Councils use many methods of selecting an outsourcing contractor. These include:
- Registrations of interest and/or tendering - this is a more transparent process, and councils generally have good access to experienced people to administer tendering processes. Registrations of interest are a moderately formal method of producing a short list of contractors. They can be generated through public advertisements or by asking selected consultants to prepare a statement of relevant skills and experience. Registrations of interest are typically requested prior to asking for tenders from the short listed contractors.
- Requests for proposals - this can be undertaken for either the initial set-up, or on a regular basis. Requests for proposals are more formal, involve the preparation of an offer of service, tender, or bid, and may leave scope for contractors to show innovation in their approach to the work.
- Direct approaches - a contractor of choice can be approached, formally or informally. This approach is commonly taken if specialist skills are being sought. However, there may be legal or policy limitations on the value of work that can be undertaken by a contractor without an open, formal process - check this before proceeding.
- Previous experience - a planner who has previously worked at the council may be preferred due to their knowledge of systems.
- Previous performance - there are obvious advantages in going back to a contractor who has performed to expectations on a previous occasion.
Prior to awarding new contracts or renewing existing contracts, it may be appropriate to trial several current and potential contractors over a month or two to ensure that contractors are able to deliver the required outputs in terms of cost, quality, and timeliness, and to confirm that council is receiving the best service possible.
If a more informal approach is being considered, such as a direct approach, ensure that the Council's documentation of the expected deliverables is adequate to clearly inform both the council and the potential contractor. There is a clear advantage in developing the contract, including the scope of services first, and using it as the basis of obtaining the proposal(s) from the contractor(s). By developing the contract first, and providing it to prospective contractors, both the council and the contractors are aware of the terms, and by responding are committing to complying with them.
The selection criteria will depend to a large extent on the type of services required. When selecting a contractor to provide specialist skills, technical skill will be very important. Some general selection criteria may be:
- availability of an appropriate skill mix
- processing experience
- adequate quality control procedures
- value for money
- capacity to meet the council's workload requirements
- the ability to integrate into the council's systems
- responsiveness for overflow processing
- quality of references from previous clients.
Councils often engage more than one contractor, for both technical input, and overflow work. This can have the advantage of spreading the workload across several contractors, providing contingencies if there is a conflict of interest or if a contractor is unavailable. This is particularly the case for larger councils where there is a significant outsourcing workload.
For smaller councils, there may be a strong desire to form a close relationship with one or two primary contractors in order to minimise risk and maximise integration into the council team. Potential advantages with an exclusive contract include reduced management input and possibly the opportunity to negotiate a better rate. Ensure there is scope for review of exclusivity in the event of poor performance. Also consider what conflicts of interest are being created, and whether the council risks becoming a dominant purchaser in the local consultant market. This may lead to fewer choices and greater cost for other sectors of the community.
Feedback from councils has shown some dissatisfaction with the level of experience and skill shown by some consultants. This can be as a result of not understanding or communicating each other's needs, and a lack of specificity in contracts. In addition, it is important for councils to understand that consultancies need to make a profit, and that in most instances senior planners will need to charge more than junior planners. Over-emphasising potential cost reductions will almost inevitably lead to junior consultants undertaking the bulk of the work, possibly with inadequate senior supervision.
Being realistic about fee expectations assists in managing both the council's and the consultant's expectations. Take these matters into account particularly when the council issues the request for service and selects the service provider.
To resolve potential fee expectation issues, consider drafting a contract that:
- specifies individuals and rates by name
- specifies workload commitments by named individuals
- specifies the contractor's internal review procedures.
Managing the relationship
Large councils tend to have a greater number of contractors, a greater volume of work, and potentially greater risks. Accordingly, more formalised contract management may be needed. Major urban councils will often share knowledge and procedures if requested.
Do not underestimate the time and resources required to effectively manage a contract. Feedback from councils shows this is routinely underestimated. Incorporating the contractors into council processes and maintaining regular workloads can reduce this issue.
The contractual relationship will be enhanced if contractors are provided with regular opportunities for up-skilling, regular performance reviews and peer review. It is also important to include contractors in email circulations (e.g. team meeting minutes or internal best practice guidelines) to keep them up to date with the changing internal environment.
The nature of these tasks requires that they are undertaken by someone with appropriate experience, skills and authority within the council.
Consider an appropriate mix of people skills for the contract manager. Communication skills, objectivity and fairness are important. Previous consulting experience may be beneficial.
Developing a partnership type of relationship is beneficial to both the contractor and council. Building a partnership confirms that trust and goodwill is of primary importance to both parties. Councils need to consider the time contractors invest in the set-up phase of a long-term contract and it is therefore important for councils to honour the commitment to maintain a level of work that is forwarded to the contractor.
Routinely, matters outside the scope of services in the contract arise, or the contractor is required to use their judgement in the absence of specific instructions. At these times, a partnership ideology is invaluable.
Deal with potential conflicts early, openly and in good faith. Contractors do not like losing clients, especially when they are not sure why, and councils may risk losing a great deal of knowledge and skill.
Getting the best from a contractor requires feedback on performance, both informal and formal. Informal reviews and feedback can effectively be undertaken as a part of the peer-review process.
Use review and feedback to see whether the council's systems can be improved or if the terms of the contract may need to be reviewed. Remember that steady incremental improvement is usually far more effective than attempting larger infrequent changes.
Ongoing (weekly/monthly) discussions between the contact persons in both organisations can assist with small changes and updates on current practice procedures.
Ensure the contract is reviewed regularly, in terms of both the services being provided and changed legal or processing requirements.
Review contracts if any of the following occur:
- the scope of services has changed
- the contractor's personnel has changed
- it has been more than six months since the last review
- council's consent processing or consent administration procedures have changed.
Experience has shown that outsourcing for one purpose can grow into different levels of service without positive decisions being made, or reviews taking place. An example may be a short-term secondment - initiated while a council staff member is on leave - that continues after the staff member returns, possibly along different lines.
When these situations occur, it is important to take a step back, and complete a review. Ask:
- Has a strategic assessment been completed?
- Is the contract still appropriate?
- Is the council still getting value for money?
- Are internal skills and feedback into the policy/planning equation being lost?
- Would it be better to increase in-house resourcing?
Use this checklist to ensure that all the contractual issues have been covered before selecting a contractor:
- Define the scope of services and level of services with key agreed performance indicators.
- Prepare a draft contract before selecting the contractor(s).
- Ensure there are appropriate council staff available to administer the outsourced consents process. These staff need to be able to objectively peer review, answer questions about council procedures and systems, and identify performance issues.
- Ensure appropriate compatibility of IT technology for delivery of services from contractors.
Selecting a contractor:
- Establish processes for inviting offers of service and developing selection criteria.
- Request and assess offer(s) of service.
- Identify potential areas of conflict of interest.
- Select the contractor(s) and sign contracts.
- Set up administrative matters, such as computer logins, access cards, financial systems, and administrative procedures.
- Provide templates, any procedural policies, and written delegations.
- Undertake an induction or orientation with the contractor to introduce them to the relevant people, places and processes.
- If possible, trial a few consents to iron out any procedural matters and clarify the level and style of service required.
- Diary the first review.