Archived decisions

Contact: Steve Nicholson ext 6346 email: [email protected]

1. Summary

1.1 This report explores the options for procuring professional services within the Environment Department which are necessary to supplement the internal design consultancy in the design of highway and environmental works and in providing transport assessment and planning. The timing of these considerations is constrained by the need to renew the contract for design services, awarded to Atkins in 2001, which is due to expire in April 2006.

2. Corporate Strategy

2.1 The proposals support Aim 3 (Achieving economic prosperity) and Aim 2 (Stewardship of the environment) of the Corporate Strategy by influencing how services are procured across highway authority and transportation functions, so that sustainable efficiencies are delivered to meet Best Value obligations for continuous business improvement.

2.2 The options for procuring professional services are being considered at a time when procurement policy, in general, is under review, which in the longer term may give rise to significant changes in how services are procured across the delivery of highway and traffic management services. It is therefore proposed that, in developing plans for ensuring continuity of professional service support, flexibility is built-in to allow for wider consideration of how the design services could be coordinated in future highway construction and maintenance work. Overall, the work will consider how to apply the principles of the Government `Rethinking Construction' agenda with the aim of delivering cost savings projected by the Gershon Efficiency Review.

3. Background

3.1 Traditional procurement practice has been focused on buying the goods and services required to achieve specific Service Delivery Plans, where service development teams have initiated the form of procurement. In recent years the way key contracts and services are procured has been influenced by changes in the services delivered. For example, the Atkins commission for professional services, integrated with the Department's internal design consultancy, was procured to support the delivery of a step change in the County Council's output of integrated transport schemes. The county-wide highway term maintenance contract with Raynesway Construction Southern Limited sought to improve efficiency and quality and included certain highway maintenance devolved functions being transferred back from the district councils to the County Council.

3.2 The County Council is now taking a more corporate approach to procurement. There are also a growing number of Government initiatives focusing on procurement to deliver efficiency gains. Hence, it is reasonable to assume that scope exists for further significant improvement, which is reflected by procurement being part of the CPA improvement plan for the County Council, established from the review in December 2004.

3.3 Setting the role of professional consultancy services within the overall service strategy is a priority, as the current contract with Atkins will expire in spring 2006.

4. Key Policy Influences

4.1 The standing Best Value obligation for seeking continuous business improvement has been given specific policy emphasis in the area of procurement by Sir Peter Gershon's Review of Government Efficiency (the Gershon Review). The projected savings from adopting a smarter procurement approach across the public sector are now embedded in the spending plans of Government Departments for the forthcoming three financial years (2005/06 to 2007/08). The projected savings that Government expect to be delivered will affect the County Council.

4.2 The Gershon Review highlights local transport and road maintenance as target service sectors for delivering efficiency gains. In line with Gershon, at the end of last year the Department for Transport published its `Efficiency Programme' which advises that the Highways Agency (HA) is to lead a project to improve roads procurement in local authorities. The HA has been instructed to work with local authorities to develop proposals for improved and collaborative procurement to deliver efficiency gains. Local authorities are now being consulted by the HA on how to deliver the level of efficiency gains expected from local authority roads procurement but this is unlikely to provide firm advice before the tendering process for a professional service contract(s) needs to be commenced. The overall target savings at the national level is shown in Table 1 below. These savings are reflected locally by the Treasurer's proposal to deliver efficiency gains of 2.5 % per year between 2005/06 and 2007/08.

Table 1

5. Professional Service Procurement Options

5.1 The proposed short term strategy would in essence be to retain the current separate procurements for professional services, road maintenance and construction, with the County Council retaining overall responsibility for integration of service delivery. However the contract(s) would be structured to allow future alignment with other term contracts (street lighting and highway maintenance) which have between two and five years to run. The contract(s) will also include incentives for improved integration between design and the construction and maintenance of the works, so that the design consultants are aligned with County Council objectives for managing the highway network on a minimum whole-life cost basis.

5.2 The experience with managing the Atkins design commission will be reviewed taking into account the experience of other authorities, which is shared routinely through the County Surveyors' Society and Service Improvement Groups, at national and regional levels. This work will also explore the benefits of procuring a single design service partner against the alternative of retaining competition by appointing a number of consultant firms using a framework approach. The latter involves a primary procurement competition to establish overarching contract requirements (in a framework agreement) which would lead to the appointment of a minimum of three consultant firms. Having selected the framework consultants, specific work is then issued to one of the three successful firms, based on mini-competitions between the three firms. Further study of this option would also explore the potential benefit from pooling the need for professional services across the Environment Department, and across the County Council, drawing on cross-cutting support from the Corporate Procurement Network. Pooling requirements across the County Council may prove to be essential if sufficient business is to be offered to attract competent candidates on a framework contract basis.

5.3 The arrangement for procuring professional services will follow the guiding principles of the Government's `Rethinking Construction' programme, which advocates a partnering environment involving integrated teams comprising client sponsors, designers and construction/maintenance contractors, where each party is mindful of public policy and commercial goals. In the longer term such an arrangement may invite further reorganisation of the Environment Department. As stated above steps will be taken to ensure that the new arrangements for procuring professional services do not prejudice future options for more radical reorganisation discussed below.

5.4 More radical procurement options are now being promoted by Government, which involve the private sector taking risks as a result of its reward being linked directly to the quality of services delivered. In the extreme this includes PFI arrangements for delivering integrated highway services and Members may be aware that Portsmouth City Council has recently adopted this approach. There is also a growing use of PFI contracts for street lighting services.

5.5 Under its `Rethinking Service Delivery' initiative, the Office of the Deputy Prime Minister set up a Strategic Partnering Taskforce to explore how to establish Strategic Service Delivery Partnerships to deliver improved services in local government. After a two year investigation the Taskforce reported last year. The initiative is linked to new ways of financing change through a prudential system of finance rather than through the former regulated structure. A range of options for establishing public/public and public/private partnerships is covered by the published guidance. It is proposed to look at these options, including the scope for public/public partnerships taking into account the Highways Agency initiative for exploring potential collaboration with the County Council.

5.6 In taking forward new arrangements for procuring professional services, it will therefore be necessary to build-in sufficient flexibility to be able to merge these new arrangements with any further developments that the County Council may wish to introduce in the foreseeable future. To provide this flexibility it is proposed that the new arrangements for professional services are able to be terminated after two years, in 2008.

6. Cost and Timetable

6.1 The study into professional service procurement options will be undertaken using internal staff but some specialist consultant support will be required. Provision has been made to cover the cost of this work within the 2005/06 budget. The estimated cost of specialist consultant support is in the region of £15,000.

6.2 The study is planned to report by early in the summer to allow the procurement strategy to be decided without jeopardising the continuity of service delivery.

Recommendations

1. That the Panel considers the issues set out in the report, and notes the future programme of work to examine procurement options to inform the development of a procurement strategy for consideration by Members later in 2005.

2. That the Executive Member for Environment be advised that the work to prepare for the renewal of the professional service contract should commence in April 2005 and proceed as recommended so as to ensure continuity of resources required for service delivery.

9242/SN