180.1 Waverley Borough Council recognises the potential to shape the future direction of sport and leisure opportunities in the Borough, through a long-term strategy. In April of this year members agreed to the principle of consolidating the leisure management contracts into a single contract by July 2008 and to a review of leisure centre provision with the formation of a long term Leisure Centre Procurement Strategy. Following the agreement of these recommendations In April the Council commissioned Capita Symonds Sport and Leisure Consulting (Capita Symonds) to develop a clear vision and strategy for the future of sport and leisure provision in the Borough. Specifically, the Strategy focused on:
· the management of leisure facilities in the future
· the level of leisure facility provision that should be provided in the future
· procurement issues associated with management and facility options.
Specific actions the Council wanted to explore through the Strategy were to:
· commence the development of a clear vision for leisure in Waverley
· establish an understanding of the community’s needs in the future
· develop a clear understanding of the corporate priorities that leisure contributes to and the development of a strategy to achieve them
· determine how the Council will procure the services it seeks to deliver within its strategy and which management option would provide the best approach
· set out an implementation plan for the chosen procurement route.
180.2 A project group containing members of the Leisure Special Interest Group (SIG), Heads of Service and Senior Officers has developed the strategy, supported by Capita Symonds. The Special Interest Group agreed the final recommendations contained in the Strategy, following consideration on the 22 September 2006.
180.3 The comprehensive and detailed Strategy report is attached as a separate document (Members who have already received this document are requested to bring it with them to the meeting; for other members, a copy is enclosed). Given the nature of the subject the Strategy document is full and detailed. Members are directed to the Executive Summary at the beginning of the report, which provides an overview of the recommendations being supported by the Project Group. In addition an overview of the key findings and recommendations is set out below.
180.4 In developing the strategy the following process was followed:
180.6 Farnham Sports Centre is dated and requires upgraded, customer facing, facilities. Extension of the health and fitness facilities and improvements to reception areas are key improvements identified.
180.7 Facilities at Cranleigh and Haslemere are generally in good condition, with some need for improvements to customer facing areas in the coming years.
180.8 All investment decisions should be based on improving the quality of facilities and service for the community over the long term and should address the need to improve the financial sustainability of the centres and ensure the facilities remain focussed on customer needs in the future.
180.9 The Council has previously taken the decision to outsource day-to-day management and delivery of sport and leisure facilities to management partners. The Council has made a clear commitment to continue to act as an enabler of sport and leisure. In addition to its strategic role leisure services will be responsible for:
· contract management
· support to the voluntary and education partners
· sports development
· performance monitoring and management.
180.10 The Council should also be cognisant of the significant number of sport and leisure opportunities offered by the education, voluntary and commercial leisure sectors in the Borough. These providers form an integral part of the leisure offering for residents. Waverley should seek to maximise the benefit offered by these providers by complementing them rather than competing with them.
180.11 The needs analysis focused on the current and future management of facilities. Procurement is the means by which these management and facility needs will be developed and implemented. The key findings from the leisure needs analysis, relating to the procurement of management contractors, can be summarised as follows:
· the existing management of all facilities is generally seen as good by users, although there is some room for improvement, which can be addressed in a new contract
· the relationship with DC Leisure is regarded as successful and one that Council Members and Officers would be willing to consider extending in the future
· there is recognition that there are significant potential benefits from entering in to a single contract for all centres for a longer term than has previously been the case.
· a decision has been taken to negotiate co-terminous contracts to enable the procurement of a future single management contract across all facilities.
180.12 The options appraisal was the most significant part of the analysis in determining the future strategy for Waverley Borough Council. A shortlist of options was created to keep the process manageable.
180.13 There are various options to consider, under three main areas are listed below:
180.14 The options were developed using high-level estimates, reasonable assumptions and summary data. A full analysis of all of the options considered is set out in the body of the Strategy Report. The preferred option, selected under each of these areas forms the basis of the strategy and is set out below.
Preferred Option - Replacement of Godalming (in partnership with a commercial health and fitness operator). Significant Upgrade at Farnham and Cross Borough Improvements
180.15 Significant facility improvements would take place across the Borough. This would include building new facilities at Godalming, in partnership with a private sector health and fitness operator. A new 25-metre pool would be built on the site of the existing rugby club. Health and fitness facilities will be added to the school site in an existing building to complement the newly refurbished sports hall. There will be an early significant upgrade of Farnham, to improve customer-facing areas, as well as smaller scale improvements to Haslemere and Cranleigh over the period of the contract.
180.16 The improvements will provide the residents of the Borough with an enhanced and improved range of facilities at each of the main population centres. The long-standing shortcomings at Godalming and Farnham will be addressed.
180.17 A significant funding contribution from a private sector health and fitness operator, in terms of capital and revenue in Godalming, will help deliver facilities that may otherwise have been unaffordable. However, a significant amount of funding will still need to be committed by the Council to provide the capital required across all facilities.
180.18 The facility options recommended are outline proposals at this stage and much work will be involved in developing these proposals further. This delivery of this option is dependent upon the co-operation and agreement from the Rugby Club and the School. If the option of working in partnership with a commercial leisure operator in Godalming does not materialise then it will be necessary to revisit the options presented to find an alternative solution, which is affordable and deliverable. Members of the SIG agreed a preference for Option 2b (an extension to the existing Godalming Leisure Centre, to undertake moderate improvements as per the capital programme at Farnham and Cross Borough Improvements) as an alternative however this may require a reduction in the scope of the refurbishment proposals to produce an affordable alternative solution.
180.19 The Council is currently working towards a position whereby each of the existing management contracts is aligned to create a co-terminous position. The date for co-termination is July 2008. This approach will enable the Council to procure one management contractor for most, or all, Council owned leisure centres, under a single contract. The benefits of this approach have already been considered and agreed prior to the development of this strategy. The preferred management option, to deliver the new management contract, is summarised below.
Preferred Option – Private Sector Management Contractor
180.20 The preferred management option is private sector management contractor (hybrid trust model). The additional financial benefits associated with the private sector Trust vehicle are the key benefits making it the preferred option over a private sector option. This route combines the benefits of a private sector approach to management and the NNDR revenue savings associated with the external Trust option. It is assumed that NNDR savings can be achieved at Waverley however in order to achieve these savings the Council may need to change its current policy in relation to rate relief and this may have wider financial implications which will need to be assessed.
180.21 The continuation of private sector management was clearly the preferred route identified in the option appraisal workshop. The reason for this was that it would have least impact on the service continuity and, as a result, would be the most deliverable option. It is a tried and tested option that has generally worked well for Waverley in recent years. The commercial approach to management and the economies of scale associated with the large-scale leisure operator are also attractive as is the potential for private investment in facilities in return for a long-term contract.
180.22 The contract for managing the facilities at Farnham, Haslemere and Cranleigh will be the subject of a single tender process. The management of facilities at Godalming will be split between a private sector health and fitness operator that will operate the new 25-metre swimming pool, and Broadwater School that will manage the health and fitness as part of the dry side dual use facilities, located on the school site.
180.23 The Council is faced with a decision on which procurement route to follow in order to achieve best value and improved service to the community. The management contract alone is likely to cost a significant sum, details of which are included in the Exempt Report (depending on which facility options the Council chooses) and will involve a commitment to a long-term partnership (15 years+) with the chosen operator.
180.24 Following detailed consideration, a recommendation was provided by senior officers, and agreed by members of the Special Interest Group, as to which option will provide best value to the Council. The SIG’s preferred procurement route is to initially seek to negotiate a contract with the existing contractor DC Leisure. This option is summarised below.
Preferred Option – Negotiated Contract
180.25 Securing a negotiated contract is the least complex option and allows more flexibility than other procurement options in terms of negotiating timescales for implementation and levels of investment over the term of the contract. This is particularly important where these may not be fully agreed at the start of the contract. Given the scale of the costs associated with the preferred facility options identified in the Strategy the Council may benefit from this flexibility as part of the procurement process.
180.26 Waverley Borough Council will seek to agree terms for the future management of facilities across the Borough. The facilities that will be included in this contract will be Farnham, The Edge, Herons and Cranleigh. Facilities at Godalming will be subject to negotiated contracts between a private health and fitness operator, Broadwater School and Guildford Rugby Club.
180.27 The contract negotiations will be supported by a thorough benchmarking exercise. This will provide a view on whether the outcome of the negotiations represents value for money to the Council in relation to the wider market. This will ensure that negotiations are underpinned by an element of market testing.
180.28 If the Council is not satisfied it is achieving a good outcome and best value through the negotiations with DC Leisure it is proposed to open up the tender process to the market via a select list (Option 2). The list would include private sector operators only.
180.29 Given that the current contracts are due to expire in 19 months time (July 2008) it is imperative that the Council determines which procurement option it wishes to pursue with a view to starting the process as soon as possible to allow sufficient time to secure the best deal for Waverley. If a new contract is not secured in time and the Council is forced to seek an extension to the existing contracts then it is likely to face significant cost increases which recent experience has shown. The process and timetable associated with each procurement option is set out in the Exempt Strategy report.