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27 September 2022: workplace and facilities management accounting officer assessment - outline business case

Updated 5 October 2023

This is the outline business case that relates to the full business case approved on 15 August 2023.

It is normal practice for accounting officers to scrutinise significant policy proposals or plans to start or vary major projects, and then assess whether they measure up to the standards set out in Managing Public Money. From April 2017, the government has committed to make a summary of the key points from these assessments available to Parliament when an accounting officer has agreed an assessment of projects within the Government’s Major Projects Portfolio.

Background and context

The purpose of this project is to design, procure and implement a delivery model for workplace and facilities management services in Defra by March 2024. In March 2024, 2 major workplace and facilities management contracts are expiring. They cover the majority of the Defra estate, and any extension of the Defra contract would be subject to highly challenging commercial restrictions.

Workplace and facilities management services make it possible for Defra group to operate its extensive property portfolio (over 300 properties across all regions of England) for 27,000 colleagues. These essential services include asset maintenance in line with health and safety requirements and bio-security regulations; cleaning; security; and reception. Without these services, the estate (including offices and other sites which underpin statutory functions such as science laboratories, flood depots) would be unsafe and unable to operate, with severe consequences for the UK economy and environment given the frontline nature of much of Defra group’s activity.

This funding will be used to procure new workplace and facilities management contracts, and any additional spend will be used to run the contract(s). These are designed to improve safety standards to the required level, deliver an improved quality of services and also enable the transformation of Defra group property portfolio management.

This assessment has been made during the Outline Business Case stage (November 2021) by Tamara Finkelstein, the Accounting Officer for the Department for Environment, Food and Rural Affairs.

Assessment against the Accounting Officer tests

Regularity

In this case, we rely on common law powers to enter into the arrangements with contractors to provide workplace and facilities management services pursuant to the Public Contract Regulations 2015.

Overall assessment: Met

Propriety

The Outline Business Case and funding have been developed in line with the principles and controls set out in Managing Public Money. The preferred options will be funded for the period through to financial year 2025 via funding received by Defra for Spending Review (SR) 2021 and the Defra internal business planning round. For the period financial year 2026 to financial year 2031 funding is expected to be secured via the subsequent spending review, SR 25. No external funding is expected to be sought for the Workplace and Facilities Management Project. The programme has followed the required and designated approval gateways including Cabinet Office, facilities management controls and HM Treasury approvals. Compliance and accountability continue to be monitored by Defra, the Infrastructure Planning Authority and HM Treasury, and the National Audit Office.

Overall assessment: Met

Value for money

In line with HM Treasury Green Book Guidance (2020), the shortlisted options have been analysed in the Economic Case of the Outline Business Case to appraise the social, environmental, and economic costs, benefits, and risks over the appraisal period financial year 2021 and 2022 to financial year 2030 to 2031. This assessment has been used to identify the “preferred option.”

The Net Present Social Value (NPSV), the key performance indicator for programmes that must be assessed based on social as well as economic impact, of the project is estimated to be positive for the wider Defra group preferred options. This means that the quantified benefits of the project are expected to exceed the costs, even under the most cautious of assumptions with non-quantified benefits further bolstering the value for money.

For Defra’s Weybridge science facility, the NPSV of the preferred option using allowable known benefits is estimated to be negative. However, for this unique estate, there are material benefits that we have not been able to quantify as part of the NPSV calculation. These are likely to be highly material as they include the protection of the UK against harmful animal pathogens and disease outbreaks (a major outbreak of BSE in the 1980s cost the UK more than £8 billion); the ability to trade internationally products of animal origin (this is not possible without APHA’s science capability) and the UK’s world leading science capability which drives growth and bolsters animal and human health resilience. As such, there will be significant wider benefits delivered as part of the joint running Science Capability in Animal Health Programme, which will not be scoped until 2023. Overall, we expect a significant positive NPSV across both programmes.

The value for money from the preferred options remains compelling despite the increase in costs compared to the current contract.

Overall assessment: Met

Feasibility

The project has been resourced by a project team, enhanced with external support for discrete groupings of work and varying levels of support from key stakeholders through one-to-one sessions, design workshops, multi-criteria decision-analysis workshops. As part of the procurement activities, Defra will rely on Crown Commercial Services (CCS) frameworks where possible. This will mitigate the contracting risks posed to Defra and ensure advantageous terms that CCS have agreed with suppliers can be exploited. Defra will also use the procurement guidelines provided in the Sourcing Playbook where possible, which will ensure key commercial principles are followed which will result in a high-quality contract being procured in the market.

This project will use Defra’s mandated system for reporting risks. It has its own core governance structure, reporting to the Defra Investment Committee and subsequently HM Treasury. As such, the programme has established protocols and checks for spending decisions to ensure that all expenditure is proper and auditable.

A risk management strategy will be in place providing a framework for risk identification, reporting, and development of mitigations. Risk is factored into financial estimates and contingency management plans are in place should risks be realised.

Fraud risks, both those arising from procurement and from operational activities, will be managed through the department’s risk management framework. The project will capture such risks and put necessary controls in place to mitigate them. A project procurement strategy will be completed which will involve extensive risk identification, including fraud risks, and implementation of associated countermeasures. The project team will continually consult with the counter fraud team for advice on fraud risk and any necessary steps to strengthen controls throughout the life of the project.

Benefits management on the Workplace and Facilities Management Project will be critical given the cost, complexity, and stakeholder interest in this project. Therefore, a detailed benefits tracking methodology will be implemented. The approach to monitoring benefits will be as follows:

• development of a clear benefits realisation plan, which will include measures, required reporting, ongoing evaluation, and timings
• identification and confirmation of levels of associated and overall risk, benefits owners, accountabilities, and responsibilities for benefits realisation
• ongoing review and update where required of benefits as the programme evolves

Overall assessment: Met

Affordability

Short term, the funding needs of the programme remain affordable based on approved funding from SR 2021. Funding is secured for the current financial year and subject to internal planning within Defra for years up to 2025. Workplace and facilities management services are critical to Defra’s operation, therefore whilst funding for future years up to 2025 is not yet agreed, it is a top priority for the department. For the period financial year 2026 to financial year 2031 funding is expected to be secured via SR 25.

One of the major risks for the programme and its affordability is inflation. Defra has worked hard on the scope and scale of the contract, but based on current global and UK projections, the main affordability risk has been determined as inflation on both the potential labour market and materials costs. Hence, we consider this test to be met but with risks aforementioned needing to be managed.

Overall assessment: Met

Conclusion

We have completed an assessment of the compliance of proposed spend on the Workplace and Facilities Management Project against the Accounting Officer tests.

The Accounting Officer tests described above have assessed regularity, propriety, feasibility, value for money and affordability. Overall, my assessment is that these tests have all been met, with some noted risks particularly regarding the lack of certainty on the current UK fiscal climate and inflation.

Accounting officer sign off

As the Accounting Officer for the Workplace Facilities and Management Project, I have considered this assessment and approved it on 12 January 2022.

I have prepared this summary to set out the key points which informed my decision. If any of these factors change materially during the lifetime of this project, I undertake to prepare a revised summary, setting out my assessment of them.

This summary will be published on the government’s website (GOV.UK). Copies will be deposited in the Library of the House of Commons and sent to the Comptroller and Auditor General and Treasury Officer of Accounts.

Tamara Finkelstein CB, Permanent Secretary
27 September 2022