To advise the Committee on the key contractual mechanisms currently in place to manage performance within the contracts with Amey Herefordshire.

The Committee considered a report on the key contractual mechanisms currently in place to manage performance within the contracts with Amey Herefordshire.

The Assistant Director – Place Based Commissioning (ADPBC) reminded the Committee that negotiations on a contract extension with Amey Herefordshire were ongoing.  It was intended to send supplementary information to Members on current performance.  The performance of the service areas delivered through Amey were reported through the Council’s Integrated Corporate Performance Report.  He confirmed that the performance measures included measures from the former Best Value Performance Indicators set, where these were considered to be relevant.

The Head of Highways and Community Services (HHCS) presented the report.  He commented on the current performance framework and the development of a future framework.

In discussion the following principal points were made:

·         Some concern was expressed that the report did not provide the Committee with the information necessary to assess and test performance and the assurance that there was a sufficient level of independent challenge to performance. 

·         The HHCS gave an example of how there had been a significant improvement in performance in the management of highway defects since the introduction of the Managing Agent Contract, driven by challenge from the Council as client, through the mechanisms established in the contract.  The ADPBC assured the Committee that in his opinion strong mechanisms were in place to manage performance.  The HHCS commented that whilst Amey was required to manage its own performance additional checks were provided by the Client Management Team.  He described the work of the team and how it audited works and sought to achieve performance improvement.

·           In response to questions about the stated savings achieved under the contract it was confirmed that the Council’s service budgets were reduced to account for the guaranteed annual saving delivered through the contract.  Further cashable savings were driven by the client team and had resulted in managed reductions in the budgets allocated to Amey Herefordshire for the delivery of services.  Directorates had been required to make significant savings over the past year.  Whenever they had been generated from a service area delivered through Amey Herefordshire these savings had also been taken into account in the budgets allocated to Amey.

·           In response to a question about the fact that no dividend had been paid to the Council as a shareholder in Amey Wye Valley Ltd, the Leader of the Council commented that when Amey had taken over the contract a deficit had had to be repaid.  He was mindful of the need to ensure that the Council received its fair share of any future profits. In response to further questions about the transparency of arrangements and the closeness of the relationship between the contractor and the Council under the current contract the Leader commented that he was seeking assurance that the current contractual model was to the Council’s benefit.

·           Members expressed a number of concerns about whether the contract represented value for money.  In response to a specific concern about the cost of work sub-contracted by Amey the HHCS stated that each job was costed on the basis of established rates and payment mechanisms.  The price the Council paid was the same whether Amey undertook the work itself or not.  The proportion of any management fee to Amey that was then paid to sub-contractors for individual works was a matter between Amey and its sub-contractors.

·           The ADPBC commented that value for money was a key aspect of the current negotiations.  It was emphasised that the Committee would wish to consider the content of new contractual proposals prior to the decision on whether or not to offer Amey a contract extension.

·         It was noted that the Managing Agent Contract, negotiated in 2009, governed highway services whilst property services continued to be delivered under the former contractual arrangements which were viewed as less effective.

·         It was suggested that a Task and Finish Group should be established to look into the issues and that questionnaires should be sent to all Members to seek evidence.

·         It was confirmed that some authorities did retain their own Direct Labour force to carry out the sorts of works provided under the Amey contract.  The ADPBC added that authorities generally were considering service delivery options and the Council continued to receive a number of enquiries about its approach.

RESOLVED:

That (a)           the report be noted.

(b)          a supplementary report be circulated to Members of the Committee providing the historical background to the Amey contract and the financial and performance management provisions within it; and

(c)          consideration be given to when the Committee could most effectively consider the content of new contractual proposals prior to the decision on whether or not to offer Amey a contract extension.