Exit management at the Cabinet Office
Procuring and implementing high-profile pensions administration contracts and navigating multi-supplier exit management for complex pension scheme transitions at the Cabinet Office.
Large-scale pensions administration procurement
In 2021 the Cabinet Office initiated a high-profile programme to deliver the procurement and implementation of the pensions administration contracts for two schemes which it holds the role of Scheme Manager for, the Civil Service Pension Scheme (CSPS) and the Royal Mail Statutory Pension Scheme (RMSPS).
Lumera were responsible for directing this programme, which included the onboarding and leading of external legal procurement specialist, Cabinet Office complex transition teams and Cabinet Office commercial teams to develop and deliver a robust procurement.
The importance of effective procurement management
Due to its scope and risk exposure this is one of the flagship programmes in the Cabinet Office with combined contract values of £350 million, subsequently inviting scrutiny and interest of ministers, cross government senior leadership, unions, members and the media.
Failure to deliver these contracts could have resulted in reputational damage if services that the Prime Minister is statutorily required to deliver degrade or fail, resulting in immediate financial hardship to civil service pensioners. Failure to do so would have been of paramount interest to unions, the tress and wider government. There was also the risk of increased unnecessary costs to continue to run the services if the transactions don’t complete on time, as the incumbents are not obligated to continue BAU services after the expiry of the contract.
Any delay to transition would have risked the breach of procurement regulation relating to the length of incumbent contracts, thus increasing the risk of challenge. The risk of not realising opportunities to deliver enhanced automation and digitisation in a large-scale services contract, has huge implications, such as not realising the cash releasing benefits outlined in the full business case that will benefit the taxpayer. The management of this procurement was therefore extremely high-profile and vital to get correct.
Defining the procurement route
The initial procurement strategy outlined the Competitive Procedure with Negotiation (CPN) as the preferred procurement route. This route was chosen in order to encourage a greater understanding of the requirements and programme, enabling tenderers to develop strong proposals and tender submissions. It also minimised incumbent advantage as the current provider has been in place since 2012, which was a concern raised during market engagement.
The procurement route ensured bidders had ample opportunity to interrogate information provided in the data room and non-standard elements of the requirements and areas of complexity introduced risks that would benefit from discussion with tenderers.
Our team were intrinsically involved in the planning and execution of the 4 stage process, including pre-market engagement, Selection Questionnaire (SQ), Invitation to Negotiate (ITN) and Negotiation and Invitation to Submit Final Tenders (ITSFT).
This included:
- Preparing and conducting the supplier market day.
- Working with external lawyers to draft the Find My Tender Notice, Selection Questionnaire, Initial Tender Instructions and Final Tender Instructions.
- Designing the evaluation and moderation framework for the SQ, initial tender and final tender stages of the procurement.
- Negotiation planning and execution.
- Development of the model service contract.
- Defining social value approach.
- Working with legal and commercial experts to define insurance profiles and commercial liabilities.
- Working with legal teams to ensure that the procurement process was robust enough to defend potential legal challenges.
The programme has successfully delivered two complex ‘Competitive with Negotiation’ Procurements for contracts in excess of £300 million, and in doing so was commended for being one of the best run procurement programmes in Cabinet Office by the Permanent Secretary and Chief Financial Officer.
The success of the procurements has been noted by other public sector departments running pensions administration procurement and consequently the Lumera team have been asked to provide advice and guidance on the approach and execution of these procurements.
The results
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