Issue details

Proposed decision –

The Cabinet Member for Economic Development to agree to entering a contract with the successful bidder once the selection process is completed.

Background 

Kent County Council is seeking to procure Inward Investment Services for the period August 2021 to April 2023. This will replace the existing inward investment services contract with Locate in Kent, which commenced in August 2016 and runs until the end of July 2021. Current and future contracts for this service are predominantly grant funded by the European Regional Development Fund (ERDF), with match funding from Kent County Council and Medway Council.

The Inward Investment Service will deliver, alongside Kent County Council and Medway Council, specific outcomes that contribute to economic development in Kent and Medway. These are:

•           More investment opportunities from overseas markets

•           Increased supply chain benefits for local businesses

•           More inward investment in Kent and Medway

•           Raised profile as a destination for inward and foreign direct investment. 

The Inward Investment Service will be contracted to a supplier for the period 1 August 2021 to 30 April 2023 (21 months). The contract period appears to be an unusual duration but is because of the previous contract being extended by agreement with the funding accountable body, MHCLG. The contract was extended because the previous exercise to reprocure a service provider was halted due to the impact of the Coronavirus pandemic and a requirement to redirect KCC procurement services.

The purpose of the service will be to promote and raise the profile of Kent and Medway as an attractive business investment location for UK and foreign-owned businesses relocating and expanding within and into the county, and to create jobs from successful company investments.

The new inward investment services contract cost will be £1,666,667 + VAT. The contract will be funded by KCC, Medway Council and the European Regional Development Fund (ERDF) Growth Programme. The ERDF funding is subject to a Grant Funding Agreement between KCC and MHCLG. 

The service will aim to promote and raise the profile of Kent and Medway as a business location with the aim of attracting new investment from Kent, UK, and overseas businesses, creating jobs and economic prosperity. Contracted outputs over the contract period will be 2,800 new jobs from SMEs and non-SMEs and a minimum of 100 successful business investment/location/expansion projects.  

Options

Five  options were considered:

•           Option 1 Do nothing. This would mean having no further external service commission after the cessation of the current contract with Locate in Kent, and no in-house provision within KCC. This would provide significant financial savings to KCC. However, because there is currently no comparable business support service in Kent and Medway, this would result in a failure to capitalise on opportunities for growth in the local economy and job creation.

•           Option 2 – Do minimum. This would mean establishing for the first time a bespoke, outward-facing business support service based in KCC. Although currently KCC does not have the expertise in-house to provide the specialised, face-to-face support that businesses want, this would potentially deliver cost savings to the County Council. However, it is unlikely to attract financial support from Medway Council, the ESIF programme and the private sector. There would also be TUPE implications of transferring staff from the current supplier to KCC. There are also currently difficulties of establishing a new team of this nature at a time when the return to office situation is not fully settled.

•           Option 3 – Minimum Plus. This would mean an external supplier providing a less ambitious service at a lower price than currently. This would deliver financial savings to KCC and other potential funders and would maintain some specialised inward investment services in a post Brexit economy. However, it could result in a reduction in the county’s ability to compete for domestic and foreign inward investment, and it is uncertain whether financial support would be forthcoming from Medway Council.

•           Option 4 – Targeted approach (Preferred option). This would involve delivering a targeted approach to attracting more domestic and foreign business investment to Kent and Medway, focusing specifically on the opportunities and challenges in a post-Brexit economy. This is the preferred option and is supported by the proposed funding partners, who will provide financial support for the duration of the proposed commission.

•           Option 5 – Comprehensive service.   This would be expected to cover all sectors across Kent and would thus increase targets and outputs. Although there would be higher targets and more business beneficiaries, with the potential to create more jobs, this option would be too costly and therefore unaffordable.

The preferred option will deliver an improved service and a more targeted approach to attracting domestic and foreign investment in a post-Brexit economy. It is the best fit to offer an optimal service with the funding that is available.

How the proposed decision meets the challenges in the Interim Strategic Plan

The decision addresses the economic challenge by seeking to attract investment in Kent’s economy to support economic growth.

The project is also consistent with Kent’s Economic Recovery Plan, which recognises the need to support businesses in the return to growth including through focussed efforts on place marketing, sector specific support and supply chain development and support for innovation.

Financial implications: