PAPER E

Purpose: for Decision

REPORT TO THE EXECUTIVE

Date : 10 SEPTEMBER 2003

Title : PUBLIC CONVENIENCE CLEANSING AND MINOR MAINTENANCE CONTRACT

REPORT OF THE PORTFOLIO HOLDER FOR SUSTAINABLE DEVELOPMENT, ENVIRONMENT AND PLANNING POLICY

IMPLEMENTATION DATE : 22 September 2003

SUMMARY/PURPOSE

1. To make a decision in relation to the award of the Public Convenience Cleansing and Minor Maintenance Contract.

BACKGROUND

2. The Council’s current Islandwide Public Convenience Cleansing contract commenced in November 1998. The contract covers the cleansing and minor maintenance of 77 public conveniences located throughout the Island. The contract was awarded to Coastline Cleaning Company, based on the most economically advantageous tender received. The contract length was for five years with an ability written into the contract to extend the term by up to one year. The contract is now in its fifth year and terminates on 2^nd November 2003. The option to extend by up to one year was not taken up.

3. To allow a new contract to commence on 2nd November 2003, procedures have been followed in accordance with the Council’s ‘Best Practice Guide to the Process of Contract Letting‘ and in particular the European Union Procurement legislation. Tenders were invited from a select list of 6 contractors who met Financial, Health and Safety and other criteria following receipt of 8 expressions of interest questionnaires. Tenderers were required to submit tenders for both a three and six-year term, with the potential for a maximum of a three year extension. A total of 4 tenders were received for which detailed tender analyses have been prepared. A précis is given below.

Contractor	Tender Total - 3 Year Contract	Tender Total - 6 year Contract
Contractor A.	278,327.03	263,282.03
Contractor B	309,303.21	309,303.21
Contractor C	354,297.11	354,297.11
Contractor D	441,333.82	422,382.60

4. Each tenderer also provided the level of resources to be deployed on the contract and which would form part of the tender evaluation exercise. The following is a summary of the time and operatives to be deployed on the contract for the various parts of the year (Winter, Summer, Peak Summer):

Contractor	Winter	Summer	Peak Summer
Contractor A.	1 Sup,5 F/T, 4 P/T 289 Hours P/W	1 Sup, 5 F/T, 6 P/T 395 Hours P/W	1 Sup,7 F/T 6 P/T 505 Hours P/W
Contractor B	2 Sup,5F/T 3 P/T 382 Hours PW	2 Sup, 7 F/T 2 P/T 466 Hours PW	2 Sup, 12 F/T 2 P/T 739 Hours PW
Contractor C	1 Sup,5 F/T 2 P/T 232 Hours PW	1 Sup,7 F/T 3 P/T 340 Hours PW	1 Sup,8 F/T 6 P/T 562 Hours PW
Contractor D	3 Sup,4 F/T 4 P/T 340 Hours PW	3 Sup,9 F/T 4 P/T 589 Hours PW	4 Sup,10 F/T 4 P/T 628 Hours PW

5. The above times do not include for head office time but do include for overtime and additional time to cover special events that are specifically referred to in the new contract.

6. As stated above, contractors were asked to provide alternative tenders for both a three year and six year contract period. Although the service is predominantly labour based this gave the opportunity for each Contractor to consider maximising capital investment in plant and equipment to maintain a high level of service. Only Contractors A & B have indicated that there would be a reduction in the annual cost of the service if awarded a six year contract instead of a three year contract at the outset. Contractor A submitted the lowest tender for both contract periods tendered.

7. Following the Environment and Transport Select Committee away day on 1^st August 2001, members agreed to consider and explore options for the future provision of public conveniences across the Island. For this purpose a Task Group was set up to consider the issues and report back to the select committee.

The select committee last received an update report from the task group on 26^th September 2002.

8. The work of the task group is ongoing and has focused on various areas where there is clearly:

Ø Duplication of facilities by geographical proximity

Ø Where toilets could be offered to town or parish councils or other authorised bodies

Ø Where it can be demonstrated that facilities are underutilized

Ø Where toilets are beyond economic upgrading or repair

Ø Where there are specific concerns as to their long-term viability

9. Although the work of the task group is ongoing a number of potential public conveniences have been identified which could either be closed or transferred as a result of applying the above criteria. This reduced the number of public conveniences to 68. Whilst a number of public conveniences have been closed or transferred under separate arrangements and have not been included within the tender process, 9 other public conveniences were omitted on the basis of potentially being closed or transferred. The above tender totals therefore do not include for these.

10. Until a firm decision is made on the future of these public conveniences, and the work of the task group is concluded and any recommendations approved, the additional cost of including the 9 public conveniences omitted from the tender process need to be added back in. Based on the lowest tender received this will add a further £12,000 to the cost. Therefore for Contractor A the revised tender totals would be as follows. Similar amounts would be added to the other contractor’s tenders and would not affect the order of tenders received.

Contractor	Tender Total - 3 Year Contract	Tender Total - 6 year Contract
Contractor A	290,327.03	275,282.03

11. The tenders also include a contingency allowance of 2% of the tender total that provides scope to vary the levels of service to be provided. In addition the new contract allows for variations of 15% in either cost, number of public conveniences cleansed, floor areas cleansed etc without the need to renegotiate rates or the contract. This flexibility allows for the potential transfer / closure programme of toilets currently envisaged.

12. As in the previous contract, cleansing frequencies are based on winter, summer and peak summer frequencies, with a number of public conveniences being closed during the winter period. The frequencies are based on the ability to maintain a good level of cleanliness. Additional cleansing is also provided for key events, including Cowes Week. The contingency allowance does allow some flexibility to carry out additional cleansing when required. Incorporated within the tender is also a locking and unlocking service.

13.An assessment of delivery options was considered prior to undertaking the procurement exercise. Given the existing stock of public conveniences, the slow and phased programme of rationalisation and the health and safety, crime and disorder and asset management consequences of ceasing to maintain to at least minimum standards, ceasing maintenance was not seriously considered.

14. As stated above, initiatives are under way to find partners able to take on responsibility for individual units. This will only represent a limited and gradual diminishing of the burden that falls upon the local authority. This trend is anticipated by building in variation to service volumes without penalty.

15. In house provision was not pursued as an option. Given the well established market for commercial provision of these services, in house provision would have to be the result of a competitive process and it is unlikely that an in house bid would be commercially competitive. In addition it was concluded that there are avoidable significant risks involved with carrying out the service in house due to the labour intensive nature. With respect to partnering, the Executive have already taken a decision to pilot this approach initially in Schools Maintenance and is not current policy to undertake partnering in this service area until that pilot has been evaluated.

16. Although future consideration could be made for aggregation with office and beach cleaning, the timing of the letting of these contracts has not coincided, preventing aggregation in this cycle.

STRATEGIC CONTEXT

17. Public Convenience Cleansing is consistent with the strategic objectives contained within the corporate plan and in particular: -

Improving health, housing and the quality of life.

Protecting the Islands natural environment.

In addition, other supplementary objectives are addressed: -

Promoting health and wellbeing.

Promoting independence.

Social inclusion.

Improving access to services.

Targeting greatest need.

A responsive Council.

Raising the image and profile of the Island.

CONSULTATION

18. Extensive consultation has been undertaken both through the Town and Parish Protocol, and the Environment and Transport Select Committee Task group work in respect of public convenience provision and cleansing standards. Consultation has also taken place with disabled groups. This process is ongoing as part of the Task Groups deliberations.

FINANCIAL/BUDGET IMPLICATIONS

19.The current annual cost of the service included in the budget for 2003 - 04 is £238,750. Inflation will raise this to £244,750 in the budget for 2004 – 05. If the tendered specification service is adopted and the contract awarded to Contractor A for an initial 6 year period, as recommended, then the annual cost would increase to £263,282 and produce a current annual budget deficit of £24,532. If the 9 public conveniences omitted from the original tender are reinstated the annual cost of the service would increase to £275,282.03, and produce a budget deficit of £36,532. If the contract is awarded to Contractor A for an initial 3 year period for the tendered specification the annual cost would increase to £278,327 producing a budget deficit of £39,577. This deficit would increase to £51,577 if the 9 public conveniences omitted from the original tender were reinstated.

20. For both initial contract periods the stated sums will increase by the Retail Price Index (RPI) on an annual basis.

Items within the contract, which would significantly affect the tendered sum, are summarised below: £

Reduce the Summer cleansing frequency to same as Winter 25,594

Delete the locking and unlocking Service 15,473

21. Without a locking/unlocking service this will likely result in an increase in vandalism and associated maintenance costs. Previous experience has indicated that this is the case although cause and effect are difficult to measure and quantify.

LEGAL IMPLICATIONS

22. The power to provide public conveniences is created by the Public Health Act 1936 as amended by the Local Government Act 1972. Tendering has proceeded on the basis that the TUPE Regulations will potentially apply, the existing contractor being responsible for workforce consultation.

OPTIONS

1) To Award the contract to Contractor A for all 77 public conveniences for: -

i) A three year term costing £ 290,327

ii) A six year term costing £ 275,282

Subject to additional funding being made available corporately.

2) To close the 9 identified public conveniences not included in the tender before 2^nd November 2003 and award the contract for 68 conveniences to Contractor A for:-

i) A three year contract costing £ 278,327

ii) A six year contract costing £ 263,282

Subject to additional funding being made available corporately.

3) To reduce the level of cleaning to Winter frequencies for the Summer period and to include the Peak Summer frequency enhancements for all 77 public conveniences and award the contract to Contractor A for:-

i) A three year contract costing £ 250,718

ii) A six year contract costing £ 237,176

Subject to additional funding being made available corporately for 3(i).

4) To negotiate a Service Level Agreement on the best possible terms with the shortlisted contractors for a budgeted sum of £244,750 per annum for: -

i) A three year period.

ii) A six year period.

5) To negotiate with the existing contractor to extend the current contract for a further 6 or12 months.

EVALUATION/RISK MANAGEMENT

23.In the current financial climate it is not viable to pursue an option with a cost in excess of budgeted cost without identifying other services that can be cut to accommodate the additional cost. The viable options are, therefore limited to:

i. 3(ii) a six year contract with contractor as set out in option 3(ii)

ii. negotiating a service level to a fixed price, as in option 4, or

iii. negotiating an extension to the existing contract to allow for future levels to be clarified, and for service planning and budgeting processes to be completed.

24. The length of contract is significant in assessing risk. In a labour intensive, competitive industry, in relation to a service with a planned reduction in volume in development and the potential for aggregation with other contracted services, a six year contract would normally be inimical to demonstrating best value

25. Two of the tenders received indicate that an annual cost saving of up to £15,000 can be achieved if a longer contract is let. Assuming consistent service levels it appears that an aggregate saving of up to £90,000 may accrue over a six year period.

26. In the context of negotiation for the service to a fixed fee, the aggregate savings for the letting of a longer contract term can be expected to manifest themselves as additional service elements.

27. Under a longer contractual period the inability to reduce the service, or to take the advantages in reductions in cost, creates additional risk to the authority. The ability to procure the service on a radically different basis also postponed for six years.

28. It can be safely asserted that the costs of providing labour intensive services is unlikely to decrease significantly over the next six years, so the greatest element of risk is the inability to change service levels, or to procure through other means (including aggregation or development of partnerships).

29. If option (5) is accepted, then the existing contractor may well seek to raise his rates as he has already been informed in writing that the Council did not wish to

exercise that option.

30. If option (3) i) or (3) ii) is accepted then this represents a significant cut in the current level of service and there is likely to be a significant increase in complaints, particularly during the summer period.

RECOMMENDATIONS

That the Head of Engineering Services, in consultation with the Portfolio Holder, be given a specific delegation to pursue and agree a contract under whichever of options 3 (ii), 4) ii), or 5, delivers as closely as possible the objectives of the original specification.

BACKGROUND PAPERS

Specification and invitation to tender

Tenders (exempt from disclosure under paragraph 8 and 9 of schedule 12 Local Government Act 1972)

Contact Point : Steve Boswell 01983 823732 email: [email protected]

STEVE MATTHEWS Head of Engineering Services

T M BUTCHERS Portfolio Holder for Sustainable Development, Environment and Planning Policy