Inclusion of Streetscape and Parking Maintenance Activities Within the Highway Services Contract

18/11/2013

1
CHESHIRE EAST COUNCIL
CABINET
Date of Meeting: 17 September 2012
Report of: Strategic Director – Places and Organisational Capacity
Subject/Title: Inclusion of Streetscape and Parking Maintenance
Activities Within the Highway Services Contract
Portfolio Holder: Cllr Rod Menlove
1.0 Report Summary
1.1 This report seeks Cabinet approval to extend the scope of the Highways
Services Contract by the inclusion of existing Streetscape and Parking
Maintenance (excluding parking enforcement) activities that are currently
undertaken directly by the Council (refer to 10.2 and 10.6 for full details).
The activities being considered are those that are predominantly
undertaken within the highway boundaries or those activities (such as
grounds maintenance) that are similar in nature to cyclical and routine
activities undertaken within the scope of the Highways Services Contract
currently managed by Ringway Jacobs. The report outlines the benefits
and risks of extending the scope of the Highways Services Contract. The
report also seeks delegated authority to commence discussions with
Ringway Jacobs that will ultimately aim to result in the new service
arrangements commencing on 1 January 2013.
1.2 It is anticipated that the increased contract scope will realise immediate
savings in the last quarter of 2012-2013 in excess of £50,000, increasing to a
full-year saving of over £250,000 during 2013/14 on existing annual revenue
budgets within Streetscape, rising to a value of circa £450,000 per annum
from 1 April 2014 after the first full year of operation, without any reduction in
existing service standards and any compromise on ongoing initiatives.
Parking Maintenance will see efficiencies generated from combining the
management activities with those undertaken within the Highways Team,
seeing works associated with Traffic Regulation Orders and maintenance
activities that are common to both areas being combined as one operational
team activity without a reduction in service standards. It is anticipated that
after the first full year of operation, efficiencies generated will be in excess
7.5% of current operating costs.
1.3 Members attention is drawn to paragraph 10.13 which describes how these
proposals are intended to be complimentary to the Council’s localism agenda.
Agenda Item 7
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2.0 Decision Requested
2.1 Cabinet is requested to approve the (subject to no challenge being received
during the Voluntary Ex-ante Transparency Notice period commonly
referred to as the VEAT notice) extension of the scope of the Highways
Services Contract to include Streetscape and Parking Maintenance
activities as outlined in 10.2 and 10.6 below.
2.2 To approve the publication of a procurement VEAT Notice
2.3 To approve the development of a detailed activity programme that will
engage with elected members, existing employees and their Trade Union
representatives with a view to achieving a commencement date of 1
January 2013 for the new service delivery arrangements.
2.4 To note that extending the scope of the Highways Services Contract will
trigger the automatic application of the TUPE Regulations which will affect a
transfer of a number of existing Council employees within the Streetscape,
Parking and Fleet Services to Ringway Jacobs.
3.0 Reasons for Recommendations
3.1 Due to the ever increasing financial pressures that the Council is facing,
new and innovative ways of service delivery are required that will allow the
Council to achieve ‘more for less’, ensuring that existing service provision
continues to the same high standards as delivered previously whilst being
sustainable in future years.
4.0 Wards Affected
4.1 All Wards are affected by the proposal.
5.0 Local Ward Members
5.1 All Ward Members are affected by the proposal.
6.0 Policy Implications including – Carbon Reduction
- Health

6.1 The existing Highways Services Contract requires Ringway Jacobs to carry
out the services in a manner that achieves greater value for money for the
Council, year on year, by reducing costs and delivering the Services more
efficiently whilst seeking to maximise the achievement of the Council’s
Strategic Objectives throughout the contract period. Our Strategic
Objectives include ‘limiting carbon emissions’, which ensures that Ringway
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Jacobs are required to demonstrate that they are achieving this.
Additionally, in support of this, Ringway Jacobs must also maximise the
‘achievement of the objectives set out in the Local Transport Plan’. The
Local Transport Plan includes Priority Policies that work towards carbon
reduction, through for example, minimising the future need to travel and
through encouraging technological development in transport services in
partnership with operators.
6.2 Ringway Jacobs have already embraced the Council’s objectives
associated with well being and carbon reduction and in the short time they
have been in operation, have become an integrated member of the Carbon
Reduction Group. The same approach will apply to all services included
within the increased scope of contract.
6.3 An existing performance framework exists which requires Ringway Jacobs
to measure performance in this area with challenging targets established for
energy reduction.
7.0 Financial Implications (Authorised by the Director of Finance and

Business Services)
7.1 The services which are included within the scope of works for the Highways
Services Contract and undertaken by Ringway Jacobs as core services
have an annual value of around £14 million (capital and revenue).
7.2 The current 2012-13 annual combined value of the Streetscape services
associated with Grounds Maintenance and Street Cleansing activities is
around £5.5 million.
7.3 The new arrangement will deliver immediate savings in the last quarter of
2012/13 in excess of £50,000, increasing to a full year saving of over
£250,000 during 2013/14 on existing annual revenue budgets within
Streetscape, rising to a value of circa £450,000 per annum from 1 April
2014 after the first full year of operation when compared to existing Service
costs. This will be achieved through the removal of existing casual/agency
staff combined with operational efficiencies secured during the first full year
of operation, generating savings of around 7.5% as per the contractual
commitment contained within the Highways Services Contract. In addition
to these initial savings, future year-on-year savings of 3% per annum will be
secured from innovation and efficiency gains. The potential additional
2013/14 & 14/15 savings referred to above (circa £400,000), over and
above the £50,000 savings already secured against the approved 2012/13
budgets, will be reported as part of the Business Planning process for
2013/14 onwards and will be clarified after the detailed work associated
with increasing the Contract scope is completed (as referred to in 7.2
above).
7.4 Parking Maintenance will benefit from efficiencies generated from
combining the Parking Maintenance activities with those similar activities
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undertaken by Ringway Jacobs as part of the Highway Services Contract.
Over the course of the first full year of operation, the Council will benefit
from efficiency improvements that will see a reduction in running costs
without any reduction in service standards. It is anticipated that after the
first full year of operation, efficiencies generated from service delivery will
reduce the current financial pressure across the Service by around 7.5%
combined with a further year on year reduction of 3% per annum associated
with future innovation and efficiency gains. Again, additional future savings
referred to above, the approved 2012/13 budgets, will be reported as part of
the Business Planning process for 2013/14 onwards and will be clarified
after the detailed work associated with increasing the Contract scope is
completed (as referred to in 7.2 above).
8.0 Legal Implications (Authorised by the Borough Solicitor)
8.1 The Council has entered into the Highways Services Contract (the
Contract) with Ringway Jacobs. The term of the Contract is five years with
the opportunity to extend for a further two years (depending on performance
and at the Council’s ultimate discretion). The Contract commenced early
October 2011.
8.2 The Council, as Highway Authority for the Cheshire East area, has
numerous powers and duties under the Highways Act 1980 to carry out
highway associated activities including maintenance, improvement and
repair work on the highway network all of which were included within the
original contract scope as set out in the OJEU Procurement Notice (the
Notice) for the Contract. None of the duties discharged by Ringway Jacobs
on behalf of the Council relieve the Council of those powers and duties and
the Contract contains contractual remedies that can be exercised in the
event that Cheshire East Highway’s fails to discharge the functions.
8.3 The Highways Services Contract sets out very clearly the statutory
obligations of the Council the performance of which, are delegated to
Ringway Jacobs along with the protocol for the discharge of other statutory
obligations of the Council.
Substantially amending the scope of a contract post award of tender can
lead to a breach of the procurement rules. A substantial change in scope
could amount to an award of a new contract which could then be challenged
as an unlawful award of contract. Some elements of the increased service
e.g. verge and hedge management are specifically within the scope of the
Contract. However other elements, namely street cleansing and grounds
maintenance activities in parks and open spaces amount to a technical
breach of the Notice. Although the wording within the Contract was widely
drafted with a catch all phrase of ‘any additional services as may be
requested by the Employer from time to time’ this would be legally
construed in the light of the overall content of the Notice and the categories
of services included within that Notice. Although adding the services to the
Contract would not result in the value of the Contract exceeding the
estimated financial contract value given in the Notice this is not the only
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issue to consider when interpreting if a change in scope amounts to an
award of a new contract that could be challenged as an unlawful award of
contract.
8.4 Advice was sought from Bevan Brittan, the external solicitors involved in the
procurement of the Highway’s Contract, as to the potential risk of a
challenge that could result from any perceived change in the scope and
value of the contract. Bevan Brittan has provided clear advice as to what is
unequivocally within scope and what is in strict legal terms was outside
scope. A commercial view was proffered as to the risk of challenge by the
unsuccessful tenderers; this was considered to be low. However, a
challenge can be brought by anyone, in practical terms only parties that
might stand to benefit bring claims, however in the given situation the
Council needs to consider the Unions and Members and would be unwise
to proceed in the event that there was not universal support for the action.
Although it is envisaged that the risk of challenge from both internal and
external sources is minimal, the proposed increased scope of activities will
result in a variation to the existing arrangement that is sufficiently material to
fall beyond the scope of works originally advertised and with hindsight
should have been included on the original published OJEU Notice. It is not
only original tenderers that could challenge the award organisations that are
able to provide street cleansing and/or park maintenance might also wish to
challenge, any one could raise a complaint with the EU Commission which
would pursue the Council of its own volition.
8.5 It has been suggested that prior to the Council extending the scope of the
Contract it could protect its position by issuing a VEAT Notice. Provision is
made for the VEAT Notice in the Public Procurement Regulations to be used
to advertise to the market an intention to award a contract directly without
making a call for competition. However these direct awards can only be made
where explicit justification is given. The permissible justifications are set out in
regulation 14 as follows:
(1) A contracting authority may use the negotiated procedure without the prior
publication of a contract notice in accordance with regulation 17(3) in the
following circumstances-
(a) in the case of a public contract-
(i) when a contracting authority is using the negotiated procedure in
accordance with regulation 13(a) and invites to negotiate the contract every
economic operator which submitted a tender following an invitation made
during the course of the discontinued open procedure or restricted procedure
or competitive dialogue (not being a tender which was excluded in accordance
with regulation 15(11), 16(7) or 18(10)); and
(ii) subject to paragraph (2), in the absence of tenders, suitable tenders or
applications in response to an invitation to tender by the contracting authority
using the open procedure or the restricted procedure but only if the original
terms of the proposed contract offered in the discontinued procedure have not
been substantially altered in the negotiated procedure;
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(iii) when, for technical or artistic reasons, or for reasons connected with the
protection of exclusive rights, the public contract may be awarded only to a
particular economic operator;
(iv) when (but only if it is strictly necessary) for reasons of extreme urgency
brought about by events unforeseeable by, and not attributable to, the
contracting authority, the time limits specified in-
(aa) regulation 15 for the open procedure;
(bb) regulation 16 for the restricted procedure; or
(cc) regulation 17 for the negotiated procedure;
The Council does not fit comfortably within these justifications, however as
Bevan Brittan has advised issuing the VEAT is a way of flushing out potential
challenges and would protect the Council’s
position.
Although the publication of the VEAT notice in itself can encourage a
challenge, in practice since the introduction of the New Directive Remedies
these notices are being used across the EU to resolve the changing needs
of long-term arrangements.
A challenge can be received anytime during the first six months of a
Contract but by following the VEAT Notice approach identified above, will
reduce the risk of any challenge being made.
8.6 It must also be noted that extending the scope of the Contract will trigger
the automatic application of the TUPE Regulations which will affect a
transfer of a number of existing Council employees within the Streetscape,
Parking and Fleet Services to Ringway Jacobs.
9.0 Risk Management
9.1 The potential risks to the Council of a procurement challenge are dealt with
in paragraph 8.5 above.
9.2 The Council is at the forefront of pursuing devolution of services and the
objectives of the Localism Act 2011 with its Town and Parish Councils.
Currently a ‘Pathfinder’ is underway with Congleton Town Council. The
Pathfinder has been conducting trials on local delivery of services and is
currently considering the benefits of devolving services from Cheshire East
Council to the Town Council of Congleton. Other Town and Parish
Councils are also considering similar service delivery models. The
extended Contract with Ringway Jacobs will not prevent or delay such
initiatives and is flexible enough to accommodate future delivery needs.
9.3 Achieving the target date of 1 January 2013 for the commencement of
service delivery under the revised scope of contract is dependant upon the
successful completion of 2 key activities, namely, concluding the terms of
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the extension with Ringway Jacobs and liaising with staff and trade unions
in relation to TUPE transfer.
9.4 The Council has recently introduced a requirement for all major projects
and programmes to be reviewed by a new corporate quality assurance
group called the Executive Monitoring Board (EMB) before they can
proceed. Major projects and programmes are defined where there is a total
cost in excess of £250k and/or where there is significant risk. The project
arising from this report will therefore need to be reviewed by the EMB prior
to any approval to proceed being given.
10.0 Background and Options
Grounds Maintenance and Street Cleansing Existing Arrangements
10.1 There are currently 143.3 full-time equivalent (FTE) Council employees
employed on Grounds Maintenance, Street Cleansing and related Fleet
activities, along with 17 FTE agency employees. These 138.3 members of
staff within the Streetscape Service (operatives, apprentices and a mixture
of office-based staff) along with 5 employees who work within Fleet
Services, maintaining vehicles and plant. The exact numbers of staff
eligible for TUPE transfer will be determined as scope of the contract
extension is finalised.
10.2 Services to be included within the revised scope of contract :

All highway verges (Already included within scope of works for Ringway
Jacobs);

Grounds maintenance activities in parks and open spaces;

Horticultural activities;

Tree Management;

Street Cleansing activities; and

Litter & dog bin emptying;
10.3 Services to be excluded from the revised scope of contract:

Allotments;

Public Conveniences;

Markets; and

Bereavement Services
10.4 The operation is currently undertaken from nine discrete sites across the
borough. Locations are determined by the key work locations and the
mobility of the equipment used during maintenance operations.
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Car Parks and Parking Services Existing Arrangements
10.5 There are currently 2 Council employees employed directly working on
Parking Maintenance activities that have been identified eligible for transfer.
10.6 Services to be included within the revised scope of contract:

Maintenance and management of all off-street and on-street parking
facilities.
10.7 Services to be excluded from the revised scope of contract:

Civil parking enforcement activities

All other services within Community Services.
10.8 Although the existing service provision is predominantly focussed upon
parking enforcement issues, all activities associated with Parking
Maintenance and management are common to highway management
activities, requiring the same resources and management/maintenance
regimes to deliver the service. These common practices will allow future
efficiencies to be generated.
10.9 The operation is currently managed within Community Services.
Management Arrangements – Highways Services Contract
10.10 Ringway Jacobs are the service provider for the Councils Highways
Services Contract.
10.11 A ‘Thin Client Team’ has been established to oversee the Contract. The
Thin Client is responsible for ensuring that Ringway Jacobs work in
accordance with the Council’s objectives and achieves all the performance
standards contained within the Contract and complies with all the financial
controls required for a contract of this size and complexity.
10.12 It is intended that the additional service provision identified above in 10.1
and 10.5 will be managed in accordance with the existing Contract. The
size of Thin Client Team may need to be slightly increased to oversee the
additional contract elements and this will be determined prior to service
commencement.
Key Priorities - Addressing Localism
10.13 This is a key objective of the Council and considerable focus has been
given to ensuring that Ringway Jacobs’ solutions address localism. The
Council is at the forefront of enabling its Town and Parish Councils to have
a greater say on the way services are delivered in their areas.

A greater focus upon localism has the potential to increase the
reputation of both Cheshire East and the local Towns and Parish
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Councils. This approach may also gain national recognition for enabling
local working, reducing the amount of complaints received, and
increasing the quality of the services, whilst still achieving the necessary
efficiency savings over the long term.

Ringway Jacobs are committed to working closely with the Council to
achieve any objectives associated with localised devolution
opportunities whilst also embracing any changes resulting from the
introduction of the Localism Act 2011; and Engaging with existing Town
and Parish Councils to form part of the decision making process.

The Council has for some time been working with Congleton Town
Council on a Pathfinder project that, if agreed will see a range of
services being provided by the Town Council. This arrangement would
result in a number of employees being transferred to Congleton Town
Council with responsibility for the provision of plant and other equipment
remaining with the Council and managed via the Highways Services
Contract. It is expected that the financial implications of this
arrangement will provide at least the same value for money as those
provided through the Ringway Jacobs contract.

Should other Town and Parish Councils wish to pursue similar initiatives
the Contract with Ringway Jacobs is flexible enough to accommodate
this along with other local requirements such as the ‘Parish Compact
Agreements’ (arrangement that allows small budget allocations to be
paid directly to Town and Parish Councils to facilitate self delivery of
some services. A number of Parish Compacts remain in place following
their previous use by Crewe and Nantwich District Councils. The
arrangements are expected to continue and may provide a model for
further future devolution subject to the requirement that these
arrangements provide at least the same value for money as those
provided through the Ringway Jacobs contract.

Whilst the Congleton Pathfinder and Parish Compacts illustrate 2 forms
of service devolution it is recognised that others models may develop
over time. The Contract extension with Ringway Jacobs will be
developed in such a manner that supports this subject to the overall
value for money considerations set out above.
Key Priorities - Innovation and Efficiencies
10.14 A key focus under the Highways Services Contract is to improve the
efficiency of the provision of services provided. Ringway Jacobs has
produced a schedule of the potential efficiencies and are currently working
towards achieving them over the agreed timescale. Budgets have already
been adjusted to reflect these improvements.
10.15 Ringway Jacobs (Ringway Jacobs) operates similar contracts across the
UK; this allows them to bring their knowledge and innovation from
elsewhere to benefit Cheshire East.
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Key Priorities – Trade Union and Staff Engagement
10.16 Ringway Jacobs have already demonstrated their ability to work closely
with all employees that are eligible to transfer from the Council. During the
Highways Services procurement, over 140 eligible staff from both the
Council and the existing term maintenance contractor (BAM Nuttall)
transferred to Ringway Jacobs. A Staff Stakeholder Group was created
and was active throughout the transfer process. A new Stakeholder Group
will be established during the proposed change in scope of the Highways
Services Contract. The group will facilitate employee engagement and
cascade information to colleagues as things progress. The group includes
union representatives and allows all issues and concerns to be raised and
discussed on behalf of the wider employee group.
10.17 Key issues and concerns raised during previous meetings have been:

Pension issues;

TUPE issues, when will information be released to staff;

Depot/accommodation strategy – ‘Where will I be based’; and

Programme – timeline of events;
Mobilisation and Contract Commencement
10.18 Unlike the Highways Services Contract the speed at which the existing
Contract scope could be varied and TUPE arrangements progressed could
be completed within a very short period of around twelve weeks. The target
date for new service arrangements commencing is 1 January 2012.
11.0 Access to information
11.1 The background papers relating to this report can be inspected by
contacting the report writer:
Name: Kevin Melling
Designation: Head of Highways and Transport
Tel No: 07825 935258
Email: Kevin.melling@Cheshireeast.gov.uk
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