Bath & North East Somerset Council

DECISION MAKER:

Cllr Terry Gazzard, Cabinet Member for Development and Major Projects

DECISION DATE:

On or after 1st November 2009

PAPER NUMBER

1

TITLE:

Heritage Services Catering Contract

EXECUTIVE FORWARD PLAN REFERENCE:

   

E

2049

WARD:

Abbey

CONTAINING EXEMPT APPENDICES

List of attachments to this report:

Appendix A is Exempt by virtue of paragraphs 3 of Schedule 12A to the Local Government Act 1972.

1 THE ISSUE

1.1 The report sets out the action that has been taken by officers and members in tendering for the Heritage Services Catering Contract, which is to be awarded under Voluntary Competitive Tender.

2 RECOMMENDATION

2.1 The Cabinet member is asked to award a contract for 11 years for sole rights to the provision of catering services at venues managed by Heritage Services to Company B, details of which are set out in the exempt Appendix. This recommendation is made on the grounds of quality of service and financial return to the authority based on the proposals in Company B's tender documentation, and the likely health and sustainability of the company over the term of the contract.

3 FINANCIAL IMPLICATIONS

3.1 The bid by Company B should provide a net concession income to the Council in the first full year of operation of all areas within the contract totalling £810,000, and is likely to total c. £4.3 million over the first five full years of operation (at 2009 values). This level of income will be included within the Heritage Services Business Plan for 2010/11 - 2015/16 to be considered by the Cabinet Member in March 2010.

3.2 The original specification was for an eight year period from 1 February 2010 to 31 January 2018. The tenders received from all companies for this length of contract did not provide an overall level of return that matched those included within the current Heritage Services business plan.

3.3 The four shortlisted companies were therefore asked to submit alternative proposals for 11 year and 13 year contract periods that would allow them to more fully amortise their investment and reflect this within the concession offer. Financial evaluations of all the shortlisted bids were made for all three contract lengths. On the basis of these proposals, the panel recommends that the optimum contract length is 11 years.

3.4 The investment proposals contained within the preferred bid may impact upon the Council's VAT partial exemption position. The manner in which investment is made will be carefully monitored and managed in order to minimise the impact upon the Council's VAT position.

3.5 The financial evaluation of the tenders received is described in Section 7 below.

4 CORPORATE PRIORITIES

4.1 In recommending Company B, officers have taken into account the following corporate priorities:

4.2 Sustainable growth: the tender submissions have been evaluated on the basis of 50% quality : 50% finance. Company B's tender offers the best financial return to the Council and also the highest level of investment in the service and the Council's assets.

4.3 Addressing the causes and effects of Climate Change: the contract specification required tenders to set out their environmental policies. Officers are satisfied that Company B's policies on local sourcing, minimising delivery miles and on recycling are robust and sustainable.

4.4 Improving transport and the public realm: Company B's proposals enhance the public realm and encourage the evening economy in the centre of Bath.

5. THE TENDER PROCESS.

5.1 A Tender Evaluation Panel was established, consisting of the following:

5.2 Following the successful practice when the contract was previously tendered in 2004, the Chair of the Enterprise and Economic Development Overview & Scrutiny Panel was invited to attend and observe Evaluation Panel meetings.

5.3 The Panel was advised by Catering Consultant John Downman of Tricon Foodservice Consultants, whose services were used throughout the tendering process. He was appointed following competitive quotations from a select list of catering consultants who expressed interest in advising on the contract when they saw it advertised.

5.4 The criteria for the Tender Evaluation Panel were established and a ratio of 50% Quality : 50% Finance agreed. The tenderers were informed of the full scoring criteria in advance, in accordance with the latest EU regulations.

5.5 The Financial criteria assessed the concession proposed and the risk attached to its delivery; proposed levels of investment, and the adequacy of support proposals, business development support and financial systems.

5.6 The Quality criteria assessed a range of criteria, weighted to reflect their relative significance. These criteria were:

5.7 The new component in the contract is a new on-street catering facility. Tenderers were also invited to submit their proposals for its style and presentation and, particularly, for the level of investment the company was prepared to make in the site.

6. The tender evaluation process.

6.1 There were 19 expressions of interest in the contract. 11 companies submitted pre-qualification questionnaires, of which the five most suitable were invited to submit exact tenders. After an evaluation of these tenders, four companies were invited to interview.

6.2 The adequacy of investment proposals was reviewed. A minimum investment level required to support turnover assumptions was established, and bids that did not provide at least this level of investment received point scores that reflected the shortfall. Bids containing investment proposals that exceed the minimum level received additional points.

6.3 The bids were reviewed to assess the risk that each company would not meet the sales targets necessary to generate the levels of return contained with the current Heritage services business plan. This risk was measured by comparing the sales targets included within each bid against the "standard" levels of sales assumed within the current Heritage Services business plan.

6.4 On the basis of the overall evaluation on a `50% Quality, 50% Price' formula, four companies scored appreciably higher than the others in both the quality and financial evaluations. The four shortlisted companies were invited to interview. The interviews were conducted by the Evaluation Panel shown at 5.1 above. The final evaluation, based upon the tenders and information provided at the interviews, was as follows:

6.5 The evaluation shows Company B to be the clear winner. Company A provided a strong second bid and companies C and D had major weaknesses in the financial and quality aspects of their bids.

7. RISK MANAGEMENT

7.1 The Evaluation Panel has fully reviewed the risk assessment related to the issue and recommendations, in compliance with the Council's decision making risk management guidance.

7.2 The Catering Consultant confirmed that the tendering and selection process was thorough and fair. His independent assessment is that the Panel has reached an appropriate conclusion on the caterer recommended for this contract.

7.3 The Chair of the O/S Panel confirmed that the interview and evaluation process was thorough and fair. He has agreed that the Panel has made the correct recommendation to the Cabinet Member in this report.

8. EQUALITIES

8.1 The Contract specifies that the Caterer's equal opportunities policies should be at least as robust as that of the Council. Each caterer was required to submit details of its Equal Opportunities policy at Pre Qualification Questionnaire stage. This was analysed before selected caterers were invited to tender. Details of training, development and special needs provision were also submitted as part of the bids and the successful caterer impressed in all of these requirements.

9. RATIONALE

9.1 The rationale for the recommendation is contained in Sections 5 and 6 above which deal with the evaluation of the bidding companies. A further section entitled `Rationale' is included at Section 3 of the Exempt Appendix attached.

10. OTHER OPTIONS CONSIDERED

10.1 The process of specifying, tendering and evaluating the requirements of and bids for this contract has been extensive and exhaustive. The recommendation to appoint Company B is made with the aim of achieving the very best result for the Council and the customers who will use the Service's catering over the next eleven years. To appoint Company A would result in a lower quality offer with less return to the Council than that of Company B. The bid from Company C does not provide an adequate financial return to the Council and the bid from Company D would result in a reduction of the quality of the catering offer in Heritage Services' venues.

11. CONSULTATION

11.1 Cabinet member; Overview & Scrutiny Panel; Staff; Service Users; Stakeholders/Partners; Section 151 Finance Officer; Monitoring Officer.

11.2 Consultation was carried out in person, by telephone and/or e-mail and through stakeholder and service user feedback mechanisms.

12. ISSUES TO CONSIDER IN REACHING THE DECISION

12.1 Customer Focus; Sustainability; Property; Corporate; Health & Safety.

 

Contact person

Stephen Bird, Head of Heritage Services x7750

Patricia Dunlop, Commercial Manager and Contract Monitor x7759

Richard Hartill, Finance & Business Manager x6405

Background papers

None

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