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ITEM EX15

EXECUTIVE – 13 MAY 2003

BANKING SERVICES CONTRACT

Report by Head of Finance

Introduction

1. The County Council has contracted its banking services with Lloyds TSB plc since 1986. The last full tendering exercise was carried-out in 1998, at which time a 3 year contract was awarded, with the option of a 2 year extension subject to review. A review was carried out in 2001, which resulted in confirmation by the County Treasurer of the extension, which expires on 30 September 2003.

Proposals

2. In December 2002, officer discussions were commenced at the Oxfordshire Treasurers Association (OTA) and a forum involving Lloyds TSB was held on 17 January 2003, to explore an initiative for a joint approach to tendering of some or all banking services. Subsequently serious discussions have been pursued with officers at Oxford City Council about the possibility of joint commissioning of banking services.
3. The City Council’s current contract with the Cooperative Bank expires on 31 March 2004 and consequently, in order to dovetail both Council contracts and allow a full exploration of the joint requirements, a further 6-month extension of the County Council’s contract with Lloyds TSB is proposed. This period would also be used to refine our requirements and allow improved interface with any developments planned in MIS Phase 2 and other E-government related initiatives.
4. It should be made clear at the outset that there is no suggestion of merging funds or bank accounts – these would have to be managed and accounted for completely separately. But joint commissioning is expected to bring increased value to both Councils in the form of lower overall contract prices, as a result of increasing the banking volumes and widening the scope of the services covered (as the City Council with its high levels of income transactions from Council Tax and Housing rents have rather different, but complementary, requirements).
5. The plan is initially for each partner to draw up a broad specification of requirements and invite the major banks to come forward informally with ideas on what they could provide and how they would operate. It would be at this stage that all the potential benefits and any disadvantages, transfer costs and risks involved would be fully assessed before pressing ahead with the next stage.
6. The specifications could then be refined and formal tenders invited in the third quarter of this year. Tenders would be assessed and the contract awarded by the end of 2003 in order to allow adequate time for implementation of the new contracts from April 2004.
7. At the OTA forum interest was expressed in this joint tender process by other members (i.e. District Councils and the Thames Valley Police Authority), but currently they are unable to participate because of longer term contractual commitments. However it is hoped that there will be enough flexibility in any new contract that is developed through the County/City initiative to allow them to "buy-in" to the contract at the relevant time in the future.

Payroll Services

8. Members of the Executive should also note that, in a parallel initiative, negotiations are taking place with the City Council for the County Council to supply payroll services to them via access to the relevant facilities provided under our SAP (MIS) system. They are currently operating a relatively old in-house system, which is proving relatively costly and at risk from the support and maintenance perspective. The target date for this implementation is also April 2004.
9. A short report on both these proposals was presented to and approved by the City Council’s Executive Board on 23 April 2003 (see Annex 1) (download as .doc file).

RECOMMENDATION

10. The Executive is RECOMMENDED to approve the proposal to explore a joint commissioning arrangement with the Oxford City Council for the contract for banking services.

CHRIS GRAY
Head of Finance

Background Papers: Nil

Contact Officer : David Wilkins (01865 815441)

May 2003