6.
The provision of subsidy for the operation of
non-commercial bus services will
assist in generating greater use of public transport. This is wholly in
accord with the targets and objectives set out in the Council’s Local Transport
Plan and in particular supports the Community Strategy and the Corporate Plan.
The Local Transport Plan (LTP) seeks
·
To provide real alternatives for car users by
increasing transport choice and
·
To provide and promote safe, reliable and acceptably
priced public transport
One of the principal LTP targets set is to increase public
transport patronage
The objectives of this exercise are:
i: To maintain the existing
network, thereby reflecting views expressed in public consultation
ii: To increase patronage of bus
services – for social inclusion and traffic management purposes
iii. To stimulate a competitive
market to help deliver best value
The network proposed by the subsidised service contracts reflects the
responses.
CONSULTATION
7.
The following were consulted prior to the tendering
process:
Members of the Isle of Wight Council, all Parish
and Town Councils, local bus operators, IW Bus Users Group, LIFT Isle of Wight,
Older Voices, Isle of Wight Youth Council, Quality Transport Partnership,
Community Forums and Partnerships, Ryde Development Trust, North Medina
Development Trust, West Wight Local Transport Action Group
The great majority of
those who responded to the consultation said that they supported retention of
the existing network. These views were reflected in the specification for the
subsidised services contracts.
A small number of
respondents also called for Wightbus to undertake a greater role in the
provision of local bus services.
PROCUREMENT
PROCESS
8.
The procurement process is described below in terms of
the Council’s Strategic Procurement Policy –
but did not follow that policy in it’s entirety as, although of significant
value in financial and service terms, the procurement of subsidised bus
services is not in the highest categories of value or risk to which the full
rigour of the policy applies. Furthermore, the method of procurement is
substantially determined by the terms of the Transport Act 1985.
9.
The consultation set out in paragraphs
7 influenced the adoption of the objectives set out in paragraph 6. The consultation exercise supported
the maintenance and incremental development of the current network and a
decision was taken, in order to demonstrate best value (particularly in
stimulating the market) to undertake an open tendering exercise.
10.
This decision effectively rolled together the first
three gateway reviews required in a strategic procurement which ensure the
services being procured demonstrate strategic fit, require the development of a
business plan and determination of which procurement mechanism to follow.
11.
Invitations to tender against a detailed specification
were advertised in March and April 2004 in the local press, in the national
trade press and in the Official Journal of the European Communities.
12.
Two tenders were returned from Southern Vectis and
Wightbus. The decision to submit a bid from the
internal provider of public transport was taken by the Wightbus manager at the direction
of the Head of Engineering Services in order to stimulate a more competitive
market and in reaction to consultation responses. In order to ensure fair
competition, the tenders submitted by Wightbus were not made with reference to
client-side officers. Therefore the content and costings in the Wightbus tender
were not revealed until the tender deadline had passed.
13.
Neither tender was judged to have offered to deliver
the specification within available budget. At this stage, rather than undertake
a new procurement exercise, the decision was taken to enter into negotiations
with both Wightbus and Southern Vectis to determine the best network which
could be delivered from available resources.
14.
Key considerations in this negotiation were price,
maximising network coverage against the tendered specification, availability of
cross ticketing arrangements (particularly rover tickets) and access to bus
stations.
15.
A series of further options were provided by Southern
Vectis, culminating in the option being recommended.
16.
The underlying principles defining the contract
are:
·
A 2 year contract to from 3 October 2004 to 30
September 2006
·
A four week period at the commencement of the contract
on 3 October, during which the existing network will be provided, to allow
operational mobilisation by the contractor and sub contractor to meet the
substantive terms of the new contract
·
Preservation of a network equivalent to that to that
currently provided, (subject to operational changes)
·
Utilisation of Southern Vectis bus stations for all
subsidised services which require their use
·
Cross ticketing – rover tickets accepted on all
contracted services.
·
Deliverable within budget available in 2004-05,
including ring fenced additional resources
·
Deliverable within projected budget allocation for
2005-2006 and 2006-2007
·
Utilisation of Wightbus as a subcontractor
17.
As well as resulting in the provision of a broadly
equivalent network, would see a significant sub-contract (approximately 35% of
all non-commercial services) awarded by Southern Vectis to Wightbus, and would
result in a significant Wightbus presence in the provision of local bus
services in the evening and at weekends.
18.
For operational reasons, and due to the need to notify
the Traffic Commissioners of the details of the subsidised routes, the proposed
start date of the contract is 31 October 2004. This date coincides with the end
of half term and the introduction by Southern Vectis of winter timetables. It
also allows Wightbus, as the sub contractor, to mobilise resources for its new
role.
19.
The current contractor has indicated it’s willingness
to extend the existing contract from 2 October to 31 October.
20.
The recommendations in this report amount to a proportionate
gateway review at the stage of awarding the contract. The background set out in
this report and in the supporting documentation
FINANCIAL/BUDGET
IMPLICATIONS
21.
The tender price of £559,214 for the year commencing
31st October 2004 exceeds the budget for 2004-05 by approximately
£21,000. For the following year it will exceed the budget by £43,000, assuming
that the 3% inflation uplift anticipated within the contract is matched by the
Council in setting the 2005-06 budget.
22.
It is proposed to meet the shortfall in each year by
ring-fencing car parking income resulting from the recent order.
LEGAL
IMPLICATIONS
23.
The procurement exercise is being conducted under the
provisions of s89 Transport Act 1985.
OPTIONS
24.
Option 1
To
determine not to subsidise bus services at all, or to the same extent.
Option 2
A four
week period at the commencement of the contract on 3 October, during which the
existing network will be provided, to allow operational mobilisation by the contractor
and sub contractor to meet the substantive terms of the new contract
Option 3
To ring fence up to £50,000 from income
generated from car parking charges to increase the budget available for
subsidised bus services.
Option 4
To let a contract with Southern Vectis which best
delivers the objectives set out in paragraph 6 and represents best value.
EVALUATION/RISK
MANAGEMENT
25.
In evaluating the impact that the potential withdrawal
of subsidy for provision of non-commercial bus services would have, specific
consideration must be given to the impact in respect of social inclusion
issues.
26.
There would be a risk of encouraging a decline in the
usage of public transport and accordingly a failure to meet targets within our Local
Transport Plan. This in turn could lead to a reduction future Government
transport funding to the Council.
27.
Of the
current budget of £509,214, some £244,811 is
funded by Rural Bus Grant. No notification has been made by the Government of
the level of grant to be provided in the second year of the contract (2005-06),
but verbal enquiries to the Department of Transport have met with assurances
that a sum equivalent to at least the current year's grant can be expected.
This will not be confirmed until later in the year.
28.
The proposed
arrangement entails an award of a sub-contract worth
£206,171 to Wight Bus. Whilst this is expected on current projections to
make a positive contribution to existing overheads, there is some risk involved
in any trading undertaking.
29.
The proposal in respect of subsidy for this group of services relies on up to £50,000 of income being available
as a result of the new car parking charges recently introduced. There is some
risk that the yield will fall short of the amount required, either for this
purpose or for other budget shortfalls that are relying on the same source of
income.
30.
Consideration
may not be given to simply extending the term of the current contract since it
was let in 1999 for the five year maximum term permitted by the Transport Act
1985.
31.
The
proposed use of funding is almost exclusively for services for which actual
levels of patronage and income are known over the past five years, and for
which, therefore, informed prediction for income over the next two years can
readily be made.
32.
The
services to be provided are in accord with consultation response expectation.
33.
Government
Rural Bus Grant is provided solely in respect of the subsidy of bus services
and may not be used for alternative public transport related schemes. The Grant
is provided to stimulate growth in passenger usage and the proposal meets that
requirement.
34.
Overall,
in order to meet the Council objective of increasing use of public transport,
the continuance of provision of funding to underpin a subsidised bus network
for which there is ample evidence of current usage, would appear to offer the
Council best value in assisting it to meet that objective.
|
RECOMMENDATIONS
i.
To ring fence up to £50,000
from income generated from car parking charges to increase the budget
available for subsidised bus services.
ii.
To delegate to the Head of Engineering Services and
the Chief Financial Officer, in consultation with the Portfolio Holders for
Transport and Resources the authority to enter into a contract with Southern
Vectis which to ensure best value delivery of:
·
A 2 year contract to from 3 October 2004 to 30
September 2006
·
A four week period at the commencement of the contract
on 3 October, during which the existing network will be provided, to allow
operational mobilisation by the contractor and sub contractor to meet the
substantive terms of the new contract
·
Preservation of a network equivalent to that to that
currently provided, (subject to operational changes)
·
Utilisation of Southern Vectis bus stations for all
subsidised services which require their use
·
Cross ticketing – rover tickets accepted on all
contracted services.
·
Utilisation of Wightbus as a subcontractor
Within:
·
The budget available in 2004-05, including ring
fenced additional resources
·
Projected budget allocation for 2005-2006 and
2006-2007
|
BACKGROUND
PAPERS
35.
Procurement File – This file contains papers which are
exempt for the purposes of paragraph 9 Sch 12A Local Government Act 1972.
Contact
Point :Andy Morris - Telephone: 823780
e-mail :[email protected]
|
Stephen
Matthews
Head
of Engineering Services
|
Ernie Fox
Portfolio
Holder for Transport
|
