THE COUNCIL S VEHICLE FLEET Report of the Task Group

Transcription

1 CX/06/91 Policy & Resources Overview/Scrutiny Committee 21 September 2006 THE COUNCIL S VEHICLE FLEET Report of the Task Group 1.0 Findings and recommendations 1.1 The establishment of Devon s Transport Coordination Service (TCS) in 1986 represents good practice in vehicle fleet management and promotes economy, efficiency and effectiveness, including shared use of vehicles and co-ordination between services. 1.2 The Executive should note that scrutiny investigations in other councils lacking such a coordinating body have recommended setting one up to realise the kind of benefits Devon has enjoyed. 1.3 Acquisition through contract hire was adopted as the result of a Best Value Review and has since proved well-suited to meeting the transport needs of the increasing number time-limited, externally funded projects undertaken by the Council. 1.4 The restructuring of directorates and their services has consequences for the management of the vehicle fleet. Uncertainty over the future requirements of those services (especially where there is a move to a commissioning model) has delayed decisions on the replacement of existing vehicles and this situation needs to be resolved as soon as possible. 1.5 The Executive should consider what savings might be realised from making the normal contract period for the Council s vehicle fleet insurance three years. 1.6 Winter maintenance: Devon s local micro-climates can make quite different demands on winter emergency services and the employment of local contractors and farmers to assist in handling winter emergencies is an appropriate, flexible response to this, taking advantage of local knowledge; in view of the above, the Executive should be asked whether it is satisfied with the present distribution of plant and depots and whether it has an alternative agenda with the reorganisation of the Local Service Groups; while the present inventory of winter maintenance plant and equipment appears satisfactory, the Executive should also be asked whether it is satisfied that the present criteria for acquisition and disposal of these items are sufficiently clear; the use of pre-wetted salt on roads is more effective than dry salting, uses less salt, is less damaging to the environment and is being extended across the County; the Council should welcome the close collaboration with the Met Office, facilitated by the latter s move to Exeter, aimed at improving specific aspects of forecasting and so assist in better decision making. 1.7 That the day-hire contact arrangements under which vehicles are available to members and officers, bookable through the Council s intranet, should be publicised through the Members Weekly Bulletin. 2.0 The task group

2 2.1 The group was appointed by the committee on 23 March 2006 (minute 51(b) refers) with the following membership: 2.2 Its remit was: Councillors Hart (Chairman), Clatworthy, Hull, Radford & Tucker. To examine the County Council s policies for its vehicle fleet, its operation of the fleet, and the merits of acquiring vehicles by leasing, purchasing or contract hire. 2.3 The group met on 15 June, 19 July, 31 July and 6 September Evidence 3.1 The group considered briefing papers by the Director of Environment, Economy & Culture on the fleet s management (EEC/06/52/HQ) and on costs (EEC/06/96/HQ) as well as details of the inventory and disposition of winter maintenance equipment. Members also visited the Council s Highways Operations Control Centre (see 13.0 below). 3.2 Members took evidence from the following officers: Philip Alexander Mike Bird Chris Cranston Paul Edmonds Adrian Hilliard Mike Parnell Andy Rogers Bruce Thompson (Head of Waste, Engineering & Transport) (Transport Asset Manager) (Operations & Communications Manager) (Transport Co-ordination Team Leader) (Principal Accountant) (Traffic & Highway Operations Manager) (Principal Finance Manager) (Transport Manager) 4.0 Transport Co-ordination Service (TCS) 4.1 The service had existed in its present form since 1986 when a number of discrete units were combined. At that time there had been issues requiring urgent attention, not least that around half of Social Services minibuses were not operating in full compliance with the law. By 2002 however, a Best Value review had assessed the service as good with excellent prospects of improvement. 4.2 TCS s roles included the management of the vehicle fleet; support and development of public transport services; community transport schemes; the Devonwide concessionary fares partnership; and promotion of the Council s aims and interests with respect to the local and national rail network. 4.3 The fleet did not employ any drivers of its own. 4.4 It was noted that close co-operation was maintained with the District Councils as licensing authorities, since the County Council made extensive use of taxis, e.g. for school transport.

3 5.0 Acquisition and replacement of vehicles 5.1 The present acquisition policy was set by the Executive in November All vehicles other than specialist types were obtained via contract hire agreements, purchases being made through the County Environment Directorate and Devon Purchasing (as it was then known). 5.2 Prior to that time, vehicles in the fleet had been financed through operational leasing (which circumvented some of the capital spending restrictions then imposed on local authorities). This had become less attractive with changes in the economic climate and the taxation regime (see 6.0 below). 5.3 There had been a joint exercise with Devon Purchasing to identify Best Value options to procure vehicles for 2002/03 and the possibilities investigated had been: contract hire; current operational leasing; and outright purchase. 5.4 The options had been market tested and contract hire had emerged as preferable except for some specific types of vehicle. The Council had however taken a policy decision to own its specialist winter maintenance fleet outright since this avoided the risk that an outside owner might go out of business. Comparative information considered by the group showed this to be common amongst highway authorities, and the Highways Agency did likewise. 5.5 Investigation of outright purchase had shown that procuring vehicles in this manner would be both expensive and reduce the flexibility to renew vehicles to suit changing user needs. 5.6 A comparison had then been made between current operational leasing and contract hire. This had been achieved by identifying six major contract hire companies and inviting them to tender prices for specified vehicles. The results had been analysed by the (then) Resources Directorate and the conclusion reached that advantages would be gained if specialist vehicles remained with operational leasing and non-specialist vehicles were obtained through contract hire. Fleet strength at that time had been 425 and was now Over the last five years, contract hire had become a very competitive method of acquiring smaller vehicles but this advantage did not apply to vehicles with specialised adaptations since their resale value was limited. 5.8 Customer requirements were an important influence on vehicle acquisition. TCS offered customers a range of options for vehicle type, contract term and so on. Alternative fuels had been evaluated but vehicles using liquid propane gas (LPG) and compressed natural gas (CNG) had been found unreliable and to entail heavier maintenance costs with high mileage. Choice of alternative fuel vehicles was limited as the industry was concentrating its efforts on cleaner diesel technology. 5.9 Replacement intervals depended on vehicle type: cars would be replaced after 4 5 years (i.e. within the guarantee period), a coach-built minibus after 8 years. Mileage too varied greatly between types and costs per mile of individual vehicles were monitored by logging the odometer reading at each service. Cases of apparent under use were taken up with the users.

4 5.10 Indicative prices of larger vehicles were: (approx.) Minibus 30,000 Welfare bus 46 50,000 Mobile library 80, The 2006/07 acquisition budget was 2,500,000, of which 450,000 related to winter maintenance equipment. The total included an underspend of 990,000 carried forward from 2005/06 1. This underspend had been largely attributable to the receivership of two coach builders during the year and to the need to defer acquisitions until decisions on the Adult Services Modernisation Programme had been taken The group asked whether last year s shortfall in minibus purchases would be made up during 2006/07 and was advised that this would depend to a great extent on decisions taken by the Children & Young People s Services and Adult & Community Services Directorates about their own structures and policies and hence their transport needs. TCS was a consultee in both restructuring exercises Fleet numbers had been increased by grant-aided projects which required a vehicle. When the external funding was for a fixed term, these vehicles were usually obtained on contract hire The Council had moved from pool cars to a day-hire contact arrangement. This service was available to members and officers and could be booked through the Council s intranet European procurement rules had lengthened the acquisition process and so TCS was working with Devon Procurement to develop generic framework contracts to streamline the process as far as possible At the end of their lives, directly owned vehicles were sold at auction through three different venues around the country. 6.0 The Vehicle & Equipment Loans Pool (VELP) 6.1 With changes in the taxation regime leasing companies had begun to pay more attention to eventual resale value and thus to impose a range of extra charges. In 2004, the advent of the prudential code of practice for capital borrowing had prompted a review which had concluded that operational leasing was no longer good value compared to ownership financed by borrowing. 6.2 The VELP covered all tangible assets with an expected life of 3 10 years. Vehicles were usually depreciated and paid for over 5 7 years and 10 years for certain types. Under the Council s Financial Regulations, Service Directors could approve purchases below 250,000 whilst items above that figure were determined by the Executive Member for Resources. 6.3 Directors made bids against the pool, the item was then paid for from the pool and financing charges (including a small administrative charge but no profit element) were levied on the directorate concerned. This offered predictable costs and repayment periods and there were no hidden charges or penalties. All purchases through the pool were recorded in a register of capital assets and when the asset was eventually disposed of, the directorate could retain any receipt below 10,000. The VELP had proved very cost-effective. 7.0 Route planning and co-ordination 1 Spending on new vehicles in 2005/06 had been 1,670,000.

5 7.1 TCS operated a computerised route planning system. Requests for transport were channelled through two teams which assessed these requests against opportunities to share with other users. 7.2 Half of the minibus fleet was now jointly used by two or more services, rather than belonging exclusively to any operator. 7.3 The service co-ordinated 18 ring and ride community transport schemes and there was a growing partnership with NHS bodies. 7.4 The Adult Services Modernisation Programme s planned move from direct provision to commissioning would inevitably have consequences for the size and composition of the Council s vehicle fleet and these issues were being discussed by TCS with the Director of Adult & Community Services. A move to fewer centres catering for clients with more profound needs drawn from larger catchment areas could result in an increase in transport requirements. 8.0 Contract compliance, inspection and servicing 8.1 Contract compliance was an important element of TCS s work along with the vetting of drivers (a database of over 7,000 persons was maintained). The fleet s vehicles were monitored for safety with TCS able to carry out spot checks at any time: there was for example a programme of twice-monthly school visits, interspersed with random inspections of vehicles. 8.2 The quality of the vehicles operated was an important factor in users perceptions of and confidence in the service provided. For larger vehicles, inspections between major services took place according to the conditions of the operating licence; cars and vans were dealt with in accordance with manufacturers recommendations subject to a minimum of two services and inspections per year. 8.3 The current vehicle maintenance contract with South West Highways ran until April 2007 and provided for six unannounced sample inspections each month, distributed among SWH s depots. The tender invitation for included criteria for quality as well as value for money and there would be no TUPE liability on the County Council if a new tenderer won the contract. The Executive was due to consider awarding a contract at its meeting on 5 September All Directorates had agreed a policy of no private use of Council vehicles and staff were advised of the disciplinary and taxation consequences of any breach of this rule. 9.0 Fleet insurance 9.1 The group considered data supplied by the Council s Insurance Manager. Vehicles were insured through a fleet policy. Claims for accidental damage in 2005/06 had totalled 78,000 and this was apparently seen by the insurer as a good performance since premiums for 206/07 had not increased. 9.2 Premiums for the last five years had been as follows and were inclusive of Insurance Premium Tax. The apparent blip in 2004 had arisen from a change in the way Community Use vehicles were insured:

6 , , , , , Devon s fleet insurance was obtained in the general market, using external brokers and an open tender process, as required under EU rules. The Council's insurances were generally put out to tender every five years although on the last occasion the contract had been let for three and was later extended by a further two. The next tender would be in Insurance costs had reduced while fleet numbers had increased over the same period (in all classes but predominantly in cars and small vans). 9.5 The Council only insured school minibuses that were part of the fleet (albeit their purchase had been funded by the school or Parent teacher Association) with TCS billing schools for insurance and other costs. 9.6 The Council s insurers, Royal Sun Alliance, had audited fleet management, policies and safety provisions and found them satisfactory Operating costs 10.1 The group requested and received a table of representative costs per mile of different classes of vehicle in the fleet (see Appendix A) Other councils 11.1 The group considered a briefing note by the Scrutiny Officers on responses to a canvass of colleagues in other councils about scrutiny reviews of their fleets. This had identified three authorities which had scrutinised some aspect of their operations: Barking LBC, Worcestershire and Staffordshire All three reviews had recommended improved liaison between departments and strengthened arrangements for the planning and co-ordination of vehicle operations, indicating that establishment of a resource similar to TCS was seen as opening the way to a more efficient and effective operation of an authority s vehicles. Where such coordination was lacking, there appeared to be concern that vehicles were not being used to the best advantage either in terms of economy or service Winter maintenance fleet 12.1 The group considered a full schedule of the vehicles and items of equipment in the winter fleet and the depots in which they were held. The inventory was valued at 4,000,000 and had recently been audited with everything accounted for. Replacement needs were checked regularly, especially for dedicated gritting vehicles (which cost between 75,000 and 80,000 each) Devon owned the vehicles and equipment (see 5.4 above) but they were operated by the maintenance contractor.

7 12.3 Network Management had requested a mix of dedicated and demountable equipment and TCS had drawn up specifications accordingly. One chassis could be used to carry a variety of demountable equipment (e.g. a tipper) and the conversion from one use to another required only about 15 minutes Having considered this information, the group broadened its enquiries to include the deployment and preparedness of the winter maintenance fleet Winter maintenance budget, plans and facilities 13.1 Section 111 of the Railway and Transport Safety Act 2003 had placed a duty on highway authorities to ensure, so far as is reasonably practicable, that safe passage along a highway is not endangered by snow or ice." Legal advice had been taken on the implications of this but there was at present insufficient case law to define what reasonably practicable might entail The County Council s winter maintenance budget was based on a winter of average severity and totalled approximately 3,700,000 pounds, broken down as follows: Operations 1,600,000 Plant and associated costs 1,700,000 Operations centre and associated systems 320, Last year the budget had been overspent owing to the large number of marginal nights (those with temperatures very close to 0 C). Nevertheless, operational criteria remained the same, however much of the budget might already have been spent. It was understood that an overspend was sometimes necessary (although approval was required to do this) with the shortfall later made up from elsewhere The new term maintenance contract (distinct from that for vehicle maintenance, see 8.3 above) was due to commence in April 2007 and a decision would be made by the Executive on 5 September This lead-in was necessary as the successful tenderer must be fully operational from the first day of the new contract Each October there was a practice mobilisation requiring all vehicles to be available, fuelled-up and with a driver, ready to proceed to its assignment under the Winter Maintenance Plan The equipment held by the County Council was cascaded to the second-line inventory as it grew older and, in time, disposed of. Holdings of second-line equipment had been reduced and there was, for example, no longer a spare gritter for every route. The Council had five snow-blowers but where bulk snow clearance was required, diggers were hired from contractors. If conditions became sufficiently severe, the authority could also mobilise farmers and others to assist with their plant One salting of the county s roads cost 11,000 (over and above standing costs) and prewetted salting had been introduced at depots serving the most routes. Smaller lorries were needed to deal with Exeter s roads but once those were operational, there would be just four dry-salted routes in the county, all in Torridge Currently pre-wetted salt was spread on 37 of the 47 gritting routes. Once the equipment installation programme was complete, this would rise to 43 routes. The technique entailed spraying the dry salt from the gritter hopper as it hits the spinner with concentrated brine containing about 24% salt (sea water being about 5%).To combat the heightened danger of corrosion, gritters were washed down after use. During their summer service they were thoroughly checked, cleaned and any paint damage repaired, after which each vehicle a protective coat of wax. Brine tanks for pre-wetted salting added considerable weight to a vehicle and so specifications had to be adjusted accordingly Quieter stone mastic asphalt (SMA) road surfaces required more dry salt if treatment was to be effective but when pre-wetting was employed, the same amount could be used as on other surfaces. In most applications SMA was as durable as hot-rolled asphalt and in

8 wet conditions it produced less spray. Overall, pre-wetting meant the same effect could be achieved with less salt than dry salting would have needed The Council s salt stocks were approximately 9,700 tonnes. After replenishment this summer the autumn stock would be 21,400 tonnes. Average winter use was 10,000 12,000 tonnes (in 2005/06 it had been 15,600 tonnes) and there was usually at least some replenishment each winter but stocks on hand would normally carry the Council through one year if necessary A record was maintained of each route salted and the dates when this had taken place. The total number of kilometres salted could be derived from these records if required The location of strategic and supporting depots was kept under review, including the environmental factors such as the risk of stored salt polluting watercourses The group noted that the proposed amalgamation of Local Service Groups was being treated as a separate issue but urged that the holding of winter maintenance equipment where it can best be deployed must not be compromised Whilst the plans and equipment were ready, with the passing of time and winters becoming warmer, there were now few members of staff with experience of a severe, countywide winter emergency Highways Operations Control Centre 14.1 The group visited the centre in Lucombe House and received a short presentation on its facilities and procedures. Members were also able to see how the centre dealt with police requests for assistance, two of which came in during the visit The officers explained the staffing and decision-making arrangements for the Centre and liaison procedures with the Local Service Groups, with particular reference to weather emergencies Devon was divided into a number of micro-climates and the officers explained the meteorological facilities available to the centre, including satellite photography and weather radar and a countywide network of sensors to detect the conditions leading to the formation of ice on roads A partnership had been established with the Met Office seeking improved forecasting of hoar frost and to develop route forecasting. Better information would lead to better operational decisions (e.g. in deploying plant and commencing gritting and salting) and this close collaborative working had been greatly strengthened by the Met Office s relocation to Exeter. John Hart (Chairman) John Clatworthy Douglas Hull Ray Radford Joe Tucker Electoral Divisions: Executive Members: All Environment; Policy & Resources.

9 Local Government Act 1972 List of Background Papers Officer contact: Nick Beale Room: G.36 Tel No: Background Paper Date File Reference