Enclosure 1.pdf

HER MAJESTY THE QUEEN

NEW ZEALAND DEFENCE FORCE
TE OPE KĀTUA O AOTEAROA

TENDER EVALUATION REPORT
FOR
Facilities Maintenance and Management Services –
FM2767 Manawatu Hub and FM3065 Waiouru Museum

March 2011

Released under the Official Information Act 1982

FM2767/FM3065
Evaluation Report
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Executive Summary

Introduction
The evaluation of the offers received for the tender for Facilities Maintenance
and Management Services to FM2767 Manawatu Hub and FM3065 Waiouru
Museum has been conducted.

Evaluation
The evaluation was conducted for compliance with the Statement of
Summary
Requirement and contractual conditions by the tenderers, and concluded that the
‘best fit and best value for money’ option for NZDF would be to negotiate a
contract with Spotless Services (NZ) Ltd to provide Facilities Maintenance and
Management Services to FM2767 Manawatu Hub and FM3065 Waiouru
Museum. Al prices are quoted exclusive of GST.

Recom-
It is recommended that the Project Sponsor:
mendation
Notes. The Evaluation Team’s initial recommendation that Spotless Services
(NZ) Ltd is the preferred supplier for Facilities Maintenance and Management
Services FM2767 Manawatu Hub and FM3065 Waiouru Museum for a five year
term, and that this period may be extended for one consecutive additional term of
five years at NZDF’s sole discretion.
Notes. The estimated value of the contract is $67M over a five year term, with a
total estimated value of $134M over a ten year term.
Notes. DSS Property Group is to conduct final clarifications and negotiations
with the preferred supplier to enable a final recommendation to be taken to the
NZDF Major Tenders Board via the DSS Tenders Board.
Notes. DSS Commercial Support to consider a reduction in the bond value from
$5M down to $1M for the FM2767/FM3065 FM contracts.
Notes. DSS Commercial Support to advice on the probity of accepting various
savings initiatives offered by the preferred supplier in their tender submission.
Notes. DSS Property Group to negotiate with the preferred supplier for
ownership of the Waiouru Camp Service Centre facilitiy to be incorporated into
the FM2767 contract.
Notes. Any alternative proposals offered by the preferred supplier are put to one
side for later consideration.

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FM2767/FM3065
Evaluation Report
Page 3 of 18

Scope of Services
Current
The intent of this RFP is to re-tender and imbed a new Facilities Maintenance
Contracts and
and Management Services contract for the Manawatu Hub and Army Museum to
Scope
replace the fol owing existing contracts.

FM1060 Transfield Services (NZ) Ltd for FM Services to Waiouru Military
Camp & Army Museum.

FM2239 Transfield Services (NZ) Ltd for Trades Services to Ohakea Air
Force Base.

FM2240 OCS NZ Ltd for Cleaning and Pest Control Services to Ohakea
Air Force Base.

FM2242 Budget Waste for Waste Management Services to Ohakea Air
Force Base.

FM1203 PAE (NZ) Ltd for FM Services to Linton Military Camp.
The Manawatu Hub encompasses the folowing four main NZDF sites plus other
outlying defence sites within the region.

Ohakea Air Force Base

Waiouru Military Camp

Army Museum Waiouru

Linton Military Camp

The scope of services to be delivered by the new FM2767 Manawatu Hub and
FM3065 Army Museum FM Contracts are as fol ows:

Grounds & Roads Maintenance.

Pest Control.

Shooting Ranges Maintenance.

Buildings & Structures.

Services Trades & Utilities.

Security (fences, gates, alarms).

Waste Management.

Cleaning & Hygiene Services.

Building Compliance.

Asset & Data Management.

Project Management.

Service Cal Centre.

The current budget for delivery of the above services (FY 10/11) is $13,994,822
per annum.

Out of scope services that are excluded from the new FM2767 Manawatu Hub
and FM3065 Army Museum FM Contracts are as fol ows:

Security Guard Staf ing.

Barrack & Transit Accommodation Services.

Catering & Mess Services.

Hospitality & Bar Services.

Cleaning of bedrooms, toilets and common areas within Army & Airforce
barracks.

Cleaning of bedrooms, toilets and common areas within Of icers, Warrant
Of icers and Senior Non Commissioned Of icers messes.

Library Services.

Reprographic Services.

Communications & Data Reticulation/Cabling.

Al other Garrison Support Services.

A number of options have been identified for the continued delivery of these
excluded services. These options are being developed separately to the
implementation of the Manawatu Hub & Army Museum contracts.

FM2767/FM3065
Evaluation Report
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Market Strategy

Procurement
The Procurement Plan for the Manawatu Hub Facilities Maintenance Contract
Plan
was endorsed by the Major Tenders Board on 26 May 2010. The project was
initiated to re-tender the Manawatu Hub as a regionalised contract in accordance
with DFO8/2009, implement an outcomes performance based contract model,
and to address the various existing Facilities Maintenance (FM) contracts that are
due to expire on 30 Jun 11.

Project
The objectives of the Statement of Requirement are:
Objectives


achieve quality Services for the maintenance and management of NZDF
assets and facilities,


utilise market expertise, seeking innovation, sustainability initiatives, and a
culture of continuous improvement,


receive value for money, and


minimise NZDF’s need to invest in non-core processes.

Other benefits to be realised as a result of this tender are:


consistent service provision across al  sites,


ongoing programme of improved contract type and performance,


NZDF wil  be better positioned for future changes and demands within the
FM market,


DSS Property Group wil  be better positioned for future policy and strategic
changes with respect to estate management,


improved cost certainty and financial management of contracts, and


potential gains in resource efficiencies and management structures.

Competitive/
Competitive tender processes were fol owed, using a two stage approach (i.e.
Selective
ROI then RFP) to engage the market.

The ROI was advertised through e-tendering and the three main New Zealand
daily newspapers. The ROI evaluation process short-listed seven companies to
proceed to the RFP stage. The short-listing was endorsed by the Major Tenders
Board on 20 Sep 10.

The RFP document was released to seven companies on 23 Nov 10.  Six
companies responded by the tender closing date of 11 Feb 11. The seventh
company – City Care Limited withdrew citing an unexpected volume of work
required with providing services arising from the first Christchurch earthquake in
Sep 10.

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FM2767/FM3065
Evaluation Report
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Project
The Project Sponsor is D DSS.
Governance
The Project Sponsor champions the project, interprets and approves steering
group decisions and promotes and supports ef ective col ective decision making.
A Steering Group was established and includes:

GM Prop Gp - Chair

GM Com Spt

GM Bus Dev

GM Cust Spt

GM Bus Proc

DSS Fin Advr
The Steering Group is responsible for providing guidance on strategy and any
matters af ecting project outcomes, resourcing, funding, key stakeholder
management and approval of evaluation criteria. Steering Group meetings
convenes prior to any tender board submissions required on this project.
The NZDF Majors Tenders Board (MTB) through the DSS TB reviews and
endorses decisions taken with regards to ROI short-listing and RFP preferred
tenderer.

Evaluation
The Evaluation Team consisted of:
Team
Name
Title/Role
Function Undertaken
s. 9(2)(a)
Project Manager
Evaluation Lead
Panel Member
Qualification Envelope
Facilitator
Technical Envelope
Moderator
Technical Envelope
Panel Member
Technical Envelope
Panel Member
Technical Envelope
Panel Member
Technical Envelope
Panel Member
Technical Envelope
Panel Member
Technical Envelope
Panel Member
Technical Envelope
Facilitator/Moderator
Commercial Envelope
Panel Member
Commercial Envelope
Panel Member
Commercial Envelope
Panel Member
Commercial Envelope

Process
NZDF contracted Audit New Zealand to provide an independent assurance that:
Assurance


Key stages of the RFP tender process conformed to NZDF’s procurement
policies and recognised good practice in procurement.


Any significant risks that the assurance provider identified during the
course of the tender process would be promptly made known to DSS
personnel so that those risks can be appropriately managed and mitigated.

The issue of probity was addressed to ensure the integrity and consistency of the
tender process and to ensure al tendering parties are treated fairly.

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Evaluation Process and Criteria

Evaluation
The tender responses were evaluated and moderated in accordance with the
Approach
Evaluation Plan at (Encl One dated 10 Feb 11) and the Instructions to Evaluators
dated 7 Mar 11.

The plan required the evaluation process to be completed in six stages. These
stages were:


Stage One – Evaluation Commencement.

Stage Two – Scoring the RFP Responses.

Stage Three – Non-Price Attributes Assessment and Moderation Meeting.

Stage Four – Price At ributes Assessment Moderation Meeting.

Stage Five – Final Assessment and Initial Recommendation.

Stage Six – Evaluation Completion and Final Recommendation.

SmartProcure
Tenderers submitted their responses to the mandatory questions detailed in the
Qualification
Qualification envelope on NZDF’s e-tendering system – SmartProcure.
Envelope
Of ers were checked for compliance against the mandatory criteria as set out in
the RFP documentation as part of stage one of the evaluation process.

SmartProcure
Tenderers submitted their responses to the Statement of Requirement questions
Technical
in the Technical envelope on SmartProcure. Evaluators individual scoring to
Envelope
these “Non-Price Attributes” was conducted as part of stage two of the evaluation
process.

SmartProcure
Tenderers submitted their Price Attributes responses in the Commercial
Commercial
envelope on SmartProcure. The prices were evaluated and scored against a risk
Envelope
analysis profile as part of stage two of the evaluation process.

Moderation
Once the scoring of the Technical and Commercial evaluations were completed
Meetings
a number of moderation meetings were conducted as part of stages three, four,
and five of the evaluation process to arrive at a combined moderated
assessment of the Non-Price and Price At ributes of ers.

The evaluation team also requested a number of clarifications of tenderers
submissions, as fol ows:


PAE NZ Ltd – one technical question.


Spotless Services Ltd – one qualification question, one technical question
and one commercial question.

The final outcome of this stage was that the evaluation team made an initial
recommendation of one tenderer as providing the ‘best fit and best value for
money’ for NZDF.

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FM2767/FM3065
Evaluation Report
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Clarifications
Completion of the Evaluation Report and endorsement of the initial
and Final
recommendation by the Project Sponsor is to be conducted as part of stage six
Recommendati
of the evaluation process.
on

This stage also requires final clarifications and negotiations to be undertaken
with the preferred tenderer. Once completed a submission to the NZDF Major
Tenders Board via the DSS Tenders Board is to be made for endorsement of a
final recommendation.

Offers Received

Offers
Tender documents were issued to and responses were received from:
Received

Fulton Hogan Ltd.

Transfield Services (NZ) Ltd.

Downer.

PAE NZ Ltd.

Spotless Services (NZ) Ltd.

Serco Sodexo.

Tender documents were also issued to City Care Limited, but they declined to
submit a bid due to an unexpected work load arising from the September 2010
earthquake in Christchurch.

Compliance Evaluation

Evaluation
Tenderers were asked in the RFP Qualification Envelope to confirm that their
Findings
RFP response was compliant against the mandatory criteria.
Al  responses to this envelope were found to be compliant, however a number of
Tenderers had not ful y accepted al  the NZDF’s draft contract terms and
condition clauses. These clauses require resolution either with clarification or
during negotiations with the preferred tenderer in stage six of the evaluation
process.
A notable request from the majority of tenderers was for NZDF to consider
reducing the value of the bond from $5M down to a value in the order of $1M.
Spotless Services Ltd even proposed an annual saving of $51,350 should the
bond value be reduced to $1M.

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FM2767/FM3065
Evaluation Report
Page 8 of 18

Non-Price Attributes Evaluation

Evaluation
Tenderers were asked in the RFP Technical Envelope to respond to a series of
Criteria
questions across three key non-price elements.


Asset Related Outcomes – The physical maintenance works e.g. grounds,
cleaning, services trades, waste management.


High Level Outcomes - Enablers provided by the company at the site level
e.g. asset management, data management, cal  centre, project
management services.


Over Arching Attributes – Wider corporate level enablers to the provision of
services e.g. added value, innovations proposed, health & safety, reporting.

Evaluation
The scoring used to evaluate the non-price responses were:
Scoring
  Rating
Scoring Guideline
Scoring Range
Supporting statement demonstrates a
Exceeds al
level of service significantly beyond
requirements
NZDF’s base requirements and business
10
objectives in al  areas.
Exceeds by a   Supporting statement exceeds the
clear margin
specified requirement by a clear margin in
8
several areas.
Supporting statement indicates a good
Meets
understanding of the requirement. No
requirements   weaknesses or deficiencies that wil
6
impact on requirements.
Has minor
Supporting statement indicates a general
deficiencies
understanding of the requirement.  Some
4
minor weaknesses or deficiencies.
Has major
Supporting statement indicates an inability
deficiencies
to meet most of the requirement. Some
2
major weaknesses or deficiencies.
Does not
Supporting statement indicates a
meet any
complete inability to deliver the
0
requirements
requirement and/or did not answer the
requirement.

A total possible score achievable by Tenderers for the three non-price elements
is 1000. The minimum score required to enable a tenderer to proceed to the price
assessment phase is 600.

The fol owing table outlines how the scoring was al ocated to each element.

Asset
High
Total
Tenderer
Related
Level
Overarching  Non-Price
Outcomes
Outcomes
Attributes
Score
A
350
325
325
1000

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FM2767/FM3065
Evaluation Report
Page 9 of 18

Evaluation
Based on a careful evaluation of how wel  each of the six responses could meet
Findings
the technical envelope evaluation criteria, only five tender responses met the
requirements and achieved a score of 600 or better.

The fol owing table provides a summary of the moderated scoring for the non-
price attributes evaluation phase:

Asset
High level  Overarching
Total
Tenderer
Related
Outcomes
Attributes
Non-Price
Outcome
Score
Score
Score
Score
Downer
186
187
207
580
Fulton Hogan Ltd
209
216
219
644
PAE NZ Ltd
212
226
214
652
Serco Sodexo
201
213
208
622
Spotless Services Ltd
205
210
215
630

Transfield Services
210
226
214
650

Non-Price
Downer’s response failed to convince the evaluation team in respect of the
Summary
Asset Related Outcomes and High Level Outcomes elements and this resulted in
Content
their overal  score fal ing below the required score of 600. This prevented their
response from proceeding to the price attributes assessment phase. Their
response did however, score reasonably wel  in the Overarching Attributes
element but this was tempered against 39 clear deficiencies across the other
elements. The Evaluation Team’s overal  comment was that Downer’s response
tended to provide overarching statements while lacking detailed methodology.

Fulton Hogan Ltd’s response scored consistently across al  elements and
resulted in them being placed a close third in the non-price attributes assessment
phase. Particular strengths in their response were shown in regards to Waste
Management, Cleaning and Overarching Attributes elements where responses
were wel  detailed and indicating an area of expertise for Fulton Hogan Ltd.
These are areas where they have demonstrated a clear ability being the
incumbent service provider to NZDF at Papakura Military Camp.

PAE NZ Ltd as the incumbent service provider at Linton Military Camp achieved
the highest non-price attributes score. Their response was consistent across al
elements with a particular strength in High Level Outcomes elements where they
demonstrated good use of the SPM asset management system, CMMS data
management software, intergration with NZDF systems, and a predictive
model ing approach to maintenance. They also scored wel  against Asset
Related Outcomes in the planned maintenance of grounds, buildings and
services trades. Their response indicated a clear understanding of NZDF’s key
drivers in the management of the estate.

Serco Sodexo provided a response which was average across al  elements that
resulted in them being placed fifth in the non-price attributes assessment phase,
while stil  achieving a score in excess of 600. The Evaluation Team’s overal
comment was that their submission suf ered from excessive referencing which
made assessing their response dif icult, and also suggested a lack of knowledge
of work volumes required across a number of elements. Nevertheless, a good
response from a company looking to re-establish themselves in New Zealand.

Spotless Services Ltd also provided a response which was average across al
elements and which resulted in them being placed fourth in the non-price
attributes assessment phase. Their response was characterised by a number of
good initiatives, added value items and a sound approach to asset/data
management. Spotless Services also provided in their submission a significant

FM2767/FM3065
Evaluation Report
Page 10 of 18
Released under the Official Information Act 1982

number of cost saving initiatives for separate consideration. Boiler management
was one area of concern in their response; however it is fair to say that the
majority of respondents provided unconvincing responses to this element.

Transfield Services Ltd are the incumbent service provider at Waiouru Military
Camp and Ohakea Air Force Base. They provided a response which ranked
them a very close second in the non-price attributes assessment phase. Their
response was very consistent across al  elements with particular strengths in the
areas of asset/data management and performance management. Transfield
Services Ltd have proposed a dedicated asset management team utilising good
IT systems and field technologies to fit wel  with key NZDF drivers around the
management of the defence estate.

Price Attributes Evaluation

Evaluation
Tender prices were evaluated in the RFP Commercial Envelope as fol ows:
Criteria and

Risk Filter
  Those tenderers that achieved a non-price attributes score of 600 or
more then progressed to the price attributes evaluation phase. The
tenderer’s scores from the non-price attributes evaluation phase were
removed and they were then assessed solely on price.

  The total annual contract price of ered by each tenderer was then scored
in accordance with a median calculation formula (“500+1000 x (median
tender price-tender price)/median tender price”).  Refer to the Evaluation
Plan for a detailed explanation on how the formula works.

  The price scoring by the median formula mechanism was ‘overlaid’ with a
risk analysis filter applied to a number of pricing factors as detailed below
to achieve an overal  moderated price score. Where risks are considered
too great to accept that tenderer’s ranking was downgraded.

  The filter also provided the final ranking of the tender prices with the
highest moderated score being ranked first.

Pricing factors in which the risk analysis filter was applied to included:

  Total Contract Price: under priced, over priced or non priced cost
elements which would distort the annual cost component.
  Overheads: unreasonable and unjustifiable overhead costs.
  Profit Margin: was the identified profit margin reflective of the industry as
a whole and was the nominated Profit Margin at Risk mechanism
reasonable.
  Outcome Prices: was there relativity of prices between outcomes and site
locations.
  Work Labour Rates: over priced work rates that may have had an impact
on the variable work offered to the contractor, potential y designed to
make up for losses on the fixed fee components of the contract.
  Other Rates and Charges: were there any rates and charges that would
expose NZDF to increased costs in variable work offered.
  Transition Costs and Manuals: were the nominated amounts reasonable
or would these have an impact on current operating budgets.

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FM2767/FM3065
Evaluation Report
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Evaluation
The fol owing table provides a summary of the moderated scoring for the price
Findings
attributes evaluation phase and final overal  ranking of bids:

Total Annual
Score
Tenderer
Contract
out of
Moderated
Final
Price
1000
Score
Ranking
Downer*
-
-
-
-
Fulton Hogan
$17,876,483
263
453
5
PAE NZ Ltd**
$14,452,797
500
531
3
Serco Sodexo
$14,717,324
482
526
4
Spotless Services
$13,262,714
582
706
1
Transfield Services
$13,972,134
533
566
2

*Note: This Tenderer did not achieve a score of 600 or better for the non-price
(technical envelope) attributes evaluation phase and subsequently their Total
Annual Contract Price of $14,157,389 did not move to the price (commercial
envelope) attributes evaluation phase.
**Note: This Tenderer’s price was the Median price.

Price Summary  A detailed commentary and summary of the Financial Risk Assessment is at
Content
Annex A.

Downer failed to make the required non-price attributes score of 600 and was
therefore excluded from consideration during the price attributes phase.

Fulton Hogan Ltd’s total contract price was assessed overal  as an extreme
high risk on account of their price being 28% ($3.9M) higher than the current
budget al owance. The company identified scope variations excluded in the RFP
that were offset by a number of proposed innovations. Other pricing categories
were inconsistent with other tendered prices.

PAE NZ Ltd’s total contract price was assessed overal  as a medium risk and is
3% ($0.5M) higher than the current budget al owance. Their price is also the
Median of al  prices assessed. The margin they have identified as Profit at Risk is
the lowest of al  prices received and was assessed as a high risk.

Serco Sodexo’s total contract price was assessed overal  as a high risk and is
5% ($0.7M) higher than the current budget al owance. Their total profit margin
was significantly higher than al  other prices received.

Spotless Services Ltd’s total contract price was assessed overal  as a low risk
and is the lowest of al  prices received at 5% ($0.7M) lower than the current
budget al owance. Their al owance for Transitioning onto site was significantly
lower than other prices received. Their pricing submission also contained a
number of savings initiatives, which are discussed later in this report.

Transfield Services Ltd’s total contract price was assessed overal  as a
medium risk and is only 0.2% ($0.02M) lower than the current budget al owance.
Their pricing across the Asset Related Outcomes raised concerns when
compared with other tender pricing. However, other pricing categories were
consistent with other tender prices.

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FM2767/FM3065
Evaluation Report
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Initial
Upon completion of the tender evaluation it was agreed by the Evaluation Team
Recommendati
that Spotless Services (NZ) Ltd would be submit ed as an initial recommendation
on
to the Project Sponsor for the preferred supplier for Facilities Maintenance and
Management Services FM2767 Manawatu Hub and FM3065 Waiouru Museum.

It was determined and agreed as a result of a thorough evaluation process that
the Spotless Services (NZ) Ltd submission provided the best fit and best overal
value for money to NZDF.

Added Value
The Spotless Services Ltd tender submission provides a number of distinct
opportunities to NZDF, as set out below:

  The Spotless Services Ltd total contract price provides a notable saving to
NZDF on current budget al owances as was expected from regionalisation.

  A further saving is of ered by Spotless Services Ltd should NZDF accept a
reduction in the bond value from $5M down to $1M. DSS Property Group
consider a $1M bond as stil  providing adequate assurance to NZDF in light
of the new col aborative partnering approach to FM contracting, and that the
service provider provides al  operating procedures and plans to NZDF.

  A proactive approach to innovations and ef iciency improvements.
Particularly in the use of new field technologies and data software systems
which is envisaged to achieve savings in maintenance management through
the life of the contract.

  A significant number of other cost saving initiatives were offered. NZDF
need to careful y consider these further cost savings initiatives to avoid any
breach of probity, to distinguish the savings initiatives from being simple
inducements and to establish the true merit of each initiative. Note that these
were not factored into the evaluation Team’s evaluations and were sidelined
for further consideration by the appropriate authority.

  A ful  asset verification, data col ection and condition appraisal of al  assets
on al  sites during the contract transition phase.

  Spotless Services Ltd submit ed an alternative proposal for the inclusion of
the NZDF Wel ington Hub in the Manawatu Hub.  DSS Property Group
position on this proposal is to put it to one side for later consideration.

Other Considerations

Other
Army have requested that as part of negotiations with the preferred supplier that
Considerations  ownership of the Waiouru Camp Service Centre be discussed with a view to
having ownership of the facility incorporated into the FM2767 Manawatu Hub FM
contract, thereby resolving a legacy issue from the FM1060 contract.

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FM2767/FM3065
Evaluation Report
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Next Steps
Upon endorsement of the Evaluation Report by the Project Sponsor, the fol owing
steps wil be taken:

Communication with NZDF internal key stakeholders to provide a
commentary on project progress, without revealing the identity of the
preferred tenderer at this stage.

Formulation of a negotiation strategy and scoping of items to be discussed
with the preferred supplier.

Negotiations and clarifications with the preferred supplier to enable a final
recommendation to be taken to the Tenders Board.

Preparation of the Tenders Board submission.

Preliminary drafting of the contract document.


Preliminary transition planning.

Recommendation

Recom-
It is recommended that the Project Sponsor:
mendation
Notes. The Evaluation Team’s initial recommendation that Spotless Services
(NZ) Ltd is the preferred supplier for Facilities Maintenance and Management
Services FM2767 Manawatu Hub and FM3065 Waiouru Museum for a five year
term, and that this period may be extended for one consecutive additional term of
five years at NZDF’s sole discretion.
Notes. The estimated value of the contract is $67M over a five year term, with a
total estimated value of $134M over a ten year term.
Notes. DSS Property Group is to conduct final clarifications and negotiations
with the preferred supplier to enable a final recommendation to be taken to the
NZDF Major Tenders Board via the DSS Tenders Board.
Notes. DSS Commercial Support to consider a reduction in the bond value from
$5M down to $1M for the FM2767/FM3065 FM contracts.
Notes. DSS Commercial Support to advice on the probity of accepting various
savings initiatives offered by the preferred supplier in their tender submission.
Notes. DSS Property Group to negotiate with the preferred supplier for
ownership of the Waiouru Camp Service Centre facilitiy to be incorporated into
the FM2767 contract.
Notes. Any alternative proposals offered by the preferred supplier are put to one
side for later consideration.

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Signed By (Author):
Signed:

Name:
s. 9(2)(a)
Title:
Property Contracts Of icer, Prop Gp,
DSS
DtelN:
343 6014
Date:
Mar 11
Endorsed / Not Endorsed:
Endorsed / Not Endorsed
Signed:

Signed:

Name:
s. 9(2)(a)
Name:
s. 9(2)(a)
Title:
Group Manager, Prop Gp,
Title:
Director
DSS
DSS
DtelN:
343 6001
DtelN:
343 6150
Date:

Date:

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FM2767/FM3065
Evaluation Report
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ANNEX A
FM2767/FM3065 FINANCIAL RISK ASSESSMENT SUMMARY
DATED MAR 11

FM2767/FM3065 FINANCIAL RISK ASSESSMENT SUMMARY

Respondent
Total Contract
Outcome
Work Labour
Other
Transition
Price
Overheads
Profit
Margin
Prices
Rates
Charges
Prices
Risk
Fulton Hogan Ltd
Extreme High Risk  Lowest overhead
Overal  profit margin  The analysis
The tenderer has
The mark up of 10%  Although they

reflected by highest  tendered costs at
at 6.5% is equal in
highlighted major
taken advantage to
is above the
have the highest
price tendered at
$0.3k or 2% of
comparison to two
variances in prices
submit work rates
tenderers submitted  transition price at
variance of $3.9M
tendered contract
other tenders even
across al  High
which are 40% higher  profit margin of
$535k the
or 28% over current  price. Unlike the
though slightly
Level and Asset
and not consistent
6.5%.It is assumed
Company has
budget al owance.
other submission
under the expected
Related Outcomes,
with the other
the Company wil
submitted an
The Company's
the Company
profit range.
where they were
submissions.
seek to recover the
extensive
price includes
neglected to
consistently higher
lower profit margin
breakdown of
lowest overhead but  include any Site
than other tenders.
through "On
costs.  However
offset by highest
Office Overhead
Request Work". The  the transition
transition costs
costs, the main
Plant & Equipment
period of 8 weeks
based on 8 week
reason for such a
rates quoted were
is considered a
project. The
low submitted
second highest
medium risk due
Company had
cost.
against the other
to the complexity
identified scope
tenders.
and consolidation
variations excluded
of the sites.
in the RFP that
were offset by
proposed
innovations.
PAE NZ Ltd
Medium Risk when  The company had  They have
As current service
Current service
Lowest percentage
Although they

ful  contract
submitted the
proposed the lowest  provider at Linton
provider at Linton has  mark up at 6%
have offered the
analysed. The
second highest
profit margin at
as such expected
taken advantage to
indicating the
second lowest
Company had
overhead price at
4.8% which is lower  prices to be within a  include increases in
Company may
price at $207k and
submitted the third
$2.0m or 13.8% of  than the proposed
reasonable
rates, however overal   attempt to recover
current service
highest total price at  total tendered
mark up rate of 6%,  variance. Analysis
rates remain lower
an extra percentage  provider at Linton,
variance of $0.5M
price. As they are
as wel  as outside
of prices shows this  than the other
over and above the
the Company has
or 3% above current  the current service  the expected profit
to be the case with
tenders.
proposed profit
proposed a
budget al owance.
provider at Linton
range of 7.5% to
reasonable
margin of 4.8%. The  transition period of
They are the current  it is assumed they  10.5%.
variances across al
Company failed to
8 - 12 weeks is
service provider at
have included
Asset Related
provide Plant &
considered a low
Linton and assumed  known factors
Outcomes.
Equipment rates for  risk and
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FM2767/FM3065
Evaluation Report
Page 16 of 18

to have included
within their
al  the identified
reasonable given
known factors within  pricing. Therefore
items.
the nature and
their pricing. Their
the Overhead
complexity of
total contract price
costs are deemed
consolidation of
is the ‘Median’ of
both realistic and
the sites.
al  prices assessed.  reasonable.
Serco Sodexo
High Risk when ful   Third highest
The proposed profit  Their pricing of High  Overal  work rates are  The Company has
Although they

contract price is
overhead cost at
margin of 11.5% is
Level Outcomes is
slighly up but are
provided two mark
have the third
analysed. The
$1.3m or 8.9% of
slightly above the
high compared to
general y consistent
up rates 10% for
highest transition
Company had
total contract
high end of
other tenders. The
with other tenders.
works between
price at $279k, the
submitted the
price, the
expected range and  pricing of Asset
$1,000 - $10,000
Company has
second highest total  Company had
significantly higher
Related Outcomes
and 15% for works
proposed an
contract price at
included rental of
than the other
is very inconsistent
up to $1000
unclear transition
variance of $0.7M
Waiouru houses,
tenders.
when compared
indicating at a
period.
or 5% above current  (eg office furniture
with other tenders.
proposed profit
budget al owance.
& fittings for the
margin of 11%. Tthe
rental houses)
tenderer appears to
unlike the other
be seeking to regain
submissions. The
margin losses
Company had not
through increased
shown any off set
‘On Request Work’
from col ection of
that is under the
Waiouru Housing
$1,000 mark. The
rentals from its
Plant & Equipment
proposed
rates quoted were
employees. The
the highest against
inclusion of
the other tenders
housing rentals
and considered
without the
unacceptable.
receipts is viewed
as non-justifiable
overhead cost.
Spotless Services
Low Risk when ful   Second lowest
Overal  profit margin  Their pricing across  Overal  work rates are  Second lowest
The Company has

Ltd
contract pricing is
overhead cost at
at 6.4% is equal in
al  outcomes was
slighly up but
percentage mark up  submitted a
analysed. The
$0.4k or 3.1% of
comparison to two
considered to be
general y consistent
at 8%, indicating the  transition period of
Company had
total tendered
other tenders, even
reasonable and
with other tenders.
Company may
4 - 6 weeks which
submitted the
contract price,
though it is slightly
general y consistent
attempt to recover
is considered a
lowest total contract  also reflected by
under the expected
with other tenders.
an extra percentage  potential risk due
price at variance of
the low Site Office  profit range.
over and above the
to the nature and
$0.7m or 5% under
Overheads
proposed profit
complexity in
the current budget
compared to the
margin of 6.4%. The  consolidation of
al owance.
other tenders.
Plant & Equipment
the sites. The
Released under the Official Information Act 1982

FM2767/FM3065
Evaluation Report
Page 17 of 18

rates quoted were
potential risk is
considered
compounded by
reasonable against
their transition
the other tenders.
price being
significantly lower
than al  other
tenders. However
they provided a
very wel  detailed
transition plan
with their
submission.
Transfield Services  Medium Risk
The company had  Overal  profit margin  Their pricing across  As the current service  The mark up of 11%  They have

Ltd
fol owing analysis of  submitted the
at 6.5% is equal in
the Asset Related
provider at Waiouru
is above the
submitted the
tendered prices.
highest overhead
comparison to two
Outcomes in a
and Ohakea they
tenderers submitted  second highest
The company had
price at $2.1m or
other tenders even
number of areas
have taken the
profit margin of
transition price at
submitted the fifth
15.4% total
though slightly
appeared under
opportunity to include  6.5%. It is assumed  $317k and
highest total
contract price. As
under the expected
priced when
increases in rates,
the Company wil
proposed a
contract price at
the current service  profit range.
compared to other
with overal  rates
seek to recover the
transition period of
variance of just
provider at
tender pricing.
being second lowest
lower profit margin
4 - 6 weeks. As
$22k below current
Waiouru and
in comparison with
through "On
the current service
budget al owance.
Ohakea it is
the other tenders.
Request Work". The  provider they have
assumed to have
Plant & Equipment
indicated their
included known
rates quoted were
intention to ful y
factors within FM
considered
restructure its
2767. Therefore
reasonable against
organisation and
the Overhead
the other tenders.
management
costs are deemed
within the region.
both realistic and
reasonable.

Released under the Official Information Act 1982

FM2767/FM3065
Evaluation Report
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