Competitive dialogue opens new avenues for Councils in Essex

Published:  08 March, 2013

Three Essex Councils have taken an innovative approach to the management of their fleet and workshops, which has resulted in tangible efficiency savings and increased delivery of service to the public. Colchester Borough Council, Braintree District Council and Basildon Borough Council were the first local authorities in the UK to think out of the box and step away from the conventional tendering process for their fleet management requirements, and were able to select the best delivery of service via competitive dialogue, reports Ann-Marie Knegt.

Competitive dialogue is a more open and transparent way of creating a tender, especially suited to the individual needs of an authority. Instead of putting to tender a specification created by the authority in advance, it is an organic way of creating a final fit-for-purpose solution in which all parties, including the private sector bidders, have input along the way.

Basildon Borough Council was one of the first local authorities in the UK to use competitive dialogue for a vehicle provision and maintenance contract, explained Stuart Noyce, Manager Street of Scene and Technical Services. ‘When we looked at the market there was no precedent. There were other organisations, which had externalised workshops and many that had moved to contract hire. Existing contracts were very specific, but we were looking for a partnership with forward-thinking private sector suppliers so they could deliver more input in order to generate better utilisation of our own workshops. We also understood that we were only a small customer in the vehicle manufacturer's eyes, and believed that we could deliver better economies of scale if we would use the services of a company that bought 100s of RCVs a year.'

For this reason the Council used competitive dialogue to select a contractor for its workshop and fleet. Basildon Borough Council had been struggling to benchmark its maintenance costs over the years. The fleet was experiencing downtime which required replacement vehicles due to its workshops operating hours, private work was rare, and the workshop facility needed investment.

Basildon felt that it had to find a way of making its workshop's more competitive and efficient by being more commercial and try to make money, which could then be offset back against the service. Even though outsourcing the workshops was a high risk, it was seen as an opportunity to achieve efficiencies and savings as well as providing an even better service than before.

The local authority entered a six-month process of competitive dialogue with several bidders. During this exercise the Council didn't issue a detailed specification, but left bidders free to come up with a tailored solution for the issues identified. During this process there was an ongoing conversation with all the bidders, and therefore the final bids came in adjusted specifically to the needs of Basildon.

Riverside Truck Rental, a fast growing fleet management solutions provider based in Widness, was chosen after the process and was awarded a 14 year (7+7) contract, which consisted of:

• Provision of all the Council's new vehicles on a full maintenance contract hire arrangement

• Fixed price maintenance of the Council's 'owned/lease' fleet

• Setting up a workshop facility in the Council's depot

• A TUPE transfer of all the workshop staff to Riverside

• A tangible profit share in which the Council benefits from Riverside's growth

• A vehicle rental depot established at the Council's premises

• A Social Enterprise model instigated

• Staffing levels increased to accommodate the additional work that has been generated through workshop efficiencies including an apprentership scheme

• A compromised damage arrangement whereby the Council's unforeseen costs are mitigated

• Detailed and comprehensive KPIs adhered to which were better than the in-house service had provided

• A significant reduction of the Council's spare vehicle requirement and costs

• A new shift system implemented so that vehicles are predominantly maintained outside of core working hours.

Stuart explained that the new way of working was about cultural change as well, because a large part of the staff had been working at the depot for nearly 30 years. And at the same time the Council had to ensure that the public was still happy with how the frontline services were delivered having established a 90% satisfaction level with its residents.

Another benefit was found in the availability of information. In the previous years Basildon had limited information on damage levels on vehicles, or vehicle downtime, so it was hard to provide suppliers with this type of information to base tenders on. If the Council had used the standard tender process, this risk would have translated into a huge inflated cost to cover any eventualities for the private sector supplier in order to deliver the service.

‘For us competitive dialogue was a way of creating a solution that we really required, not what we thought we needed, with an idea of what we could really afford. We had to ask ourselves how we could deliver a good frontline service supported by excellent maintenance.

‘Riverside engaged with us about the types of RCVs that we required. Our future fleet will not have to go onto landfill anymore within two years, as they are building a mechanical and biological treatment facility for Essex waste. Riverside is supplying six new 6x4 compaction vehicles due for replacement this year and in two years they will replace these with rear-steer vehicles because they tend to suffer less damage and function better on congested roads. Riverside will take the 6x4s away from us two years into the contract and put them on their hire fleet. This is a major advantage of working with a commercial organisation, it presented us from being stuck with one decision for seven years. We are now currently operating a fleet of top loaders for glass collection, trade lift RCVs for sack collections and split bin lift RCVs for bin collections and a range of vans and sweepers. In addition, our partnership with Riverside was able to deliver increased fuel efficiency by trialling innovations such as electric bin lifts manufactured by Terberg – the Omnidel, which will be fitted on additional new vehicles following the successful trial.'

The next step for Basildon and Riverside is to work with its drivers and fitters to ensure that defects get detected sooner and better so that it can drive the workshops towards preventative maintenance. Riverside is also working with the staff to take them through the process of change towards a social enterprise model, and apprentices have been taken on as well. The company has also based a spot hire fleet at the Basildon depot, increasing employment in the local area by hiring extra fitters and drivers. The opening times of the workshop have also increased. In the past it was open from seven until five, but from now six in the morning until eight at night. Stuart explained that before, all servicing and maintenance had to be carried out during operational hours. ‘With the new shift system, RTR can do most of the maintenance and servicing outside of Council operational hours, reducing downtime considerably. Staff has access to their own vehicle most of the time. The nature of the Riverside business also meant that we didn't have to buy any spares, since the company can guarantee us the required number of vehicles for our operation all the time because of the rigid maintenance regime and through the adjacent spot hire business.'

The council is now reporting tangible efficiency savings from the contract – £150,000 in the first year alone. It has also improved its service delivery. Stuart concluded: ‘This is the difference between competitive dialogue and a restricted contract. A contract is set, whereas we can raise the bar every year, both financially and with service delivery. Competitive dialogue offers room for organic growth but with fixed rates and more flexibility for our fleet management operations than ever before.'

Colchester and Braintree

At around the same time – in the middle of 2011 – Colchester Borough Council and Braintree District Council decided to work together on a joint contract for procurement and maintenance of its commercial fleet to create more efficiency around their fleet management and workshops, with a special emphasis on waste, recycling and street cleansing.

Both Councils were employing the services of a consultancy called White Young & Green (which also managed the Basildon tender), which advised them to enter a partnership so they could achieve economies of scale. The authorities had similar requirements but there were some differences in how they delivered their service. Colchester, for instance; had a different collection system from Braintree, so therefore required different vehicles, while Braintree was using a local contractor but felt that it could better value for money elsewhere.

Paul Partridge, Head of Operations at Braintree District Council, explained that apart from delivering better value for money to the tax payer in the District, the Council also wanted to improve its resilience and business continuity. ‘It was a high risk for us to have all of our work allocated to a small local maintenance contractor, because if for any reason the company ceased to operate, it would leave us in a position where we would not be able to deliver our core front line services, which are primarily refuse, recycling, street cleansing and grounds maintenance.'

Matthew Young, Head of Street Services at Colchester Borough Council added that their workshop was old and tired, and needed substantial investment. ‘We also had an ageing fleet, and needed to find a resolution to this problem. We managed our workshop internally, but always felt that this could probably be done better in partnership with the private sector, to access the latest innovations and improvements.'

The Councils entered a joint procurement exercise and opened a competitive dialogue.

‘As we were already working with Colchester in other areas of work, we felt good about entering the competitive dialogue together. This process really kept our procurement costs down. If we had entered separately, we would have spent much more. In addition we lacked clarity on what we wanted and the whole point of going through the dialogue enabled the market to come to us, so the private sector could explain how they could help deliver a better service to our clients and well as delivering added value,' said Paul.

During the process, the Councils selected three bidders and went into further dialogue, after which they selected Riverside Truck Rental in April 2012.

Paul was impressed the first time he met Riverside. ‘They were open, transparent, and had a good understanding of the nature of the business in terms of the operational side. Both Russell Markstein and Sid Sadique had much experience in fleet management. The added benefit was that they did not have to check decisions with a board, unlike some large organisations with shareholders.'

In Colchester the workshop was owned by a third party and the staff were TUPE transferred over to Riverside, which took over the whole facility. In addition, an additional fitter was employed and additional administration staff were taken on. ‘We are now working with a Social Enterprise model,' continued Paul.

Previously, Braintree District Council used a third party maintenance contractor, which made it difficult for the Council to effectively measure its performance, and to ensure vehicle uptime. Riverside entered the arrangement with the authority by setting up a temporary facility on Braintree's own depot site, supported by engineers from Colchester, while a new facility is being built with a workshop and depot. At the same time the company is also building new office accommodation for the Council, which will be adjacent to the workshop facilities. The co-located facilities will generate significant savings, because Braintree will not incur separate accommodation costs.

Under the contract both local authorities will receive a new fleet, and Colchester's fleet has already been partly replaced. The Council was operating a fairly complex collection scheme and therefore required some expert advice on which fleet to take on. ‘We took advice from Riverside, and they sat down with our operations staff. Our collection regime is complicated, because we have green boxes for glass and cans, a white hessian sack for green waste, a clear sack for plastics in one week and cardboard and paper in the other as well as black sacks for domestic general waste. We have now received our first replacement fleet of Dennis Eagle Twinpacks and two new Johnston C400 sweepers, four Johnston C201s, and a VT650 truck-mounted sweeper. The operatives have been nothing but complimentary about the new sweeper fleet, especially since we have created a new street cleansing regime where we have zoned our borough, and the information about fuel and driving practices the C201s can provide us with will be integrated in this new management system as well. The best thing is that we can fit a snowplough at the front and a gritter at the rear, so we now have the capability to clear pavement, whereas in the past we had to do this by hand. We are getting around so much quicker,' commented Matthew.

Braintree operated a slightly newer fleet and arranged that the first replacement vehicles would be supplied over the life of the contract. Nick Johnson, Waste and Transport Manager for Braintree explained that the Council operates an alternate weekly collection with residual waste collected in bins and green waste in wheelie bins, and other recycling is collected in sacks. Braintree also operates a weekly food waste service in caddies on the kerbside. ‘We have an amalgamation of different collection activities, and we knew what we wanted in terms of vehicle replacement. I had a clear idea from my experience what I wanted in terms of vehicle replacements. We wanted to achieve fuel economy, so Russell and I agreed on specifying Terberg Omnidel electric bin lifts on Dennis Olympus bodies, which not only save fuel but also produce significantly less noise. We ordered six in total, two on green waste, two on refuse and the remaining two for recycling. We engaged the workforce in this process as well, and asked them what they wanted to get out of the vehicle replacement programme.

‘The issue with the procurement of vehicles is that normally we would have had to talk with all the buyers, but now Riverside can do that on our behalf, so we are able to focus on the core business of dealing with operations. Riverside has the knowledge and experience, and it came back with a range of options, while they also engaged with our staff. The essence of our contract is that we have a fixed price to replace existing vehicles. We are replacing our light commercials fleet this year, as well as replacing a significant part of our RCV fleet, with another large replacement programme in two years.'

Both councils have already been able to record significant savings over the first 10 months of the contract, not in the least because Riverside is now opening both workshops from 06:00 to 20:00 hours, instead of from 8:00 to 16:00 hours.

Partnership working

Nick added that Braintree has increased its resilience and continuity considerably, with an extra emphasis on vehicle reliability, because if a vehicle breaks down Riverside guarantees to replace it immediately. 'Dealing with just one supplier who has the responsibility to source a vehicle makes our jobs that much easier.‘ And due to the longer opening hours of the workshop there is a faster turn around on vehicles, which makes the service much more efficient and effective. It is a proactive approach and it is saving us money. Anything that is not included in the contract is added as pay-as-you-go. If anything comes through that we are not entirely happy with we can have an open discussion about it. It means that we have been able to approve our audit process much more, and have decreased our admin. This is the real benefit of partnership working.'

For Colchester the benefits have been similar, and Matthew added that it enabled to put more emphasis on operational staff and driver behaviour. Riverside has put several incentives in place where the driver behaviour is measured, and later this year KPI measurement tables will be implemented in order to increase fuel efficiency and reduce damage.

‘We would like to do a 'driver-of-the-year award'. I believe that if you praise and publicise good driving behaviour, the staff will start to value that. The new fleet has been treated really well and people are trying to keep them in the same state as how they received it. They feel a real sense of ownership. When the new vehicles came in morale rose, and we have already seen an improvement in the jobs that we are doing. We have cleaner waste streams and faster collection, and even over the last couple of weeks the operators have improved their finishing times,' said Matthew.

Drivers and workshop staff of both Councils were taken to the Dennis Eagle premises where they could try out their new fleet at first hand. Riverside and Dennis Eagle did some presentations and a lunch was put on. Nick Johnson pointed out that even these little things make a huge difference in how drivers perceive their jobs and that they take the task at hand with much more satisfaction and pride.

He also explained why an all-inclusive maintenance contract was so attractive to the local authority. ‘Riverside also offered us a profit share, so if there are savings in the second year of the contract, each party receives a 50% share, so it is definitely beneficial for everyone to maintain the vehicles at their best.'

Paul Partridge was surprised by the effectiveness of the competitive dialogue process. ‘Whilst, it is a time consuming process, the rewards speak for themselves, as Riverside was able to bring so many different ideas to the table. Therefore it is not just about the time it takes, but about the chance for local authorities to explore what they really need in order to become truly innovative.'

Matthew added that the competitive dialogue offered him expertise that he had never had access to before. ‘The problem is that we as managers in local government have to be experts in everything. I was a waste manager trying to be a transport manager at the same time. I needed advice from the private sector, and that is why the contracts that we have in place here now work; by getting vehicles supplied, serviced and with MOT, on time and with reduced downtime.'

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