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SPECIFICATION
Tender for administration of a Business Improvement Districts (BID) Recyclable
Loan Fund
1. Introduction
This specification invites responses from Tenderers wishing to administer a recyclable
loan fund under the Department for Communities and Local Government’s (DCLG)
support programme to revitalise High Streets.
A fund of £500,000 will be made available for a recyclable loan fund to offer loans to
help Business Improvement Districts (BIDs) get established. The successful contractor
will manage the fund: this will include both the assessment of applications and the
management and administration of the loan fund, which the Contractor will be able to
charge DCLG for.
We are therefore seeking proposals from Tenderers that can demonstrate the necessary
expertise and experience to set up and operate a recyclable fund, and have the
necessary skills to assess the suitability and financial viability of organisations coming
forward with new BID proposals. Details of what should be included in Tenderers
proposals are listed in Section 7 of the Invitation to Tender (ITT) document and Section
5 of this Specification.
2. Background
Mary Portas was commissioned by the Prime Minister in May 2011 to undertake a
review of the high street. In its response to the Portas Review, Government announced
a £500,000 investment to help ‘BIDs access loans for their set-up costs’.
There are currently around 120 BIDs across the UK. A BID enables businesses to come
together to fund projects that address specific common problems and improve the local
trading environment. BIDs can be established in any commercial area (where there are
non-domestic ratepayers). They charge a levy on local businesses (on top of business
rates) and these funds are reinvested to deliver agreed improvements in the local trading
environment – thus increasing trade or making it easier to trade in that area.
Examples of the kinds of projects that BIDs can deliver include projects to improve traffic
flow or parking, increased policing or street cleansing, improvements in the management
of business waste, the provision of shared facilities such as area-wide WiFi, and local
area branding or marketing campaigns.
BIDs are only formed following a successful ballot of businesses in the BID area. More
than 50% of businesses that vote in the ballot must be in favour. BIDs are operational for
a fixed term, often between 2-5 years, following which they need to undertake another
ballot.
The Government recognises that the development of new BIDs requires significant up
front expenditure, for example, to employ dedicated staff to prepare a business plan for
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the BID, for publicity materials and for engagement with businesses to help ensure a
positive result at ballot. To facilitate the setting up of more BIDs, the Government is
making available up to £500,000 for a recyclable loan fund.
Loans of any amount up to £50,000 are to be offered to BID developers who are able to
evidence preliminary details about their proposals towards becoming a BID, for example,
Eligibility Criteria could include:
 Location – BID area map and description of the area
 Demonstration by the BID of an ability to serve the general public interest in its
activities
 Consultation process – summary of consultation undertaken by the BID
 Strategic overview – ensure BID proposals are not detrimental to other local
plans
 Timings – details of duration of BID arrangements
 Governance – composition of the Board
 BID levy - details of estimated level and who will pay
 Finances – estimated cash flow and operating budget
 Service level agreements – baseline of services provided
Based on the above, Tenderers will be required to indicate in their responses what the
minimum level of detail an applicant should provide to ensure only organisations with
genuine aspirations to form a BID will apply.
3. Scope
The Contractor will be expected to deliver the following:
3.1 Publicity
The Contractor will need to ensure that potential Loan Applicants have access (e.g. via a
website) to details of the loan fund and how it operates. The Department anticipate that
the Contractor may use existing networks to publicise the availability of the loan fund,
but may specify any costs they consider necessary to advertise the availability of the
Loan Fund.
3.2 Financial and Administrative Structures
The Contractor will be expected to set up all the financial and administrative structures
necessary to operate a £500,000 loan fund. The Contractor can offer successful loan
applicants with expert advice on BID development (although the organisation will be free
to choose from other sources of advice). Please note that the costs of the expert advice
must not be taken from the recyclable fund but must be charged separately to the BID.
3.3 Loan Assessment, Eligibility Criteria and Award
Loans of any amount up to £50,000 are to be offered to BID developers who are able to
evidence preliminary details about their proposals towards becoming a BID. For
example, eligibility could include:
 Location – BID area map and description of the area
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Demonstration by the BID of an ability to serve the general public interest in its
activities
Consultation process – summary of consultation undertaken by the BID
Strategic overview – ensure BID proposals are not detrimental to other local
plans
Timings – details of duration of BID arrangements
Governance – composition of the Board
BID levy - details of estimated level and who will pay
Finances – estimated cash flow and operating budget
Service level agreements – baseline of services provided
Tenderers will be required to define and set appropriate eligibility criteria to entitle a BID
to access a loan. The objective Eligibility Criteria will be agreed with DCLG and the
Preferred Supplier prior to the signing of the Contract. If the proposed BID does not meet
the Eligibility Criteria then the Contractor will not assess the proposal and no cost shall
be incurred by DCLG.
Once the Contractor has assessed Loan Applications the Contractor will make
recommendations to the DCLG Contract Manager as to which Loan Applications are to
be awarded on a monthly basis. The DCLG Contract Manager will respond within 5
working days as to whether the recommendations have been accepted. For the
avoidance of doubt loans should not be awarded until the DCLG Contract Manager has
approved the monthly report. It would be expected that contractors due diligence would
pick up any real concerns.
3.4 Loan Administration
The Contractor will be required to disseminate loans to organisations assessed as
eligible and to which the DCLG Contract Manager has agreed should be awarded. It will
also be the Contractor’s responsibility to monitor the loans and ensure they are being
used for their intended purpose, setting out the processes and procedures required to
ensure any misuse is picked up at an early stage and how this will be reported to the
DCLG Contract Manager.
The Contractor will be required to provide a monthly highlight report to DCLG on the
number of expressions of interest, Loan Applications in process, Loans recommended or
rejected (subject to the DCLG Contract Manager’s approval), and the administrative
costs incurred as well as current size of the Loan Portfolio.
Any interest accrued from monies given out by DCLG must be added to the available
pot. Repayments must also be added to this available pot. The money cannot be
reinvested and can only be used for the sole purposes of delivering the loan fund.
The interest rate set will ensure the real value of the pot does not diminish over time.
Nominally this should be set at 1% above the rate of inflation at the time of administering
the loan.
The Contractor is responsible for agreeing repayment terms with applicants taking into
account their expected income, but all repayments must be made before the end of the
contract. All monies including interest will need to be gathered in from the BIDs by the
end of the contract.
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The Department reserves the right to recover all monies from the Contractor on
termination of contract.
3.5 Loan Recovery
The Contractor will be required to have re-collection procedures that are robust and
workable, and make it easy for organisations to repay their loans. The Contractor will
need to ensure that the proposed approach ensures the maximum likelihood or
recovering the money as well as the interest that has accrued.
3.6 Implementation
The Delivery Agent is expected to begin offering loans from September 2013 and the
contract will run until September 2018 with the option to extend.
Key dates:
 Award of contract and inception meeting – August 2013
 Progress meetings to be agreed with Contractor on signing of contract
 Loan fund ready to launch – September 2013
3.7 Loan Fund and Costs
The costs incurred by the Contractor for assessing the viability of organisations, who
pass the Eligibility Criteria will be met by DCLG.
Payments from DCLG to the Contractor will be taken from the overall £500,000 fund.
Payments to meet the Contractors quarterly Administration Costs will be subject to
approval from DCLG following submission of a quarterly report. Payments for
Administration Costs will be made quarterly in arrears. Funds for the loans will be paid
quarterly in advance as a grant payment to the Contractor. Any Set Up Costs will also be
met from the Loan Fund but these are expected to be minimal as the Contractor will
likely have similar operations already in place.
Following the necessary consideration of a successful BID, the Contractor will make a
decision to offer a loan of any amount up to a maximum of £50,000 per BID.
DCLG will pay Administration Costs to the Contractor until April 2015 but from this point
onwards the Contractor will hold the entire Loan Portfolio and would need to take its
Administration Costs out of the Loan Portfolio as the rates set out within the Contract.
The contract will last for 5 years. The supplier will need to ensure that all loans are
repaid before the end of the contract (September 2018). The supplier will need to decide
when to stop providing loans to applicants in order to allow reasonable time for
recollection. There will be a break point in March 2016 where DCLG can decide to
terminate the contract if there is insufficient interest.
A decision will be made in September 2018 about what to do with the outstanding
recyclable fund – with the options including an extension for a maximum of 2 years to
the contract to 2020 on similar terms to the original or DCLG taking up their right to
recover all monies from the Contractor on termination of contract.
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Key dates:
August 2013 – supplier appointed
March 2016 – break clause
September 2018 – contract will end but with option to extend
September 2020 – end of contract
The work will be located with the Contractor and the Contractor will provide all necessary
facilities (i.e. in the Contractor’s offices).
The contractor should have all appropriate licences, authorisations and permissions to
carry out the activities set out in the proposal in accordance with legal requirements.
4. Objectives
The over-arching objective of the BID loan fund is to:
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increase the number of new BIDs by offering low cost loans to BID developers
who have a good prospect of achieving a successful ballot; and
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minimise risks of unsuccessful ballots and loan defaults (e.g. through setting
eligibility and loan application assessment criteria).
5. Award Criteria
Bidders will be expected to provide details of how they will deliver this requirement, the
proposal will need to provide the bidders’ approach to all of the following aspects:
1. Understanding of the Requirement. Tenderers should provide a diagrammatic
representation, supported by an executive summary of their proposed Scheme
structure which provides an overview of all the elements of the Scheme. (This
diagram can be referred back to in the rest of the tender if required to illustrate
responses further). Tenderers, (within the tender as a whole) should also clearly
address all requirements necessary for operation of the Scheme). Maximum of 2
sides of A4. (Assessed under the ‘Understanding of the Requirement’ evaluation
criterion of Annex F).
2. Quality of Award process. Tenderers should set out their overall assessment and
award processes (as referenced in Section 3.3) ensuring that that the proposed
Eligibility Criteria identifies BIDs that are sufficiently advanced in the BID
development process. DCLG considers ‘sufficiently advanced’ as meaning those
who are able to provide details about their proposals, for example the type and
structure of the BID, the project and services the BID is looking to offer, the BID
area, how the BID will be accountable to the local businesses, and an initial
indication from businesses in the area that there is a good prospect of a
successful ballot.
Tenderers should also clearly set out how they will only assess BIDs that have
reached a minimum criteria and how they will ensure that DCLG will only pay for
assessments that have reached that criteria. (Assessed under the ‘Quality of
Award process’ evaluation criterion of Annex F).
3. Quality of Loan Administration. Tenderers should set out how they will manage
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the overall Loan Fund including (as set out in Section 3.4):
 protect against fraudulent applications and mis-use of public money;
 monitor performance of each loan and ensure delivery of stated
objectives.
 demonstrate having adequate banking arrangements in place; and
 have all the appropriate licences, authorisations and permissions to carry
out the activities set out in the proposal in accordance with legal
requirements.
(Assessed under the ‘Quality of Loan Administration’ evaluation criterion of Annex F).
4. Quality of payment recovery. Tenderers should set out how (as set out in Section
3.5) they will put in place re-collection and recovery procedures that are robust
and workable. Tenderers will need to set out how the proposed approach
guarantees ease of payment at the end of loans as well as the maximum the
likelihood or recovering money should the loans be subject to misuse or default.
(Assessed under the ‘Quality of payment recovery’ evaluation criterion of Annex
F).
5. Quality of Project Management. Tenderers should detail their proposed
management procedures to demonstrate effective administration of the Contract
including
i.
team communications.
ii.
quality assurance
iii.
issue resolution
iv.
reporting and reviews
v.
risk management
vi.
how the required skill sets will be maintained for duration of the Scheme.
(Assessed under the ‘Quality of project management’ evaluation criterion of
Annex F).
6. Quality of Delivery Team. Tenderers should provide details of the delivery team,
which is to include the number of roles, a description of each role, and the
responsibilities of each role and how the team will be managed as well as the
required skill set being in place for the duration of the Contract. (Assessed under
the ‘Quality of delivery team evaluation criterion of Annex F).
7. Implementation. Tenderers should set out their approach to set up to ensure the
Loan Fund will be operational by September 2013. (Assessed under the
‘Implementation’ evaluation criterion of Annex F).
8. Publicity and Marketing. Tenderers should describe their proposed publicity and
marketing methods to be used once the scheme goes live, including the
audience they are aimed at. Tenderers should also provide details of any
additional publicity or marketing you propose to undertake prior to go live.
(Assessed under ‘Publicity and Marketing’ evaluation criterion of Annex F).
9. Costs. Tenderers should detail their Set Up and Administration Costs. (Assessed
under the ‘Price Set Up’ and ‘Price Ongoing’ evaluation criterion of Annex F
using the OGC Most Economically Advantageous Tender (MEAT) methodology.
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10. Risk. Tenderers should set out the percentage of administration payment (set out
in Annex C, Table C) that is dependent on successful recovery of the loan. The
percentage of your overall payment dependent on recovery will be used in
calculating your total score for this section. If 80% of the costs set out in Annex
C, Table C are not payable until successful recovery of the loan then this will
7. Payment
The Delivery Agent will be paid at quarterly intervals as specified in the contract,
following submission of financial reports.
8. Contract management arrangements
 The contract manager is Mark Holder. There will be support from Sue Cave
(Procurement) and C Bowden (Finance) as necessary.
 Timings of reports are monthly. Format of reports to be suggested by contractor
but should include, as a minimum:
o Numbers of expressions of interest.
o Loan applications in progress.
o Current overall value of fund.
o Progress of BIDs in receipt of loan
o Status of loan repayments.
9. End of contract (optional)
All materials prepared for administering and assessing loans will be the property of
DCLG at the end of the contract. A decision will be made about any remaining funds and
outstanding loans prior to the end of the contract. The Department reserves the right to
recover all monies within the Loan Fund from the Contractor on termination of contract.
Annex A: PROCESS INVOLVED IN A SUCCESSFUL BID
1. BID comes forward with proposal
2. Contractor assesses BIDs against criteria
3. BID application recommended/rejected for Loan
4. Contractor informs DCLG monthly of recommendations
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5. DCLG provides Loan amount required to Contractor
6. Contractor provides BID with loan amount / agrees loan repayments
7. Loan is re-collected after x period
8. Money is re-invested into recyclable pot
9. Process re-starts for another BID when required
Glossary
Administration Costs. Costs payable to the Contractor for assessment, award and
administration of Loans.
Contractor. The successful bidder
Eligibility Criteria. The criteria that potential BIDs must reach before the Contractor will assess.
Loans. The sum awarded to successful Loan Applicants.
Loan Applicants. The potential BIDs seeking Loans.
Loan Applications. The application received by the Contractor from potential BIDs.
Loan Fund. The £500,000 (which will vary dependent on interest, loans etc) fund from which
Loans, Administration Costs and Set-Up Costs must be met.
Tenderers. Organisations bidding for this contract to provide the administration of a Business
Improvement Districts (BID) Recyclable Loan Fund
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