Decision details

The item was originally included on the Executive Work Programme under "future items for consideration" however officers now advise it should be submitted to the December meeting of Executive as a decision is required to ensure progress in a timely manner. 

Due to the significant impact on two or more wards and financial implications the decision is key (previously indicated). The Chairman of the Overview and Scrutiny Committee has been notified.

Due to the report containing ‘exempt’ information as defined in paragraph 3 of Schedule 12A of the Local Government Act 1972, it has been identified that the report should be restricted (previously indicated). The Chairman of Overview and Scrutiny Committee has been consulted and has agreed to the issue being considered in private, having had regard to the urgency and the financially sensitive nature of the report.

The Director of Community and Environment submitted an exempt report relating to Woodgreen Leisure Centre improvements and the new Leisure Management Contract.

Resolved

(1)          That it be agreed that a three lot procurement approach be adopted in conjunction with South Northamptonshire Council (SNC) to maintain the option of individual decisions by each council whilst exploring the opportunity for mutual benefit through a combined contract.

(2)          That it be agreed that Lot 1 be based on an operating plus investment contract for Woodgreen, Lot 2 be a contract determined by SNC and Lot 3 be the combined option with SNC as a Design Build Operate and Maintain contract subject to further SNC consideration.

(3)          That a whole site annual lifecycle maintenance approach through the use of a mandatory contract variant be considered.

(4)          That tenders for an 18 year operating contract term to align with the end of the Council’s main leisure centres contract be sought

(5)          That the requirement for a very good BREEAM rating for new internal areas be incorporated in the tender documents.

(6)          That the output specification for the contract be prepared based on the approach outlined in the exempt report.

(7)          That the use of the residual Sports Centres Modernisation capital budget to fund the appropriate specialist support and technical surveys in 2014/15 be noted and supported.

(8)          That a building condition survey be undertaken in 2015/16 as part of the capital investment scheme if approved.

(9)          That the joint procurement with SNC of  the relevant external technical support and surveys for the project be supported.

(10)       As set out in the exempt decisions.

(11)       That some flexibility be offered and a non-prescriptive delivery structure within tender documents to seek opportunities for maximum cost efficiency and value for money options from bidders within an agreed overall capital and revenue financial envelope be supported.

(12)       That authority be delegated to the Director of Resources and the Director of Community and Environment in consultation with the Deputy Leader and the Lead Member for Resources to take urgent decisions when these are needed and they fall outside the scheduled Executive meetings.

(13)       That, subject to the prior seeking of legal and procurement advice as to feasibility, the contract be structured to enable other partner Councils to opt to join the contract during its term.

Reasons

Clarity of the market’s appetite for risk, practicable timeframes and different contract options has been achieved through a soft market testing exercise. The conclusions from this are as set out in the exempt decision notice.

Swift decision making will be required throughout the procurement process to adhere to the project plan and meet the tight tender time lines. Although major key decisions and updates will be presented to the Executive regularly, it is recommended that delegated powers are given to the Director of Resources and Director of Community and Environment in consultation with the Deputy Leader and the Lead Member for Resources to take lesser decisions quickly when required and when the need for these falls outside the scheduled Executive meetings.

A DBOM contract is the market’s preferred procurement approach as it provides the operator with design input to maximise income potential and to minimise operating costs. However, this will be dependent on whether one joint contract or separate lots are awarded as the preferred separate option for Woodgreen is an operating contract plus investment. It is therefore recommended that a three lot approach is taken in order to ensure best value for money, test the market and encourage operator innovation. To do this, the procurement documentation should be structured into Lot 1 - based on an operating plus investment contract for Woodgreen,. Lot 2 a contract determined by SNC and Lot 3 the combined option.

As the tender preparation process progresses, a number of key factors have emerged which require a Council direction to enable further preparation to continue. Those identified in this report include - the adoption of an annual lifecycle maintenance approach as a mandatory contract variant so that the Council can assess the financial implications as part of its final decision making process - a contract term of 18 years is proposed to align with the end of the Council’s main leisure centres contract and to provide improved value for money along with sufficient annual lifecycle maintenance benefit - to factor in the corporate energy efficient objective of ‘very good’ BREEAM rated facilities – to incorporate contract flexibility to seek opportunities for maximum cost efficiency and value for money options from bidders within an agreed overall capital and revenue financial envelope - and to be clear on the basis of the output specification to define what the Council wants over the term of the contract which in turn influences what needs to be monitored and measured.

To meet Project Plan timescales and to inform the tender documentation, the procurement of both the Technical Advisors and survey works is recommended now to be funded from the balance of the 2014/15 Sports Centres Modernisation budget given its suitability and sufficiency for the 2014/15 part of this process.

It is recommended that some flexibility be offered and a non-prescriptive delivery structure within tender documents to seek opportunities for maximum cost efficiency and value for money options from bidders within an agreed overall capital and revenue financial envelope. It is also recommended that, if feasible in legal and procurement terms, scope be offered within the proposed contract to enable other partner Councils to opt in at a later date during the contract term.

Alternative Options

Option 1: Three different contract lots

Option 2: Two different SNC investment strategies to address cost risk

Option 3: The inclusion or not of annual lifecycle maintenance