I hereby give notice that an ordinary meeting of the Tenders and Procurement Committee will be held on:

 

Date:                      

Time:

Meeting Room:

Venue:

 

Tuesday, 27 May 2014

8.30am

Council Chamber
Auckland Town Hall
301-305 Queen Street
Auckland

 

Tenders and Procurement Committee

 

OPEN AGENDA

 

 

 

MEMBERSHIP

 

Chairperson

Dick Quax

 

Deputy Chairperson

Denise Krum

 

Members

Cr Anae Arthur Anae

 

 

Cr Cameron Brewer

 

 

Cr Sharon Stewart, QSM

 

 

Cr Sir John Walker, KNZM, CBE

 

Ex-officio

Mayor Len Brown, JP

 

 

Deputy Mayor Penny Hulse

 

 

(Quorum 3 members)

 

 

 

Maureen Koch

Democracy Advisor

 

22 May 2014

 

Contact Telephone: (09) 357 3096

Email: maureen.koch@aucklandcouncil.govt.nz

Website: www.aucklandcouncil.govt.nz

 

 


 

TERMS OF REFERENCE

 

 

Responsibilities

 

The Committee is established to assist the Chief Executive to undertake the management procedure of ensuring sound probity procedures are followed in relation to procurement of goods and services necessary to deliver on the work programme and operations outlined in Council’s adopted Annual plan. 

 

It will ensure that reasonable purchasing procedures have been followed in awarding contracts and will provide an efficient mechanism for documenting the approvals for those contracts. 

 

Within a framework where contracts are an operational matter delegated to the Chief Executive, this Committee will consider all tenders beyond the Chief Executive’s financial delegations.  The Chief Executive may refer contracts within his financial delegations which are sensitive or may impact on the reputation of the Council.

 

The Committee will have responsibility for:

 

·         Awarding of contracts greater than $7.5 million; and

·         Awarding of contracts less than $7.5 million which are sensitive or may impact on the reputation of the Council where the Chief Executive refers the matter to the Committee;

·         Oversight over the tendering and procurement process and procedures of the Governing Body and local board; and

·         Developing a tendering and procurement strategy as policy for recommendation to the Governing Body for adoption.

·         From time to time the Committee may advise the Chief Executive and Council on changes to the Procurement and Contracts probity procedures.

 

Powers

 

All powers necessary to perform the Committee responsibilities.

 

Except:

 

(a)     powers that the Governing Body cannot delegate or has retained to itself (see Governing Body responsibilities)

(b)        where the Committee’s responsibility is limited to making a recommendation only

(c)        where the Committee’s responsibility sets out financial limitations

 

 

 

 


Tenders and Procurement Committee

27 May 2014

 

ITEM   TABLE OF CONTENTS                                                                                        PAGE

1          Apologies                                                                                                                        5

2          Declaration of Interest                                                                                                   5

3          Confirmation of Minutes                                                                                               5

4          Petitions                                                                                                                          5  

5          Public Input                                                                                                                    5

6          Local Board Input                                                                                                          5

7          Extraordinary Business                                                                                                5

8          Notices of Motion                                                                                                          6

9          Parks Contracts - Changes in Value                                                                           7  

10        Consideration of Extraordinary Items 

PUBLIC EXCLUDED

11        Procedural Motion to Exclude the Public                                                                 31

C1       2014 Rating Valuation QV Procurement Plan                                                          31  

 


1          Apologies

 

At the close of the agenda no apologies had been received.

 

2          Declaration of Interest

 

Members are reminded of the need to be vigilant to stand aside from decision making when a conflict arises between their role as a member and any private or other external interest they might have.

 

3          Confirmation of Minutes

 

That the Tenders and Procurement Committee:

a)         confirm the ordinary minutes of its meeting, held on Tuesday, 25 March 2014, including the confidential section, as a true and correct record.

 

 

4          Petitions

 

At the close of the agenda no requests to present petitions had been received.

 

5          Public Input

 

Standing Order 3.21 provides for Public Input.  Applications to speak must be made to the Committee Secretary, in writing, no later than two (2) working days prior to the meeting and must include the subject matter.  The meeting Chairperson has the discretion to decline any application that does not meet the requirements of Standing Orders.  A maximum of thirty (30) minutes is allocated to the period for public input with five (5) minutes speaking time for each speaker.

 

At the close of the agenda no requests for public input had been received.

 

6          Local Board Input

 

Standing Order 3.22 provides for Local Board Input.  The Chairperson (or nominee of that Chairperson) is entitled to speak for up to five (5) minutes during this time.  The Chairperson of the Local Board (or nominee of that Chairperson) shall wherever practical, give two (2) days notice of their wish to speak.  The meeting Chairperson has the discretion to decline any application that does not meet the requirements of Standing Orders.

 

This right is in addition to the right under Standing Order 3.9.14 to speak to matters on the agenda.

 

At the close of the agenda no requests for local board input had been received.

 

7          Extraordinary Business

 

Section 46A(7) of the Local Government Official Information and Meetings Act 1987 (as amended) states:

 

“An item that is not on the agenda for a meeting may be dealt with at that meeting if-

 

(a)        The local  authority by resolution so decides; and

 

(b)        The presiding member explains at the meeting, at a time when it is open to the public,-

 

(i)         The reason why the item is not on the agenda; and

 

(ii)        The reason why the discussion of the item cannot be delayed until a subsequent meeting.”

 

Section 46A(7A) of the Local Government Official Information and Meetings Act 1987 (as amended) states:

 

“Where an item is not on the agenda for a meeting,-

 

(a)        That item may be discussed at that meeting if-

 

(i)         That item is a minor matter relating to the general business of the local authority; and

 

(ii)        the presiding member explains at the beginning of the meeting, at a time when it is open to the public, that the item will be discussed at the meeting; but

 

(b)        no resolution, decision or recommendation may be made in respect of that item except to refer that item to a subsequent meeting of the local authority for further discussion.”

 

8          Notices of Motion

 

At the close of the agenda no requests for notices of motion had been received.

 


Tenders and Procurement Committee

27 May 2014

 

Parks Contracts - Changes in Value

 

File No.: CP2014/08890

 

  

 

Purpose

1.       To seek approval for the new contract values of the Parks Full Facility North and South contracts. The supplier for the Full Facility North Urban and Rural contracts is Recreational Services Ltd, and for the Full Facility South Urban and Rural contracts is Downer.

Executive summary

2.       During 2011/12, a significant parks contract procurement process was undertaken to rationalise the number of contracts and suppliers, harmonise service levels, and enable significant efficiencies to be realised. As part of this process, new Parks Full Facility contracts came into effect in July 2012. Six Full Facility contracts were awarded, two for the North and South sectors and one each for the Central and West sectors. The contracts were awarded for 5 years with the right to renew for 3 years plus a further 2 years at the Council’s sole discretion.

3.       Due to the very tight procurement timeframes, it was not possible to ensure a high degree of parks asset data integrity, so legacy asset data had to be relied on as the starting point.  Consequently, there have been issues with asset data in some areas, primarily the northern and southern sectors. This includes assets that have been missed, incorrectly mapped, and assigned incorrect service standards. Significant work has been undertaken since the start of the contracts to remedy these issues, and has involved a combined effort on behalf of Council staff and contractors. Improvements focused around correcting asset data integrity issues, upgrading asset schedules and pricing, improving contract maps and incorrect service standards, and refining claim file processes.

4.       Further to this, a large number of new assets and reserves have been added to the maintenance programmes since the start of the contracts.

5.       The correction of the asset data used in the procurement process and addition of new assets resulted in a variation to the abovementioned contracts in excess of 5% of their values. Due to the significant changes, the northern and southern contracts had to be renegotiated.

6.       Early in 2012, the Tenders and Procurement Subcommittee approved the contract values, including a CPI adjustment of 3% per annum and a contingency of 5% per annum of the total contract cost for any increase in contract scope due to new assets being brought into scope. The new contract values are however larger than the 5% contingency, and requires approval from the Committee.

7.       The increases in contract values are budgeted for.

 

 

Recommendations

That the Tenders and Procurement Committee:

a)      approve the attached Contract Variation Approval Form for the Parks Full Facility North Urban contract:

i)        revised annual value $13,256,449

ii)       revised 5 year value $63,262,256

b)      approve the attached Contract Variation Approval Form for the Parks Full Facility North Rural contract:

i)        revised annual value $5,026,844

ii)       revised 5 year value $24,414,655

c)      approve the attached Contract Variation Approval Form for the Parks Full Facility South Urban contract:

i)        revised annual value $12,070,337

ii)       revised 5 year value $57,208,359

d)      approve the attached Contract Variation Approval Form for the Parks Full Facility South Rural contract:

i)        revised annual value $5,779,937

ii)       revised 5 year value $25,492,407

e)      approve a CPI adjustment of up to 3% per annum, and a contingency of up to 5% per annum of the total contract cost for any increase in contract scope due to new assets being brought into scope.

f)       delegate the financial signing authority for the revised contract values to the Chief Executive Officer.

 

 

Comments

 

Repricing of the Full Facility North Urban and Rural Contracts

8.       Due to the significant changes in asset volumes and services, the full facility north contracts had to be renegotiated. The key steps in the repricing process is set out below:

·        Correction of errors in asset data and upload in SAP

·        Reconciliation of asset data between Council and Recreational Services

·        Compare new data with RFP data and quantify differences

·        Unit rates review

·        Bench mark changes in unit rates

·        Identify cost implications

·        Efficiencies and potential savings

·        Ensure sufficient budgets in place

 

New contract value of the Full Facility North Urban and Rural Contracts

9.       The increase in contract values for the Full Facility North Urban and Rural contracts are set out below.

Item

Original Annual Contract Value

New Annual Contract Value

New 5 year Contract Value

Full Facility North Urban

$10,840,458

$13,256,449

$63,262,256

Full Facility North Rural

$4,451,192

$5,026,844

$24,414,655

Total

$15,291,650

$18,283,293

$87,676,911

 

 

10.     The increase of $2,991,643 can be split into three categories namely:

·        Additional services since the start of the contract

·        New assets

·        Omission of assets during the procurement process

 

Additional services since the start of the contract;

11.     A number of services that did not form part of the initial procurement process were added to the full facility contracts at a later date. These include:

·        Litter bin emptying, which was undertaken by AT and Solid Waste contractors during the first year of the full facility contracts. The deferred start date for inclusion into the Full Facility contracts was July 2013.

·        The maintenance of 14 cemeteries in the Rodney area, which had a deferred start date in the northern sector.

·        Traffic management costs associated with street garden maintenance

 

New assets;

12.     Due to the large number of new subdivisions and growth in the North, there has been a significant volume of new green assets introduced to the contract since preparation of the RFP. A summary of the significant additions is shown below.

New and additional assets northern contracts

 

 

 

Mowing

 

 

Passive Mowing

358,514

Square metres

Passive Edging

672,407

Metres

Hard Assets

 

 

Hard Surface

82,000

Square metres

Playground

2

Each

Artificial Cricket

14

Each

Litter Bins

792

Each

Sports Lighting

51

Each

Public Toilet

1

Each

Horticulture

 

 

Shrub Gardens

19,000

Square metres

Bush and Natural

424,000

Square metres

 

13.     In addition to this, there have been a large number of new assets developed that have been added to the maintenance programme. The Metropark sports field development is an example of a significant new facility being added for maintenance.

 

Omission of assets during the procurement process;

14.     The compressed timeframe to convert the legacy North Shore asset management system data to the RFP data format (including integration of nine years of electronic contract variations) resulted in a number of existing assets being missed in the RFP. The legacy Rodney data existed in a database format prior to the RFP and asset issues have generally been based around;

i)        missing assets in the conversion of a full facility contract to a measure and value contract (some assets were not scheduled and managed as day works);

ii)       asset volumes were not quantified e.g. edging

iii)      historical assets not carried over fully in development of the RFP

15.     Significant work has been undertaken since the start of the contracts to remedy these issues. Data has been reviewed and updated as part of the SAP migration process.  

16.     Although there were major changes and movements in the asset data, the overall impact was minimised due to over and under estimates offsetting each other.  The correction of asset data resulted in significant increases in asset volumes in two particular areas namely edging and mowing associated with tracks and drains.

 

Budget for the northern contracts

17.     Sufficient budgets are in place for the increase in contract values for the Full Facility North Urban and Rural contracts.  Additional costs are being covered as follows:

·        Additional funding being obtained through the annual plan process for litter bin emptying - $450k

·        Transfer of budgets from Solid Waste for a portion of litter bins - $250k

·        Budget from AT for bus shelter garden maintenance - $100k

·        Consequential Opex and Inflation/CPI adjustments – $2.2million

 

Efficiencies for the northern contracts

18.     The repricing of the contracts provided the opportunity to identify further savings through efficiencies. Overall efficiencies and savings of $310,000 were realised in the northern contracts. This was mainly achieved through maximising staff resources.

 

Repricing of the Full Facility South Urban and Rural Contracts

19.     Due to the significant changes in asset volumes and services, the full facility south contracts had to be renegotiated. The key steps in the repricing process is set out below:

·        Correction of errors in asset data and upload in SAP

·        Reconciliation of asset data between Council and Downer

·        Compare new data with RFP data and quantify differences

·        Unit rates review

·        Bench mark changes in unit rates

·        Identify cost implications

·        Efficiencies and potential savings

·        Ensure sufficient budgets in place

 

New contract value of the Full Facility South Urban and Rural Contracts

20.     The increase in contract values for the Full Facility South Urban and Rural contracts are set out below.

Item

Original Annual Contract Value

New Annual Contract Value

New 5 year Contract Value

Full Facility South Urban

$10,723,305

$12,070,337

$57,208,359

Full Facility South Rural

$4,246,512

$5,779,937

$25,492,407

Total

$14,969,817

$17,850,274

$82,700,766

 

21.     The increase of $2,880,457 can be split into three categories namely:

·        Additional services since the start of the contract

·        New assets

·        Omission of assets during the procurement process

 

Additional services since the start of the contract;

22.     A number of services that did not form part of the initial procurement process were added to the full facility contracts at a later date. These include:

·        Otahuhu Streetscape

·        Waterway Maintenance

·        Housing for the Elderly Hard Surfaces

·        The increased level of maintenance of cemeteries in the southern sector

 

New assets;

23.     Due to the large number of new subdivisions and growth in the South, there has been a significant volume of new green assets introduced to the contract since preparation of the RFP. A summary of the significant additions is shown below.

New assets southern contracts

 

 

 

Mowing

 

 

Passive Mowing

36,654

Square metres

Sports Mowing

207,081

Square metres

Passive Edging

7,833

Metres

Hard Assets

 

 

Hard Surface

2189

Square metres

Horticulture

 

 

Revegetation

22,482

Square metres

Shrub Gardens

576

Square metres

Bush and Natural

16,541

Square metres

 


24.     In addition to this, there have been a large number of new assets developed that have been added to the maintenance programme. The William Green Domain and Barry Curtis Park sports field developments are examples of significant new facilities being added for maintenance.

 

Omission of assets during the procurement process;

25.     The compressed timeframe to convert the three legacy asset management systems to the new RFP data format resulted in a number of existing assets being missed in the RFP.

26.     Significant work has been undertaken since the start of the contracts to remedy these issues. Data has been reviewed and updated as part of the SAP migration process.  

27.     The correction of asset data resulted in significant increases in asset volumes in a number of areas including passive turf edging and mowing of sports fields.

 

Budget for the southern contracts

28.     Sufficient budgets are in place for the increase in contract values for the Full Facility South Urban and Rural contracts.  Additional costs are being covered as follows:

·        budget reprioritisation, the new costs are accommodated within budget envelopes, and there is no material or significant impact on service levels

·        Consequential Opex

 

Efficiencies for the southern contracts

29.     The repricing of the contracts provided the opportunity to identify further savings through efficiencies. Overall efficiencies and savings of $45,000 were realised in the southern contracts.

Consideration

Local board views and implications

30.     Local Boards have been updated on the increase in contract values.

Maori impact statement

31.     Parks and open spaces contribute significantly to Maori well-being, values, culture and traditions.  There has been no specific consultation with Tangata Whenua around the issues raised in this report.

Implementation

32.     The revised contract values for the Full facility north contracts are already effective, whilst the Full facility south contracts are planned to become effective from 1 July 2014.

 

 


Attachments

No.

Title

Page

aView

Contract Variation Approval Full Facility North Urban

15

bView

Contract Variation Approval Full Facility North Rural

19

cView

Contract Variation Approval Full Facility South Rural

23

dView

Contract Variation Approval Full Facility South Urban

27

      

Signatories

Authors

Mark Bowater - Manager Local and Sports Parks

Authorisers

Ian Maxwell - Manager Parks, Sports & Recreation

Peter Blackwell - Manager, Procurement

 


Tenders and Procurement Committee

27 May 2014

 





Tenders and Procurement Committee

27 May 2014

 





Tenders and Procurement Committee

27 May 2014

 




Tenders and Procurement Committee

27 May 2014

 



     

 


Tenders and Procurement Committee

27 May 2014

 

Exclusion of the Public: Local Government Official Information and Meetings Act 1987

 

That the Tenders and Procurement Committee:

a)      exclude the public from the following part(s) of the proceedings of this meeting.

The general subject of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter, and the specific grounds under section 48(1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution follows.

This resolution is made in reliance on section 48(1)(a) of the Local Government Official Information and Meetings Act 1987 and the particular interest or interests protected by section 6 or section 7 of that Act which would be prejudiced by the holding of the whole or relevant part of the proceedings of the meeting in public, as follows:

 

C1       2014 Rating Valuation QV Procurement Plan

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

Ground(s) under section 48(1) for the passing of this resolution

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

s7(2)(h) - The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

In particular, the report contains confidential contract information with regards to Rating Valuation Services to Auckland Council.

s48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.