(1) That the merger of management of the County Council s vehicle fleets is agreed.

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1 Cabinet Member for Finance Fleet Management Restructure and Vehicle Maintenance Framework Procurement January 2016 Report by Executive Director Communities and Public Protection and Director of Operations Ref No: FIN16(15/16) Key Decision: Yes Part I Electoral Division: N/A Executive Summary This report seeks approval to merge the two separate fleet management functions that operate within the County Council and also to a procurement exercise to replace the existing Vehicle Maintenance Framework. The existing Framework expires on the 30 June 2016 and a suitable replacement must be procured to ensure continuity of service delivery with the opportunity for service improvement thereafter. The merger will provide a single fleet function that manages all of the County Council s vehicles and provides the basis for a revised approach to vehicle maintenance that includes the provision of maintenance for elements of the core vehicle fleet and elements of the Fire and Rescue (FRS) fleet. The framework will need to be run in parallel with the existing Fire and Rescue Service workshops and must be flexible enough to support these workshops if required. Recommendations (1) That the merger of management of the County Council s vehicle fleets is agreed. (2) That procurement commences for a new Maintenance Framework to replace the existing Framework and to be aligned with the merged fleet set-up. (3) That the Framework Agreement be for a minimum of 3 years commencing on the 1 July 2016 with an annual value of 250,000, to include an optional extension of up to 1 year to a maximum contract period of 4 years, subject to the future requirements for this service and the performance of the service providers appointed to the framework. (4) That the Executive Director Communities and Public Protection be given delegated authority to let the Maintenance framework agreement to be procured in accordance with this decision.

2 1 Background and Context 1.1. The existing fleet management functions are currently duplicated within the County Council. In order to bring greater efficiencies and reduced management costs, a review of the two fleet management teams has been undertaken and a proposal for a merged structure developed The current vehicle maintenance framework commenced on the 1 July 2013 and is due to end on 30 June This arrangement was extended for a 12 month period in July 2015 to give the County Council time to review existing fleet management and maintenance arrangements with a view to restructuring the two teams into a single fleet management team Permission to extend the existing vehicle maintenance framework for 12 months was given on the proviso that a new framework was procured from the 1 July The FRS fleet of 204 vehicles is maintained at an annual cost of 668,000. This provides for approximately 13,500 hours of maintenance per annum and includes direct staff costs in addition to management and administration costs, property costs and back office overheads. Maintenance for the core council fleet of 288 vehicles managed by highways and transport is provided through the framework with an associated annual labour cost of 250,000 for the 4,500 hours delivered 1.5. A Procurement Plan has been developed to secure a new framework by the time the current one expires and to remodel the framework to ensure the most efficient use of in-house and framework resourced services. This can be found at Appendix 1 to this report In addition to this, under the auspices of the Emergency Services Collaboration Project (ESCP), a transformation programme for the provision of an Integrated Transport Function (ITF) for the blue light agencies within Surrey and Sussex (West Sussex Fire, East Sussex Fire, Surrey Fire, Sussex Police, Surrey Police, South East Coast Ambulance) is on-going The stance taken throughout the engagement with the ESCP has been that the County Council fleet is not limited to Fire and Rescue vehicles and that the continued involvement of West Sussex Fire and Rescue Service was only possible if the ITF was able to accommodate the entire County fleet. To date this has been the case, notably with the inclusion of all of the County fleet in the collaborative fuel procurement The achievement of a fully integrated emergency services transport function is a long term ambition which the County Council supports and should not impact on the plan to merge the County fleet functions. The merged structure will support the on-going interaction with the ITF project and ensure that all of the County fleet is considered.

3 2. Consultation 2.1. The Cabinet Members for Residents Services and for Highways and Transport have been fully briefed and are entirely supportive of the plans for fleet merger and of the plans for procurement Consultation has taken place with service users to understand their requirements under the procurement strategy. These are internal customers including the library service, adult services and education Internal service contacts included in the consultation and developments of this strategy are: Title Department Title Department Transport and Transport & Senior Transport Transport Provision Countryside Group Manager Countryside Coordinator Transport Bureau Manager Transport Bureau Transport Coordinator Transport Provision Operations Director Fire & Rescue Service Chief Procurement Officer Procurement Fleet Services Manager Transport Provision Procurement Officer Procurement Market testing exercises have been carried out, which has involved meeting prospective suppliers for fleet management, car hire and national and local fleet maintenance suppliers. This market engagement assisted in determining some aspects of the specification, the commercial model to be used, and the procurement process (open tender) Unison has been consulted and has no objections to the staff merger proposals. 3. Proposal 3.1. Fleet Merger 3.2. There are currently two separate teams within the County Council who are engaged in the management of vehicle fleets, from specifying requirements through to procurement, vehicle maintenance and regulatory compliance and ultimately disposal. These teams are in the Highways and Transport Directorate and the FRS Operations Directorate. There are obvious overlaps between the two teams and for a period of over a year there has been closer working between the teams that has identified potential efficiencies and improved working A review of the functions has been undertaken and a proposed new single structure developed. This structure provides resilience across the areas of operations, notably in the areas of procurement, contract management and vehicle maintenance. A staff engagement and consultation process

4 will be completed to help drive the implementation of the new structure which would be proposed to take effect by the end of April The Transport Provision Manager from Highways and Transport has been seconded on a part time basis into the Fire and Rescue Fleet team, to assist with the management of the team and lead on the engagement with the ESCP. This secondment has already yielded benefit, with Fire and Rescue engineers assisting with the maintenance and repair of County minibuses. The secondment has assisted with the development of the proposed structure and has identified a number of areas where efficiencies can be achieved through the merger Maintenance Framework 3.6. It is proposed that a replacement Maintenance Framework is procured to replace the existing framework which is due to expire on the 30 June The FRS workshops will continue to provide business critical maintenance to the FRS specialist fleet of 112 vehicles to ensure the emergency response capability is maintained at existing levels and not put at risk. It is proposed to move the maintenance of specialist vehicles within the non- FRS fleet into the FRS workshops in order to maximise value for money. To achieve this it will be necessary to free up capacity within the FRS workshop by transferring the maintenance of 92 non-specialist FRS vehicles into the maintenance framework 3.8. The current fleets consist of Fire Appliances, minibuses, library vans, vans and cars. The new framework will procure maintenance for 289 nonspecialist vehicles (cars, vans and minibuses) across both fleets. The remaining 196 specialist vehicles (fire appliances, library vans, accessible minibuses, motorbikes) will be maintained through the internal FRS workshops The framework period should be for 3 years initially to allow the Blue Light Collaboration project to be finalised, as this could impact on future maintenance provision. 4. Other Options considered 4.1. There are a number of alternatives that could have been considered to provide the required maintenance facilities for the two fleets: 4.2. Extend the existing maintenance framework for 12 months. Whilst there is provision within the existing framework for a further 12 month extension, extending further would not give the fleet management team the flexibility to manage the fleet in the most cost effective manner Utilise the internal workshops to undertake all maintenance. Whilst this would bring down the hourly labour rate for maintenance the difference in the hourly labour rate for the non-specialist vehicles is negligible. As the internal workshops do not have the capacity to maintain the entire County

5 Council/FRS fleet, it would require a large investment in buildings and equipment to bring the workshop capacity up to the required level and staff FTE would have to increase to ensure that there are enough technicians available to complete the required workload Outsource all maintenance. The nature of the FRS vehicles requires a highly trained specialist maintenance workforce. This would be difficult to procure and would present a risk to the FRS as the County Council would just be another customer and priority for the fire fighting vehicles may not be given without additional cost. 5. Resource Implications and Value for Money 5.1 The merger of the two teams creates a more efficient transport function with increased resilience. The merger is scheduled to be completed and in place by the end of April The restructure results in an overall reduction of 0.4 FTE, with no increase in Hay Grade numbers. The estimated saving associated with the staff restructure is 3,300 p.a. As set out in paragraph 1.4, the FRS fleet of 204 vehicles is maintained at an annual cost of 668,000. This provides for approximately 13,500 hours of maintenance per annum and includes direct staff costs in addition to management and administration costs, property costs and back office overheads. Maintenance for the County Council fleet of 288 vehicles is provided through the framework with an associated annual labour cost of 250,000 for the 4,500 hours delivered. 5.2 The proposal to move the maintenance of specialist vehicles within the County Council fleet into the FRS workshops and transfer the maintenance of non-specialist FRS vehicles into the maintenance framework will reduce the cost of maintenance procured through the framework by 40,000 per annum. This is based upon continuing to achieve similar hourly rates through the new framework and the ability of the FRS workshop to absorb a small net increase of 400 maintenance hours per annum, which is considered achievable. The saving will contribute towards the delivery of the 2016/17 Transport Review thematic savings target. ( 175,000 by 2017/18) under the Transport Transformation Programme; 5.3 The small increase in internal workshop hours of 400 hours equates to less than 2 hours additional work per day for the entire workshop team. This can be managed through the recruitment of a replacement Workshop Team Leader (An existing vacancy) which will allow the technicians to operate more efficiently and concentrate on their core function vehicle maintenance. 5.4 Merging the two fleet management teams will allow economies of scale to be utilised to gain best value for money from the market place from a more joined up approach to delivering and procuring maintenance.

6 5.5 In order to achieve the restructure a provision is required for redundancy payments, to a maximum amount of 36, Impact of the proposal 6.1 There are no Human Rights or Crime and Disorder obligations affected by these proposals. 6.2 The merging of the two departments will result in a number of staff being placed at risk of redundancy. This has already been discussed with UNISON. A staff consultation programme is planned and will be implemented if and when the recommendation is agreed. 6.3 The procurement process will be run in accordance with best practice procurement principles to mitigate any risk of challenge or noncompliance with the relevant regulations. It is anticipated that the procurement process will be run by Procurement and Contract Services. 6.4 A risk log will be developed to mitigate risks associated with the project and the procurement process. The risk log will be dynamic to reflect the progress of the project and will be managed by an appointed officer from the project team. 7. Equality Duty Under the Equality Act, the council has a public sector equality duty. It must have and show how it had due regard to the need to: eliminate unlawful discrimination, harassment and victimisation; advance equality of opportunity between people who share a protected characteristic and people who do not share it; and foster good relations between people who share a protected characteristic and people who do not share it An Equality Impact Report has been undertaken and is considered to be unnecessary in relation to the procurement proposals. Equality and diversity implications for staff will be assessed during the consultation period and considered as part of the proposals for implementing the restructure arising from the merger. 8. Risk Management Implications 8.1 There is a risk that the Internal workshop capacity is exceeded, putting the fleet maintenance programme at risk. This can be mitigated by spot purchasing our maintenance requirement from suppliers on the framework. 8.3 Running a new procurement exercise could result in an increase in costs. Prices for the existing Framework are fixed and have been since 2013 which means that the County Council may be paying lower prices now

7 than the market currently demands. This could be mitigated by the greater utilisation of the FRS workshop facilities and the increase in competition generated by the new Framework. 8.4 Call off arrangements will be put into place to ensure any emergency maintenance and repair work can be provided. Sean Ruth - Executive Director Communities and Public Protection Kieran Amos Acting Director of Operations and Assistant Chief Fire Officer Contact: Paul Mace Transport Provision Manager Appendix - Background Papers None

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