With regard to Minute 54 (29 January 2018), Members expressed their dismay that no written report had been submitted for consideration. David Armstrong, Assistant Chief Executive informed that given commercial dialogue was still ongoing on this matter, it had not been feasible to present a definitive update on negotiations regarding the re-commissioning of highways services at this point in time. A member pointed out that the subject matter had only been presented to Councillors by virtue of a Leader decision published on the Council website (29 November 2017).

The Chair asked the Committee if it wished to receive a written report on the subject at a future meeting. This was confirmed. The Chair advised that given the attendance of the Officers, it would be helpful to Members to receive a verbal report on the background to the re-commissioning of highways services in advance of receipt of the written report.

The Assistant Chief Executive introduced the item and informed that the current contract valued at £6m p.a. (£5m p.a. of which would be contracted out, as at present) was due to end in October 2018 and impacted on 29 staff.

Mr Mark Smith, Strategic Commissioner Environment then addressed the Audit and Risk Management Committee and informed that the Council and contractor Bam Nuttall (BAMN) had recently agreed that the current strategic contract for Highway services would come to an end on 30th September 2018 after one six month extension to the original four year contract that had commenced in April 2014. 

As a result, there had been a limited period of time to re-commission these services and an options appraisal exercise using the Highway Maintenance Efficiency Programme (HMEP) Procurement Route Choices Toolkit indicated the most viable way forward was to bring these services back under the direct control of the Council.

For these reasons, re-commissioning of these services, including the commencement of the necessary procurement processes, was based on a ‘direct control/ ownership’ model.  The most viable approach was for the contracted service to transfer back under Council control. 

The Audit and Risk Management Committee was informed that there were no changes to service policies or standards associated with the re-commissioning of these services however the matter was considered to be a Key Decision based on financial value (BAMN contract around £6m p.a.) and being delivered across all Wards. The decision had been published (subject to call-in) in November 2017.

Members were apprised that commencement of the necessary procurement processes and market engagement had been necessary to ensure service delivery arrangements were in place for October 2018 when the current contract arrangement expired.  This was especially important for the day-to-day routine work such as pothole and street lighting repairs that ensured the Council met its statutory obligations as Highway Authority. 

The proposed model for re-commissioning the services involved the operational functions currently executed by contractor Bam Nuttall (BAMN) being brought back under the direct control of the Council.  Client functions would continue to be discharged by staff in Highways Management (Commissioning Support Unit) as they are now, however the Strategic Outline Case process suggested contracting functions could be either brought into the Council’s organisational structure in the traditional manner (ie. they would become part of Delivery Services)

The value of the current contract was around £6m p.a. consisting of approximately £1m p.a. revenue for Routine/ Reactive Works and £5m p.a. capital for Structural/ Planned Works. 

In terms of staffing, 29 BAM employees were being reassured that the service would continue in some form following the 30 September 2018 when the current arrangements ceased and that the Transfer of Undertakings and Protection of Employment (TUPE) Regulations would apply to those that may be affected – n.b. staff on the ‘client’ side (Commissioning Support Unit) were not directly affected by this re-commissioning exercise.

The Strategic Commissioner Environment informed the Audit and Risk Management Committee that, once confirmed, the Business Case was to be the subject of a report and Leader decision as scheduled on the Council’s Forward Plan and that the subject was also listed on the Business Overview and Scrutiny Committee Work Programme as a matter for pre-decision scrutiny.

Members questioned the Strategic Commissioner Environment on a number of areas regarding the contract, staffing, service delivery, quality and programming of works.

A Member requested that the issue also be subject of an additional entry in the Council’s Risk Register. This was challenged by the Chair and on a show of hands the request to include the issue on the Council’s Risk Register was carried eight votes to one.

Members re-affirmed their request that the Audit and Risk Management Committee receive a written report at its July 2018 meeting.

Resolved – Committee wish to be satisfied by way of written report that procedures are in place to ensure full preparation for transfer i.e. costings are in place for plant, equipment, materials, adequate supervision and management resources; and that the issue be subject of an additional entry in the risk register.