Contact: Kevin Ings, ext 6986 email: [email protected]

1. Summary

1.1 The following decisions are sought:

(i) That small grants continue to be offered to support the work of organisations operating voluntary car schemes.

(ii) That single tender negotiations take place with the operators identified in paragraph 7.3 of the report currently receiving medium sized grants and that new four-year contracts be awarded from 1 April 2008.

(iii) That the criteria in paragraph 8.4 of the report for awarding single tender contracts to area-wide community transport schemes be approved.

(iv) That single tender negotiations using the above criteria take place with the Councils for Voluntary Services, identified in paragraph 8.6 of the report, which operate area-wide community transport schemes and that new two-year contracts be awarded from 1 April 2008.

(v) That a decision on the tendering process for the support of an area-wide community transport scheme in Basingstoke be deferred pending further consideration of the options available.

(vi) That support for new mini-buses will continue through `one-off' grants which will be assessed against criteria, with recommendations being made to the Executive Member for Environment for grant awards.

(vii) That single tender negotiations take place with the current operators of the Dial-A-Ride and Call and Go services identified in paragraph 10.4 of the report and that temporary contracts be awarded for the period 1 April 2008 to 30 September 2008.

(viii) That the Dial-A-Ride and Call and Go services identified in paragraph 10.4 of the report be competitively tendered and that new four-year contracts be awarded from 1 October 2008.

(ix) That the proposal for consulting with existing users of Dial-A-Ride and Call and Go services be agreed.

(x) That the proposal to competitively tender for the development and operation of a county-wide Wheels to Work scheme be approved, with a view to initially awarding a two-year contract as soon as is practically possible, subject to funding being identified.

2. Reason

2.1 Maintaining and developing services provided by community transport schemes in Hampshire contributes towards maximising well-being. This decision will ensure that the County Council can continue to do this in the future, whilst at the same time meeting the necessary requirements of procurement legislation and the Council's Standing Orders.

3. Other Options Considered and Rejected

3.1 The use of grants, partnership agreements, contracts using single tender criteria and competitively tendered contracts have all been considered against the background of the current procurement regulations and the County Council's Standing Orders. The general conclusion was that in future most community transport services would need to be procured through contracts.

4. Conflicts of Interest Declared by the Decision Maker or Other Executive Member Consulted - None.

5. Dispensation granted by the Standards Committee - None.

6. Reason(s) for the Matter being dealt with if Urgent - None.

Approved by: Date:

Councillor M J Kendal

Executive Member for Environment

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Contact: Kevin Ings, ext 6986 email: [email protected]

1. Summary

1.1 The Passenger Transport Group in the Environment Department works with a range of voluntary and community sector organisations to either directly or indirectly support the provision of community transport services that are best delivered by the sector. Many of these arrangements are covered through service agreements.

1.2 The financial arrangements for supporting these schemes in the future has recently been reviewed. This has addressed the need to move from service agreements to grants or contracts as required by the new Hampshire Compact Funding Code and in order to ensure that the County Council meets current procurement regulations and the Council's Standing Orders.

1.3 Ongoing officer discussions have been taking place within the County Council, particularly regarding some of the issues associated with transferring service agreements to contracts. Consultation on the proposed changes with the current larger voluntary sector transport operators and other funders, primarily district councils, has taken place over a four month period. This report summarises the results of this consultation process, and sets out how grants and contracts will be used in the future to support community transport services and the timescale for implementing these changes.

1.4 Maintaining and developing services provided by community transport schemes in Hampshire contributes towards maximising well-being. This decision will ensure that the County Council can continue to do this in the future, whilst at the same time meeting the necessary requirements of procurement legislation and the Council's Standing Orders.

2. Recommendations

2.1 That small grants continue to be offered to support the work of organisations operating voluntary car schemes.

2.2 That single tender negotiations take place with the operators identified in paragraph 7.3 of the report currently receiving medium sized grants and that new four-year contracts be awarded from 1 April.

2.3 That the criteria in paragraph 8.4 of the report for awarding single tender contracts to area-wide community transport schemes be approved.

2.4 That single tender negotiations using the above criteria take place with the Councils for Voluntary Services, identified in paragraph 8.6 of the report, which operate area-wide community transport schemes and that new two-year contracts be awarded from 1 April 2008.

2.5 That a decision on the tendering process for the support of an area-wide community transport scheme in Basingstoke be deferred pending further consideration of the options available.

2.6 That support for new mini-buses will continue through `one-off' grants which will be assessed against criteria, with recommendations being made to the Executive Member for Environment for grant awards.

2.7 That single tender negotiations take place with the current operators of the Dial-A-Ride and Call and Go services identified in paragraph 10.4 of the report and that temporary contracts be awarded for the period 1 April 2008 to 30 September 2008.

2.8 That the Dial-A-Ride and Call and Go services identified in paragraph 10.4 of the report be competitively tendered and that new four-year contracts be awarded from 1 October 2008.

2.9 That the proposal for consulting with existing users of Dial-A-Ride and Call and Go services be agreed.

2.10 That the proposal to competitively tender for the development and operation of a county-wide Wheels to Work scheme be approved, with a view to initially awarding a two-year contract as soon as is practically possible, subject to funding being identified.

3. Background

3.1 In January 2007 the Executive Member for Environment considered a report which set out the proposed future arrangements for supporting community transport services. This addressed the need to move from service agreements to grants or contracts as required by the new Hampshire Compact Funding Code, which in turn would ensure that the County Council met the necessary procurement regulations and the Council's Standing Orders. It reflected the understanding of the issues at that time:

(i) New arrangements should be introduced as soon as practically possible after 1 April 2007 but existing service agreements could continue until their expiry date.

(ii) Services such as Dial-A-Ride and Call and Go would probably need to be subject to contract, possibly through single tender action, but that further discussions should take place on the most appropriate arrangements for funding these services.

(iii) That in the remaining cases the existing grants and service agreements should become grants with conditions attached and offered, where appropriate, on a three year renewable basis, eg transport organiser's posts at district-wide community transport schemes, vehicle grants, small scheme payments, scheme start-up grants, etc.

(iv) That changes to funding arrangements would need to be the subject of consultation with the sector, in accordance with the Compact.

3.2 Consultation on the proposed future arrangements commenced on 30 April initially for a 12 week period but this was extended until 20 August at the request of the voluntary sector. The results of the consultation process are set out below with the remainder of the report setting out how grants and contracts will be used in the future to support community transport services and the timescale for implementing these changes.

4. Consultation Results

4.1 Consultation and information gathering have been taking place with:

(i) existing larger voluntary sector transport providers in Hampshire which would be directly affected by the proposed funding changes;

(ii) district councils which fund, in partnership with the County Council, many existing community transport services in Hampshire;

(iii) other local authorities to determine their own approaches to supporting and providing community transport services;

(iv) officers from the Chief Executive's Department to consider the options and issues associated with transferring service agreements to contracts; and

(v) an independent transport consultant from the TAS Partnership, to determine what could be learnt from experiences elsewhere.

Each of these areas are now considered in turn.

Voluntary Sector Transport Operators

4.2 In view of the sensitivity of the issue, it has been important to get the consultation process right. Initial and mid-term meetings have taken place with the voluntary sector and a number of consultation documents have also been circulated.

4.3 Not surprisingly, the voluntary sector has opposed the proposed changes, although there has been recognition that the consultation process has been well done and in line with the Hampshire Compact good practice. The strength of feeling has been evident during the consultation meetings; correspondence during the consultation period; the robust lobbying of Members; and in the formal responses submitted.

4.4 A joint response was received on behalf of 10 organisations. In addition, five organisations submitted individual responses. Some of the individual responses were also from organisations which had signed up to the joint response. The joint response stressed that the current arrangements were based on positive relationships, innovation and flexibility in the spirit of meeting local needs, including those of vulnerable people. They feel that a tendering process has the potential to disrupt this and will not achieve the outcomes stated in the consultation document. In particular they consider that it will:

(i) not result in Best Value;

(ii) decrease accessibility for vulnerable people due to reduced service provision; and

(iii) not maximise the use of public money.

Officer comment: The risk of higher costs or reduced levels of service is recognised although through careful design of the tender process the aim will be to seek to reduce risks to contractors, stimulate innovation and encourage realistically priced tender bids. There is however no other option for procuring these services under current legislation.

4.5 The operators also made a number of detailed comments on the proposed tendering process, a number of which are summarised below:

(i) user groups and passengers need to be consulted and their comments should inform the tender specification;

(ii) evaluation of tenders should favour quality: 70% quality, 30% price;

(iii) criteria on quality and added value need to be clearly set out to ensure that the needs of vulnerable people are not reduced to a pricing exercise;

(iv) Quality Assurance: this should not be too specific (eg ISO9001) and be commensurate with the service being sought. There should be recognition of a history of successful service delivery;

(v) framework contracts are preferred;

(vi) payments: the payment profile proposed for Year 1 should apply to each year during the contract period; and

(vii) exceptional costs clause: examples are needed to help operators apportion risk.

Officer comment: The quality of service is clearly important. Where services are to be competitively tendered consultation with passengers will be used to understand the aspects of quality they value most. A pre-qualification process will be used to ensure that potential bidders meet a quality threshold. Additional quality and added value will be taken into account in the evaluation process. A 30:70 bias in favour of quality over price could mean that there is no option but to accept a bid that offers very high quality but is priced well in excess of the budget available. It is therefore recommended that the minimum quality threshold be set fairly high and the evaluation be based on a price:quality balance of 60:40 or 70:30. The comments on the payments profile and exceptional costs clause are accepted and should help to reduce perceived levels of risk.

4.6 In general terms the consultation has shown that existing operators see tendering for contracts as embodying significantly higher risks than operating under service agreements. Where services are to be tendered then further work is needed to reassure operators that the current service agreements are a form of contract and therefore the new contracts are very similar in terms of the level of risk to operators. The tendering process itself will be carefully explained to potential bidders in a seminar when the tenders are issued, to ensure that tenderers fully understand the process and what they need to do.

District Councils

4.7 District councils also had the opportunity to attend the initial and mid-term consultation meetings and were sent the consultation documents. Nine district councils have submitted formal responses.

4.8 The district council responses generally acknowledged the need to move away from service agreements and in most cases reflected the County Council's concerns about the possible increase in prices that may result from a competitive process. Quality of service was seen as important and, whilst price is also important, the tender process needs to make sure that the high quality of service to passengers is maintained.

4.9 Several councils felt that the move away from three-way service agreements to contracts, where the County Council would be the contracting authority, could diminish the role of the districts. This will need to be recognised in some way, as the districts will remain as joint funders and there is a need to acknowledge their equal status, perhaps in a form of partnership arrangement. A number of councils wished to be fully involved in the drafting of the service specification for their areas, and in the selection of the tender list and of the successful tender.

Officer comment: Recognising the joint funding arrangement it has always been the intention for districts to be closely involved in this process.

Other Local Authorities

4.10 Other local authorities have been contacted during the consultation period to establish the national position although few authorities have responded. Cheshire and Milton Keynes have both tendered for Dial-A-Ride schemes and seen an increase in prices. Both Dial-A-Rides have been won by a London operator - Ealing Community Transport. Elsewhere, services seem to be supported by a mix of service agreements and grants. Having taken informal soundings with a consultant, the general trend appears to be moving in the direction of tendering, albeit the pace is fairly slow at present.

Legal Position

4.11 Legal advice has been sought throughout this process to consider the most appropriate way of supporting community transport services in the future. The role and use of grants, partnership agreements, contracts using single tender criteria and competitively tendered contracts have been considered against the background of the current procurement regulations and the County Council's Standing Orders.

4.12 The resulting conclusions were that grants are most appropriate where voluntary organisations approach the County Council for financial support towards an activity which they have identified themselves and wish to progress. In these situations conditions can be applied to the grant, to offer some control over how the money is used. Alternatively, where the County Council is wishing to specify, outline or influence the service operated by a provider in return for a payment then a contract is advocated. This means that in most cases community transport services in Hampshire will need to be procured through contracts but that in some instances a case could be made for securing these through a single tender procurement process. Any contracts will need to comply with the current procurement regulations and the County Council's Standing Orders.

4.13 A useful outcome from the advice has been the suggestion that where competitive contracts apply then the use of a `framework contract' approach could be considered. Whilst this would still require competitive tendering, the framework approach can protect small enterprises and allows safeguards to be built in to stop one bidder winning most or all of the contracts.

Advice from Independent Transport Consultant

4.14 During the consultation period the County Council also sought advice from John Taylor, an independent transport consultant from the TAS Partnership - a leading firm of transport consultants. John Taylor has worked on a number of community transport consultancy studies in Hampshire and is recognised nationally as a leading expert in this field. The advice sought from this source supports the emerging view that many of the community transport services which the County Council supports should in future be secured by contract. It also reinforced the view that this is an area of procurement now being considered by many local authorities.

5. Future Funding Arrangements

5.1 Currently financial support for community transport services takes a number of different forms, as set out below:

(i) small grants - often less than £1,000;

(ii) medium sized grants for transport services - under £10,000;

(iii) contributions through service agreements towards the core infrastructure costs of area-wide community transport schemes, such as those run by Councils of Voluntary Service;

(iv) grants through service agreements towards mini-bus purchase, to facilitate affordable transport for voluntary and community groups;

(v) operation of Dial-A-Ride and Call and Go services through service agreements; and

(vi) operation of Wheels to Work schemes through service agreements.

5.2 The proposed future funding arrangements for each of these areas, together with the process and timescale for implementing any changes, is set out in the following sections of this report. Where this is different to that reported to the Executive Member in January 2007 this is identified.

6. Small Grants

6.1 These are typically for sums of a few hundred pounds per annum, such as grants to make up losses made by community care groups and good neighbour schemes in operating their car schemes with volunteer drivers. These schemes provide a valuable safety net for older and vulnerable people, particularly in providing transport to local services. In view of the small sums, grants will remain the most appropriate form of financial support.

7. Medium Sized Grants

7.1 These are typically grants of less that £10,000 per annum which the County Council allocates for the operation of specific services such as:

(i) weekly or fortnightly shopper services for people with mobility difficulties, such as the `Denmead Shopper';

(ii) small-scale rural Dial-A-Ride services run entirely by volunteers, such as those in the Romsey and Bishops Waltham areas; and

(iii) community care groups and good neighbour schemes operating larger scale car schemes.

7.2 In some cases these grants are matched by payments from other funders. Originally, it was proposed that in view of the modest sums involved, the good value represented by the current providers and the lack of alternative providers, that grants should continue to be the most appropriate form of financial support for these services. This is still considered to be the most appropriate approach for supporting the work of the larger scale car schemes.

7.3 However, as some of these grants are currently used to secure the delivery of regular services it is proposed that in future these should be supported through a single tender contract arrangement due to their low value, specialist nature of the service and, in some cases, their heavy reliance on volunteers. It is considered that the prices which are currently being secured for these services are both competitive and reasonable given the high reliance on volunteers. Current market conditions are such that the costs of providing these services by a commercial operator would be significantly higher than identified in the table below. The current services affected by this are:

7.4 Contracts will be offered for a four-year period with the option of a further year extension and the threshold for these contracts will be index linked for inflation. Approval is sought to enter into single tender negotiations with the above operators for the operation of these services for a four-year period from 1 April 2008.

8. Area-wide Community Transport Schemes

8.1 These community transport schemes provide a pool of wheelchair accessible mini-buses, available for hire by local voluntary and community groups. The contribution made by the County Council usually represents the cost of a `transport organiser' post and associated administration costs to oversee the operation of the fleet, ensure that the mini-buses are properly maintained, and recruit and train volunteer mini-bus drivers. The reason behind these grants is to build capacity in the voluntary and community sector. It is a more efficient and effective use of public money to build capacity within a single organisation, which can make good use of its mini-buses by hiring to a range of groups, than to provide individual grants to organisations to purchase their own mini-buses, many of which will be little used.

8.2 Originally it was suggested that the service agreements which cover these schemes should be replaced with three-year grants, renewable annually, with conditions attached. However, the advice subsequently received would suggest that these payments should be administered under contracts as opposed to grants. There would, however, seem to be a case for awarding these contracts through single tender negotiation. Under Standing Orders there are existing criteria which cover two main reasons for not seeking competitive tenders:

(i) a specialist provider - only one company is able to provide a service, for example this can apply to specialist care providers;

(ii) emergencies - where a short term contract needs to be put into place pending competitive tendering, for example securing a service where a contractor ceases trading at short notice.

8.3 In order for these schemes to be considered as specialist providers, single tender criteria would need to be developed and agreed and then negotiations could take place with relevant organisations who fulfil these requirements. In addition to this there would be a need to put an entry on the County Council's procurement website to give notice that these particular contracts would be let by way of negotiation.

8.4 Organisations which host these area-wide community transport schemes need to fulfil the following criteria:

(i) a not for profit organisation able to legally operate mini-buses under Section 19 permits;

(ii) experience of operating accessible transport;

(iii) access to a pool of mini-buses (standard and accessible);

(iv) ability to select, recruit, train and support volunteer drivers;

(v) ability to deliver MiDAS minibus driver training;

(vi) able to operate from a local base in the area served by the scheme so that minibuses can be easily collected and returned by hire organisations at minimum costs;

(vii) ability to deliver support and advise in areas of legislation and good practice to other local voluntary organisations providing transport, eg voluntary care groups, etc;

(viii) evidence of working in partnership with statutory bodies in delivering services;

(ix) have a district-wide remit to support, advise and foster the development of voluntary and community activity and well being;

(x) evidence of good working relationships with voluntary and community groups in the scheme's area of operation; and

(xi) experience of reaching and working with `hard to reach' groups.

8.5 Only one type of organisation fulfils all the above criteria - the Councils of Voluntary Service (CVS). These organisations have additional strengths:

(i) Transport is closely linked to their community development role. If they are working with an organisation to develop voluntary day care provision, they can also provide transport to enable it to happen.

(ii) Their ability to recruit volunteer drivers is greatly enhanced by the fact that most CVS also run a Volunteer Bureau specifically to recruit and place volunteers.

It is therefore proposed that the CVS be regarded as specialist suppliers, each being the only organisation able to meet the single tender criteria within the district in which they operate.

8.6 The current details for the area-wide community transport schemes are listed below:

8.7 With the exception of Basingstoke Community Transport, all of the above providers are CVS and would meet the criteria for single tender negotiation. Approval is therefore sought to enter into single tender negotiation with these operators. Contracts will be offered for a two-year period with the option of a further year extension with these contracts being in place by 1 April 2008. Basingstoke Community Transport is an independent organisation and not part of a CVS. It therefore does not meet the single tender criteria and support for an area-wide community transport scheme in Basingstoke will need to be tendered. There may be merit in tendering this together with the dial-a-ride service in Basingstoke but further consideration of the options is needed. It is therefore proposed that a decision on the appropriate tendering process for Basingstoke be deferred at this stage.

8.8 The proposed single tender arrangement for the other five schemes listed in the table in paragraph 8.6 recognises and seeks to maintain the partnership arrangement which exists with the current operators. In many cases the operation of these schemes is directed by a steering group which comprises a range of stakeholders, including funders and others, which bring particular expertise to assist the overall development, direction and management of the scheme. Together these partners agree shared objectives and seek to identify local transport needs and responses to these. In order to ensure consistency across the county it is proposed that Steering Groups should be in place for each of these schemes where they are supported through single tender action, and that the County Council should work with each of the operators to implement this by the start of the new contracts in April 2008.

8.9 Currently, there are three districts where the County Council does not directly support financially the infrastructure costs of area-wide community transport schemes - Fareham, Gosport and Winchester. A further report will be prepared for a future decision meeting which will look at completing support for a network of schemes across the county.

9. Grants toward Mini-buses Purchased to Facilitate Affordable Transport for Voluntary and Community Groups

9.1 The County Council currently provides grants towards the purchase cost of voluntary sector mini-buses, largely using funds from the Local Transport Plan capital programme to assist the availability of affordable transport locally. Grants are mainly provided to the area-wide community transport schemes, although some grants have also been provided to other organisations whose mini-buses are widely used by the local community. All such grants are generally attached to service agreements which set out conditions of use, performance, etc.

9.2 Originally it was proposed that this support to schemes should continue to be administered as `one-off' grants but that the service agreements should be replaced with conditions attached to the grants. This is still considered to be the most appropriate way forward. However, the process for allocating these grants will change. In future any funds which are available for vehicle replacement will be advertised on the County Council's website along with criteria and a process for application. Applications will then be considered against the criteria with recommendations being made to the Executive Member for grant awards.

10. Dial-A-Ride and Call and Go Services

10.1 The provision of Dial-A-Ride and Call and Go services in Hampshire is currently procured through service agreements. Originally it was suggested that because the service agreements for Dial-A-Ride and Call and Go clearly related to service delivery, there was a strong case for replacing these existing agreements with contracts. As there was strong evidence to suggest that open competition for contracts in this particular area has not delivered good value for money, it was suggested that the scope for awarding these contracts by single tender negotiation should be investigated.

10.2 Whilst this option has been explored through the consultation process, it has become very clear from the advice and guidance received that these services should in future be secured through a competitive tender process, in order to ensure compliance with the relevant procurement requirements. This is because there is potentially a range of transport providers for each of these services.

10.3 The challenge for the County Council, therefore, is to determine a process for competitively procuring these services in the future which will offer the best opportunity both for securing value for money and for achieving the Council's overall transport objectives of improving accessibility. Given this, the preference is to procure these particular services in future through a framework contract. This has the advantage of potentially overcoming the Council's concern that a new entrant to the market could win most or all of the tendered services. On the expiry of the first contract, the monopoly provider would then be in a dominant position, as the previous operators may have lost their expertise and not be in a position to bid for the next contracts. A framework approach allows a limit to be placed on the number of individual services that can be won by one contractor. This would help to maintain a diversity of providers and avoid a monopoly supplier emerging and exploiting its position.

10.4 The current details of the Dial-A-Ride and Call and Go services which would need to be competitively tendered are set out below:

10.5 Given the nature of the tendering process, this will involve the development and implementation of a framework contract with the start date for new contracts expected to be 1 October 2008. This allows for user consultation to take place, a two stage framework tender process and a `hand-over' period should there be a change of provider. New contracts are expected to be for four years. Service agreements on many of the existing services above expire on 31 March 2008 and this means that interim arrangements would need to be agreed prior to the award of contracts following the tendering process.

10.6 As previously mentioned, the support currently provided to the Basingstoke Community Transport Scheme needs to be tendered, as the organisation does not fulfil all of the single tender criteria. In view of the fact that a previous consultant's report for the County Council suggested the merger of the Basingstoke Dial-A-Ride and Basingstoke Community Transport operations, there may be a case for tendering these two services together following further consideration of the options available.

10.7 One of the issues raised during the consultation process was the need to consult with existing users regarding any possible changes to services. Consultation with the users will focus on satisfaction levels with the current services, improvements users may wish to see to the current services, together with those aspects of the service which they consider to be most important. The latter will be used to guide any decisions which may need to be made about changes to service levels following the retendering exercise. The proposed consultation will take place through a number of service-based focus groups with a structured sample of over 100 existing Dial-A-Ride and Call and Go users who will represent a cross-section of users. This will be facilitated by an independent consultant and will cost approximately £5,000.

10.8 Where service changes are possible following retendering, then further specific focus groups may be held with users to help inform any service decisions. For example, if the lowest tender was higher than the budget available, then the feedback from the user focus group could inform the decision on how best to reduce the level of service to the budget available. It is proposed that the above user consultation arrangements be agreed. This will also ensure equality issues are explored. The above costs will be funded through the Community Transport Budget.

11. Wheels to Work Schemes

11.1 The provision of Wheels to Work schemes in Hampshire is currently supported through service agreements. Two small-scale schemes currently operate in Hampshire. Given the intention to begin the process of merging the two existing schemes into one, to then roll-out Wheels to Work in the districts of East Hampshire and Winchester, the annual value of this enhanced scheme is expected to be in the region of some £50,000. A contract for this scheme will therefore need to be awarded through a competitive process. As the development of this scheme is one of the rural pilots then it is proposed that the competitive tender process for this scheme should start as soon as is practically possible and the contract awarded, subject to affordable bids being received and funding being secured from East Hampshire District and Winchester City Councils. It is anticipated at this stage that the implementation of a county-wide scheme will most likely begin early in 2008.

12. Implications of the Proposed Changes

12.1 Under the proposals contained in this report, many of the existing voluntary organisations in Hampshire will be able to continue providing their current transport services, even though there will in some cases be changes to the approval process. Smaller organisations will still be eligible to apply for grants and small-scale services and virtually all the area-wide community transport schemes will continue to be supported through the award of single tender contracts. The majority of the services provided by these organisations rely very heavily on volunteers and the proposed arrangements will ensure that this valuable contribution and benefit to the local community is not lost. For these organisations, the proposals will also allow the strong working partnerships which have been built up with the County Council over 20 years to continue, whilst also ensuring that the ability to increase capacity in the sector is present at a time when conventional bus services are seen to be reducing in rural areas.

12.2 The most significant impact will be for the current operators of the larger Dial-A-Ride services, Call and Go and the Wheels to Work schemes. Current service agreements offer good value for money. The limited experience of tendering following the Best Value Review of Passenger Transport showed that when the Havant Dial-A-Ride and Leigh Park Cango service were jointly tendered, this resulted in the lowest tender price being significantly above that of the previous price paid under a service agreement, even though the operator was the same in both cases. Portsmouth City Council had a similar experience when it tendered the Portsmouth Dial-A-Ride service. There is therefore a strong possibility that tender prices could be higher than the current funding levels. This view has been supported through the consultation process where operators have clearly indicated that they regard the level of risk in a competitive tendering situation as significantly higher than under a negotiated service agreement. One outcome of the tendering process could therefore be that the community transport budget will buy a smaller volume of service. Clearly the challenge for these services will be to develop a framework contract tendering approach which can, as far as possible, minimise the risk to operators, maintain the current service and quality levels and achieve value for money for the Council and its funding partners.

12.3 Where existing voluntary sector transport operators lose their services through tendering then a number of financial impacts could result:

(i) One-off costs for the existing operator will result directly from the need to transfer staff and assets to another contractor. There may also be longer term funding implications owing to the loss of the contribution which the service made to the overheads of the organisation as a whole. Staff redundancies, although expected to be limited, may arise where an organisation has to slim down its activities to fit its remaining funding. This will undoubtedly have an effect on the ability to deliver those services which remain with the organisation.

(ii) One-off costs for the County Council, as it would be expected to help meet any one-off costs incurred where an organisation loses work for which it is currently funded, particularly where this may affect other areas of the organisation's operation.

12.4 A move from service agreements to competitive contracts for these services will require the support of the district councils. Many of the risks which the County Council may be exposed to through this process, they will also share. Whilst the district councils collectively acknowledge the need for these changes some have also indicated their concerns that the move away from the three-way service agreements to contracts, where the County Council would be the contracting authority, could diminish their role. Clearly there is a need to work closely with district councils throughout this process to ensure that this source of funding is not reduced or lost and that partnership working is retained.

12.5 Where services are to be competitively tendered there could be impacts on the existing service users, both in terms of changes to service provision and in terms of the uncertainty which the whole process will cause. This situation in turn has, quite understandably, the potential to attract adverse media coverage. Communicating the proposed changes to existing users will therefore need to be undertaken both carefully and sensitively. The proposed consultation process will also allow users' views to influence any future decisions about the services which they use.

12.6 The whole process of moving from service agreements to grants and contracts is expected to absorb significant resources over the next 12-18 months and this may result in some staff resources being directed away from other areas of work. In particular the work will involve:

(i) undertaking user consultation - in turn the results of this will need discussion with district council partners for each service, to decide how the service specification may need to change to meet users' priorities;

(ii) determining the ownership and transfer of assets - agreeing with each scheme which assets have been funded solely by county and district councils and other assets provided by fundraising which will not transfer;

(iii) ensuring that schemes provide TUPE details for staff who may transfer. This has proved time-consuming in the past; and

(iv) assessing tender results, in partnership with district councils, for each service.

13. Impact Assessments

13.1 Many of the services operated by these schemes and services will be available to all bona fide voluntary and community groups in their area of operation. Where services are available to individuals they are often targeted at members of the community who are disadvantaged in some way.

14. Conclusion

14.1 This report outlines the changes which need to be made to the financial arrangements for supporting schemes in the future, in order to ensure that the County Council meets procurement regulations and the Council's Standing Orders. These changes will mean that some existing organisations will continue providing their current transport services even though there may be changes to the approval process. In contrast, service providers for the larger Dial-A-Ride, Call and Go and Wheels to Work schemes will need to bid to run these services within a competitive tender process. Clearly the challenge will be to develop a framework contract tendering approach which can, as far as possible, minimise the risk to operators, maintain the current service and quality levels and achieve value for money for the Council and its funding partners.

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