This report addresses the motion from the Committee on 25 August 2009 as noted below:
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1 ED1 NBVRGH + THE CITY OF EDINBURGH COUNCIL Item no 4 Report no Fleet Procurement Process Finance and Resources Committee I6 March 2010 I 1.I Purpose of report This report addresses the motion from the Committee on 25 August 2009 as noted below: To request the Director of Corporate Services to provide an overview of the vehicle procurement process and fleet management arrangement, with a view to identifying how the Committee could best scrutinise this Summary Responsibility for the procurement of vehicles on behalf of the Council has been vested in the Corporate Transport Unit (CTU) which is managed within the Corporate Services Department. The CTU liaises closely with vehicle users to identify their requirements, develop suitable specifications and, in partnership with the Corporate Procurement team and City Fleet Maintenance colleagues, to make suitable arrangements to source the vehicles. Once sourced, the CTU s Fleet Management responsibility will be to commission the vehicle (inspection, branding and handover) and ensure that it is legally compliant for use by service departments. For certain vehicles this may entail adding the vehicle to the Council s Operators (0) Licence. During the vehicle s life, the CTU will continue to assist user-departments in licence checking, ad-hoc inspection checking, liaison with inspection agencies such as the Vehicle and Operator Services Agency (VOSA) and facilitating training as and when appropriate. At the end of the vehicle s useful life, the CTU will make arrangements with the leasing company to facilitate the disposal of the vehicle. The CTU does not maintain vehicles; this is the function of the City Fleet Maintenance Services Significant Trading Operation (STO). It should be noted that the CTU is not passive in responding to requests from departments for new vehicles, each request is challenged and no procurement activity is undertaken without full authorisation from the relevant senior departmental manager. 1
2 3 Main report Background The CTU, as noted in section 2 above, is responsible for the procurement of all Council vehicles. In addition, it is responsible for overall fleet management activity and this involves: 0 ensuring that vehicles are legally compliant; 0 liaison with inspection agencies such as VOSA; 0 overseeing the Council s fuel supplies and sites; 0 liaison with insurance companies; 0 liaison with Finance colleagues about leasing and/or borrowing requirements; 0 operating a hire desk for short-term hired vehicles; and 0 liaison with user departments on matters such as licence checking, training and the results of ad-hoc compliance checking. A key interface for the CTU s Fleet Management staff is with the ultimate vehicle users. This relationship starts with specifying an appropriate and costeffective vehicle which is fit for purpose. During the life of the vehicle, the Fleet Management function will manage the process for dealing with accident damage, maintain a fuel system, monitor the vehicle s history and also, when it proves necessary, deliver driver training. Within the relationship with end-users, the CTU expertise in sustainable fuels and emissions minimisation can come to the fore. The relationship is continued throughout the lifetime of the vehicle and into a disposal and replacement phase. Throughout the lifecycle of the vehicle, the CTU team will offer challenge to the user departments but, it must be stressed, the user is ultimately responsible for the costs of the vehicle whilst in service. Procurement Activity The CTU routinely monitors the size of the Council fleet and plans a proactive dialogue with end-users as and when vehicles approach the end of the lease period. A flowchart showing the key stages is attached as Appendix One. As vehicles approach lease renewal time, the CTU offers the end-user a choice as follows: Do not replace the vehicle; 0 Replace groups of vehicles with fewer e.g. 2 new for 4 old replacements based on revised routes and/or functions; 0 Replace with a smallerldifferent type of vehicle; 0 Replace like for like; and 0 Extend the current lease arrangement 2
3 Once departments have had opportunity to consider replacement vehicles and have authorised, at a suitable level of seniority (usually Head of Service), the formal process of procuring the vehicle commences. The outline to this process is summarised in the Project Plan attached as Appendix Two. One area of activity that could be developed under future arrangements is the management of the fleet corporately across the Council rather than just within departmental functions. In this manner, a replacement vehicle may be shared between departments or leases on existing vehicles extended and the use of the vehicle transferred to another department or user; this activity may involve further consideration of branding/logos on shared vehicles. To date, this activity has been limited to re-deploying vehicles that have become surplus to requirements whilst still under a lease agreement. Enhancing Committee Scrutiny As the Fleet Replacement Programme is ongoing, a mechanism for enhancing scrutiny may be to seek an annual report from the CTU showing the extant fleet, vehicle replacements in the pipeline and those vehicles scheduled for consideration of replacement in the next six months all split by department. The report could also detail trends in replacing vehicles and the impact on fleet size overall. In addition to the above, the Committee could call for information reports by exception when large contracts (say >f 1 m) are either to be placed, are awarded or are withdrawn due to changes in service profile Finally, the Committee could call for an annual state of the fleet report which would list the total fleet by category at the start and end of the financial year giving reasons for significant movements between the two positions Financial Implications There are no specific financial implications arising from this report. Environmental Impact The CTU is fully aware of the need to reduce the harmful effects of vehicle emissions. There are two strands of current activity in this area, reducing the overall fleet size and hence mileage travelled and adoption of clean fuels by specifying Euro V compliant diesels, adding Urea based additives to fuel to lesson emissions and trialling hybrid vehicles. Conclusions The CTU has a significant role to play in managing and monitoring the Council s fleet and its usage in a manner which balances the need to facilitate service delivery whilst at the same time being environmentally aware. The Committee has expressed a desire to assist in this function by offering greater scrutiny and hence accountability from end-users; this is welcomed by the CTU. The reporting regime will help to strengthen the accountability of vehicle users. 3
4 7 7. I Recommendations The Committee is invited to: a) b) Note the content of this paper; and Call for the suggested reports noted in paragraphs 3.8 to 3.10; e- l \./,&lb Jim Inch Director of Corporafe Services Appendices I Overview Flowchart 2 Procurement Project Planning Contact/tel/Emait Wards affected Steve Renwick Steve.renwick@edinburgh.gov.uk All Single Outcome Agreement Background Papers 4
5 OVERVIEW FLOWCHART OF KEY STAGES IN FLEET MANAGEMENT APPENDIX ONE Establish Vehicle Requirement Process Owner Develop fleet replacement programme and Identify vehicles due replacement in the next 12 months. 1 1 Produce vehicle replacement list Issue replacement list to users for consultation with their operations I I Corporate Transport Unit type and current specification, look at vehicle usaae Corporate Transport Unit & User department complex What are the new requirements? ew requirements process User department Revise Specification Produce technical specifications detailing requirements, including environmental assessment > Corporate Transport Unit & User department 1 meet needs? I Yes 4 Obtain Approval on vehicle categories and numbers to be replaced Corporate Transport Unit & User Department Senior Managers 5
6 ~~~ ~ ~~ APPENDIX TWO PROCUREMENT PROJECT PLANNING Annual vehicle procurement process Month From data held on fleet system, produce the fleet replacement Droararnrne ~ Scan 12 months ahead (minimum) to identify fleet assets due reciacement ~ Produce vehicle replacement list scanning ahead 12 months Review existing fleet products by type and current specification Issue fleet replacement list to fleet users for consultation within their operations Receive back details from fleet users on their fleet requirements Meet fleet users to receive feedback and make recommendations Agree exact requirements and produce technical specifications Meet again and modify specifications if necessary Obtain approval on the vehicle categories and numbers to be replaced Produce technical specifications for all fleet categories to be rep laced Consult with Procurement and agree procurement process Until recently CPU would action OJEU Notice 0 Now possible to use Scotland Excel for vehicle purchases - more direct mechanism List potential suppliers to ensure all vehicle categories are catered for Support CPU to network fleet requirements Deal with queries and issues raised by potential suppliers
7 I Month I I 12 3 _. 4 Accept completed tenders and download supplier information into database Produce tender evaluation sheets for each individual fleet category Agree participants for Tender evaluation panel including fleet users 5 Reach final agreement and proceed to CPU CPU send award / decline letters to suppliers CPU enact 10 day standstill period, thereafter Suppliers to provide estimated delivery date Place Oracle orders for new vehicles and log details Produce worksheet and allocate new fleet numbers etc for new assets Monitor supply chain to ensure on-time delivery Complex vehicles may have 3 or 4 different suppliers and the Council must manage that supply chain to ensure effective build quality within timescale Where necessary visit manufacturers with fleet users to deal with technical issues and/or changing requirements Liaise with manufacturers and fleet users if product training - is required Receive vehicle and carry out a 100% compliance check on build quality, 7
8 Issue fleet numbers and affix Council livery Input vehicle information into fleet management system Issue new vehicle to fleet user Month I Receive old vehicle from fleet user Inspect end-of-lease vehicle condition Manage via lease company the end-of-lease condition restitution and agree charges if applicable Manage end-of-lease disposal to auction markets I I I I I I I I I I I I NOTES: The process from start to delivery can be up to and over 12 months Last year the lead time from point of order to delivery for large trucks was 72 weeks and this makes planning on-time replacements a complex I task.. 8
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