Reason for the decision:
Kent County Council (KCC) is the Statutory Authority responsible for the delivery of highway services for the residents of Kent (excluding Medway). The Highway Term Maintenance Contract (HTMC) is delivered by Amey Highways Ltd and the contract is managed by Highways and Transportation (H&T). This will expire in August 2023 which includes the initial ten-year term and subsequent extension due to COVID-19.
To procure a replacement contract is complex and time consuming. To deliver the programme, a longer lead time is required to finalise the strategy and outline the contract requirements. The procurement and mobilisation process should in best practice require 27 months. This allows for float for any unexpected issues and mobilisation to protect KCC’s statutory obligation.
Due to Winter Service requirements, the recommended period for any new contracts to commence is late spring/early summer. This allows preparation for Winter Service (which formally starts in October) and includes securing/maintaining vehicles, salt purchase, route optimisation and driver recruitment and training. To deliver the programme, a longer lead time will allow for sufficient market engagement, finalise an appropriate strategy and outline the new contract requirements. A procurement programme will ensure a new contract will commence from 1st May 2026. An interim 32-month contract with Amey Highways is required.
Background:
The current arrangement commenced on 1 September 2011 and has been worth between £40m and £50m per annum split across revenue and capital budgets which is dependent on certain grants and KCC funded elements. Several key services are delivered through this contract including:
• Winter Service Provision – i.e. gritting of our major routes during freezing conditions.
• Drainage Maintenance and Capital Projects – i.e. gully cleansing and drainage repairs.
• Structures Maintenance – i.e. bridge repairs and construction.
• Patching and Small Resurfacing Services – i.e. pothole and surface defect repairs.
• Surface Treatments – i.e. road and footway surface preservation and life extension.
• Emergency Response – i.e. supporting emergency services in response to incidents across the network including weather events and structural failure.
• Highway Schemes Delivery – i.e. construction of highway improvement schemes, including those for crash remedial measures and s106 requirements.
Due to the aftermath of COVID-19 and the market volatility due to demand, inflation and raw material availability, the re-procurement of a strategic contract of this kind at this time would represent an elevated risk for the Council (and would not elicit or enable a good market response).
Options (other options considered but discarded):
Re-procure on a like-for-like basis.
Disaggregate the contract and procure smaller contract packages.
A partnering (Highway Alliance) model developed jointly between the Council and Commercial Services Kent Limited (CSKL).
How the proposed decision supports Framing Kent’s Future 2022-2026: (https://www.kent.gov.uk/about-the-council/strategies-and-policies/corporate-policies/our-council-strategy)
Priority 2: Infrastructure for communities
This framework will support the delivery of maintaining, repairing and installing drainage assets on the Kent highway network to a safe standard which in turn impacts on Kent residents’ accessibility to employment, education, health provision and leisure opportunities.
Data Protection implications:
The initial screening identified that a Data Projection Impact Assessment will not be necessary as no personal data is collected for this commission.
Decision type: Key
Reason Key: Expenditure or savings of more than £1m;
Decision status: Recommendations Approved
Notice of proposed decision first published: 20/06/2023
Decision due: Not before 19th Jul 2023 by Cabinet Member for Highways and Transport
Lead member: Cabinet Member for Highways and Transport
Lead director: Haroona Chughtai
Department: Growth, Environment & Transport
Contact: Andrew Loosemore, Head of Highway Asset Management Email: andrew.loosemore@kent.gov.uk Tel: 03000 411652.
Consultation process
The proposed decision will be considered by Members at the Environment and Transport Cabinet Committee on 5 July 2023.
Financial implications: Prior to Decision 17/00124 (April 2018) it was identified following the market engagement that a full re-procurement will result in an increase of £2.4m due to a realignment of rates (prior to inflation). This created a financial pressure and included as part of a Medium-Term Financial Plan (MTFP) pressure. There was further £400k budget to allocated for the procurement process. This will be delayed until 2026. There is elevated risk that due to the market uncertainty and instability that this will fall short of the actual costs tendered with submissions being unaffordable and the operational service being materially affected. There is a budgetary impact to the new contract prior to any future inflationary pressures on both Capital and Revenue streams. The effect on future revenue budgets is forecasted to be £530k and has been included as a pressure in the MTFP.
Legal implications: Under the Highways Act 1980, as the local Highway Authority, KCC has a legal duty to maintain its respective sections of the highway network under section 41. Due to KCC having a legal duty to maintain its respective sections of the highway network under section 41 of the Highways Act 1980, continued service provision is required. The current contract has been extended beyond its original allowable period due to the COVID-19 pandemic. There is no scope to extend the current contract legitimately in accordance with the Public Contract Regulations 2015. Legal advice is being sought and will be considered before the publication of the Proposed Record of Decision.
Equalities implications: An Equalities Impact Assessment has been carried out and no implications have been identified at this early stage. This will be continually reviewed as required. Individual schemes EqIA’s will be completed separately as required.