PAPER E

 

 

RESOURCES SELECT COMMITTEE – 7 APRIL 2005

 

PRINT UNIT REVIEW

 

REPORT OF THE PORTFOLIO HOLDER FOR RESOURCES

 

 

REASON FOR SELECT COMMITTEE CONSIDERATION

 

1.                  This report has been requested by the Committee chair in liaison with the Resources Portfolio Holder.  The report summarises the findings from an externally commissioned review of the Council’s Print Unit and makes proposals for the future procurement of the authority’s print and copy needs.

 

 

ACTION REQUIRED BY THE SELECT COMMITTEE

 

To receive the report, comment upon the proposals and make any recommendations to the Executive that are deemed appropriate to future procurement of the Council’s print and copy needs.

 

 

BACKGROUND

 

2.         With a staff of 5, the Print Unit provides the following services :

 

·                     a bespoke one-off printing and finishing operation largely based on plate-based printing machines

 

·                     a photocopying service (colour & black and white)

 

·                     a limited design service to originate the basic content which is printed by the two processes above

 

·                     a corporate print procurement service to advise and manage the external sourcing of print work

 

3.         In September 2004 it was agreed to commission an external review of the existing Print Unit with a view to establishing a cost-effective basis for future procurement of the Council’s print and copy needs.  This has followed increasing difficulty in reaching the cost-recovery target for the Unit.  A consultant from the British Print Industry Federation was engaged to undertake the review which was completed in December 2004.

 

4.         A further report based upon the review findings and making recommendations for future procurement of the Council’s print and copy needs has been drafted (Appendix 2 circulated separately).  This covering report summarises that further report.

 

5.         The consultant assessed a number of procurement options and recommended that the Council undertake an exercise to test the market’s response to supplying all print and copy requirements.  The main findings were as follows :

 

·                     Falling copier volumes have led to a situation where full-cost recovery for this work is not being achieved.  A forecast loss of £13k will be incurred in 2004/5.  Internal charges would have to be increased by 29% to offset this loss.

·                     Internal litho printing is becoming less competitive.  The Unit is dependent upon 2 colour litho printing equipment which is nearing the end of its useful life.  To upgrade to current industry standards would cost £150 – 250k.  A loss of £11k is forecast for 2004/5.

 

·                     Unit competitiveness is weak.  By operating at a productivity level 10% below the industry norm of 75% and only working a single shift, the Unit has real difficulties in matching prices from external competitors who benefit from both these positive features (more hours per shift and more shifts)

 

·                     There is potential to achieve significant savings through externalisation of part or all of the Council’s print and copy needs.  This was confirmed by a market testing exercise.  This exercise particularly highlighted the potential for significant savings on photocopying by using the NHS Trust. 

 

·                     To achieve the Unit recovery target with no change in current service activities would require an increase in copier charges of 29% and litho print charges of 10%.  Whilst copier charges would remain relatively competitive even at the higher level, litho print charges would then be at the margins of competitiveness

 

6.         Looking to the future, 3 options have been identified for meeting the Council’s print and copy needs :

 

·                     Option 1 : Retention of an internal service

 

·                     Option 2 : Retention of internal copy service and externalisation of

                              litho printing

 

·                     Option 3 : Externalisation of all print and copy needs

 

Each of these options is detailed and assessed in the report attached as Appendix 1.

 

7.         The key issue of principle to be determined is whether the Print Unit is a service or a business – if it is deemed to be a service it could be considered that the benefits outweigh the extra costs involved in maintaining the Unit and increasing the charges to internal users ie. Option 1 could be approved.  If it is viewed as a business and expected to operate on a full cost-recovery basis, full or partial externalisation of the service is a natural consequence since the Unit already operates at the margins of commercial competitiveness ie. Option 2 or 3 should be pursued.

 

8.         Prior to determining which of the available options the Council wishes to pursue, and in line with the consultant’s findings, it is recommended that a formal market testing exercise be undertaken to assess the financial and operational implications of full or partial externalisation.  It is anticipated that such an exercise would take 2-3 months to complete and involve two stages – inviting outline expressions of interest followed by a formal tender process.  Given the Council’s established policy of seeking closer integration with the PCT and NHS Trust, this exercise should also take into account the potential for a joint approach to print and copy procurement.

 

9.         At a meeting on April 4th the Informal Executive also considered this matter.  That meeting gave consideration to the following proposals :

 

a)         That the Council’s print and copy needs should be met in the most effective and economically advantageous manner.

 

b)         That a market testing exercise be undertaken to assess the implications of a full or partial externalisation of the services currently provided by the Print Unit.  This exercise will include consideration of a joint procurement exercise with the PCT and NHS Trust.

 

c)         That a decision on which of the 3 options for on-going procurement of the Council’s print and copy requirements be considered when the results of the market testing exercise are available.  This is expected to take 2-3 months.

 

d)        That the Resources Select Committee be invited to comment upon the proposed procurement options and advise the Executive as to how best to meet the Council’s future print and copy needs.

 

            10.        A verbal update on the outcome of the Informal Executive meeting will be provided at the meeting of the Select Committee.

 

            RELEVANT PLANS, POLICIES, STRATEGIES AND PERFORMANCE INDICATORS

 

11.       The Council’s Corporate Plan includes a commitment to “excellence in service delivery.” Specific reference is made to the development of “new models of service delivery…” and development of a “more rigorous approach to market testing, contract packaging and value for money” in all procurement activities.

 

            CONSULTATION PROCESS

 

12.       This report has been produced in consultation with the Resources Portfolio holder, the Chief Executive, the Head of Legal and Democratic Services, the Compliance and Risk Manager, and the Chief Finance Officer.

 

13.       Consultation with the staff of the Print Unit has also been an important element of the process.  Comments have been received from Unison on behalf of all the Print Unit staff. Comments have also been received from one individual staff member.  These are attached as Appendix 1.  The staff preference is for retention of an in-house service and investment in further equipment to support development of the Unit’s work.

 

            FINANCIAL, LEGAL, CRIME AND DISORDER IMPLICATIONS

 

14.       The Council has a legal duty to pursue best value in discharging its responsibilities.  The market for sourcing the Council’s print and copy needs is, however, changing.  In its present form the Print Unit faces on-going difficulties in attaining its cost-recovery target – whilst this is due in large part to the decline in copier volumes, the litho printing service is also becoming less competitive and will require significant investment in new equipment for which there is insufficient provision.  Experience elsewhere also suggests that the Council could secure significant cost savings through alternative means of print and copy procurement.  It is, therefore, timely for the Council to review the manner in which it procures its print and copy needs.

 

15.       There are no Crime and Disorder implications.

 

APPENDICES ATTACHED OR AVAILABLE

 

Appendix 1 : Staff Comments (attached)

Appendix 2 : Print Unit Review (circulated separately)

Appendix 3 : British Print Industry Federation - Consultant’s report (circulated separately)

 

BACKGROUND PAPERS USED IN THE PREPARATION OF THIS REPORT

 

Print Unit Review – report by the British Print Industry Federation, Dec. 2004

 

 

Contact Point :            John Bentley, Head of Corporate Policy and Communications. ( 823346. e-mail [email protected]

 

 

 

 

 

COUNCILLOR REG BARRY

Portfolio Holder for Resources

 

 

 

 

 

 

 

 

 

 

APPENDIX 1

STAFF COMMENTS

11 March 2005

 

Dear John

 

PRINT UNIT

 

I am writing following the recent discussions involving UNISON management and the staff of the Print Unit in connection with the report to be considered in the near future by both the Resources Select Committee and the Executive regarding the future of the Unit.

 

I have now had the opportunity to consider the draft report and its implications and have also continued to discuss the situation with UNISON members within the Print Unit.  Having done this, I should like to make the following points:

 

1.                  UNISON takes a firm view that it believes that the optimum arrangement for the Council would be for this Service to continue to be provided on an ‘in-house’ basis.  Whilst externalisation might appear to be potentially financially beneficial in the short-term, there is clearly a real danger that in the medium to longer term such an approach could lead the Council to be dangerously over exposed to the possibility of being exploited by a small number of printers in the private sector.  My understanding is that in a number of cases where public bodies have externalised this kind of service, such a situation has arisen with the consequence that there has been a need to recreate an ‘in-house’ service at considerable additional expense in terms of start-up costs.

 

2.                  For any final decision to be taken at this time seems to be entirely premature and inappropriate given the structural change being faced by the Council at present.  Given the likely creation of a new Health, Housing and Social Care Organisation in 2006, UNISON believes that the creation of a merged Print Service covering both organisations needs to be actively considered before any irrevocable decision on externalisation is taken.

 

3.                  UNISON believes that more details are needed by both Elected Members and Council Officers in terms of the cost of re-equipping the current Unit.  Staff in the Print Unit have been very concerned over a considerable period about the age and efficiency of the current machines and UNISON considers that there needs to be further exploration of the expense involved in purchasing either new or good second-

 

 

 

hand machinery.  Although this might be initially relatively costly, the purchase of such equipment could be a sound capital investment in allowing the future development and expansion of the Unit’s work to the future benefit of the Council.  I know there are a number of recent examples of other authorities investing heavily in re-equipping of this type in order to safeguard their position in relation to the dangers posed by over-reliance on the private sector.

 

4.                  UNISON believes that, given the fact that two detailed reports have now been provided by David Butler, he should be present at relevant meetings with Councillors in order to be able to give a detailed appraisal of the situation from an objective and knowledgeable basis.

 

I hope the above comments are helpful in clarifying UNISON’s views.  If you wish to discuss these further, by all means contact me.

 

Yours sincerely

 

 

 

 

 

Branch Secretary

 

 

Mr J Bentley

Head of Policy and Communications

Floor 5

County Hall      Newport

Isle of Wight       PO30 1UD

 

 

cc        Mr R Barry, Portfolio Holder for Resources

            Mrs M Lloyd, Chairman of Resources Select Committee

            Mr M Burton, Head of Human Resources

 

 

 

 

 

Comments from Sharon Ould

 

 

As the youngest member of the unit, I would just like to say that I would obviously like to see the print unit retained in-house.

 

However, it is not down to me as to which proposal should be taken.

 

I realise that changes need to be made, but in my view they should have been made long before now, and it is due to the fact that these changes haven’t been made that we are in the situation that we are now in.

 

I feel very tired of this uncertainty within the unit and feel that surely these are not conditions that employees should be subjected to work under.  It is very disruptive to the team and morale is very low.

 

Mr Butler first came down to review our unit in October 2000, and here we are again four years later in the same situation yet again.  He completed his report in December 2004 (after coming back in October 2004) and we are now in March 2005 and still no decision has been made about the unit’s future.

 

Is this really a way of saving money??!!

 

 

Sharon Ould

Printing Services

13/3/05