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Waverley Borough Council Committee System - Committee Document

Meeting of the Executive held on 07/03/2006
Leisure Centre Procurement Strategy



APPENDIX D
WAVERLEY BOROUGH COUNCIL

EXECUTIVE – 7TH MARCH 2006
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Title:

LEISURE CENTRE PROCUREMENT STRATEGY
[Wards Affected: All]
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Note pursuant to Section 100B(5) of the Local Government Act 1972

An annexe to this report contains exempt information by virtue of which the public is likely to be excluded during the item to which the report relates, as specified in Paragraph 3 of the revised Part I of Schedule 12A to the Local Government Act 1972, namely:-

Information relating to the financial or business affairs of any particular person (including the authority holding that information).

Summary and Purpose

The Council is currently facing many challenges regarding the provision and development of its leisure centres. This reports sets out for members an overview of the current position, highlights some of the issues facing the Council in the longer term and makes recommendations for the Council to undertake a strategic review of its leisure centre provision which will result in a clearer and sustainable long term strategy for delivery.
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Social/Community implications:

Leisure centres provide the community opportunities to improve their health and well being. The centres provide accessible facilities to all sectors of the community and there is provision for people on low incomes to utilise the Council’s IN2 leisure discount scheme to access facilities at reduced cost. The development of a borough wide strategy will contribute to ensuring that all sectors of the community have appropriate access to facilities.

Environmental implications:

The strategy will have due consideration for the environment and any opportunities to minimise the impact the centres have on the environment will be investigated.

E-Government implications:

The Council’s web site will be used in the consultation process so members of the public have the opportunity to make their views known.

Resource/Legal implications:

The resource implications are considered in detail within the report.


Current Position

1. The Council owns four leisure centres, which are operated on behalf of the Council by external management contractors. The Council has also recently agreed to transfer the ownership and management of the JSJ Godalming Leisure Centre to the Council.

2. The contracts currently operating have been entered into separately, as and when required by the Council. The following table sets out the start and finish dates for the current contracts and identifies the current contractors.

Table 1

3. As well as agreeing to transfer the ownership and management of the current Godalming Leisure Centre from the JSJ Trust to the Council, the Council has agreed to fund a refurbishment of the centre at an estimated cost of £817,000. Funding for this has been identified in the capital programme over the next 2 years. The Council has articulated in its priorities the desire to build a new leisure centre in Godalming.

4. In April 2004, the Council approved an extension to the current management contract of Farnham Sports Centre up to April 2007 and agreed to allow officers to explore whether solo negotiations with DC Leisure offered the best solution for Waverley under a longer-term contract post April 2007. It became evident from a survey of the building that the centre is in need of modernisation and a degree of catch–up repairs. In December 2004, Members agreed the inclusion of £1.8m within the draft capital programme to cover the cost of a basic refurbishment to be phased over the following 3 years. In the 2006/7 capital programme £300,000 is identified, with £1.5m identified in 2007/8. Officers are now in the position to give assurances that the funding for the basic refurbishment has been approved and is fully financed, which should enable negotiations with the leisure contractor to be progressed.

5. In 2003 the Council adopted the Waverley Cultural Strategy, which identified the aim of seeking to achieve a minimum standard of provision for ‘pay and play’ access to indoor sports in each of the four main centres so that core facilities are available to the community. The provision of facilities to include: 25m swimming pool, teaching pool or area, health and fitness facilities, 4 court sports hall (at least to Sport England minimum standards), high quality ancillary facilities, crèche facilities and soft play facilities.

Current Challenges

6. Whilst the Council supported a minimum standard of provision in the four main centres as part of the Cultural Strategy recommendations, there is currently no clear vision for how the Council will support the delivery of this standard through its leisure centres. Throughout the borough the community is experiencing differing levels of service, partly due to the relative condition of the facilities, as well as the actual facilities provided.

7. Like many local authorities there are significant financial implications in maintaining good quality leisure centres which meet the needs of communities. The financial commitment required to maintain existing facilities is considerable in itself before adding to or improving facilities.

8. The Council needs to have a long-term comprehensive strategy for borough-wide leisure provision to ensure that the community’s leisure needs are met into the future and good value is achieved from Waverley’s assets. Without such a strategy the result will be an ad-hoc approach with short-term solutions to leisure procurement issues. The approach to development and procurement to date in Waverley has been on a centre-by-centre basis addressing the needs of the individual locations and not on a borough wide approach.

9. The landscape of leisure provision within and surrounding the borough is continually changing with new facilities becoming available. This in turn impacts on any previous supply/demand and needs analysis. The existing research carried out to date is not comprehensive, in some cases outdated and with limited non-user input.

10. The Council has pledged as a priority the wish to build a new leisure centre in Godalming. The delivery of this has proved difficult to progress given the issues of trying to identify a suitable location, the need to relocate Guildford Rugby Club and the cost implications overall of delivering this scheme.

11. The basic refurbishment of Farnham Sports Centre in the capital programme will only keep facilities at the current standard and provide essential maintenance and replacement. It is evident that attendances are falling as other more attractive and modern facilities are offered in the area. This is impacting on the income streams, which are forecast to continue falling. Increasing utility, insurance and staff costs coupled with rising maintenance bills are likely to result in significantly increased operating costs in any future contracts.

12. Proposals to enhance the centre on a larger scale and the cost implications of this will also be considered as part of any strategy development.

The need for a Leisure Procurement Strategy

13. Like many local authorities the Council has ageing leisure centres. With increasing financial pressures on services across the Council and recent developments in relation to taking over Godalming Leisure Centre and the identified need to undertake a refurbishment at Farnham Sports Centre, senior officers have identified the need to consider how best the Council can address its leisure procurement requirements to attain best value, whilst at the same time meeting the needs of the community.

14. The Council needs to be reassured that its proposals for the delivery and implementation of the leisure centre developments are feasible and, more importantly, sustainable in the longer term. Decisions need to be based on sound justifications that have arisen from comprehensive research. There are always a number of options available when considering procurement, therefore detailed options analysis must be presented to ensure value for money is achieved and the best interests of the Council are served.

15. Implementation of complex procurement decisions can be difficult if an agreed policy, process and timetable are not endorsed by all key stakeholders. A lack of clarity will hinder progress. A strategy will provide transparency to the process; provide reassurance to external stakeholders leading to less confusion and unrealistic expectations. A strategy will also enable delivery to be monitored and evaluated to ensure objectives are being met.

16. Given that the Council has agreed to take responsibility for Godalming Leisure Centre, and is considering options for refurbishment proposals as part of a new contract at Farnham, coupled with the fact that other contracts are shortly due for renewal, the Council now finds itself in a position where there is the opportunity to consider a more strategic approach to future leisure procurement. This may assist in meeting some of the long-term challenges the Council faces.

17. Feedback from other local authorities facing similar issues has shown that where authorities start to approach procurement on a more comprehensive basis economies of scale and long-term partnerships can be developed helping authorities to tackle the problems of resources and practical implementation.

18. Initial investigations have highlighted that there may be an opportunity to improve value for money and ease of operation by streamlining the management function and procurement of the leisure centres by consolidating the existing contracts. By bringing the existing contracts together as one there will be benefits to both the contractor and customers. The contractor would benefit from economies of scale through overhead savings as well as the streamlining of services and these savings should be reflected in a reduced management fee. For the customer there would be greater opportunity for cross utilisation of facilities. The aggregation of smaller contracts into a larger single contract would also be more attractive to the market.

19. Timing is such that there are opportunities for Waverley to consolidate its contracts. As well as being a favourable option in terms of possible economies of scale, it would also provide a window of opportunity for members to develop a longer-term leisure centre procurement strategy over the next 6 months.

Process

Short Term

20. With reference to Table 1: To bring the contracts co-terminous in July 2008 the following actions are required:

1. Seek an extension of the Farnham Sports Centre contract to July 2008.
2. Seek agreement from DCL Leisure Ltd to waive the 2-year option to extend at the Edge.
3. Put in place a short-term management contract at Godalming Leisure centre up to July 2008.
4. Seek an early termination (ending June 2008) of Cranleigh Leisure centre contract from Serco Leisure Ltd. If an early termination proved to be an expensive option for the Council it may still be possible to tender a consolidated contract with an option to bring in the Cranleigh contract a year later.

21. These actions, if concluded, would make all five contracts co-terminous in July 2008 allowing the Council to procure one contract with a single specification, contract and management regime.

22. Officers have, as part of the negotiations with DCL, discussed actions 1 and 2 above and the initial outcomes are set out in the (Exempt) Annexe to this report.

Long Term

23. If the Council agrees to consolidate the contracts from July 2008, the procurement of this contract will need to commence this autumn allowing a minimum of 18 months, which will be necessary to undertake the tendering process.

24. This provides a window of opportunity for the Council over the next six months to develop a coherent long-term strategy for what it would like to deliver as part of any new contract post July 2008 and to consider the size, scope and nature of the leisure provision the Council can afford to provide.

25. To support the Council in the process of developing a Leisure Centre Procurement Strategy, officers are recommending the use of an external facilitator to assist the process. Capita Symonds Sport and Leisure Consulting were recently commissioned to conduct an options review for the Council on the JSJ Trust. Having carried out this options review Capita have acquired a substantial amount of knowledge and understanding of the Council’s current position in relation to leisure. They also have a strong track record of working with other local authorities on the development of leisure strategies. Given this background, officers requested Capita to provide more detail around how they might support the Council moving forward with a strategic review of leisure centre procurement.

26. The detailed proposal from Capita is attached in Annexe 1. Resource plans and details of the proposed team are attached to the Exempt Annexe. In summary, the process they outlined will involve the following stages:

ProcessRequirementApproachTimescale
Develop a vision for leisure in WaverleySupport the Council to develop a clear vision for Leisure centre provision in the Borough for the next 15 yearsTours of existing facilities.
Study tour of other facilities provided by local authorities.
Facilitated member workshop
April
Leisure Needs Analysis – understand supply and demand Conduct focused study into identifying the Boroughs future leisure needs.Desk study
Consultation including focus groups across the borough, public meetings, non-user surveys, citizen’s panel.
Mapping exercise to identify supply and demand taking into account surrounding boroughs.
April/May
Options AppraisalSupport the Council in identifying the most appropriate options for procurements and refurbishment of the leisure facilities and their respective costs and benefits Options appraisal and evaluation exercise to be conducted by Capita. June
Formation of a Leisure Strategy for the next 15 yearsProduction of a leisure strategy document which links the Council’s vision for leisure to its corporate objectives, provides the context for the strategy and sets out clear aims, objectives and outcomes to be achieved.Assimilation of research with vision and options appraisal concluding with a workshop to determine recommended option and approachJune – July
Confirmation of StrategyCouncil endorsement of strategyRelevant committee approvals followed by adoption by the CouncilOctober

27. Given that Capita has a sound knowledge of the Council’s current position in relation to leisure provision and procurement, a substantial track record in developing leisure strategies with other local authorities, come highly recommended by other local authorities and offer comparative rates which have been benchmarked, Officers are recommending that the Council agrees to commission Capita Consulting to facilitate the development of a long term leisure procurement strategy. If the Council agrees to this commission without seeking alternative quotes, then officers recommend that the normal provision of Contract Procedure Rules A108, CPR G-L, and B be waived, thus allowing a single tender contract to be accepted.

Resource Implications

28. At the Finance seminar in October 2005, Members were informed of the likely pressures on the leisure centres’ capital and revenue budgets in the next few years. In December 2004, the Council recognised the need to invest capital in a refurbishment of the Farnham Sports Centre and agreed that £1.8m should be included in the capital programme. Members were also updated on the negotiations with DC Leisure and informed of the likely future significant increase in management fee at Farnham (even after the basic refurbishment) and the tightening contract conditions in the leisure market that would transfer certain cost risks to the Council.

29. In November 2005, the Council also agreed to include £817k in the capital programme for the Godalming Leisure Centre. In addition, the Centre’s deteriorating revenue position is reflected as a variation in the 2006/07 draft revenue budget.

30. If the Council agree to manage the situation so that the existing contracts become co-terminous in July 2008 to consolidate the contracts, as recommended by officers in this report, the additional cost to the Council would be as set out in the (Exempt) Annexe.

31. As the position develops, the Medium Term Financial Strategy will be updated to forecast the potential impact over the next few years.

Risk Analysis

32. If an agreed policy, process and timetable for leisure centre provision and procurement are not agreed by all key stakeholders then the implementation may not achieve the best outcome for Waverley in the longer term. If procurement decisions are not based on appropriate needs/supply and demand analysis then the Council may fail to meet customers needs.

33. Failing to develop a clear long-term strategy may result in unrealistic, undeliverable or unsustainable proposals. Without undertaking a detailed options appraisal, proposals may fail to deliver value for money for the Council. If the Council chooses not to extend the Farnham Sports Centre contract at the end of March 2007, there will be insufficient time to undertake a full tendering exercise including a detailed options appraisal. This may result in not securing the best option for the Council.

34. If the process of developing an agreed long-term strategy for leisure procurement is not undertaken with the support of a cross-party SIG and agreed by all parties, then any proposals could be affected by the pending 2007 district elections.

35. If Waverley does not invest capital funds into repairing the Farnham Sports Centre, this may result in significant additional revenue implications in the form of increased management fees (in excess of those increases likely as a result of tightening contract conditions) and reduced income share. By consolidating the contracts into a single larger contract this may deter smaller scale leisure operators from bidding thus limiting the market place.

Conclusion

36. For some time the Council has found itself in a position of having to react to various leisure procurement issues. There is a perceived pressure on the Council to make provision equitable across the borough. As the needs of communities change and the landscape of provision alters, the Council needs to monitor and evaluate its approach to provision accordingly. Like many local authorities in England, Waverley is under increasing financial pressure and must therefore take every opportunity to maximise the outcomes of the resources it has to deliver good quality services to the community.

37. Approaches to the way in which local authorities can procure sport and recreation services are changing and there is greater opportunity and scope to attain value for money. The Council is fortunate in that it now finds itself with a window of opportunity within which it can assess the various options available to it and develop a more viable longer-term strategy, which meets the needs of the community.

Consideration by the Godalming Leisure Needs Special Interest Group (SIG)

38. At its meeting on 23rd February 2006, the Godalming Leisure Needs SIG considered matters arising from this report. The SIG agreed the following, that:-

· there should be a review of leisure centre provision and the formation of a long term Leisure Centre Procurement Strategy;

· all contracts should be made co-terminous in 2008 allowing the Council to consolidate the leisure management contracts into a single contract; · the proposed consultation be undertaken, to be commissioned by Capita Symonds Sport and Leisure Consulting, at the cost of £33,470; and

· the SIG be re -established as a Waverley-wide Leisure Needs SIG with membership drawn from across the whole Borough and that specialist Members are co-opted when required. Members agreed that membership should not be too large. It was agreed that the terms of reference of the wider SIG should include the 'equality of provision in the borough'.

Recommendation

It is recommended that

1. the current position and challenges facing the Council leisure centre provision in the borough be noted; 2. the principle of consolidating the leisure management contracts into a single contract at July 2008 be agreed; 3. officers be requested to discuss with Serco Leisure Ltd an early surrender of the Cranleigh Leisure Centre contract and report back with any terms identified by Serco; 4. the terms set out by DC Leisure Ltd for the extension for the Farnham Sports Centre contract and the waiver of The Edge option to extend as set out in the (Exempt) Annexe be agreed; 5. a review of leisure centre provision be undertaken and the formation of a long term Leisure Centre Procurement Strategy, following the process set out in this report; 6. a waiver to the Contract Procedure Rule A108, the requirement be approved to obtain alternative quotations using the provisions of CPRW101 to commission Capita Symonds Sport & Leisure Consulting; 7. the Council be recommended to approve a supplementary revenue estimate of up to £34,470 to employ Capita Symonds Sport & Leisure Consultancy to assist in the development of the Leisure Centre Procurement Strategy; and

8. a Waverley-wide Special Interest Group be established to oversee the development of the strategy.
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Background Papers (DoEL)

There are no background papers (as defined by Section 100D(5) of the Local Government Act 1972) relating to this report.
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CONTACT OFFICER:

Name: Julie Maskery Telephone: 01483 523432
E-mail: jmaskery@waverley.gov.uk

comms/exec/2005-06/294