of Small Software Suppliers.

Enterprise Package Software

13. This software provides the core systems that run Council’s services, including Payments, Consenting, Licensing, Customer Relationship Management (CRM), Purchasing, Asset Management and Human Resources (HR). Nearly all of the of the software in this space is provided by SAP, one of Council’s key information technology suppliers.

Line of Business Packaged Software

14. Line of Business Packaged Software is made up of approx. 200 small applications, that support much of Councils wider services. These services are almost exclusively provided by Small Direct Software Suppliers.

Tātaritanga me ngā tohutohu / Analysis and advice

15. This procurement strategy, at its heart, proposes that Council enhances the way it procures software.

Market segments and key considerations:

16. At a commercial level the software market can be divided into three market segments which have particular key considerations when procuring from those market segments:

· Global Strategic Software Suppliers – these are suppliers that form a core part of council’s services and are long standing partners for example SAP and Microsoft. The key consideration in this market segment is focusing on ensuring that council is extracting the maximum value out of its existing software investments. Council and the supplier must work together in a collaborative manner, so councils strategic direction is well understood by the supplier to ensure together we can ensure we are making use of all features of software already owned by council.

· Large Indirect Suppliers – these are suppliers who are multinational but do not have a direct commercial relationship with council for example Cisco and VMware. As we do not have direct relationship with the publisher (the entity that develops the software product) making sure that the publisher and reseller (the entity selling the software on behalf of the publisher) commercial dynamic is well understood by council is key to understanding how to approach this market segment. Having this insight to this allows us to work with the reseller and publisher in order to achieve a win-win for council and the reseller.

· Small Direct Software Suppliers – these are smaller software suppliers that we deal with directly for example Envibe and TimeTarget. The key consideration in this market segment is focusing on de- risking the purchase of software. This requires council undertaking due diligence focusing on early engagement with council’s ICT department and clear understanding:

o the software’s capability;

o the suppliers depth of resourcing, presence in the NZ market and cultural fit with council

Procurement Approaches

17. It has become apparent that traditional procurement approaches are not always well suited to evaluating and purchasing software. Industry wide, a high percentage of software implementations fail, due in part because issues were not fully explored and understood at the procurement phase.

18. Modern software has many critical components, including User Experience, Integration into the wider ICT landscape, Licensing and compliance, Implementation and Project Management, Support and Hosting among others.

19. Customers are often reliant on the software vendor to explain the capabilities of the software, which is not easy to do in a traditional Request for Proposal, which can limit customer/vendor interactions.

20. Council has identified a number of principles and approaches that it believes will improve the quality of purchasing in this category. These approaches have been trialled in a small number of smaller procurements and have proved successful. The approaches are:

· Competitive Dialogue – this allows council to thoroughly discuss each aspect of the procurement with suppliers before specifying the requirements and before inviting the suppliers to submit their full and final tenders or proposals.

· Agile Procurement – This approach takes approaches from Agile Project Management methodologies and adapts them for procurement. Interactions with suppliers and stakeholder are broken into ‘sprints’, allowing work that was previously handled sequentially to be worked on concurrently, shortening the procurement approach.

· Using the wider total cost of ownership of the software as an input of the procurement approach. Traditionally procurement evaluation focusses on the price and benefit of the item being purchased. By considering the wider system impacts identified as part of the business case process, procurement can drive down the cost of the wider environment. This may lead to a more expensive individual product being chosen, on the basis that it is cheaper in a broader sense.

· Analyst Led Shortlisting – Council uses Gartner, a global analyst firm to help it understand the capabilities of products. Gartner employs subject matter experts in most ICT industries. This allows council to focus on products that meet its need, enabling shorter time to market and more in-depth examination of each products capabilities.

· Proof of Concepts as Evaluations - With software, paper based evaluations can be of limited value. Allowing council staff to actually use the product will allow better understanding of products and their capabilities.

· Early Engagement with Architects, End Users, ICT Service Owners and Vendors. In traditional models architectural design, requirements gathering, procurement and vender engagement can be siloed, and initiated separately. This can lead to disconnect between teams, and slower time to market. By working as a single team from the beginning, many of these issues can be overcome, and a better outcome can be achieved.

21. By implementing one or more of the above approaches council believes we can improve time to market, de-risk implementation and support, save money and ultimately deliver the best solution to the end user of that solution, either internally or externally.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe /
Local impacts and local board views

22. There are no local board impacts associated with this category strategy.

Tauākī whakaaweawe Māori / Māori impact statement

23. There are no Māori impacts associated with this category strategy.

Ngā ritenga ā-pūtea / Financial implications

24. All software purchases will be budgeted for and the proposed approaches will deliver greater value, and where possible lower costs.

Ngā raru tūpono / Risks

25. This strategy provides a range of tools and approaches that will allow an appropriate level of risk mitigation to applied to each procurement. This will improve our risk status, as it is a move from a ‘one size fits all’ approach that was previously employed.

Ngā koringa ā-muri / Next steps

26. Council have trialled the procurement approaches identified above in a small number of lower risk projects. These have proven to be successful in reducing time to market, risk and have achieved excellent commercial outcomes.

27. Council is currently looking to develop a series of toolkits to be used appropriately in upcoming procurements.

Ngā tāpirihanga / Attachments

No.	Title	Page
a ⇩	Software Category Strategy FY18 - presentation	15

Ngā kaihaina / Signatories

Author	Stephen Horsley - Procurement Manager
Authoriser	Aaron Donaldson - ICT Commercial Lead

Strategic Procurement Committee

11 June 2018

Update on FY19 Capex Forward Work Programme

File No.: CP2018/08870

Te take mō te pūrongo / Purpose of the report

1. To provide the forward work programme update of currently agreed capital projects that are scheduled to be delivered in FY2019.

Whakarāpopototanga matua / Executive summary

2. This report provides a forward work programme update on all currently agreed capital projects scheduled to be delivered in FY2019.

3. The information gathered in preparation for this report has been gathered from a request for capital projects being delivered during FY2019. Project information has been received from the following departments:

· Community Facilities

· Healthy Waters

· Development Programme Office

· Panuku

4. The report provides a summary of 281 projects totalling $826.6m of expenditure. This includes information on projects currently underway that will incur spend during FY2019 and new projects due to start in FY2019.

5. There is also additional Community Facilities spend for minor capital expenditure covering 862 projects at a total value of $67.6m. This work will be undertaken via the full facilities & maintenance contractors.

6. The project information has been provided by departments from different sources of information and as a result there is some inconsistency in the project information provided.

7. The report provides a summary of spend and some insight to the project details made available. Further work is required to provide consistency of reporting across all departments and to also better understand when procurement support will be required for the projects.

8. Staff will develop the forward work programme further and will provide an update of the report to the Committee on a quarterly basis.

9. Targeted rates, especially in the Healthy Waters programme, could add additional projects to the current programme of activity.

10. There is an intention is to make the FY2019 capital projects forward works programme publicly available to suppliers.

Ngā tūtohunga / Recommendation/s

That the Strategic Procurement Committee:

a) note the information contained in this report on the updated summary of currently agreed capital projects.

Horopaki / Context

11. As part of the council budgeting and planning process, all capital projects are entered into the council’s Sentient project management system. This information has then been used to provide the attached summary of the FY2019 capital projects forward work programme.

12. The report was originally requested by the Strategic Procurement committee to provide transparency and visibility of capital projects to be delivered or commenced in FY2019

13. Project information was supplied by the following departments to create the attached summary report:

· Community Facilities

· Healthy Waters

· Development Programme Office

· Panuku

14. The report provides a summary of 281 projects totalling $826.6m of expenditure. This includes information on projects currently underway that will incur spend during FY2019 and new projects due to start in FY2019.

15. There is also additional Community Facilities spend for minor capital expenditure covering 862 projects at a total value of $67.6m. This work is under $300,000 in value (per project) and will be undertaken via the full facilities & maintenance contractors.

16. The project information has been provided by departments from different sources of information and as a result there is some inconsistency in the project information provided to enable the development of a cross-departmental forward work programme. This functionality will be developed by procurement in collaboration with the Operations division.

17. An update of the forward work programme report will be provided to the Strategic Procurement Committee on a quarterly basis.

18. The report provides a summary of spend and some insight to the project details made available. Further work is required to provide consistency of reporting across all departments and to also better understand when procurement support will be required for the projects.

19. Targeted rates, especially in the Healthy Waters programme, could add additional projects and associated budget to the current programme of activity. Further details will become available regarding the targeted rates projects over the next 6 weeks. It is anticipated that this could be in the range of an additional $20m to $30m in value.

20. There is an intention is to make the FY19 capital projects forward works programme available to the public and suppliers via the council’s website and other mechanisms, such as supplier briefings.

21. With the forward work programme being generated from Sentient, an appropriate link can be developed with the quarterly update reporting of over $5m projects provided by the Strategic Portfolio & Programme Office.

Tātaritanga me ngā tohutohu / Analysis and advice

22. A summary of capital expenditure forward work programme activity is provided in the report. However, should committee members require additional clarification or details, council staff will seek to provide additional details and clarification in a timely manner.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe /
Local impacts and local board views

23. Sentient reporting provides a full breakdown of projects by local board area. This is relevant to Community Facilities projects. Further work is required to include these details on other department projects.

Tauākī whakaaweawe Māori / Māori impact statement

24. Māori were consulted on the development of all projects that form the Forward Work Programme.

Ngā ritenga ā-pūtea / Financial implications

25. Projects are subject to the confirmation of the Long-term plan 2018-2028.

Ngā koringa ā-muri / Next steps

26. The next report will be provided at the September 2018 Strategic Procurement Committee meeting.

Ngā tāpirihanga / Attachments

No.	Title	Page
a ⇩	FY19 Capex Forward Work Programme Summary report	49

Ngā kaihaina / Signatories

Author	Peter Cunningham - Head of Physical Works & Technical Services Procurement
Authoriser	Aaron Donaldson - ICT Commercial Lead

Strategic Procurement Committee

11 June 2018

Update on capital projects over $5 million

File No.: CP2018/09541

Te take mō te pūrongo / Purpose of the report

1. To provide the update summary of currently agreed capital projects with a budget of over $5 million as previously reported at the Strategic Procurement Committee at its meeting on 7 March 2018.

Whakarāpopototanga matua / Executive summary

2. This report provides a progress update on all currently agreed capital projects with a budget of over $5 million.

3. Projects are briefly described, including what stage the project is at in its lifecycle, whether the projects are currently under or over budget, and expected completion dates noting any delays.

4. As per the request of this committee at the 7 March 2018 meeting, the report now contains details on the objectives/scope of the project, local board area, project phase and specific project commentary.

5. Staff will keep the capital project report updated and report this to the Strategic Procurement Committee on a quarterly basis.

6. The FY18 budget for the 48 (over $5 million) projects included in the report totals. More information can be found in the confidential report attachment.

7. The data in this report was first prepared for the Finance and Performance Committee quarterly report which includes data up to 31 March 2018.

Ngā tūtohunga / Recommendation/s

That the Strategic Procurement Committee:

a) note the information contained in this report, on the updated summary of currently agreed capital projects, enables transparency on the topic due for discussion in the public excluded part of the meeting.

b) note that the confidential report contains information that could prejudice council's position with suppliers.

Horopaki / Context

8. As part of the council project management process, all capital projects are updated monthly using the council’s Sentient project management system. The up to date project details are then used to compile the quarterly update on projects over $5m that is subsequently presented to the Strategic Procurement committee.

9. The details included in the report which is attached to the confidential report are as follows:

· Project ID, Project Name and Project Objectives

· Portfolio Department (e.g. Healthy Waters, Community Facilities, etc.)

· Local Board Area

· Current project phase of the project (e.g. concept, planning, execution & delivery, etc.)

· Estimated start and finish dates

· SPI calculation (Schedule Performance Index – a forecast whether the project will be completed ahead or behind schedule)

· CPI calculation (Cost Performance Index – a forecast whether the project will be completed under or over the current project budget)

· % of project completion

· Total project budget

· Total project actuals

· Total project forecast

· Commentary

10. The report has a traffic light system which is detailed below:

· Green = on time and on budget (SPI or CPI equal to 1 in the attached report indicates that the project is on budget and on schedule)

· Amber = slightly above budget and/or slightly behind schedule.

· Red = over budget and behind schedule

· Grey = project commencing – insufficient data to calculate SPI or CPI

11. The report will provide project reporting and commentary from the project manager on all projects

12. The reports are being compiled by the council’s Strategic Portfolio and Programme Office (SPPO) and the quarterly report will be delivered by the Head of the SPPO, Ramari Slattery.

Tātaritanga me ngā tohutohu / Analysis and advice

13. Commentary regarding project progress is provided in the confidential report. However, should committee members require additional clarification or details, council staff will seek to provide additional details and clarification in a timely manner.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe /
Local impacts and local board views14. Consultation with local boards on the progress of projects was not required as this engagement is being managed by the relevant department within the Operations Division.

Tauākī whakaaweawe Māori / Māori impact statement

15. Māori are regularly kept up to date on project delivery through regular reporting by the appropriate department in the Operations Division.

Ngā ritenga ā-pūtea / Financial implications

16. Financial implications are reported regularly by the appropriate department in the Operations Division through the delivery of individual projects.

Ngā raru tūpono / Risks

17. Risks are reported in the confidential report. Projects categorised as red or amber may indicate a risk that these projects could potentially run over budget and/or be delivered behind schedule.

Ngā koringa ā-muri / Next steps

18. The next report will be provided at the September 2018 Strategic Procurement Committee meeting.

Ngā tāpirihanga / Attachments

There are no attachments for this report.

Ngā kaihaina / Signatories

Author	Peter Cunningham - Head of Physical Works & Technical Services Procurement
Authoriser	Aaron Donaldson - ICT Commercial Lead

Strategic Procurement Committee

11 June 2018

Procurement of building consents overflow services

File No.: CP2018/09351

Te take mō te pūrongo / Purpose of the report

1. To seek approval for the supplier recommendation report for building consent overflow services.

Whakarāpopototanga matua / Executive summary

2. Building consent services are currently provided through a combination of in-house delivery, an overflow delivery model that operates across the Auckland Region and a legacy out-sourced provider model that operates exclusively in Manukau. In the central region, in addition to the overflow model there is also an agency provider to manage building consenting volumes.

3. The current contracts for provision of building consent services expire on 30 June 2018.

4. A final recommendation on the continued provision of building consent services will be presented for approval in the confidential section of the meeting.

Ngā tūtohunga / Recommendation/s

That the Strategic Procurement Committee:

a) note the information in this report enables transparency around the building consents overflow supplier recommendation report due for discussion and approval in the public excluded part of the meeting.

Horopaki / Context

5. Building consent services are currently provided through a combination of in-house delivery, an overflow delivery model, an out-sourced provider model and an agency provider to manage building consenting volumes.

6. The preferred regional service delivery model for building consents is one where third-party suppliers are used to process consents and inspect buildings that council staff do not have the capacity to process, e.g. an overflow delivery model. In an overflow model, the suppliers would act as an agent of Auckland Council.

7. Due to restraint on additional staff and to manage risk of over-capacity, the overflow model is considered an essential component to ensure the delivery of an efficient, quality, timely building consenting service.

8. Further information is provided in the confidential report.

Tātaritanga me ngā tohutohu / Analysis and advice

9. The overflow model is considered a more feasible alternative to delivering the full service in-house, as it provides flexibility during seasonal peaks and troughs in building consent volumes.

10. Further information is provided in the confidential report.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe /
Local impacts and local board views

11. Local boards were not specifically consulted during the development of the recommended delivery model and associated recommended procurement approach.

12. Consultation with Local Boards on the contract terms agreed with the suppliers was not required as these will not impact on the currently approved charge out rates to applicants for building consents.

Tauākī whakaaweawe Māori / Māori impact statement

13. Māori were not specifically consulted during the development of the recommended delivery model and associated recommended procurement approach.

Ngā ritenga ā-pūtea / Financial implications

14. Financials will be presented in the confidential report.

Ngā raru tūpono / Risks

15. Failure to process building consent applications within the statutory timeframes has been identified as a risk for the Building Consents department. The provision of overflow services as recommended in this report is aimed at mitigating this risk by having sufficient accredited resource contracted to the council to ensure the Building Consents department continues to meet the statutory timeframes.

Ngā koringa ā-muri / Next steps

16. There are no implementation issues arising from the report. Any implementation issues relating to the contracts for provision of building consent overflow services have been noted in the report titled “Confidential: Building Consents Overflow Services - Supplier Recommendation Report.

Ngā tāpirihanga / Attachments

There are no attachments for this report.

Ngā kaihaina / Signatories

Author

Peter Cunningham - Head of Physical Works & Technical Services Procurement

Authorisers

Ian McCormick - Manager Building Control

Penny Pirrit - Director Regulatory Services

Dean Kimpton - Chief Operating Officer

Aaron Donaldson - ICT Commercial Lead

Strategic Procurement Committee

11 June 2018

Status update: Westgate multipurpose facility (integrated library and community centre) construction

File No.: CP2018/09085

Te take mō te pūrongo / Purpose of the report

1. To provide a construction status update to the Strategic Procurement Committee on the Westgate multipurpose facility construction contract with Fletcher Construction Company Limited.

2. To seek approval for a contract variation to the scope and costs for which approved budget is available within the project. Further detail for the committee consideration can be found in the confidential section of this agenda.

Whakarāpopototanga matua / Executive summary

3. Construction of the Westgate multipurpose facility commenced on 6 March 2017, with practical completion on 3 October 2018. The structure is complete and the building largely enclosed with internal fit-out and service work underway.

4. As previously reported functional fit-out items related to the children’s library area were to be delivered outside of main contractor contract. The governance group has identified a potential saving and reduced risk by including this work as a variation to the main contract. Budget for this work is held within the project.

5. The contract has incurred delays and costs due to initial pre-commencement works, design documentation changes and extension of time costs. These events have been managed within the time and cost contingency provisions.

6. A health and safety incident recently occurred which has been investigated and corrective actions implemented. Otherwise the health and safety performance record and quality of construction remains good.

7. Due to its higher-risk profile, the Westgate multipurpose facility construction will provide monthly status reporting to the committee.

Ngā tūtohunga / Recommendation/s

That the Strategic Procurement Committee:

a) note the Status update: Westgate multipurpose facility (integrated library and community centre) construction report.

b) note that the information contained in this report enables further transparency on the proposed contract for Main Contractor: Construction Works for Westgate Multipurpose Facility (Library and Community Facilities) for a variation related to artwork construction and installation in the children’s library area in the confidential section of the agenda.

Horopaki / Context

8. The Westgate Multipurpose Facility project was reported to Strategic Procurement Committee on 7 March 2018 in a memorandum and presentation entitled “Westgate Multipurpose Facility Construction Contract Status Update – February 2018” under the “Update to Capital projects over $5 million” in the confidential section of the agenda.

Tātaritanga me ngā tohutohu / Analysis and advice

9. As previously reported functional fit-out items related to the children’s library area were to be delivered outside of main contractor contract. Budget for this work is held within the project and a variation to the main contract is required to include this integrated work within the main contract works.

Health and safety

10. The contractor’s general attitude to the management of health and safety on site is very good, demonstrated by independent audits undertaken on behalf of council and its own reporting. A notifiable incident has recently occurred on site which has been investigated thoroughly and corrective actions have been implemented.

Timeline status

11. The revised due date for practical completion of the main construction contract is 3 October 2018.

Quality

12. Ongoing quality audits are being conducted by the architect and consulting engineers. Quality of construction audited to date has been of a good standard, and no significant quality issues have been reported.

13. These audits confirm the contractor’s attitude and attention to the management of quality construction practice on site is good.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe /
Local impacts and local board views

14. The Henderson-Massey Local Board has received monthly updates and quarterly reports. The local board plans to visit the site on 26 June 2018.

Tauākī whakaaweawe Māori / Māori impact statement

15. Council staff are currently working with local mana whenua around the naming and signage of the facility.

Ngā ritenga ā-pūtea / Financial implications

16. Contract variations to date are within the contract contingency sum allocated with some still to be agreed.

17. Variations and claims not yet agreed are subject to recommendation by the quantity surveyor prior to any final agreement. Any agreed variations will seek approval from the committee.

18. Actions resulting from a project risk workshop have been undertaken to mitigate further cost and time risks for the remainder of the contract programme. Value engineering to minimise costs is on-going but at this stage unlikely to provide significant savings.

19. At contract award some fit-out items including functional art were not included in the main construction contract. Budget is allocated within the project for this work and the governance group has identified a potential saving and reduced risk by including this work as a variation to the main contract.

20. The variation is made up of two portions of work and not yet included under anticipated contract variations. Supply and installation of timber fins mounted to the ceiling and walls of the children’s area and supply and installation of bespoke bookshelves and bins for the children’s area. These are best included within the contract price as the risk of retro-fitting the required seismic restraint features as well as bringing them into the completed building post practical completion has been estimated as cost prohibitive.

21. Budget is available and allotted for this work within the project.

Ngā raru tūpono / Risks

22. The governance group held a risk workshop to review and identify any additional risks. Mitigations and controls have been implemented and the risk management plan is operating.

23. Several of the risks have eventuated since the last report. Notably, two additional extensions of time for delays in providing timely design information, design and coordination problems with regards to structural steel and further changes in design drawings from those issued at tender.

24. Some costs associated with these risks have been identified, and we are working to ensure these are as minimal as possible. We are also working to ensure any delays to the contract delivery are minimal.

25. During the closing stages of the contract, and due to the increase in the number and severity of outstanding risks, status reports to the Strategic Procurement Committee will increase to a monthly frequency for the duration of the contract.

Ngā koringa ā-muri / Next steps

26. The project governance group will continue to work with the professional services team and the contractor to mitigate and control risks and minimise any additional costs.

27. Monthly status update reports will be provided to the Strategic Procurement Committee for the remainder of the contract.

Ngā tāpirihanga / Attachments

There are no attachments for this report.

Ngā kaihaina / Signatories

Author

John Schermbrucker - Head of Project Delivery

Authorisers

Rod Sheridan - General Manager Community Facilities

Dean Kimpton - Chief Operating Officer

Aaron Donaldson - ICT Commercial Lead

Strategic Procurement Committee

11 June 2018

Vertical construction procurement category strategy

File No.: CP2018/08820

Te take mō te pūrongo / Purpose of the report

1. To provide governance visibility and to seek endorsement of the vertical construction procurement category strategy for Auckland Council.

Whakarāpopototanga matua / Executive summary

2. Vertical construction procurement category under the Physical Works and Technical Services portfolio covers all building related construction activities for council.

3. The strategy identifies the challenges and opportunities in the category through spend analysis, market analysis, internal business engagement and strategic supplier interviews.

4. The key challenges/opportunities are: supply market constraints, traditional tendering process, market approach, leverage on the Group spend, supplier performance management and Group strategic supplier relationship.

5. The strategy identifies some key actions to support:

· a Council Group approach;

· making the most of our size and scale;

· being a customer of choice;

· the efficient delivery of capex projects; and

· efficient procurement processes.

6. Further information setting out how we propose to approach this procurement category is provided in the report on the confidential agenda.

Ngā tūtohunga / Recommendation/s

That the Strategic Procurement Committee:

a) note the information in this report enables transparency on the vertical construction procurement category strategy due for discussion in the public excluded part of the meeting.

b) note the confidential report contains information which if released would have a negative impact on the council’s ability to deliver best value to the ratepayers.

Horopaki / Context

7. Further context on the vertical construction category strategy is provided in the confidential report.

Tātaritanga me ngā tohutohu / Analysis and advice

8. Further analysis and advice on the category strategy is provided in the confidential report.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe /

Local impacts and local board views

9. A sustainable procurement strategy will be embedded within the various category initiatives which will actively support local employment opportunities, environmental benefits and local amenity improvements.

10. Local board views are addressed at the programme and project level as part of local board consultation for the capex works programme.

Tauākī whakaaweawe Māori / Māori impact statement

11. As part of the sustainable procurement strategy, Māori employment opportunities will be sought through the procurement documents for targeted projects and preference will be given for willing participation by suppliers.

Ngā ritenga ā-pūtea / Financial implications

12. Further details on the category strategy is provided in the confidential report.

Ngā raru tūpono / Risks

13. Risk details are provided in the confidential report.

Ngā koringa ā-muri / Next steps

14. Further stakeholder engagement and consultation for implementation.

15. Market sounding and supplier briefing sessions will be undertaken to prepare the market.

16. Strategy implementation according to the action plan over three time periods captured in the strategy document.

Ngā tāpirihanga / Attachments

There are no attachments for this report.

Ngā kaihaina / Signatories

Author	Peter Cunningham - Head of Physical Works & Technical Services Procurement
Authoriser	Aaron Donaldson - ICT Commercial Lead

Strategic Procurement Committee

11 June 2018

	STRATEGIC PROCUREMENT COMMITTEE FORWARD WORK PROGRAMME 2018 This committee deals with ensuring sound procurement processes are followed in order to deliver on the work programme and operations outlined in council’s adopted Annual Plan. It has responsibility for awarding contracts of $22.5 million or greater, awarding sensitive contracts and oversight of procurement strategies, processes and procedures.
Priorities for 2018 will be on initiatives which: 1. Delivery on Annual Plan Outcomes 2. Review delivery of Capital Projects 3. Endorse Procurement Category Strategies 4. Enhance Group Sourced Procurement 5. Improve Procurement Maturity				The work of the Committee will: · Approve award of contracts and variations within the Committee’s delegations. · Monitor the delivery programme of major capital projects and recommend reporting to Finance and Performance Committee. · Endorse procurement strategies and process improvements related to the Committee’s responsibilities. · Monitor progress and make recommendations on group sourced procurement activities.
1. Delivery on Annual Plan outcomes (Contracts to be awarded)
Priority #	Area of work	Reason for work	Strategic Procurement Committee role (decision or direction)		Budget / Funding	Expected timeframes Highlight financial year quarter and state month if known
						FY18			FY19
						Apr-Jun	Jul-Sep	Oct-Dec	Jan-Mar	Apr-Jun
1.1	Building Consents Regional Overflow Model	Approve the supplier recommendation for the Building Consents Regional Overflow Model	Progress to date: Decision: agree procurement plan- 13 December 2017 meeting, Resolution Number STR/2017/60 – Item C5 Supplier recommendation will be provided in June 2018			Q4 June 18
1.2	City Centre Development	Approve procurement plan and award contract for City Centre Development project	Decision: Agree procurement plan and award contract Progress to date: Update received at the 13 December 2017 meeting Resolution number STR/2017/59 - Item C4 Next Update will be considered in July 2018		$370m (total council family spend)		Q1 July 18
1.3	America’s Cup 36 progress update	Update on the infrastructure delivery in support of AC36	Receive: progress update		$212m		Q1 July 18
1.4	Organics (Food Waste) Processing, caddies and food waste bins	Award contract for food waste process service, caddies and bins	Decision: Agree to award contract				Q1 August 18
1.5	St Marys Bay Outfall construction contract	Approve procurement plan and then award contract for St Marys Bay stormwater project	Decision: Agree procurement plan and award contract		$35 million		Q1 August 18

2. Review delivery of Capital Projects
Priority #	Area of work	Reason for work	Strategic Procurement Committee role (decision or direction)	Budget / Funding	Expected timeframes Highlight financial year quarter and state month if known
					FY18			FY19
					Apr-Jun	Jul-Sep	Oct-Dec	Jan-Mar	Apr-Jun
2.1	Capital Project Delivery	Elected member oversight of progress of Major Projects	Progress to date: Update received at the 6 September 2017 meeting Resolution number STR/2017/37 - Item C2. Update received at the 13 December 2017 meeting Resolution number STR/2017/61 - Item C6. Update received at the 7 March 2018 meeting Resolution number STR/2018/11- Item C2. Next Update will be considered in June 2018. Receive: No decisions required		Q4 June 18
2.2	Westgate multipurpose facility (integrated library and community centre) construction	Elected member oversight of progress of Westgate multipurpose facility. Receive report, review and approve variation to contract for Westgate MPF	Update received at the 7 March 2018 meeting Resolution number STR/2018/11- Item C2. Receive: Approve contract variation application		Q4 June 18
2.3	Forward Work Programme (Pipeline)	Elected member oversight of pipeline of activity for capital works delivery forward work programme	Receive: No decisions required		Q4 June 18

3. Endorse Procurement Category Strategies
Priority #	Area of work	Reason for work	Strategic Procurement Committee role (decision or direction)	Budget / Funding	Expected timeframes Highlight financial year quarter and state month if known
					FY18			FY19
					Apr-Jun	Jul-Sep	Oct-Dec	Jan-Mar	Apr-Jun
3.1	ICT Software	Create a plan for engaging the market to purchase Software.	Receive: No decision required		Q4 June 18
3.2	Vertical Construction Category Strategy	Development of the overall strategy for vertical construction and building	Receive: No decision required		Q4 June 18
3.3	ICT Technology Services	Create a plan for engaging the market to purchase Technology Services – Cloud, Data Centre Services, Print, Network.	Receive: No decision required			Q1 July 18
3.4	Professional Services	Create a plan to go to market and manage professional services across Auckland Council.	Receive: No decision required			Q1 July 18
3.5	Professional Technical Services	Implementation of professional technical services category	Receive: No decision required – update from approved strategy by T&P 2016			Q1 July 18

4. Enhance Group Sourced Procurement
Priority #	Area of work	Reason for work	Strategic Procurement Committee role (decision or direction)	Budget / Funding	Expected timeframes Highlight financial year quarter and state month if known
					FY18			FY19
					Apr-Jun	Jul-Sep	Oct-Dec	Jan-Mar	Apr-Jun
4.1	Fleet Optimisation Update	Keep Committee informed on progress of Fleet changes	Progress to date: Update received at the meeting on 7 March 2018 Resolution number STR/2018/5 – Item 10. Receive: No decision needed			Q1 July 18
4.2	Group Sourced Procurement update	Keep Committee informed on progress against Group Sourced Procurement objectives	Progress to date: Update provided at the October 2017 meeting Resolution number STR/2017/4 Item 11 Update received at the meeting on 7 March 2018 Resolution number STR/2018/4– Item 9 Receive: no decision required			Q1 July 18

5. Improve Procurement Maturity

Priority #

Area of work

Reason for work

Strategic Procurement Committee role (decision or direction)

Budget / Funding

Expected timeframes

Highlight financial year quarter and state month if known

See completed section below

6. Other

Priority #

Area of work

Reason for work

Strategic Procurement Committee role (decision or direction)

Budget / Funding

Expected timeframes

Highlight financial year quarter and state month if known

See completed section below

Completed

1. Delivery on Annual Plan outcomes (Contracts awarded)
Priority	Area of work	Reason for work	Strategic Procurement Committee role (decision or direction)
1.1	Refuse Collections	Change from collection of Bags to Bins for Waitakere and North Shore. Part of aligning refuse collection services across the region	Decision: Agree to extend current contract with Veolia for a further 2 years – 6 September 2017 – Resolution STR/2017/36 – Item C1
1.2	Electricity Procurement	Approve Procurement Plan for Electricity procurement	Update provided at the October 2017 meeting Resolution number STR/2017/47 - Item C3
1.3	External Legal Services	Council has gone out to market for external legal services. Additional scope may mean the contract value over the term of the engagement will exceed $22.5m	Decision: Agree to contract awards for 2 years. 13 December 2017 meeting, Resolution Number STR/2017/57 – Item C2
1.4	Graffiti Eradication and Enforcement Services	Approve procurement plan for graffiti Eradication and Enforcement Services	Decision: agree procurement plan- 13 December 2017 meeting, Resolution Number STR/2017/58 – Item C3 Decision: approve procurement plan at May 2018 meeting, Resolution number STR/2018/20 – item C1
1.5	Electricity supply SRR	Approve the supplier recommendation report for electricity supply services	Decision: agree SRR- 13 December 2017 meeting, Resolution Number STR/2017/56 – Item C1
1.6	Overflow Planning Services	Approve the procurement plan for overflow planning services to process resource consents.	Decision: approve procurement plan Decision taken to approve the procurement plan. Resolution number STR/2018/13 – item C2
1.7	External Recruitment Supplier	Current All of Government (AoG) contract expires October 2017. New AoG contracts have been negotiated by MBIE. Council will enter into AoG agreements for six months and assess whether they meet our needs.	Decision: Agree to extend AoG agreements or run own market exercise. Decision taken to extend AoG agreements at 4 April meeting. Resolution number STR/2018/12 – item C1

3. Endorse Procurement Category Strategies
Priority #	Area of work	Reason for work	Strategic Procurement Committee role (decision or direction)
3.1	Waste Solutions Procurement Strategy	Create plan for go to market exercise for all waste collection (including food waste) and disposal activity prior to 2020	Decision: Confirm strategy/challenge Update provided at the October 2017 meeting Resolution number STR/2017/40 - Item 9
3.2	Organics (food waste) Processing caddies and food waste bins	Create plan for go to market exercise for all aspects of the planned Organic (food waste) collection and Processing Service together with the caddies and bins required for collection.	Update provided at the October 2017 meeting Resolution number STR/2017/40- Item 9 and Resolution number STR/2017/45 – C1
3.3	ICT hardware	Create a plan for engaging the market to purchase ICT Hardware.	Update received at the meeting on 7 March 2018 Resolution number STR/2018/10 – Item C1. Receive: No decision required

4. Enhance Group Sourced Procurement
Priority #	Area of work	Reason for work	Strategic Procurement Committee role (decision or direction)


4.1	Sustainable Procurement Framework	Give effect to principles to be agreed in Group Procurement Policy	Update provided at the December 2017 meeting. Resolution number STR/2017/53 Item 9

5. Improve Procurement Maturity
Priority	Area of work	Reason for work	Strategic Procurement Committee role (decision or direction)
5.1	Ariba update	Update Committee on implementation of procurement enabling technology	Update provided at the October 2017 meeting Resolution number STR/2017/4 – Item 11

6. Other
Priority #	Area of work	Reason for work	Strategic Procurement Committee role (decision or direction)


6.1	Update on Waste Solutions contracts	Update the Committee on the current state of all waste contracts prior to the preparation of the Waste Solutions Procurement Strategy	Update provided at the October 2017 meeting Resolution number STR/2017/41- Item 10 and Resolution number STR/2017/46 – item C2
6.2	Review of Project 17 Contract performance	Update the Committee on the performance of suppliers against key performance metrics under the Project 17 Full Facilities Maintenance contracts	Receive: No decision required. Update provided at May 2018 meeting, Resolution number STR/2018/21 – item C2

Strategic Procurement Committee

11 June 2018

Exclusion of the Public: Local Government Official Information and Meetings Act 1987

That the Strategic Procurement Committee:

a) exclude the public from the following part(s) of the proceedings of this meeting.

The general subject of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter, and the specific grounds under section 48(1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution follows.

This resolution is made in reliance on section 48(1)(a) of the Local Government Official Information and Meetings Act 1987 and the particular interest or interests protected by section 6 or section 7 of that Act which would be prejudiced by the holding of the whole or relevant part of the proceedings of the meeting in public, as follows:

C1 CONFIDENTIAL: Update on capital projects over $5 million

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

Ground(s) under section 48(1) for the passing of this resolution

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

s7(2)(h) - The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

In particular, the report contains information that could prejudice council's position with suppliers.

s48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

C2 CONFIDENTIAL: Building consents overflow supplier recommendation report

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

Ground(s) under section 48(1) for the passing of this resolution

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

s7(2)(h) - The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

s7(2)(i) - The withholding of the information is necessary to enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).

In particular, the report contains information that if made public, will have a negative impact on council's relationship with suppliers.

s48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

C3 CONFIDENTIAL: Status update: Westgate multipurpose facility (integrated library and community centre) construction

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

Ground(s) under section 48(1) for the passing of this resolution

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

s7(2)(h) - The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

In particular, the report contains information that could prejudice council's position with suppliers and other parties with regard to the resolution of disputes.

s48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

C4 CONFIDENTIAL: Vertical construction procurement category strategy

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

Ground(s) under section 48(1) for the passing of this resolution

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

s7(2)(b)(ii) - The withholding of the information is necessary to protect information where the making available of the information would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information.

s7(2)(h) - The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

In particular, the report contains information that may prejudice the Auckland Council Group and the supply market if made publicly available.

s48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

Chairperson	Deputy Mayor Bill Cashmore
Deputy Chairperson	Cr Ross Clow
Members	Cr Dr Cathy Casey
	Cr Linda Cooper, JP
	Cr Alf Filipaina
	Cr Penny Hulse
	Cr Daniel Newman, JP

Ex-officio	Mayor Hon Phil Goff, CNZM, JP

Author	Michelle Judge - Governance Advisor
Authoriser	Aaron Donaldson - ICT Commercial Lead