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1 APPENDIX Environment & Economic Regeneration Scrutiny Advisory Board Section 2 Highways T&F Rebid - Highway Works Contract, post Capita/Amey
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APPENDIX
Environment & Economic Regeneration Scrutiny Advisory Board
Section 2
Highways T&F
Rebid - Highway Works Contract, post Capita/Amey
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CONTENTS
Foreword 3
1. Introduction 3 2. Recommendations 4 3. Background 5 4. Findings 9 5. Conclusions 25 6. Appendices 26
Task & Finish Group Members: Cllr Tom Clare (Chair T&F) Cllr Helen Fearon Cllr Joe Holliday Cllr Frank Morgan
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Foreward In presenting this second report on the future of the Highway Service the Chair wishes to thank all members of the T&F Group, Scrutiny officers and staff of the Highway Service. However, the Chair wishes to specifically thank Cllrs Frank Morgan, Helen Fearon and Joe Holliday and Alan Gunston, for all the work they put in during his absence following his unexpected illness. Nevertheless this report represents the considered view of all members of T&F.
1. INTRODUCTION 1.1 This Scrutiny report is concerned with the future of the Highway Service
following the termination of the Capita (management & consultancy) and Amey (works) contracts in January 2011 and March 2012. However, a decision has already been made with regard to Capita and it has also been decided that part of the envisaged new practices/configuration of services will be based around the Better Highways scheme currently being “rolled out”. Both, but the latter in particular, was the principal subject of our earlier, interim report. Consequently this report builds on that report, the questions and issues raised there and the subsequent comments and correspondence.
1.2. It follows that our investigations and findings fall into three parts: firstly comments on the Better Highways/Lean System thinking practices now being deployed; secondly comments, if any, on the arrangements for work formally undertaken by Capita and, thirdly, the options for service delivery after the termination of the Capita and Amey contracts.
1.3. Within the first part the scrutiny review, which was focused on the Better Highways
project, questions emerged on how the learning from the Lean Systems approach to reactive maintenance would be applied to the rest of the Cumbria Highways Service.
1.4. Members have been particularly interested to learn how the thinking would inform any
future contractual arrangements following the termination of the Capita (management & consultancy) and Amey (works) contracts in January 2011 and March 2012 respectively.
1.5. This report is seen as a related but separate stage of the scrutiny review process, it
does however pick up on some of the outstanding questions which were asked by Members as part of the Better Highways review.
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2. RECOMMENDATIONS
1. As part of its decision-making process, and in concluding a way forward, Cabinet Members need to be assured that the questions raised by scrutiny throughout the duration of its Highway T&F work, have been adequately answered.
2. When assessing options for a new Highways Contract, the attributes of flexibility
and responsiveness to economic, social and technological change must be a key factor for consideration if not a principal factor influencing decisions.
3. In any future contractual arrangement, adequate performance management
measures on productivity; cost control; H&S and community measures must be included and, again, must be a factor influencing the choice of option(s)
4. In opting for a stronger client model, the Cabinet must be confident that other
more creative and flexible contractual options which also provide closer client engagement, have been considered.
5. In order that Find & Fix Teams can work effectively and take on their new
delegated responsibilities, it will be essential that a robust and effective training programme is developed and delivered to Find and Fix teams.
6. That monitoring of the efficiency of these teams and outputs continues during
the life of any contract with the latter allowing for changes where and if necessary.
7. A full cost-benefit analysis on the two preferred contract options (2 & 7) are
undertaken in order that a more informed final decision can be made on the most appropriate contractual model for Cumbria Highway Services, post 2012.
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3. BACKGROUND
Current contractual arrangements with Capita/Amey 3.1 The current client/management (Capita); works arrangement (as set up in 1995 was
originally focused with the following key issues in mind:
Current DLO was undertaking 40% of its work external to the County Council and this was considered to be an unsupportable activity
At a time of reducing budgets the council were intent on protecting the employment of the DLO who had significantly grown their business. It was felt that a private sector partner would be able to offer this protection and continue to grow its employee base. Note, that if we do not do so, we might want to make the point that the primary purpose of Highway Service should not be employment but the delivery of the best possible highways.
The authority required a capital receipt.
Private sector investment into ageing fleet and infrastructure.
Payment of significant ongoing annual efficiencies through free work.
3.2 The current arrangements have been described as an inflexible “command and control”
process in which Capita, as the managing agent, inspect, design and instruct the works contractor to undertake reactive and planned work. Contracts were driving the method of working which was not proactive in driving out inefficiencies and delivering an improving service. The structure of the contracts does not help to achieve clear accountability. Most importantly, Performance measures were lacking KPI‟s on productivity, Health & safety as well as „community‟ indicators.
3.3 Feedback to Members would strongly suggest this has led to poor quality and cost
control, many temporary repairs; long completion times; significant „over-designing‟ (Better Highways is working to eradicate this); inefficient use of funds; lack of accountability and an inflexible response to working procedures.
3.4 In discussions with an experienced DSO Director, it was suggested to Members that in
preparing for any new contractual arrangement it was essential that the authority has a clear understanding of what it requires in the future. Any ambiguity in the delivery Better Highways and other services would result in unnecessary risk costs being „priced-in‟ by a third party.
3.5 It has been suggested to Task group members that any new contractual arrangements
should include the following attributes:
Reduced Waste
Delivering customer and community expectations
Improved Customer Service
Increased local Member input
On-going service improvement
Purposeful and effective quality performance measures and KPIs
Effective cost control and reporting mechanisms
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An ability to Protect local employment where possible and without adversely affecting some of the other principles.
As part of the options rebid review process, consideration should also be given to:
Innovation & sustainable first-class delivery
Best Value – securing financial savings to the authority
Reducing TUPE risks to the County Council
Delivery of on-going financial efficiencies
Flexibility to adapt to changing economic, social, political and technological circumstances.
Guaranteed investment in infrastructure; people; innovation and contribution to the local economy
Protecting the interests of the client
Clear accountability across all areas of the service.
Rebid history 3.6 In scrutiny‟s consideration of the build-up to the Cumbria Highways Service rebid
process (post Capita/Amey,2012) it has been necessary for Task & Finish group Members to understand the wider thinking which has informed the Environment Team‟s interim arrangements on the cessation of the Capita contract in January 2011. The following paragraphs which are largely based on Cabinet reports from October 2009 onwards, help to explain some of that thinking.
October 2009 3.7 On 13 October 2009 Cabinet members discussed a range of future service delivery
options in relation to five service areas that were currently being delivered by Capita until January 2011. At this meeting Cabinet Members identified their preferred approach for the future delivery of the service, which related to the strengthened client arrangement.
3.8 The options and subsequent decisions in relation to the authority‟s Highways service,
were about whether or not to bring services wholly or partly back in-house, and/or commission them through various types of contract models and procurement routes. The key outcome was to deliver excellent and flexible services, through „best in breed‟ national best practice, in a cost effective and efficient manner.
3.9 From these discussions it was agreed that under Environment (Highways and
Economic Development work streams), initial work relating to Option 3 - strengthening the client function (design and monitoring) would be developed. In addition, procuring other consultancy advice through existing call-off contracts with other agencies and legally expanding the services currently provided by Amey up to 31 March 2012 would be considered.
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Highways & Transport total capital/revenue budgets for 2009/10 = Approx £54m; Total Client Fees approx £10.4m
3.10 Options Appraisal Summary (Oct 09) Commencing in February 2011 parts of Capita services would be brought back in-house and the remainder into the Amey contract which expires in March 2012. Option 3, was regarded as much more strategic as it enabled the Council time to reinforce the client function and seek to undertake a wider shared Highways, transportation and street scene service, post March 2012. It was recognised that it would be crucial to get the balance right on the client and service
transfer split following Capita in February 2011, as well as the definition of an appropriate contract model, post March 2012
Any transfer of additional works to Amey would require clearly defined targets and penalties
attached to these (including the possibility of re-negotiating improvements to existing KPI‟s and financial guarantees connected to performance targets).
A longer lead-in time would be required due to the complexities of early negotiations with
other public sector bodies and agreement of future contract delivery models It was stated that such a project would need to be addressed from this period (Oct 2009) to
April 2012 to organise and implement. A draft timescale was included in the cabinet paper. It was reported that in excess of 200 staff would be affected. June 2010 3.11 Cabinet resolved to proceed with the Environment re-tendering operations on the basis
of a mix of restricted procedure and framework contract approaches to replace the current Capita and Amey works and that this will be achieved using a mix of in-house and externally procured professional, technical and works contracts at the appropriate time.
3.12 In the report to Cabinet it was proposed that while the staff who were transferring from
Capita to the County Council will be able in the main to provide the professional and technical work for the authority, from time to time there would be the need for additional resources or specific expertise. A range of consultancy services had been identified that would meet the needs of the Environment Directorate both highways & transport and economic development services (work to have been completed by July 2010).
3.13 In developing a set of over-arching principles to guide an objective assessment of the future delivery options following the cessation of the Capita contract, the transition team had also taken into account information and views from a range of stakeholders including Local Committees, Better Highways, professional bodies, scrutiny, bench marking and staff. However, TUPE was, inevitably, a factor in deciding how many staff, and therefore work areas, came back in house from Capita.
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3.14 Working with corporate procurement, options for the procurement of these services had been developed. Where appropriate, options would include the use of design and build and framework contracts. In terms of a Highways Works contract beyond April 2012, Amey currently provides the „works‟ element of Cumbria Highways Service and work had been ongoing to explore a range of contact models for analysis.
September 2010 3.15 At the meeting of Cabinet on 16 September 2010, proposed new delivery
arrangements (post January 2011) for services currently provided by Capita for the Environment Directorate, were discussed under Part 2.
3.16 Executive Members were asked to endorse a strengthened client (design and
monitoring) model and procure expert advice through a mix of call off framework contracts. A detailed report set out five options specifically relating to the activities currently undertaken by Capita for highways? and were assessed against the transition team‟s guiding principles, key benefits and risks. A strengthened client would focus on the management of the asset; a network management service devolved to localities and a transport service. In addition this would provide a flexible resource to manage major projects such as the CNDR as well as roll out systems thinking and managing the replacement of the works contract.
3.17 The team concluded that with the right expert advice from call off contracts, an
organisation with an estimated staffing level of 250 FTE‟s would deliver the benefits of a strengthened client within a reduced budget. An overview of the structure, plus financial analysis was provided to Cabinet Members to support these proposals.
3.18 The arrangements regarding the cessation of the Amey contract and the choices about
service configuration and delivery would be considered at a later Cabinet (Dec 2010).
It was highlighted that the transition from Capita to new arrangements across the full range of services supplied to the Council is expected to achieve a £1m saving plus repaying the Improvement and Efficiency reserve of £500k. The amount attributed to the Environment Directorate was £1.2m. In addition to this, savings had been earmarked for the introduction of Better Highways, these savings related to the removal and duplication between Capita and Amey and the County Council - this would be £0.15m in 2011/12 rising to £0.8m from 2012/13. The revenue budget available would therefore be reduced accordingly.
3.19 Within the report to Cabinet, there was an acknowledgement that the full financial
implications from the cessation of the Capita contract could not be fully assessed at that time due to gaps in the financial information available, including numbers of staff potentially transferring, their terms and conditions and a detailed strengthened client structure. There was no specific budgetary provision for transition costs and action to investigate these would be taken over the next few months. In addition, it was reported that potentially there would be data transition costs and property implications that could not be fully assessed until information was received by Capita.
3.20 The report concluded that the outcome of this work would mean that the County
Council would have a far greater internal resource, comparable with similar county council highway operations, over which it will have much better control in terms of
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volume and quality of work, together with a mix of external framework consultants for economic development service peaks. “In the long term both the Capita transition and the systems thinking work will result in an improved definition of work currently falling within the Amey contract”.
(M. Fallon – Corporate Director Environment – August 2010)
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4. FINDINGS This report builds on earlier scrutiny work which reviewed the Lean System’s thinking Better Highways programme and seeks to understand how the learning from this programme will be applied to future contractual arrangements for the County. 4.1 The application of Lean Systems Thinking/Better Highways model to current and
future working practices. 4.1.1 Investigation of the Better Highways (reactive maintenance) project was a principal part
of the interim report presented to Cabinet on 16 September 2010. At this meeting and in subsequent correspondence a number of questions and issues were raised for resolution.
4.1.2 As the Better Highways programme has been unrolled throughout the County, some of
these questions have been answered, however, there remains a number of outstanding concerns (identified in Appendix 1) plus new issues such as Find and Fix team supervision and responsibilities, Local Committee budget arrangements etc. that are emerging .
4.1.3 Given that Better Highways will be an integral part of any future contractual
arrangement, post 2012, it is Members recommendation that these questions should be answered and that the operations should continue to be monitored to make changes where appropriate. As yet Members have not been reassured by all the answers to questions pertinent to the Better Highways programme as promised following the September Cabinet.
4.2 The arrangements following the termination of the Capita contract. 4.2.1 In moving forward to this second stage of the review process a series of questions
relating to the rebid process post Capita/Amey, were discussed with the Corporate Director, Environment and Head of Highways and Transport. Key questions included:
a - In making your decision on the rebid service delivery model post Capita & Amey,
can you explain to Members which options were considered and what evidence was produced to support your preferred choice?
b - We understand up to seven options were considered, can you provide Members
with an assessment for the pros & cons of each?
c - As part of your consideration have you undertaken a cost-benefit analysis of each of the options? Where are the proposed savings going to be made against the current cost model?
d - Having agreed to proceed with the Strengthened Client model, have you developed
a full business case in support of this option?
e - Can you clarify the number of roles and staff that will be coming back in-house from Capita?
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f - What roles currently being undertaken by Capita will not be coming back in house?
g - Which roles will be undertaken by the delivery contractor (currently Amey)?
h - Will any roles in the proposed in-house structure be open to application from Amey
employees or will the new establishment be restricted to applications from those Capita employees currently under 90 Day notice of redundancy?
i - Is it envisaged whether any roles currently undertaken by Amey will be brought in
house or is it envisaged that these will be all be undertaken by a new contractor, at some time in the future?
j - What is the financial risk to the Council with regard to those staff currently with
Capita who will not be required in the new structure?
k - Similarly, what is the financial risk to the Council with regard to those staff currently with Amey who will not be required in the new structure?
l - How will the changes be reflected in budgetary information given to Members in
order that they are able to monitor and understand where resources are being applied?
These questions were answered and formed the basis of the rebid options appraisal meeting with T&F Members. 4.2.2 As noted, the decision to bring Capita staff back in-house has already been taken. T&F
Members however, are concerned that there appears to have been little consideration of whether this creates duplication of activity (eg in areas of management) and whether there is a need to restructure/redefine jobs. Members would recommend that this needs to be done and that it forms part of the restructuring of the whole service which is part of the thinking about options post 2012.
4.3 Questions to Corporate Director – Environment from Chair T&F Group regarding the options post 2012:
4.3.1 Scrutiny Members noted in an earlier Corporate Director‟s response that the Highways
Team would “ensure that the service is as efficient as possible before being put out to competitive tendering next year” and intends to make this the next focus of its attention. With this in mind the Chair, Highways T&F submitted the following questions on 7 September 2010:
a) When was the decision to go out to tendering made and why was Scrutiny not told and invited to investigate as Members expected?
Answer: (a) No decision has been made about the final tendering process for the “work contract” as this will be covered in the report to Cabinet in December but in respect of the wording it merely acknowledges that the contract comes to an end in 31st March 2012 and it is not unreasonable to expect us to be re-tendering in
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anticipation of the end of the contract. Indeed when we reported to Cabinet in October 2009 it was agreed that these options should be evaluated.
b) Which parts of the service are to be put out to tender; all or part?
Answer: (b) All of the services currently provided by Amey which cover not only highways but some monitoring of waste sites and fleet management will be considered.
c) If it includes all of those services currently provided by Amey why was this not
reflected in the diagrams of Highway structure hierarchy shown in power-point presentation to all Local Committees and appended here? Local Committees were given the impression that this was a single structure whereas in reality if work currently being done by Amey is again done externally there is a missing piece in which the equivalent of Highway Engineers will have to commission work from the managers of the award winning company.
Answer: (c) The presentations given to Local Committees were focusing on the Better Highways part of the service which in effect covers the area currently described as “reactive maintenance”. As outlined above, Amey provide a wide range of services to the Council and as we move forward the Cabinet will be considering how they will wish to configure the remainder of the services. As a result of the Capita transition and the outcome of the Better Highways work the Assistant Director, Highways and transport will be reviewing his whole structure in order to accommodate the various changes. I am sure once the position on the structure is clearer we will be in a position to fully explain how the Better Highways part of the service fits within the overall structure.
d) What are the comparative costs of putting work out to tender and of bringing it in
house? At what point did the Executive have such information and why did it not share it with all Members through Scrutiny?
Answer: (d) The financial options of the various proposals will be considered in the report to Cabinet in December. The reason why the information was not shared with members through scrutiny was due to the fact that this work is still ongoing in anticipation of the December deadline for Cabinet.
e) Is Cabinet aware that one of the questions T&F asked of officers was which other LAs they had looked at for best practice, what questions they had asked and what answers they had been given – and that no answer was given by the Executive.
Answer: (e) I am sure that Cabinet members would be aware that the Task & Finish Group were asking questions on other local authorities. You will note in the report to Cabinet in September on the Capita Transition – Environment Directorate (Item 18) in paragraph 4.7 we did include a summary of comparisons with other similar authorities.
4.4 The options considered for Cumbria Highway Services rebid, post Capita/Amey 2012
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T&F Meeting with Assistant Director Highways & Transport and Senior Area Engineer – 13.10.10
4.4.1 At this meeting scrutiny members were invited to consider the eight options which were
evaluated by the Highways Team as part of their preparation for the Cumbria Highways Service rebid process (post Capita/Amey, 2012). Future delivery options were considered against the key objective of developing a strengthened client function and incorporating the set of over-arching principles to guide an objective assessment.
4.4.2 Each option was explained, including strengths/weaknesses and associated risks
enabling Members to further understand and explore the reasoning behind the preferred model/s which would be presented to Cabinet in December. These are set out below. However it is important to note that the stated benefits and risks of each option are those of Highway staff and not T&F members. Indeed attention is drawn to the fact that T&F asked if the evaluation of options had included – and could include – cost benefit analysis and were told such a rigorous evaluation had not been made. T&F asked if it could be undertaken for the two leading options so as better to inform the final decision.
Option 1 Single County Contractor
Benefits:
Single Point of Contact
Economies of scale/Value-for-Money
Responsiveness in respect of additional work
Risks:
This model could reduce local delivery
Council would incur main contractors „on-cost‟ for any specialist sub contractors.
Require robust performance measurement framework with performance penalties/rewards
Specifications at commencement of contract must be extremely robust
Professional and Technical
Team
Single Contractor providing all
works
CCC Client & Design
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Does not adapt quickly to changing markets/budgets/requirements
High up front costs for service provider
This option of a single contractor to operate across the county is not seen as the most sophisticated, with little innovation or flexibility. This is about one service provider working to the County Council.
Option 2 Core Contractor with additional Specialists to create commercial
tension
Benefits:
Flexibility to deal with routine workload and service peaks.
Mixed economy including SME‟s
Locality based delivery
Responsiveness in respect of changing workload/market changes/organisational changes
Flexibility to deal with winter and weather events, supported by local supply chain.
Economies of scale
Provides Value-for-Money through Commercial Tension.
Risk:
Some duplication in terms of contract administration
Task & Finish Group’s observations
Professional and Technical
Team
Term Core Contract
Better Highways
Minor capital works
Cyclical Maintenance
Winter and severe weather
Drainage
Bridge maintenance
Jubilee Bridge operation
CCC Client & Design
Traffic Signals Road Signs
Specialist Contract 1
Large scale improvements
Specialist Contract 2
Machine surfacing
Surface Dressing
Micro Asphalt
Specialist Contract Grounds Maintenance Fleet
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4.4.3 This is a variation of the previous model. A single core contractor would operate across the whole county for all maintenance works with a framework in place to cover all specialist works such as surfacing, surface dressing, improvement schemes. In this version the client is a little bigger incorporating professional and technical services. The main contract would be set up to deliver the Winter Maintenance contract while Street lighting and electrical services (traffic signals) would be out with the main contract.
4.4.4 Following the principles of the „Big Society‟, this option would allow the authority to look at local providers, including District Councils; farmers etc. to assist when and where required. This is about having a core contractor with additional specialists who can be called upon locally. By sub-contracting out some areas of work to smaller, divisional providers, „commercial tensions‟ can be created. Work can be taken away from technical contracts or added to, as demand dictates.
4.4.5 It was suggested that by encouraging „commercial tensions‟, this would imply the client will have measures for improvement? In his response the Assistant Director maintained delivery will be measured against time, specification and price. It will be very important to set the right threshold. If a contractor meets our quality standard it would have work as of right to a certain value and therefore at that level. It has been pointed out by a Task Group Member that the Council‟s contract should ultimately specify that the contractor cannot sublet without the Client‟s approval. If this is not included then what is to stop the contractor subletting whenever there is an opportunity for additional profit.
4.4.6 Fleet is seen in two parts: Servicing of operational vehicles and vehicle maintenance which is separate and applies to all County vehicles, not just Highways? Traffic signals and road signing will be provided through separate technical specialists who will deal with large scale (Capital) and road dressing schemes.
4.4.7 In terms of the likely duration of specialist contracts, Members were informed that these are likely to be 5 years for Term contracts (with a possibility of extending by 2 years)
Option 3 Option 3 Area Based Contracts
CCC Client & Design
Professional and Technical Team
EAST WEST SOUTH
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Benefits:
Locality based
Comparison of costs across areas possible
Risks:
Significant duplication in terms of contract administration.
Difficult to co-ordinate winter and weather events with reduction in VfM
Potential complication with area overlap/access to depots and material stores etc.
Less economies of scale
4.4.8 The three area-based term contracts would be similar to three companies – different,
but providing the same type/levels of service. Each contractor would operate across a geographical area covering all works.
Option 4 Area Based Contracts with Specialists
Benefits
Local delivery of services
Comparison of costs across areas possible
Some incentivisation by competition
CCC Client & Design Professional and
Technical F/W
EAST WEST SOUTH
Specialist Framework
Surfacing Surface dressing Electrical
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Risks:
Difficult to co-ordinate winter and weather events
Less flexibility
Duplication in terms of contract administration
Reduction in economies of scale
Task & Finish Group’s observations
4.4.9 This model also includes (multiple) area-based term contracts of 4-5 years duration
with specialists in each area to cover work such as surfacing, surface dressing, electrical and traffic signals etc.(with the possibility to extend). Members assumed the budget would relate to Local Committees and in that case asked how they would be tied into these contracts - this needed to be explained. T/F Members were informed that things would stay the same; ultimately, Members will still retain the right to decide what they want.
4.4.10 The Assistant Director, Highways and Transport maintained the debate is about
making funding simpler. Current Better Highways talks were about bringing Highway Revenue Maintenance activity budget lines together; none of the rebid options will change that debate.
Option 5 Managing Agent Contract (MAC)
Benefits:
Single provider delivering to an output specification.
Transfer of risk to the contractor
Risks:
Costs generally high due to providers pricing risk
Potential to reduce locally based delivery
Reduced flexibility and responsiveness to changing service levels/budgets/organisation
Limited use of SME‟s
Less control for council and will need to guarantee budgets to provider over several years
Thin Client
MAC Managing Agent Contract
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High up front costs for service provider
Output specifications and performance framework needs to remain relevant over several years and be highly robust
Task & Finish Group’s observations
4.4.11 This option has a smaller client and is very similar to the Highways Agency Model,
where the Managing Agent is responsible for managing the budget, and deciding on the delivery of which schemes.
4.4.12 The big disadvantage with the MAC, from the Directorate‟s perspective, is that in a
large rural county the size of Cumbria, there is not enough work to make the MAC sufficiently attractive for a company to come in. The funding levels which would be attracted, would not be big enough. Through a MAC the authority can transfer the risk to the contractor. The Contractor would look at the extensive road network, country lanes etc. in Cumbria and would recognise a greater risk for them in going out to address problems.
4.4.13 A Member pointed out that through a MAC the employment risks would also be
transferred and suggested by taking on a stronger client role the County Council could govern the provision of works, currently with Capita.
4.4.14 A MAC contract requires an extremely thin client of a dozen or less with all staff
functions transferring to the contractor including the risk of legal liabilities issues to the MAC contractor. This would need to be measured against the County Councils current „rebuttal rate‟ which stands at 75% success.
4.4.15 When asked if these models had been costed, Members were informed that the
preferred models were not based on costs but on experience of the authority‟s own and other authorities‟ contracts. Soft market testing has been undertaken on MAC type contracts. Flexibility is a key factor to consider when assessing these options.
Option 6 In-House Direct Service Operation (DSO)
Framework
In-House provider
DSO
CCC Client Design and
Technical Team
Traffic Signals
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Benefits:
Flexibility, can change delivery mechanism easily with own workforce
Maximum level of control for the council
Risks:
Council becomes a provider not a facilitator
Reduces learning and innovation from commercial partners
Does not respond to changing budgets and variations in workload very well
All risk lies with the county Council
This is viewed as a more radical, broad option which has some flexibility and is more responsive to change.
Option 7 In-House DSO with Specialists
Task & Finish Group’s observations
4.4.16 This variant on Option 6 is an in-house provision to deliver Better Highways and
revenue work with framework contracts in place to cover all specialist works such as surfacing, surface dressing, electrical, road signals etc.
4.4.17 In explaining his preference for Option 2, the Assistant Director suggested that this
model (whether referring to option 2 or 7) does many good things, particularly in supporting local business providers. For some Members, there is a real concern when going out to external contractors that they have to make a profit.
4.4.18 When thinking about flexibility, there needs to be a halfway house as demonstrated by
Options 2 and 7 which are very similar. A DSO could be sub-let or provided „in-house‟. A term core contract could save those profits which would have previously gone to a contractor, going out. Area managers would play a key role in helping to manage services directly. This keeps business to a local level. The key is to manage the quality and what is regarded as the higher risk of cost.
In House DSO
Better Highways
Traffic Signals
Professional and Technical Frameworks
CCC Client & Design
Specialist Contract
Grounds Maintenance Fleet
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Benefits:
Flexibility, can change delivery mechanism easily with own workforce
Significant level of control for the council
transfers some of the risk to contractors
Fits with „Big Society‟ principles
Risks:
Council becomes a provider not a facilitator
Does not respond to changing budgets and variations in workload very well
Task & Finish Group’s observations
4.4.19 Looking at Option 2 and the possible levels of staffing, it was suggested that with Amey
it would be approximately 395 people whereas the central term core contract or in-house DSO would suggest less staff will be required.
4.4.20 A Member wondered whether there could be another Option (9) to consider a bigger
DSO arrangement – an extended Option 7. By effectively creating a business within CCC, could some of the specialist contract work be included? The Assistant Director agreed that Civil Engineering and Machine Surfacing could be done, but not so sure about surface dressing or micro asphalt work. “By shaping the highways procurement locally this can help to deliver the County’s model for local services”.
4.4.21 Officers believed there could be some merit in considering a larger in-house DSO.
There was some consideration of whether this idea would have the support of elected Members and the public and it was noted that nationally there has been a shift away from public/private schemes. A member believes Option 7 (or 9) would support the principles of the „Big Society‟ too.
Option 8 Existing Arrangement (post Jan 2012)
Specialist Contract 1
Large scale capital improvements
Professional and Technical
Team CCC Client & Design
Spot Contracts over threshold limits
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This would be in consideration of extending the existing contract to Amey – a model which is based on a single works contractor, plus spot contracts.
Benefits:
Continue with single point of contact
Reduce up front costs for the council
Risks:
Lose benefit of current economic climate providing improved VfM if service is re-tendered
Current contract lacks provision for flexibility and responsiveness; significant change would be required in order to achieve desired changes to service delivery
Reduce opportunities for SMEs
4.4.22 Members expressed some reservations at the prospect of continuing with current arrangements particularly in light of the very poor service the authority had been receiving over recent years.
Key points discussed
4.5 In consideration of the best option officers preferred option 2 which in their view had the ability to be more flexible; responsive and includes commercial tensions, whilst having the ability to deal with winter maintenance, routine maintenance and cyclical work.
4.6 In discussion members of T&F emphasised the importance in the current business environment to include in-term flexibility and deliverability as well as people‟s expectations in any new contractual arrangement. In the view of the Assistant Director, Option 2 gives the authority the flexibility of a range of options. Keeping a diverse model like this is regarded as the right approach for the County.
4.7 In answer to a question on whether a five year contract for a specialist and core term contract would be sufficiently attractive, Members were informed that most contracts work to a 5-7year period. The plan is for contractors to recover all their costs within this period. In the Assistant Director‟s view, this option (2) is particularly good as it supports local business providers.
Single Contractor providing all core
works
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4.8 If the operation was to be in-house, the Assistant Director is confident it would save money. He said there is a lot of merit in dealing with the most complex minor works in house as this is often expensive when done externally. Then put out the scheme work where the market is most competitive.
4.9 In consideration of Options 2 and 7, a Member asked where the financial risk to the
authority would be. Would this include Highway liability risk; transferred employee risk; productivity; operation liability risk; quality of work risk etc? If everything comes in-house, everything becomes the authority‟s liability.
4.10 In a scenario where poor workmanship has to be done again, then the cost also comes
back to the Council. There are nonetheless risks to the contractor. It was suggested that the County Council are more competitive on risk, relating to the maintenance work, whereas scheme work tends to go out, although this could be done in-house.
4.11 T&F Members asked if a more detailed analysis of the benefits/risks and costings for
Options 2 and 7 could be set out. At the end of the day this would serve in defence of the executive‟s final decision. Scrutiny Members also asked if matters of Value-for-Money; risk; community; fees etc. could be included in table form, and including, where possible, some figures against some of this.
4.12 Any new options proposal will have to make allowances for a reduction in funding
following the Governments Comprehensive Spending Review. Officers want to bring the service back in without relying on fees which currently stand at £11.5m, (£4m fees for Capital works and £7m+ fees for revenue work). The numbers of staff returning from Capita will depend on the final funding levels. If the level of funding fell by 25% it was anticipated that the number of transition staff from Capita would fall to approximately 229 staff. It has also been anticipated that there could be a 50% cut and if this was the case the authority‟s programme would stop spending with Amey. The authority contracts have the ability to vary or reduce the contracts to zero.
4.13 Where Local Committee Members have a sum of money for minor works, would there
be flexibility in the contract to have some of these undertaken by specialists? In his response the assistant Director said this needed to be built into the new contract. This approach would accommodate Big Society arrangements. Under current arrangements, Amey could be offered a three year extension to their current contract. Members were informed that if it was decided collectively that it would be in the Council‟s interest to do so; the contract would have to be reworded in order to allow Members more flexibility to allocate expenditure to independent contractors.
4.14 Winter maintenance is regarded as an example (and opportunity) of Big Society working. Depending on the weather, the authority currently spends between £1.5m and £4m on standby costs. When Cabinet met to consider a new menu of options, because of the current economic climate, they decided not to add to the priorities for treatment. This was a particularly difficult decision to make it was about managing a pot of money against an unknown variable (the weather).
4.15 Another way to deal with this however would be to engage with a community collective including local Parishes, farmers etc. and actively reshape all resources with local people. After all they know their areas best and rather than renegotiate a £2m standby fee, the authority could focus on a retained service approach. Local Members could be signed up to a process and a structured delivery.
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4.16 A Task group Member highlighted concern around the County Council‟s liability and it was confirmed that this would have to be an approved service. The challenge here is to save money while improving services safely and appropriately for the authority.
Other Options 4.17 In conversation with an experienced external contractor, and another local authority
which operates a Managing Agent Contract (MAC), Members have gained a useful insight into other potential contractual models which are working successfully in other parts of the Country. In these examples a Managed contract is seen as providing some benefits to the authority through the use of contract systems that are flexible enough to support the drive for on-going efficiencies.
Key points arising included:
In today‟s environment there is a need to demonstrate Best Value. In order to deliver Best Value it will be important to go for a flexible, like-minded partner.
Any future contract must be innovative and sustainable as budgets are increasingly under pressure.
T&F Members were advised that re-procurement costs to the County Council will be in the order of £1m – £1.5m.
It will be critical within any new contractual arrangements that the Client retains the ability to control costs.
A clear understanding of how performance management and KPIs are to be measured and how Best Value is demonstrated in any new contractual arrangement will be essential.
Under the proposed new arrangements, will the new framework contracts be allocated to a contractor with the capacity to provide adequate resources to cover special circumstances e.g. winter gritting?
Infrastructure investment (vehicle replacement etc) is included in a contract? Herefordshire Council 4.18 In Herefordshire a public/private contractual arrangement moved to a Manage and
Maintain contract, which has driven end-to-end accountability. It incorporates Performance measures and accountability and drives a real improvement on performance from day one. This model gets closer to the local community than the previous contractual arrangements and there are guaranteed savings written into the contract with £22m coming back into the Authority
Inclusion of performance indicators drives extension awards
Delivery of significant savings through „walk and build‟ delivery and reduction of over-design.
Flexible structure delivers the ongoing requirements of the council
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Performance indicators driving a community focussed delivery. Core council objectives reflected in core service delivery indicators.
Clear accountability across all areas of the service
Excellent communication with elected members and the public 4.19 The Authority has transferred the risk to the contractor whilst keeping in control and in
the Manage and Maintained model; penalties are built in the form of cash related performance. If the contractor does not deliver against all KPI’s in the first year, there is no extension of the contract into the following year.
4.20 The „Thin Client‟ monitors performance – control measures sit above the work
(independently), to ensure everything is delivered. This arrangement is very similar to the Highways Agency model of working (a hybrid of the HA model).
North Lanarkshire Council 4.21 In North Lanarkshire a public/private partnership (formed of a joint venture company)
ensures the TUPE risk sits with the contractor; guarantees pensions; length of service and conditions of employees.
It has been set up as a profit sharing arrangement where profits are guaranteed. The risk of under-performance in this contract sits with the contractor. The financial model drives a real desire to improve performance and drives efficiencies. This is a completely different relationship between client and contractor which includes:
A shareholder‟s arrangement
Profit sharing and risk transfer model
Growth of the contract through third party works
The removal of a client/contractor relationship to one of joint aims and objectives through the delivery of a first class service
Delivery of ongoing significant shared savings through innovative efficiency measures
Excellent communication with elected members and the public Other key issues to come out of these discussions included: 4.22 Where an authority operates a command and control style contract, there is unlikely to
be any scope for the works contractor to be pro-active in working at the best solutions, or working relationships.
4.23 In terms of Highway maintenance work, it is vital that the ratio of supervision and front
line workers is affordable. The industry standard around the ratio of supervisor to frontline worker is recognised as 1:12-15, whereas in the Better Highways model it appears to be 1-6.
4.24 The broad Lean Systems principles of removing inefficiencies have been adopted by
other Authorities (for example Bedfordshire, North Lanarkshire and Herefordshire),
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however there are aspects of these contracts that incorporate more comprehensive control measures including:
- Performance Management and KPI‟s - Cost Control and Best value - Communications and input of local members
- With a flexible contract model, further efficiencies can be achieved throughout the duration of the contract
4.25 It has been stated to Task group Members that it is questionable whether the structure
of the Better Highways contracts will allow for full performance management accountability, working solely to Right First Time and End-to End as indicators of performance. Would this be indicative of the rest of the Highways service?
Cornwall County Council 4.26 Cornwall County Council runs a Managing Agent Contract (MAC) scheme where all
staff work for the authority. The team operate design and build and run all consultancy and managed services with a contractor and over the past two years has significantly managed to reduce staffing costs
4.27 The Head of Highways & Operational Services believes control is the big issue,
maintaining that through Cornwall‟s MAC arrangements, the authority is totally in control of its expenditure and in total control of its officers who have a very clear understanding of their role. The Highways and Operational Services have a very good working relationship with its Members and maintain control through the Corporate Leadership Team.
4.28 In terms of Quality Assurance, Cornwall has its own Performance Management team
and the authority has 9001, 14001, and 18001 accreditation and sector schemes.
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5. CONCLUSIONS 5.1 The current client/management/contractor arrangement as set up ten years ago was
originally focused on Capital receipt; employee security for 400 ex-county council staff; business growth; private sector investment and annual efficiency payments. T&F believes that the primary purpose of the Highways Service is the delivery of better highways and transport not employment per se and that this consideration must guide future service configuration and delivery and thus methods of working now and the choice of post 2012 options.
5.2 There are very real and worrying aspects of RISK associated with the options appraisal
for any new contractual arrangements. Some of the issues relating to Risk and Liability have been identified in scrutiny‟s Better Highways report and include:
Legal risk to the authority
operation liability risk
staffing ratios - affordability
financial management/monitoring risk
cost of TUPE staff transferring from Capita (pensions etc.) Other risks include:
quality control work risk - underperformance
transfer of work to the contractor risk
in-house risk/liabilities
employee management risk
procurement out of county risk
cost of staff transferring from Amey risk
continuation of Amey contract risk
Health and Safety risks 5.3 Under Option 2, the Council‟s contract should ultimately specify that the contractor
cannot sublet without the Client‟s approval. If this is not included then what is to stop the contractor subletting whenever there is an opportunity for additional profit.
5.4 Any new contractual arrangement should be sufficiently flexible to allow the „client‟ to
go out and purchase/hire exceptional items and thereby minimise the risk of incurring (inflated) additional costs to the authority.
5.5 Whilst applauding the development of responsibilities to area teams, there will be times
where a lack of experience or consideration of priorities could lead to problems in the future, if these are not addressed by staff who are sufficiently experienced or have had full training.
5.6 In their assessment of alternative highway contractual models in other authorities, did
the County‟s Highways project team undertake a cost-benefit analysis; transfer of risk and the need to drive on-going efficiencies, as part of its assessment process?
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5.7 In their report to Cabinet in September on the Capita Transition – Environment Directorate (Item 18) in paragraph 4.7 reference was made to a summary of comparisons with other authorities’ internal resources. In T&F Members view, this may be erroneous as these authorities may well be looking for further efficiencies in light of the current situation with public finances. T&F wonders, therefore, whether CCC should have taken a zero based approach.
5.8 T&F has had no opportunity to assess whether the proposed new structure aligns with
Member aspirations for the service. Whilst a managed service might not be felt appropriate by the Service managers it might provide a Corporate benefit when TUPE and Pension risk is taken into account. It might, therefore, be beneficial to consider the need to evaluate a further option (9) – a larger DSO
6. Appendices
Appendix 1
Outstanding answers to Members questions relating to the Better Highways project
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16.11.10
Appendix 1 - Scrutiny Highways Outstanding T&F Questions
Having focused on the customer-led, Lean Systems Thinking Project on Better Highways, Scrutiny Members produced an Interim Report to Cabinet in September 2010. From this work a number of questions remained outstanding and accordingly a highlighted list of questions was produced. Members have recognised that some questions can only be fully answered as the Better Highways programme is rolled out. Some of these questions also apply to the Capita/Amey rebid process and thereby straddle both T&F reports. The full list of original questions are listed below and following Cabinet’s consideration of Scrutiny’s Interim Report in September, those questions requiring further clarity have been highlighted as below in bold type LEAN SYSTEMS THINKING 1. In understanding how the wider customer-led highways model is expected to operate,
what are the implications for the rest of the Highway Service (value £44m)? Where is the rest of the Highway Service in this model?
Reactive maintenance is the first stage. Other areas will be added in time. It is about changing overall thinking so capital scheme identification will also evolve from this work. Rolling in the project consists of two main work streams, firstly the changes to the way we deliver reactive maintenance. This will provide the most visible and immediate change in delivery. Secondly, the roll in process is accompanied by a Leadership Programme where management tier staff are trained in how to apply systems thinking principles to everyday workplace situations. It is anticipated that this will lead to further service improvements on a continuous basis.
2. Recognising the value of the reactive maintenance systems thinking work, how will this
fit in the future with the broader capital work? As in 1 above, we start with reactive maintenance. We have trialled this in Eden as part of a comprehensive piece of work on A592 where the road was closed for as short a time as possible (1 day) to allow patching, resurfacing, road marking, verge work, cleansing etc activities to take place. This included working closely with Eden DC. 3. Where are the Area Engineers in this project work and how is their role being
built into the new model? Area Engineers will be expected to support the service as would any managers. The AE‟s in Eden and Carlisle are currently going through the leadership programme. One outcome of Systems Thinking is to help free up managers time previously spent managing failure. 4. Considering the value that Area Engineers add to the work of Local Committees,
can Members be given a solid assurance that this role, which we see as a vital link, is not being diminished or disposed of?
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As in 3 above, everyone‟s role will change as this is about making better use of time but Members have been assured during Local Committee presentations that the strategic role of our Area Engineers will not be changed or removed as part of this process. 5. Repeat of question 3 As 3 and 4 above. Their role is at a strategic management level, key to ensuring the new service delivery model achieves its goal of improving the highway service and maintaining the network. Local Committees will continue to be serviced by the Area Engineer and their teams as we see that working relationship as vital to the success of local delivery.
For questions 3,4 and 5 Clear reassurances still being sought by Members on the function and role of the Area Engineer in the new model
6. Won‟t front-line staffing levels need to be increased to meet the new standards? One of the principles of Systems Thinking is to put the resources at the point of most demand. That would undoubtedly be the frontline although we are working within existing resource levels. We expect that we will be able to do more with the same levels by removing waste activity. 7. Particular highways maintenance issues have been raised in past Scrutiny Reviews
and recommendations made. Where/how do these recommendations sit in the new systems thinking?
Systems Thinking is giving the Council an opportunity carry out comprehensive reviews in numerous business streams across a wide range of services. The good work carried out by past scrutiny reviews have helped to identify areas to focus the interventions. 8. In light of recently reported cuts to the government grants in respect of both
Highways revenue and capital work, is the Eden pilot model something which is affordable and capable of being rolled out across other Districts?
We are working within available budget levels. We expect that we will be able to do more with the same resource levels by removing waste activity.
Clear reassurances are still sought here on the question of affordability. Recent evidence would suggest that the proposed arrangement of one supervisor to three two-man gangs will be unaffordable.
In addition, in order to pump-prime the Eden model, additional monies were found to support this element of the roll-out programme?
9. When pulling in other resources to meet demand in one area – will this in turn take
much needed resources away from another area?
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Conflicting demands will be managed in line with the Operating Principles of repairing the demand Right First Time, ensuring that any identified solution is permanent and can be assessed as Proportionate, Legal, Accountable and Necessary. 10. Where do you see the role of members fitting into the system? Members would be expected to be advocates of the service. This means being an essential member of the team engaged in joint working to deliver Better Highways. One of the major drivers for this change has been recognition by the service that we need to improve the quality of service delivery on the network to meet Members and Local Committees‟ expectations. 11. In terms of who adds value – do you have a breakdown of those people who are
fixing – as against those who are supporting (back office)?
An employee profile would be helpful here Copy of possible structure attached. Please Note: The structure will vary depending on the amount and type of demand and budget availability. 12. There are issues with the current scanning, course visual inspection – how will this
interface with the new model? Find and Fix will be the frontline visual assessment which will take place on a daily basis. The SCANNAR assessment must continue as it is directly connected to the funding. However, we will place greater emphasise on the frontline assessments undertaken by the new model. 13. What guarantee do Members have that the role of the popular Highway Stewards will
continue and be incorporated in some form, to the new model? How does the project team see this service being provided in the future and will that extend to the towns?
The new model is a natural progression and development of the Highway Steward concept allowing continued Parish Council input at the front face. The new model applies the same principles to both urban and rural areas and is based on Members and Parishes having a dedicated team who they will know by name and be in regular direct contact with should they wish. 14. How is it planned to quantify the planned and reactive work in financial terms? Demand will be identified by the Find and Fix teams which will then help direct funding to meet it. Over time it is clearly expected that this reactive nature will move more towards planned work based on the local knowledge of the demands. A single budget allocation for each area is seen as essential. In the Local Committee presentations to date Members have been keen to secure assurances that this does not mean their budgets will be changed without their involvement. We have reassured Members that any decisions about how budgets are configured is a discussion we all engage in driven by issues arising from the work on the ground and that any changes are matter for Local Committee consideration as is currently the case. As indicated above, the new system is about improving how the service works with and for Members. 15. What were the external factors that have contributed to the decline in Right-First time
work?
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Rigid budget allocation structures, national and local indicators, performance targets and existing contractual arrangements with our 2 contractors have driven the behaviour of the service to temporary fixes. BUSINESS PLAN 16. What is the business plan which will deliver the County Council’s future
Highways Service? Current Environment Department Service delivery plan and Cumbria Highways Service Plan.
Members would like to see Highways Service Plan 17. Who is administering the contract on the County Council‟s behalf? Ultimately council officers administer both the Capita and Amey Contracts. However, under the current arrangements Capita directly manage Amey and the works they deliver on behalf of the Council. This will change in time as each type of provision is re-tendered but it is the Council, through its officers, which administers the contracts. 18. Given the County Council's relatively poor record in realising projected cashable
savings and efficiencies from previous strategic contracts and improved operating systems, what evidence can be provided that the Lean Systems approach will produce the necessary funding to sustain and support the rest of the Highways transformational change programme?
This brings members back to the concerns raised regarding the need for a cost-benefit analysis which clearly demonstrate costs against income.
The current team in Eden has been designed to carry out work right first time basis. The initial cost of a RFT repair is likely to be more than temporary repairs but the overall cost will be less due to removing repeat visits/repairs and the associated waste activity. The current measures of %RFT and the End to End Times help to demonstrate VFM. The overall objective is to deliver better services for the same or less money and these measures provide evidence of this. 19. How will the proposed savings be quantified? Work has been done to evaluate financial aspects of the systems thinking review however, because the changes taking place are so fundamental direct comparisons of cost are very difficult and time consuming. This is because we are moving from a variable cost to a fixed cost plus materials maintenance regime. The true value of the new delivery method is that it produces improvement in the quality and quantity of work delivered without increases in cost. 20. Can we see a structure diagram of the current Capita Highways role? (members have
seen a proposed structure diagramme for the new reactive maintenance proposals) No. Capita will not provide copies of their structure diagrams. The current contracts don‟t specify that this information is provided. Capita will not be providing the service after 31st January.
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21. What are the future implications for Local Committee revenue budgets for Highways? Demand will direct funding. A single budget allocation for each area is seen as essential however as stated above we have reassured Members that any decisions about how budgets are configured is a discussion we all engage in driven by issues arising from the work on the ground. Any changes are matter for Local Committee consideration as is currently the case. As indicated above, the new system is about improving how the service works with and for Members. QUALTIY ASSURANCE 22. Where is the Quality Assurance in this new model - what local performance
measures will be in place to ensure the new contractual arrangements are being delivered to the required standard, and are the interests of the County Council as client being protected?
In light of what has been reported to local committees regarding overspend, what are the budget control mechanisms in the new model?
Measures are Right First Time and End to End Times, which have been identified as what is important to customers. 23. What local performance management measures will be used to oversee the work
of the contractor/s? All existing performance indicators will be removed as there is clear evidence that this does not improve performance locally. As an alternative, two measures have been identified. These are Right First Time and End to End Times, which have been identified as what is important to customers.
This applies to questions 22-25 To date Members have not been reassured that there are adequate monitoring and quality assurance mechanisms in place
In terms of measures there are 37 teams in the new model, who is assessing the productivity of all these teams?
24. Are the RFT and End to End times sufficient indicators of performance? Yes. Other supplementary, and temporary measures, may be used to also improve the service as appropriate. 25. On the Clients’ side, who is drawing up and monitoring the work of Amey or
another contractor? Under the proposed structure the front line teams will be given autonomy to carry out find and fix work, working to the operating principles, supported by the Area Steward, Area Leader and wider team.
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26. Who is measuring what Amey is delivering on the ground? If we have contractors working for the authority, how can we run without a rigorous checking mechanism?
Systems thinking shows that performance monitoring on its own is a waste activity. Supervision of work teams is not required as proven by the success of the Highway Stewards. As an alternative, support from Area Stewards and Leaders will ensure the frontline teams are able to undertake nothing but value work. Members could play a key role in this area.
These 3 answers only quote two measures. Ass. Director acknowledged other KPI’s are required. Where/what are the checks/balances on productivity
CUSTOMER SATISFACTION 27. What mechanisms are in place to feed back to the customer to reassure them their
demand had been dealt with? A key principle of the new model is for direct contact with the customer from the point of first contact through to completion of the defect. CAPITA 28. Having looked at the customer systems thinking programme, how does this
translate to the Capita and Amey contracts? The Systems Thinking programme fundamentally changes the method of delivery from that specified in the existing contracts. What we learn about the design of service delivery will be used to inform the content of future contract specifications for 2012. 29. Members would like to be reassured that when bringing services back in, there
are opportunities for efficiencies and/or cashable savings. The primary direction of officers when assessing the new model has been to identify a system that meets the demand being received and the expectations of the public. Therefore the “savings/efficiencies” being considered are in relation to the reputation of the service and its ability to meet the demands received. Continual reassessments into the future will ensure these continue to be realised. 30. How will the duplication of roles between existing staff and those who would be
brought back in house, be analysed? That forms part of the TUPE transition and not Better Highways. However, as noted in 29 above, there will be continual reassessment of the service to ensure it continues to meet the demands and expectations. 31. Members wish to have clarity on those elements of the current Capita staffing
who will be returning to the Authority in February 2011.
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Following cabinet earlier this month various options are being appraised and will be reported back to Cabinet in September 32. What are the risks and challenges to the County Council, arising from the return
of Capita staff? We currently don‟t know what will and will not return to CCC but a plan is in place to identify and manage risks around the Capita transition. 33. What evidence have officers based their 'assumptions' on numbers of staff
eligible for transfer? Affordability, workload, work type. 34. Which elements of the current Capita contract will be returning to the Authority
or be picked up by Amey until April 2012? As 32 35. How will the transition of all local office Capita staff; traffic management; design;
local practice engineers; hotline, etc be dealt with? As 32 36. As part of the new contractual arrangements, post March 2012, are the issues as
applied to Capita being applied to any Amey functions also to come back? The new delivery model post March 2012 has still to be determined
Members awaiting written clarity on these and other related questions highlighted in the additional 12 questions post Capita/Amey Rebid – as discussed 29.09.10
Still to be clarified to Members 37. When will a clear timescale (documentation) be provided to members regarding
decisions to be taken on the Amey contract? It is hoped to be able to consider this issue at September‟s Cabinet. 38. How can it be ascertained which service configuration is most suited to Cumbria, if no
decision has yet been made on the key question as to whether the new service should be delivered largely from the centre or primarily from Local Committee areas?
The new model clearly requires greater local decision making by, and autonomy for, operatives. The model has been developed to allow that and will be revised to ensure it continues to in the future. 39. How will the transition costs be met, if there is no specific budgetary provision for this?
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All costs associated with the new model come from existing budgets. 40. How and where is the County Council expected to achieve a £1m saving, plus
repayment of the Improvement and Efficiency Reserve of £500k? From a number of sources including the changes in service delivery post Capita and the Amey contract rebid in 2012 all of which are informed by the reshaping of service elements as a result of the Better Highways Project. HOTLINE 41. If the Capita hotline is coming in-house locally, who will be dealing with this and how?
Will this require an operator in each district? Will there be automated responses? Have we the technologies in place to facilitate this?
The new model works on the basis that as many decisions and activities happen at a local level. As stated in 27, this needs contact with the customer from the very start of the demand. Therefore, appropriate staff will need to be available locally. 42. As part of Scrutiny’s original task would members have an opportunity to inform
that process of thinking on the re-configuration of the Highways hotline – how will non-executive members get involved in that process of going forward?
If the demand is to be received locally then the Hotline may not be retained in its current form.
With the demise of the hotline will budgetary allocations be made to Local Areas to enable them to absorb the extra work?
43. What are your intentions relating to keeping members better informed on what is going
on in the Hotline? Members will be provided access to reports on the performance of the Measures on a weekly basis. The new system should radically reduce the need for Members to check progress of defect reports. More widely we intend to upgrade the quality of information provided to Members relating to highways works. Finally, there is an open invitation to any Member to spend time with their local Better Highways teams to check on the quality and quantity of work done. 44. Have officers identified savings/efficiencies in bringing the development and operation
of the Hotline in-house? See 41 above. The primary direction of officers when assessing the new model has been to identify a system that meets the demand being received and the expectations of the public. Therefore the “savings/efficiencies” being considered are in relation to the reputation of the service and its ability to meet the demands received. CONTRACT
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45. Who is administering the contract on the County Council‟s behalf? For any contract the County Council is always the principal client ie. administers the contract. The proposals within highways relate to the need to strengthen the client role as a result of the changes taking place over the next few years ie. involving Better Highways reviews and the Amey rebid process to 2012. 46. At what point will scrutiny members be given the opportunity to discuss the preferred
option/s for the most suitable contract model or models, post March 31 20012, (as agreed at SMB)?
We are finalising the models for future service delivery at present and would be happy to share these with Scrutiny between now and the autumn. 47. Will Members be given an opportunity to engage in the workshops which are being
arranged to consider and discuss the relative strengths and weaknesses of each - and understand which, if any are best for Cumbria?
Members are always welcome to be involved and contribute.
T&F Members will have an opportunity to discuss and consider options for the works element of the new Highways contract, post Amey 2012, having been provided with the relevant Cabinet *reports/papers, including discussion and briefing papers which were considered by Members as part of the options appraisal process.
48. In a recent Cabinet update report (para 4.5), it was inferred that the number of staff
returning from Capita will determine your final structure, rather than quality of service and the particular skills which will be required to deliver the service in-house. Members would like to have clarity on the following statement - "further work is being undertaken to ensure we match future staff structure with further work programmes"
NB: The key message from Members is to ensure a business case for bringing 200+ Capita staff in-house is properly assessed and is determined by known workload (particularly in the current climate) otherwise subsequent redundancy costs will fall on the Council.
Throughout this process we have always understood that the number of staff to transfer (to any organisation) is dependent on a business case justification. All proposals to date have been made based on their being affordable within current funding levels. Further work has been requested post general election to understand the impacts of a number of funding reduction scenarios. The full details of the business cases and options of these are being presented to Cabinet in September. 49. What are the range of consultancy services which are being identified that will meet the
needs of the Directorate both Highways and Transport and Economic Development services (work completed by July 2010)?
We understand this question to relate to the current Capita contract and refer to the above response in item 48.
July 2010
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25.11.10
