To provide the Strategic Monitoring Committee with an update on the actions taken in response to their review of the Strategic Service Delivery Partnership between Herefordshire Jarvis Services, Owen Williams and Herefordshire Council.

(The Committee resolved to exclude the public and press during consideration of part of the discussion of this item on the grounds that there would be disclosure of information relating to the financial or business affairs of any particular person (including the authority holding that information).  The following is a complete record of the proceedings.)

The Committee considered an update on the actions taken in response to their review of the Strategic Service Delivery Partnership between Herefordshire Jarvis Services (HJS), Owen Williams and the Council.

The Environment Support Manager presented the report, which set out developments since the matter had been reported to the Committee in June.  Mr S Gyford, General Manager of HJS was also present to answer questions.

The Environment Support Manager drew particular attention to action taken to improve working practices, adherence to the business planning process, improved working relationships and a possible name change for HJS.  He added that action was considered completed in relation to recommendations on the business planning process, compliance with the shareholders agreement, the understanding of to what HJS’s 8% recharge to the Council related, the development of a robust contingency plan and putting arrangements in place to monitor the fee levels of Owen Williams.  Progress against each of the recommendations made by the Committee was summarised in the appended action plan.

The report also described progress in response to Cabinet’s recommendation that, “consideration should be given to engaging an external consultant to undertake a brief piece of work to verify a number of aspects of the services supplied by the Partnership.”

In the course of discussion the following principal points were made:

·          In relation to school catering Mr Gyford advised that there was no realistic prospect of HJS seeking to return to that sector.

·          In response to a question the Environment Support Manager commented further on the improvements in working practices and in particular to the joint working between HJS and the Council.

·          A question was asked about the reference in paragraph 10 of the report to HJS updating its business planning at quarterly intervals and whether HJS had a clear picture of its actual trading position.   In reply Mr Gyford provided details on the trading position advising that HJS was on target to achieve the profit target it had set for the year.  The level of profit was a significant improvement on the previous year.

·          One of the Review’s recommendations had advocated challenging the payment charged to the Council by HJS for Management Services to ensure that it represented value for money.  The report noted that this was a contractual issue and changes could only be made through negotiation.  This was similarly the case with the cumulative liability in respect of the management fee.  The report stated that at this point in the negotiations both partners had identified issues which they considered should form part of an overall realignment of the service delivery agreement.

Asked to expand on the possible realignment the Environment Support Manager said that three years into the life of the agreement both partners had identified scope for improvement.  One example was routine reactive highway works where there was no productivity incentive in the agreement.  He acknowledged that if a reduction in the Management fee were to be agreed by HJS there would be trade-offs in the negotiations.  However, this did not mean accepting that HJS would increase costs elsewhere.  The focus of the negotiations was on achieving efficiency and productivity gains.

·          In relation to work being won by HJS from clients other than the Council Mr Gyford reported that HJS was not being as successful as he would like with such external work representing less that 10% of turnover.  However, following an improvement in the financial reputation of the Jarvis Group, HJS had now been successful in gaining inclusion on a list of contractors upon which a number of authorities drew.

·          Asked about HJS’s ability to compete particularly for smaller jobs given its overheads Mr Gyford acknowledged that there had been occasions upon which unrealistic prices had been quoted.  However, these were exceptions.  He had reduced overheads and improved productivity.  The intention was to target areas and particular customers not to seek every job whatever the price.  In response to a further question about the reputational impact of quoting unrealistic prices he advised that HJS did not intentionally submit an unrealistic price when it did not want a job.  In practice when too high a price was quoted this was usually as a result of an error or an ambiguous specification.

·          In relation to the recommendation about the need for staff to be familiar with the contract it was reported that work was ongoing to produce a manageable, clear training pack and this should be available before the end of 2006.

·          It was reported that consideration of a new name for HJS was still ongoing.

·          It was suggested that consideration be given to reconvening the Strategic Partnership Review Group to carry out a short, sharp investigation to confirm that progress in working relationships had been made.

·          The Environment Support Manager was asked about progress in engaging a consultant to verify a number of aspects of the services supplied by the Partnership.  He reported that three expressions of interest had been received and these were being evaluated.  He expected that the piece of work would be completed within three months of engaging the consultant.

RESOLVED:  That a further progress report be made to the Committee once the Consultant’s findings had been produced.