Decision Maker: Cabinet Member for Economic Development
Decision status: Recommendations Approved
Is Key decision?: No
Is subject to call in?: Yes
Proposed decision
To extend the existing Old Rectory Business Centre Management
Services contract by a further one year.
Background and reason for the decision:
The Old Rectory is a KCC owned facility that has offered high
quality office space to SMEs since 2009. The centre is managed by
an external supplier. The previous contract for management services
was awarded in 2015 for a period of seven years, with an extension
granted for a further one year which will end in November
2023.
The proposal is to extend management services contract at the
centre by a further 12 months during which time a review will be
conducted to decide the future of the Centre.
Gross estimated income will be more than £1m if the contract
was extended for three years, but current financial circumstances
suggest that a more detailed review of all the options should now
be undertaken to decide the best value course of action.
Options:
1) Extend the contract for the duration of 3-years - to exercise
the full extension clause within the existing contract, allowing
the current service provider an 11-year term (7 years with up to
48-month provision for extensions). The current provider has
proposed a reduction to their share of profits by 25% (from 40% to
30% of the total profit) for the duration of a 3-year contract
extension with effect from 31st November 2023. This option would
increase KCC’s share of the profits (if other terms remain
the same), and by extending the existing contract, it will cut out
the disruption/cost of a potential new management company replacing
the current provider (IWG/Basepoint). Also, given the volatility of
the current market, it may be sensible to go out to tender in 3
years’ time, when conditions could be more favourable to
business.
2) Initiate a full PCR compliant procurement exercise. Whilst The
Old Rectory has benefited from the current service provider
maximising potential income generation from the centre, a full OJEU
process would permit KCC to test the market to ensure both price
and value for money. KCC would continue to receive a share of
profits. However, any potential change to the service provider
could be disruptive to current licensees located at the
centre.
3) Disposal of the asset. If this option is chosen the Council
would lose out on future income revenue but would receive an
immediate capital receipt which could be put towards other Council
resources. This option would potentially be disruptive to existing
businesses located at the centre.
4) Disposal of the asset and transfer of its functions (as a
business centre) as an ongoing concern. This option would also
ensure that any disruption to existing businesses located at the
centre is minimised. As with Option 3, if this option is chosen the
Council would lose out on future income revenue but would receive
an immediate capital receipt which could be put towards other
Council resources.
The proposed decision meets the objectives of ‘Framing
Kent’s Future 2022-2026’ by supporting the Kent economy
to be resilient and successfully adapt to the challenges and
opportunities it faces over the coming years; and by backing SMEs
and entrepreneurs to start-up, grow and drive adoption of new
technology.
As Cabinet Member for Economic Development, I agree to extend the existing Old Rectory Business Centre Management Services contract by a further one year and delegate to the Director Growth & Communities to take other relevant actions including but not limited to entering into required legal agreements as necessary to implement the decision.
Publication date: 02/06/2023
Date of decision: 02/06/2023
Effective from: 10/06/2023
Accompanying Documents: