Agenda item - Highways Procurement Strategy

To inform Cabinet of the proposed Highways Services Procurement Strategy and to seek approval to procure and award the required contracts.

Cllr Vernon Smith, Cabinet Member for Highways and Flood gave a detailed update on the Council’s proposed Highways Services Procurement Strategy before seeking approval to procure and award the required contracts.

Having considered all of the information, including known proposals and the reasons for the recommendations, Cabinet noted the report and,

RESOLVED to:

Authorise the Commissioning Director, Communities and Infrastructure, to:

(1) Carry out three legally compliant competitive tender processes for the delivery of highway services under three separate contracts, comprising; -

a. a seven year highway services term maintenance contract with options for two two-year extensions;

b. a two year single provider contract for the delivery of structural maintenance works; and

c. a six year contract for the delivery of professional services support with options for two two-year extensions.

(2) Upon conclusion of the said competitive tender processes, and in consultation with the Cabinet Member for Highways and Flood, to enter into a contract with each of the preferred provider(s) evaluated as offering the Council best value for money for delivery of the three required services.

In the event that the preferred provider for any of the three proposed contracts is either, unable, or unwilling to enter into that contract with the Council then the Commissioning Director, Communities and Infrastructure to be authorised to award such contracts to the next willing highest placed suitably qualified provider.

Cllr Vernon Smith, Cabinet Member for Highways and Flood, gave a detailed update on the Council’s proposed Highways Services Procurement Strategy before seeking cabinet approval to carry out three legally compliant tender processes for the procurement and delivery of highway services. On conclusion of the tender processes, (and in consultation with the Cabinet Member), the Council to enter into a contract with the three preferred providers, evaluated as offering ‘best value for money’ for delivery of the required services.

Cllr Smith informed the meeting that, in consultation with cabinet members and following discussions with a cross-party Cabinet Panel, he and officers had developed a robust procurement strategy for delivery of the council’s highway services, post April 2019, (following expiry of the current Amey contract).

Cllr Smith informed members that the proposal was to move away from a single provider model to a multiple provider model, with some day to day operating decision-making and design of works being delivered by an-house team, resulting in approximately 45 staff transferring into the Council. The aim of the proposed model would allow the authority more control over the delivery of works, without significantly increasing its exposure to risk.

The proposed model to be broken down into three contracts; i) a smaller Term Maintenance Contract for delivery of day to day maintenance works; ii) a Structural Maintenance Contract, to deliver more cost effective resurfacing works, and iii) a Professional Services Support Contract, to provide specialist design, project management and transport planning services. Financial modelling suggested the three procurements were anticipated to result in a ‘cost neutral’ outcome.

Outlining some of the principles on which the strategy would attempt to ensure the contract was the ‘right contract’, Cllr Smith confirmed that the intention was to carefully evaluate the quality of bidders, (soft market testing has already indicated a number of bidders have demonstrated an interest in bidding for the contract); continue to engage with the cross party Cabinet Panel; develop a long term, positive relationship with the Term Maintenance Contractor, and develop a reliable performance management system to ensure the successful delivery of the contract. Cllr Smith said that the approach to be taken would be one of ‘evolution’ and not ‘revolution’.

Cllr Smith referred to the positive comments that had been received from the cross-party Cabinet Panel, (reported at Appendix B of the report). He reported that the panel met regularly and that he had been pleased with how the work of the group had progressed.

Outlining the proposed governance structure for delivering the new contracts, Cllr Smith explained how the council intended to manage performance, including the potential for poor performance. He informed members that use of the Highways Maintenance Efficiency Programme ‘standard’ contract documents, including new engineering contract, would ensure robust mechanisms were included in the contract, and enable any contractual and commercial issues to be resolved.

The contracts to include a special mechanism for resolving any poor performance issues, (lack of service delivery), by allowing any element of a failing service to be substituted by the Council.

Cllr Smith confirmed that the proposed model had been tested and challenged by the cross-party Cabinet Panel and through industry soft market testing. Other options, including re-tendering the existing contract and in-house delivery, had been considered and discounted. In terms of proposed timelines, it was anticipated that the award of the structural maintenance contract would take place in March 2018, with the other contracts following on after this date.

Responding to questions, it was confirmed that the transfer of 45 staff to the council was included in the budget and that the Lengthsman Scheme would be written into the new Term Maintenance Contract.

Experience in developing policies and responding to legislation had reinforced the decision to allow a month between the award of the contract to mobilisation.

Cllr Smith and the Leader of the Council thanked GCC officers for the extensive work and commitment invested in the project. Cllr Smith also thanked those involved in the recent successful completion of the Elmbridge Court Roundabout Scheme.