Parks and Countryside Services Procurement Exercise (PACSPE)
- Meeting of Cabinet, Thursday, 22nd September 2011 6.15 p.m. (Item 117.)
- View the background to item 117.
The Director of Technical Services advised Cabinet of the outcome of the recent Parks & Countryside Services Procurement Exercise (PACSPE). The PACSPE timetable envisaged a contract being let to commence on 2 January 2012. This was the culmination of a process that was instigated by a Cabinet decision in June 2008.
The tenders submitted had been evaluated against a combination of price and quality and a preferred external provider identified based on the results of the tender evaluation exercise.
Following the July 2010 Cabinet decision that no in-house bid should be submitted as part of the PACSPE process, Cabinet had no in-house bid to compare with the proposals from the external tenderers. However, it would be appropriate for Cabinet to consider the possibility of not accepting any tender and Members would need to consider all the risks of awarding, or not awarding, the contract and the report set out those risks.
The key issues for Members to consider when taking this decision were:
- Service quality; and the deliverability of service quality improvement over the proposed 10-year contract period.
- Cost and affordability having regard to the proposed 10-year contract period; and the likely effects of inflation.
- The financial climate in which the Council would be operating over future years and the identified need to save in excess of £85 million over the next 3 years.
- The comments of the External Auditor on value for money in relation to PACSPE, following their analysis of the benefits delivered by the Highways and Engineering Services Procurement Exercise (‘HESPE’).
- The risks associated with either letting or not letting a contract and the overarching legal obligation on a local authority to act reasonably.
- If a contract is to be let, the selection of the winning tender.
The details of the tender evaluation and options set out in the Appendices to the report contained legal advice and commercially sensitive information relating to the Council and the tenderers. The Director of Law, HR and Asset Management had advised that this should be classed as Exempt Information in accordance with paragraphs 3 and 5 of Part 1 of Schedule 12A of the Local Government Act 1972.
Councillor C Meaden thanked everyone from the Parks and Countryside Services who were in attendance at the meeting. The Leader of the Council added his thanks and expressed his appreciation and faith in the Council’s workforce in the Parks and Countryside Service. He remarked that the parks and open spaces within the Borough were highly valued by the public.
On a motion by Councillor Meaden, seconded by the Leader, it was -
Resolved - This Cabinet notes that:
(1) The District Auditor has recently stated his intention to qualify the Value for Money statement in the Council’s Annual Governance Report, which is due to be published shortly, drawing attention to “weaknesses identified in the arrangements for securing value for money in respect of the HESPE contract”.
(2) A qualification of this kind is highly unusual and significant.
(3) This was because the Council was unable to provide sufficient information on pre and post contract activity levels, service quality and performance management to be able to demonstrate that letting the HESPE contract has resulted in improved value for the money being spent.
(4) No in house bid was allowed as part of the tendering process, and no direct comparator costs with the tender specifications were drawn up to act as a “yardstick” against which to evaluate any tender.
(5) The District Auditor has advised “there are risks in letting a 10 year contract if there is only very limited information on the costs and activities levels of the existing service and Members should be made aware of this increased risk. This is because there is nothing to monitor against when assessing whether or not letting the contract has delivered better value for money”.
(6) Again, it is highly unusual and significant for this kind of warning to be issued.
(7) Although it is recognised that several processes were followed before taking the decision to put the Parks and Countryside services out to tender, these processes are ultimately dependent on the quality of data they receive in the first place.
(8) The Council has also just received a highly critical independent report on its Corporate Governance Arrangements which, amongst other things, refers generally to “not being able to commission, manage and, where necessary, dismiss failing contractors and suppliers”.
(9) The difference in cost between the current Council budget and the preferred tenderer is sufficiently marginal for that difference to be eroded over a period of three years by the contractual cost of inflation at current rates of CPI, less any contractually agreed efficiency savings.
(10) At these rates, over the ten year life time of the contract, for every £1m value of the contract, inflation would increase the £10m cost to £11.46m. Over the following seven years the continued impact of the contractual inflation provision would be likely to work to the Council’s disadvantage at a time when the Council is being required substantially to reduce its annual expenditure.
(11) Further savings from value engineering to set against these increases are subject to negotiation and cannot be guaranteed.
(12) In the current severe economic climate, Local Authorities are facing unprecedented levels of reduction in their funding and Wirral needs to save in excess of £85million over the next three years. Maximum flexibility will be needed in this context to continue to provide good quality services within limited resources. By its very nature, a ten year contract will limit this maximum flexibility, even with levels of flexibility built into the contract, because such flexibility will be likely to come at a cost to the Council.
In the light of the above, Cabinet does not believe it would be in the Council’s best interests to let this contract to an external contractor and agrees to retain these services in house.
Cabinet recognises, however, that it is essential to improve the quality of services provided in a sustainable way, within the budget provided, and that to do so will mean substantial improvements in management and working practices and some capital investment to assist in achieving efficiencies.
Cabinet therefore asks the Director of Technical Services to report back to Cabinet in November with a detailed three to five year Business Plan demonstrating how this will be achieved.
As part of this Business Plan Cabinet wishes to see an explanation of how the collection and analysis of detailed cost data and other information will be improved to assist in the proper monitoring of the activities within the remit of the Business Plan.
Cabinet has every confidence in the skills and abilities of its workforce and their commitment to the services they provide, and is confident that, with proper support and good management, they will co-operate fully in delivering an excellent, high quality service for the people of Wirral in the future.
Cabinet confirms that, in response to the criticisms outlined above and elsewhere on this agenda, it is totally committed to transforming the Council’s Corporate Governance arrangements in order to prevent any such situations arising again.