Members considered a new operating model for Highways & Transport and the award of two new contracts for highway and transport services and works.

Members had received a revised report.

The Lead Member explained that the report covered three lots. Lot 2 was intended to remain in-house. Lot 3 would involve the transfer of 31 staff to the Project Centre Ltd or Volker Ltd under TUPE conditions. Overview and Scrutiny had asked about legal costs; it was confirmed that these would be expended through Shared Legal Solutions within the current contract. The like-for-like savings were approximately £90,000 per annum along with £300,000 from optimisation savings. Approximately 80,000 highway trees required inspection; there was a backlog. A new recommendation had been included in the revised report to take this into account. At a cost of £100,000 per annum, 20,000 trees would be inspected.

The Lead Member explained that senior officers believed the proposals would work in a similar way to the Veolia contract. To say there would be no risks would be wrong but the proposals would improve resilience. The council would retain day to day control. The Managing Director explained that a report would be submitted to Employment Panel in January 2017 on the new structure. It was clear that the identification of staff to transfer and those to be retained to deliver contractual arrangements and maintain services was key. The Interim Strategic Director of Operations and Customer Services commented that a lot of work had been undertaken to ensure any risks were mitigated and the savings highlighted would be fully achievable.

The Lead Member for Finance commented that the services under discussion were ones that had an extraordinarily high profile with residents. It was therefore important that an innovative, creative and focussed approach was taken to ensure services continued to be delivered at commercially focussed rates.

Councillor Jones highlighted that she had raised concerns at the Overview and Scrutiny Panel meeting about the report, which was published just 24 hours before the meeting. The proposals represented a fundamental change in the way a range of services were delivered and was an area that had its own way of working with residents and councillors. Unfortunately the report did not set out how the service would operate in the future. The council had seen the success of the Veolia contract, however this area was routine; it could not be said the same for the departments affected. There was no evidence in the report to convince her of the viability of the proposal. A case study of another council that had successfully outsourced the service would have been useful. Some councils had since returned services in house – why? Councillor Mrs Jones acknowledged the benefit of resilience but questioned the risk of losing knowledge bases. She had not seen a business case for the proposal, or any service specifications.  Outsourcing gave little or no savings but increased risks. There was no detail to allow proper scrutiny to take place and she felt this made a mockery of the system.

The Chairman stated that he had confidence in the proposals. Senior officers had undertaken the necessary work. He agreed that a case study would have been useful. Control would be dealt with in the contractual terms and be dealt with through the legal process.

Councillor Beer referred to a lengthy statement he had made at the Overview and Scrutiny Panel about the process not working. The concept of Cabinet was backed up and supported by Panels with the time to scrutinise. He shared the concerns of Councillor Jones in relation to the loss of expertise, particularly in areas such as flooding. He highlighted that an ongoing tree inspection regime was needed and asked what happened after two years?

The Chairman confirmed that the recommendation was for £100,000 to be spent per annum and was baked into budgets. After four years when all trees would have been inspected, a review would be undertaken. He highlighted that staff employed by the borough could leave at any point, but the proposal would put in place contractual arrangements that would have to be fulfilled, therefore the certainty of services was improved. The Lead Member commented that a former employee of 20 years standing with great knowledge of flooding issues in the borough had been involved in the presentation on the contract.  It was noted that the Highways, Transport and Environment Overview and Scrutiny Panel had been fully supportive of the proposals. The Corporate Services Overview and Scrutiny Panel had not; the Lead Member had not been present. Officers were requested to ensure Lead Members were invited to all relevant Panels.

RESOLVED UNANIMOUSLY: That:

i.       Volker Highways Ltd is awarded the contract to provide Lot 1: Highways Management & Maintenance for a period of five years with the option of an extension for two further years subject to satisfactory performance each year.

ii.      The Traffic Management and ancillary services contract, Lot 2, is deferred, until January 2017 pending further review of required services and costs.

iii.    Project Centre Ltd is awarded the contract to provide Lot 3: Highway & Transport Professional Services for a period of five years with the option of an extension for two further years subject to satisfactory performance each year.

iv.    The Strategic Director of Operations and Customer Services and Head of Legal Services in consultation with the Lead Member for Highways and Transport is authorised to complete the appointment process in accordance with Council Contract Rules.

v.      The Strategic Director of Operations and Customer Services in consultation with the Lead Member for Highways and Transport is authorised to restructure the Highways & Transport service to support the new operating model, subject to approval from Employment Panel in January 2017.

vi.    Cabinet awards the tree inspection work, to Volker Highways Ltd. to the value of £100,000 per year