INVITATION TO TENDER
STATEMENT OF REQUIREMENT &
GENERAL INFORMATION
Assessing the efficiency of Network Rail’s total employment costs in
CP5
CPV Code : 79414000 : Human resources management
consultancy services
TENDER REFERENCE: ORR/CT/12-43
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Purpose of document
The purpose of this document is to invite proposals for an assessment of the
efficiency of Network Rail’s total employment costs in CP5, for the Office of
Rail Regulation (ORR).
This document contains the following sections:
1. Introduction to the Office of Rail Regulation
2. Statement of Requirement
3. Tender Proposal & Evaluation Criteria
4. Procurement Procedures
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1. Introduction to the Office of Rail Regulation (ORR)
The Office of Rail Regulation is the independent safety and economic
regulator of Britain’s railways.
ORR currently employs approximately 250 personnel and operates from 6
locations nationwide. The majority of personnel are located at ORR’s
headquarters, One Kemble Street, London.
ORR’s Vision, Roles and Objectives
Our vision of success for Britain’s railways:
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Zero workforce and industry-caused passenger fatalities, with an everdecreasing overall safety risk.
Satisfaction levels of passengers and freight customer’s equivalent to the
best in railways and other forms of transport.
Efficiency equivalent to that achieved by the best comparable railways in
the world.
Our principal roles are:


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Securing delivery by the industry of its regulatory obligations.
Helping the mainline railway meet the long-term challenges.
Enhancing and keeping under review the industry’s framework of
incentives, accountabilities and competition.
Our strategic objectives for 2009-14 are:

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Passengers and freight customers benefit fully from improved safety,
performance, efficiency and capacity.
All parts of the railway have excellent health and safety culture and risk
control processes.
Whole-life asset management in the rail industry matches that of best
practice comparators.
Committed improvements to the railways are delivered in a timely and
efficient way.
The mainline industry has in place arrangements to achieve the best use
of capacity on the network.
All parts of the industry put in place arrangements so that they have and
sustain the skills and competence needed to meet the challenges of 200914 and beyond.
Data produced by the industry is better turned into information so that all
parties can make effective and consistent use of it, and the industry’s
management systems are more robust and meet international standards.
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Supplying ORR
The ORR procurement unit is responsible for purchasing the goods and
services necessary for ORR to achieve its role as the economic and health &
safety regulator of the rail industry.
The ORR Procurement unit subscribes to the following values:

to provide a modern, efficient, transparent and responsible
procurement service;

to achieve value for money by balancing quality and cost;

to ensure contracts are managed effectively and outputs are
delivered;
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to ensure that processes have regard for equality and diversity; and

to ensure that procurement is undertaken with regard to Law and
best practice.
For further information on ORR please visit our website: www.rail-reg.gov.uk
Small and Medium Enterprises
ORR considers that this contract may be suitable for economic operators that
are small or medium enterprises (SMEs). However, any selection of tenderers
will be based on the criteria set out for the procurement, and the contract will
be awarded on the basis of the most economically advantageous tender.
Enterprises are categorised as Micro, Small, Medium or Large as follows:
Enterprise
Category Headcount Turnover
or
Balance Sheet
Total
Micro
<10
≤ € 2 million
≤ € 2 million
Small
<50
≤ € 10
million
≤ € 10 million
Medium
<250
≤ € 50
million
≤ € 43 million
Large
>251
> € 50
million
> € 43 million
Please ensure that you indicate how your organisation is categorised on the
Form of Tender document which should be submitted along with your
proposal.
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2. Statement of Requirement
2.1 Background to the project
Network Rail’s current regulatory settlement runs until March 2014. As part of our
current periodic review (PR13), ORR will determine Network Rail’s revenue
requirement for the next review period (CP5), which will run from 2014-15 to 201819, in October 2013.
As part of this work, ORR needs to make an assessment of Network Rail’s proposed
costs in CP5. We will then use this assessment to inform our PR13 draft
determinations in June 2013 and final determinations in October 2013.
During our previous periodic review (PR08), we commissioned an employment costs
report1 which found employment costs at Network Rail were around 15% - 20%
above the market. This study was undertaken in 2008 and we now wish to engage
consultants to undertake a new study to assess Network Rail’s total employment
costs for CP5 and determine if they are efficient.
2.2 Project Objectives & Scope
Objective
The primary objective of the study is to review Network Rail’s proposed CP5 total
employment costs and determine if they are efficient.
By ‘total employment costs’ we mean the total employment costs per employee,
including all elements of their package, e.g. pension contributions, bonus, and
holiday entitlement. This is not a review of the level of efficiency of Network Rail’s
total expenditure on employment, e.g. this is not about whether Network Rail has the
correct number of maintenance staff.
Scope
Although we are open to discussing with bidders how best to group Network Rail’s
staff costs, we would expect any review to cover the following types of employees:

administration;

maintenance;

staff who work on capital projects;

signallers; and

other operations staff.
In September 2011, Network Rail undertook an internal benchmarking exercise on
part of its employment costs. This involved looking at the employment costs of:

administrative, managerial and professional staff;

maintenance staff; and

signallers.
As part of this review, the successful bidder will need to consider the findings of
1
The ‘Network Rail: Employment Costs Efficiency Review’ report by Inbucon (completed in
2008) is available at: http://www.rail-reg.gov.uk/upload/pdf/pr08-empcsts_rep_130209.pdf.
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Network Rail’s own benchmarking exercise.
In line with the recommendations of the McNulty Rail Value for Money Study,
Network Rail is devolving greater responsibility to its ten operating routes. As a
result, the consultants will need to consider whether there are differences in the
efficient level of Network Rail total employment costs across Network Rail’s operating
routes2.
As part of this study, we also want to understand how other similar organisations
manage their employment costs, particularly those that started from a position of
inefficiency in recent years, e.g. since the beginning of recent issues in the financial
markets.
The consultants should expect their work to be challenged by Network Rail and other
interested parties.
Related studies
In parallel with this study, we are also commissioning a review of how efficiently
Network Rail manages general price inflation and input price inflation risk. This
review will also provide some coverage of Network Rail’s employment costs. As
such, the successful bidder may find it helpful to contact the consultants carrying out
the inflation management review during the course of their work.
2.3 Project Outputs & Deliverables
Outputs
A study is required that:

estimates the efficient level of total employment costs (separately for each
operating route) for each of the employee groups below:
a) administration;
b) maintenance;
c) staff who work on capital projects;
d) signallers; and
e) other operations staff.

considers whether there are differences in the efficient level of Network Rail
total employment costs across Network Rail’s operating routes;

compares Network Rail’s management of its employment costs to other
similar organisations;

seeks to identify whether, where there have been increases in employment
costs, there has been an increase in quality of the inputs/outputs;

where possible, suggests ways in which Network Rail can improve its
approach in areas where employment costs are found to be inefficient;.

provides a detailed description of the methodology and data sets used,
including details of assumptions made; and
2
The ten Network Rail operating routes are: Anglia, East Midland, Kent, London North
Eastern, London North Western, Scotland, Sussex, Wales, Wessex and Western.
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provides robust, evidence-based justifications for the conclusions reached.
Assigned Deliverables
Three deliverables are required for this study:

an interim report, detailing the methodology and data used, evidence, key
issues and findings by 1 February 2013;

a draft final report by 15 February 2013; and

a final report by 5 March 2013.
Each of the reports need only be provided in electronic format.
Meetings
The intention is to hold the start-up meeting on 21 December 2012 at ORR’s offices.
We would expect to have at least two further meetings to discuss the interim and
draft final reports.
We expect that the consultants will need to be in regular contact with our Regulatory
Finance team during the course of this review. Most of these contacts are expected
to be by email or phone.
Additional outputs
In addition to the above services, the consultants will also provide any other
assistance to our review as may be required.
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2.4 Project Timescales
The provisional project timetable is as follows:

Award of contract
19 December 2012

Start-up meeting
21 December 2012

Submission of draft final report
15 February 2013

Submission and presentation of final report
5 March 2013
2.5 Budget
ORR expects bidders to provide a fixed price for delivery of this requirement up to a
ceiling of £45,000.
2.6 Further project related information for bidders
Terms & Conditions
The work will be subject to ORR’s standard terms and conditions (copy attached)
Intellectual Property Rights
ORR will own the Intellectual Property Rights for all project related documentation
and artefacts and Assigned Deliverables.
ORR reserves the right to publish the documents, either in full or in part. As such, all
documents should be drafted in such a manner that allows publication without the
need for input from the chosen supplier.
Confidentiality
Each Party shall:
(a) treat all Confidential Information belonging to the other Party, and any
information provided by Network Rail not in the public domain, as confidential
and safeguard it accordingly; and
(b) not disclose any Confidential Information belonging to the other Party, or
Network Rail, to any other person without the prior written consent of the other
Party, except to such persons and to such extent as may be necessary for the
performance of the Contract or except where disclosure is otherwise expressly
permitted by the provisions of this Contract.
All consultants working on the project will be required to sign a confidentiality
agreement and abide by the Cabinet Office’s protective marking guidelines, which
ORR uses to protectively mark a proportion of its information. In addition, the
consultant may be required to sign additional confidentiality agreements as required
by stakeholders.
Sub-Contractors
Contractors may use sub-contractors subject to the following:

That the Contractor assumes unconditional responsibility for the overall work
and its quality

That individual sub-contractors are clearly identified, with fee rates and
grades made explicit to the same level of detail as for the members of the
lead consulting team
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Internal relationships between the Contractor and its sub-contractors shall be
the entire responsibility of the Contractor. Failure to meet deadlines or to
deliver work packages by a subcontractor will be attributed by ORR entirely to
the Contractor.
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3. Tender Response & Evaluation criteria
3.1 The Tender Response
The proposals for this project should include an outline of how bidders will meet the
requirement outlined in section (ii) “Statement of Requirement”. The following
information should be included:
a) Understanding of customer's requirements

Demonstrate an understanding of the requirement and overall aims of the
project
b) Approach to customer's requirements

Provide an explanation of the proposed approach and any other views that
the consultants have for managing the review

A project plan to show how outputs and deliverables will be produced within
the required timescales, detailing the resources that will be allocated

Proposed reporting arrangements
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An understanding of the risks, and explain how they would be mitigated to
ensure delivery
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Whether any conflicts or potential conflicts of interest exist
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What support bidders will require from ORR
c) Proposed delivery team

Name of proposed personnel including details of how their key skills,
experience and qualifications align to the delivery of the project, including
summary CVs

Details of similar work previously carried out by the company and proposed
project team

A resource proposal showing details of the expected input per member of the
project team

Project roles and responsibilities
d) Pricing

A fixed fee for the project inclusive of all expense. This should include:
o
A breakdown of the personnel who will be involved with the project
o
Associated charge rates
o Anticipated time inputs that can be reconciled to the fixed fee

Daily rates for any other assistance
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3.2 Evaluation Criteria
Proposals received in response to the ITT will then be evaluated against the criteria
and weightings included in the ITT and a contract will be awarded to the supplier that
provides the most economically advantageous proposal.
Quality Criteria (75%) which consists of the following sub-criteria:
Methodology (25%)
a) Explain the methodology and delivery mechanisms to ensure that the
requirements of this specification are met in terms of quality
b) Explain how your organisation will work in partnership with ORR’s project
manager to ensure that the requirement is met
c) Demonstrate an understanding of the risks, and project dependencies and
explain how they would be mitigated to ensure project delivery
Delivery (15%)
a) Explain how this work will be delivered to timescale and how milestones will
be met, detailing the resources that will be allocated to each stage
b) Explain the resources that will be allocated to delivering the required
outcomes/output, and what other resources can be called upon if required
Relevant skills & knowledge (35%)
The proposal should set out any experience relevant to the project requirement. In
particular, it must:
a) Provide CVs of the consultants who will be delivering the project
b) Highlight relevant experience for this project, submitting examples of similar
projects
Commercial Criteria (25%)
Cost / Value for money (25%)
A fixed fee / fixed day rates for delivery of the project requirement (inclusive of all
expenses), including a full price breakdown for each stage of the project and details
of the day rates that will apply for the lifetime of this project using the following
matrix
Name of
Grade as
Consultant defined
below
Day Rate
£ (max)
Number
of days
Total
£
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Please note that consultancy grades should align with the following definitions:
Grade
Requirement
Junior
consultant
Demonstrable experience in a wide range of projects in their specialist field.
Evidence of client facing experience and support services to wider
consultancy projects.
Notable experience and in-depth knowledge of their specialist field. Evidence
of a wide range of consultancy projects and client facing experience. Support
work in process and organisational design and leading workshops and
events.
Substantial experience in their specialist field and in a consultancy/training
role. Previous experience in project management and working in a wide range
of high quality and relevant projects. Familiarity of the issues/problems facing
public sector organisations.
Substantial experience in their specialist field and in a consultancy/training
role. Sound knowledge of the public sector and current policy and political
issues affecting it. Previous experience in project management on at least
three major projects, preferably in the public sector and using the PRINCE2 or
equivalent method.
Substantial experience in their specialist field and in a consultancy role. In
depth knowledge of the public sector and of current policy and political issues
affecting it. Previous experience in project management on at least 5 major
projects, preferably in the public sector and using PRINCE2 or equivalent
methods.
Extensive experience in their specialist field, in which they are nationally or
internationally renowned as an expert. Extensive experience of leading or
directing major, complex and business critical projects; bringing genuine
strategic insight. In depth knowledge of the public sector and of current policy
and political issues affecting it.
Consultant
Senior
Consultant
Principal
Consultant
Managing
Consultant
Director /
Partner
Marking Scheme for Quality Criteria
Score 0
Unanswered or totally inadequate response to the
requirement. Complete failure to grasp/reflect the core
issues
1
Minimal or poor response to meeting the requirement.
Limited understanding, misses some aspects
3
Good understanding and interpretation of requirements,
providing clear evidence of how the criterion has been met
5
Excellent response fully addressing the requirement and
providing significant additional evidence of how the
criterion has been met and how value would be added
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Marking Scheme for Commercial Criteria
Score 0
Proposed fee above ORR’s Budget
1
Proposed fee represents little value for money with regards
to total costs and number of person days proposed and/or
is in the top quartile of the range of fees proposed by
bidders
3
Proposed fee in or near the middle of the range of fees
proposed by bidders
5
Proposed fee below the middle of the range of fees
proposed by bidders
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4. Procurement procedures
Tendering Timetable
The timescales for the procurement process are as follows:
Element
Timescale
Invitation to tender issued
23 November 2012
Deadline for the submission of clarification questions 30 November 2012
Deadline for submission of proposals
12 December 2012
Interview date
17 December 2012
Award contract#
19 December 2012
Project Inception Meeting*
21 December 2012
*Please ensure that the Project Manager and other key consultants who will be delivering this work are
available to give presentations on the interview date
# estimate
Amendments to ITT document
Any advice of a modification to the ITT will be issued as soon as possible
before the submission date and shall be issued as an addendum to, and shall
be deemed to constitute part of, the Invitation to Tender. If necessary, ORR
shall revise the submission date in order to comply with this requirement.
Clarifications & Queries
Please note that, for audit purposes, any query in connection with the tender
should be submitted via the ORR eTendering portal (www.railreg.bravosolution.co.uk). The response, as well as the nature of the query, will
be notified to all suppliers without disclosing the name of the Supplier who
initiated the query.
Submission Process
Bidders must be uploaded to the ORR eTendering portal no later than the
submission date and time shown above. Proposals uploaded after the closing
date and time may not be accepted. Bidders have the facility to upload later
versions of their proposals until the closing date/time.
Instructions on registering onto the eTendering portal accompany this ITT
Please submit the Form of Tender and Disclaimer certificate along with your
proposal. Failure to submit these documents may render a bid non-compliant.
An evaluation team will evaluate all tenders correctly submitted against the
stated evaluation criteria.
Further information
By issuing this ITT ORR does not undertake to accept the lowest tender, or
part or all of any tender. No part of the tender submitted will be returned to the
supplier
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Bidding costs remain the responsibility of those tendering. This includes any
costs or expenses incurred by the supplier in connection with the preparation
or delivery or in the evaluation of proposal. All details of the proposal,
including prices and rates, are to remain valid for acceptance for a period of
90 days from the tender closing date.
Tender prices must be in Sterling.
References provided as part of the tender will be approached during the
tender stage
Once the contract has been awarded, any additional costs incurred which are
not reflected in the tender submission will not be accepted for payment.
Freedom of Information Act 2000
As a public authority, ORR is subject to the provisions of the Freedom of
Information Act 2000. All information submitted to a public authority may need
to be disclosed by the public authority in response to a request under the Act.
ORR may also decide to include certain information in the publication scheme
which it maintains under the Act. If a bidder considers that any of the
information included in its proposal is commercially sensitive, it should identify
it and explain (in broad terms) what harm may result from disclosure if a
request is received, and the time period applicable to that sensitivity. Bidders
should be aware that even where they have indicated that information is
commercially sensitive, ORR may be required to disclose it under the Act if a
request is received. Bidders should also note that the receipt of any material
marked “confidential” or equivalent by the public authority should not be taken
to mean that the public authority accepts any duty of confidence by virtue of
that marking. If a request is received ORR may also be required to disclose
details of unsuccessful bids.
Please use the following matrix: to list such information:
Para. No.
Description
Applicable exemption under
FOIA 2000
Publication of resultant contract
Please note that from 01/01/2011 all central government departments are
required to publish in full contracts let where the value is above £10,000. As
such, information provided by a winning bidder which is included within the
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contract documentation, if not redacted under a FOIA 2000 exemption, will be
published on www.businesslink.gov.uk
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