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ITEM EX12

EXECUTIVE – 7 JANUARY 2003

EXTENSION OF WORKS CONTRACTS TO INCLUDE FURTHER WORK

Report by Acting Chief Education Officer and Director of Environmental Services

Introduction

1. Three detailed project appraisals are appended in respect of schemes for which exemption is requested under Rule 3.2 of the Contract Procedure Rules set out in the Constitution, to enable contracts to be let without being subject to the full tendering process.
   
   DETAILED PROJECT APPRAISAL APPRAISAL NO. ED578/1 - Henry Box School, Witney – Demolition of HORSA Building and Provision of 6 Classroom Teaching Block and Internal Remodelling
   OUTLINE AND DETAILED PROJECT APPRAISAL APPRAISAL NO. ED 589 - Marlborough School, Woodstock – New 5-classroom maths block
   REVISED DETAILED PROJECT APPRAISAL APPRAISAL NO. 573/3 - The Warriner School, Bloxham – New 6 Classroom Block
   
   Although the Council normally relies on competitive rates obtained via an open tendering process, there are sound reasons for recommending exemption for these three schemes. These are set out in more detail below, but in summary are, the opportunities for cost savings in each case as contracts have been negotiated on the basis of previously tendered rates; the operational advantages of the same contractors continuing to work on the same sites; and the opportunity to develop partnership arrangements with contractors who have performed well on previous County Council projects.

Proposed Exemption from Contract Procedure Rules

2. The work in hand at the three sites is described in the appended project appraisals. To enable this work to be carried out within the programmed timescale and minimise the level of disruption to the school in each case, it is proposed that the contract should be let on the basis of a negotiated contract using the contractor currently on site. The three contractors are Walkplace Ltd. (Henry Box); Kingerlee Ltd. (Marlborough) and George and Harding Ltd. (Warriner). These negotiations have been approached on the basis that the works would be carried out at the current tendered rates uplifted for inflation as described below. Proceeding otherwise than by a negotiated tender would mean that the three projects would not be completed by the respective deadlines for completion of the project. This would cause severe accommodation problems the schools, which would be unable to relocate pupils displaced by the delayed construction work to other accommodation for the duration of the project. This would result in temporary accommodation having to be brought on to site for the duration of the project, which would increase costs.
3. In contrast, proceeding with a negotiated tender would have the following advantages:

• Any price risk and uncertainty would be removed by applying the contractors’ existing tender rates (which were competitively tendered) with an "open book agreement" for any increases together with an overall percentage cap of inflation noted by Building Cost Information Service of the Royal Institution of Chartered Surveyors. This would ensure that the schemes were more accurately cost planned to the budget.
• The projects could be accelerated i.e. an earlier completion would reduce price inflation. If the project were competitively tendered completion would be 3-4 months later.
• The proposed works are in close proximity to work being presently undertaken. The contractor's knowledge and experience of working in these areas of the schools could be utilised. The existing contractor’s site facilities and contractor’s access would remain in place thereby minimising disruption and cost.
  
  
• There would be a continuation of the good working relationship that has been established between the school and the contractor during the construction of the current work.

4. Furthermore, the Council has the opportunity in these three schemes to develop partnership arrangements with contractors who have performed well on previous County Council projects, as recommended by Sir John Egan’s Construction Task Force report ‘Rethinking Construction which has been recently adopted as a key service improvement in the Best Value Review of Construction.
5. Overall therefore it is considered that the case for proceeding by negotiated contract in each of these three cases is compelling, and that there should accordingly be an exemption from the usual requirement to tender (Rule 3.2 of the Contract Procedure Rules). Such exemption requires legal and financial appraisal and the Solicitor to the Council and Director for Business Support & County Treasurer (as the Council’s "S151 officer") have confirmed that, in the light of the factors outlined in the preceding paragraphs (and amplified in the appended project appraisals) the proposed exemption is in their view appropriate.
6. The Solicitor to the Council has advised that these projects are below EU thresholds and are therefore not subject to EU Competition Rules. Members must be satisfied however that compelling special circumstances exist justifying the exempting of these projects from the tendering requirements of the Contract Procedure Rules and that the acceptance of the projects represents best value for the Authority. The granting of an exemption could give rise to a legal challenge for being anti-competitive since the work will not have been advertised, denying other suppliers the opportunity to bid. Nevertheless potential disruption to pupils and staff, together with the opportunity of benefiting from the continuance of an existing contract price, are particularly relevant factors to which members will have regard.

RECOMMENDATION

7. The Executive is RECOMMENDED to agree for the purpose of Rule 3.2 of the Contract Procedure Rules to exempt the contracts from the requirement to tender, for the reasons set out in the report, and authorise completion of contracts with the respective contractors accordingly.