1. The transfer of the service vehicle fleet and pool car fleet management to the County Council from 1 July 2013.

Transcription

1 Cabinet Member for Finance and Resources and Cabinet Member for Highways and Transport Ref No. HT11(12/13) Service Vehicles Procurement Strategy November 2012 Report by Director of Business Change Key Decision Yes Part I Electoral Divisions N/A Executive Summary This report seeks approval of the Service Vehicles Procurement Strategy for the management of the County Council s vehicle fleet to replace the existing arrangements that expire on 30 June This is to ensure continuity of service delivery at the outset with the opportunity to deliver continued service improvement and contribute to the 79million savings target. The new arrangement will include transferring service vehicle fleet and pool car fleet management into the County Council, and fleet maintenance through a Framework Agreement with local suppliers to commence from the 1 st July Recommendations That the Service Vehicles Procurement Strategy encompasses: 1. The transfer of the service vehicle fleet and pool car fleet management to the County Council from 1 July That the procurement process for the provision of service vehicle maintenance through a Framework Agreement with local suppliers as detailed in the Strategy (Appendix 1) commences The Framework Agreement should be for a minimum of 2 years commencing on the 1 July 2013, to include for optional extension for periods of up to 2 years for a maximum contract period of 4 years subject to the future requirements for this service and the performance of the appointed service providers. With effect from 1 January 2013 authority is delegated to the Director of Communities Commissioning to award the contract to the bidder(s) submitting the most economically advantageous tender(s) in terms of technical and commercial ability. To make the framework available to other public body authorities within the geographical boundaries of East and West Sussex, Hampshire and Surrey who are permitted public bodies as defined within the Public Contract Regulations 2006.

2 1. Background 1.1 The current Service Vehicle Contract (SVC) with Enterprise AOL that is concerned with pool cars and commercial fleet vehicles, that commenced in 2006 is due to end on 30 June This arrangement was extended for two, twelve month periods in July 2011 and July 2012 to give WSCC time to develop a robust procurement strategy in light of changing fleet requirements across many areas of the County Council s services. 1.2 The current cost of the contractual arrangement is approximately 2 million per annum that includes substantive management costs. Costs have been reduced by purchasing end of lease vehicles. In addition to the delivery of these cost reductions it has had the effect of: enabling the County Council to reduce the fleet size with minimal penalties reducing the number of older vehicles that have higher maintenance costs. 1.3 It is considered that the current SVC is no longer fit for purpose as it will not be able to deliver a value for money service that meets the County Council s changing needs. This is due to: the substantive management costs, the need to provide a more responsive and flexible service, the outsource of services under the Support Service Outsourcing Contract, the impact of the Transport Transformation Programme, the need to deliver substantive annual savings (est. 480,000) through efficient sourcing and maintenance of the vehicle fleet 1.4 Further to the issues identified in 1.3 above and following consultation with service users the improvements required under the procurement strategy are: To contribute to the County Council s savings target of 79m by reducing operational costs in line with required savings under the Transport Transformation Programme To provide flexible sourcing of vehicles To support changing staffing numbers and increasingly flexible work patterns To contribute towards the County Council s Carbon reduction targets

3 To provide improved fleet management and vehicle usage data. To provide more flexible vehicle maintenance programmes with decreased vehicle downtime. 1.5 Detailed work has been carried out to identify critical processes, benchmark against other business models and thereby, to highlight specific improvements to be sought under the new arrangements. 1.6 Market analysis and consultation led to the evaluation of four delivery options of which the proposal to transfer the service vehicle fleet and pool car management to the County Council, and for maintenance requirements to be provided through a Framework Agreement of approved local suppliers, was found to best meet the County Council s needs (including target savings). 1.7 The Procurement Strategy developed can be found as Appendix 1 to this report. 1.8 Collaboration opportunities have been explored therefore it is recommended the framework agreement should be made available to other public bodies within the geographical boundaries of East and West Sussex, as well as Hampshire and Surrey as defined within the Public Contract Regulations Collaboration with such authorities would be in accordance with the Corporate Procurement Strategy, and it is anticipated that future benefits may be realised through these potential collaborative arrangements. 1.9 The procurement process will be undertaken using the West Sussex e-sourcing portal to increase the efficiency of the tender process for the County Council and potential bidders. The procurement process will be open, fair and transparent in compliance with WSCC standing orders on procurement and contracts and the Public Contract Regulations It will further take into account the needs of the potential service providers, and will reflect the nature of the market place To ensure best value for money the contract will be awarded to the bidders submitting the most economically advantageous tenders that balance technical and quality requirements against commercial elements to ensure the delivery of an affordable service that is best value for money It is proposed that the framework agreement should be for an initial period of two years with the option to extend for periods up to a further two years to a maximum of four years. 2. Consultation 2.1 The Cabinet Members for Highways and Transport and for Finance and Resources were briefed on 3 April 2012 and 24 September 2012.

4 2.2 The Highways Commissioning Manager has been consulted about the possible effects on the depots of new contractor(s) carrying out maintenance in their own premises. His opinion was that any effects would be negligible, although there may be opportunities for revised workshop use at the depots. 2.3 Extensive market testing exercises were carried out meeting with prospective suppliers for fleet management, car hire and national and local fleet maintenance suppliers, with representatives from East Sussex County Council, (ESCC). In addition a stakeholder event of internal users was held to review future service needs. 2.4 A paper outlining the broad procurement options was taken to the Policy and Resources Select Committee on 5 July 2012 who agreed with the risks associated with procuring fleet and pool car management from the external market but asked for further analysis of fleet usage and requirements. A further report and the Procurement Strategy that was developed as a result of the work undertaken after the July Select Committee were presented to the Policy and Resources Select Committee on 11 October 2012 where the proposal was supported. Customer Focus Appraisal 3.1 A full Customer Focus Appraisal (Appendix 2) has been completed, drawing on the consultations carried out. The findings will be integrated into the design of the service where appropriate. 4. Resource Implications and Value for Money 4.1 A 5 year cost comparison table showing the existing arrangement along with the options outlined in the Procurement Strategy is shown below. It should be noted this is based on the existing fleet that is expected to be reduced over time so is effectively a maximum cost: Existing Option 1 Option 2 Option 3 Option Option 4B Contract proposed 4A Management 2.93m 0.54m 1.85m 1.59m 0.55m 2.69m Costs Lease/Depn. 4.80m 4.80m 4.80m 4.80m 4.80m 4.80m Costs Planned 2.00m 2.00m 2.00m 2.00m 2.00m 2.00m Maintenance Costs TOTAL 9.73m 7.34m 8.65m 8.39m 7.35m 9.49m Difference m m m m m 4.2 Option 1 (the proposal) provides annual savings of approximately 480,000 from the start of the arrangement providing 360,000 part year savings in 2013/14 (9 months). Options for mitigating the part year savings shortfall in 2013/14 (c 120,000) are currently being developed,

5 and will include utilising cost savings already achieved through securing more advantageous vehicle leasing rates. 4.3 The proposal includes transferring the fleet and pool car management service into the County Council. This temporarily increases the County Council s headcount by 4 (3.5 FTE) for the transfer of staff who currently provide the service through the contract, with a view that the staff would be outsourced on the termination of the Framework Agreement. The increase in FTE is not currently included within the workforce projections. The annual costs of these staff are estimated at 107, The current vehicle leases will transfer to the County Council from July 2013 to be managed internally. There will be no extra resources required over and above the transferred staff who will manage the leases. 4.5 The vehicle maintenance will be managed through the framework agreement arrangements that will be put in place as a result of the procurement process to ensure the best value for money is achieved for planned and ad hoc maintenance, and emergency works. 4.6 The transfer of staff will require Legal Services and Human Resources support from the County Council, Capita and AOL Enterprises. 5. Risk Management Implications 5.1 As vehicle maintenance will be procured through local suppliers it is essential that the potential fragmentation of work is managed robustly by the County Council. Market testing included meeting local suppliers which will inform the development of the service delivery model that will need to include and not be limited to agreed flexible collection and delivery arrangements. Maintenance taking place on site with mobile units could be also used. 5.2 Call off arrangements will be put into place to ensure any emergency maintenance and repair work can be provided. 5.3 Transfer of staff will be undertaken in line with the Transfer of Undertakings (Protection of Employees) Regulations 2006, and the County Council policy on TUPE transfers. 5.4 The existing contractor is aware of the pending end of the contract and meetings have been set up to discuss a smooth transition. 5.5 Successful vehicle maintenance suppliers will be required to have appropriate levels of insurance in accordance with West Sussex County Council Standing Orders on Procurement and Contracts. There is a further requirement to ensure compliance with the health and safety standards of the County Council. 5.6 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

6 procurement process will be run by Capita Business Services Limited ( Capita ) on behalf of the County Council under the Support Services Outsource. 5.7 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. 6. Crime and Disorder Act Implications There are no identifiable Crime and Disorder Act implications. 7. Human Rights Act Implications There are no identifiable Human Rights Act implications. Sue Hawker Director of Business Change Contact: Andy Ekinsmyth, Service Manager, Transport & Countryside, (Ext 77811) Kim Medhurst, Principal Manager Procurement, Capita (Ext 82168) Appendix 1 Procurement Strategy September 2012 Appendix 2 Customer Focus Appraisal Background papers: None