The report explores three possible options open to the County Council which are:-

Cabinet Member for Corporate Relations

CR03(15/16)

Contract for the Provision of Liquid Fuels

September 2015

Report by Executive Director Corporate Resources and

Services

N/A Executive Summary

This report makes a recommendation regarding the County Council’s procurement options for the supply of Liquid Fuels following the expiry of the current Agreement on 30 September 2015. Total usage in the last financial year amounted to £0.365m. The report explores three possible options open to the County Council which are:-

1. Allow the current contract to lapse to a natural conclusion on 30 September 2015. However, given the on-going need for liquid fuel, this is not a viable alternative.

2. Re-tender the opportunity to create a new contract for the County Council. 3. Identify a suitable service provider via available Frameworks from ESPO

(Eastern Shires Procurement Organisation) YPO (Yorkshire Purchasing Organisation) or the CCS (Crown Commercial Service) Framework Agreements.

Recommendation

TThat the preferred procurement option is to identify a suitable service provider from the current ESPO Framework for a period of one year from 1October 2015 until 30 September 2016 and in 2016 to identify another service provider from the new ESPO framework. This new contract will run from 1 October 2016 for a period of 2 years until 30 September 2018 with the option to extend for a further 2 years until 30 September 2020.

1. Background

1.1 The current contract for the supply of liquid fuels is due to expire on the 30 September 2015. This contract was called off against the current ESPO Framework Agreement and the suppliers on that framework are:

• Birlem,

• Certas Energy, • Fuel Oils,

• Harvest Energy, • Linton Fuel Oils, • Prax Petroleum,

• Rix Petroleum, • Tate Fuel Oil,

• WFL (UK) (trading as Hall Fuels)

1.2 The County Council uses Certas Energy through the current ESPO Framework Agreement. Schools are free to use alternative suppliers, though they tend to adhere to the County’s arrangement.

1.3 ESPO

ESPO is a not for profit, self-funded organisation and therefore does not charge any fees for accessing the Framework.

ESPO’s specialist buying teams have extensive experience of providing high quality procurement solutions to the public sector on a nationwide basis. ESPO use its expertise to work with its strong and varied supply chain to bring members the best value procurement solutions possible.

ESPO have over 30 years of experience in public sector procurement. Its

Frameworks are let in full compliance with UK procurement regulations (and the EU procurement directive).

ESPO is a local authority owned purchasing and supply consortium. It is jointly owned by the county councils of Cambridgeshire, Leicestershire, Warwickshire, Lincolnshire and Norfolk and the city councils of Leicester and Peterborough. This framework has been established through a collaborative procurement exercise undertaken by ESPO on behalf of the Pro5 group of professional public sector buying organisations.

2. Performance of the Framework Agreement

2.1 Schools are not required to use the contract and can purchase from any supplier they choose, however in the last year schools have regularly made purchases and currently make up roughly 1/3 of the total County Council usage.

COUNTY COUNCIL USAGE 2014-15

Service Derv £000s Gasoil £000s Kerosene £000s Ultra 35 £000s

Total

£000s Volume - Ltrs

Fire & Rescue Service 239 239 226,022

Schools 22 20 76 118 211,993

Other Establishments 6 2 8 15,476

Totals 239 28 22 76 365 453,491

3. Options Appraisal

3.1 Set out below are the three options available to the County Council in respect of the provisionof liquid fuels.

(1) Allow the current contract to lapse to a natural conclusion on 30 September 2015

• This is not a viable option. The County Council cannot allow the current agreement to end without being replaced because it has a continuing requirement for the supply of liquid fuels.

(2) Re-tender to create a new contract for the County Council

• Due to the time scales involved there is insufficient time to undertake a complete procurement to put a new contract in place to start on 1 October 2015.

• The County Council and Capita have been liaising with ESPO over the last 6 months with a view to re-procure this requirement, however ESPO then made a decision in July 2015 to run a further competition and delay its procurement process for a Liquid Fuels Framework Agreement until 2016, this was a change to their previous approach.

• In order to protect the County Council’s supply contract ESPO has included County Council volumes alongside the other Central Buying Consortium authorities in the further competition exercise, to cover the period October 2015 – September 2016.

(3) Identify a suitable service provider via Frameworks available

from the ESPO or the CCS Framework Agreements.

• There are two Framework Agreements available, ESPO and CCS. The CCS Framework has only one year remaining and therefore another

procurement would need to commence shortly after accessing any supplier via their Framework. At present there is no evidence that CCS will be running a further procurement.

• ESPO have run a further ‘mini’ competition process using the current Framework Agreement, i.e. confined to the suppliers on the existing list which will run from 1October 2015 to 30 September 2016 and the County Council has been included.

• The new ESPO framework agreement will be in place for the start of the contract expiry date on 30 September 2016, after a more wide ranging market testing, and will be available for a period of up to four years. This is made up of an initial two year period with a two year extension.

4. Proposal

4.1 It is recommended that the Council uses the current ESPO framework agreement to select a new supplier for the period 1 October 2015 to 30 September 2016 as the current agreement is due to expire on 30 September 2015.

4.2 The new ESPO framework will be available for use next year, from which a supplier for a further period can be selected. The total contract periods would therefore be for five years (one year plus, after a mini competition using the

new framework, a further two years with the option to extend for up to another two years).

5. Consultation

5.1 The County Council’s Sustainability Team has been consulted in regards to County Council requirements and potential future specifications; their advice is that as this is a framework Agreement all the relevant health and safety

requirements are in place so a sustainability report would not add any value. 5.2 The Cabinet Member for Finance has been consulted and is happy to support

the recommendation.

6. Equality Impact Report (EIR)

6.1 After consultation with Democratic Services it was agreed that an Equality Impact Report is not required for this decision as it is a report dealing with internal or procedural matters only.

7. Resource Implications and Value for Money

7.1 The cost of County Council usage of liquid fuels is £365k p.a. This equates to around 0.07% of the ESPO Framework Agreement p.a. and it is believed that the potential to negotiate savings outside this arrangement is limited due to the relatively low expenditure. The ESPO Framework Agreement therefore provides the benefit of greater purchasing power. Furthermore, the Framework is broken down by both regions and products to allow more competitive pricing and the County Council will be liaising with its incumbent supplier with a view to including them in the Early Payment Discount Programme which would then provide the benefit of the discounts for early and/or direct debit payment. 7.2 Value for money should be delivered by a range of different public sector

organisations accessing the Framework Agreement allowing combined

purchasing power to maximise the potential savings for all ESPO Framework members including the County Council and schools.

7.3 The day to day management of the service provider will continue to be by West Sussex County Council Procurement and Contract Services who will continue to oversee any County Council contractual issues, along with price reviews,

contractual terms and conditions etc.

8. Risk Management Implications

8.1 The County Council has to comply with EU procurement directives and County Council Standing Orders on procurement and contracts to secure the best value and avoid challenge on the grounds of incorrect procedure in the procurement. 8.2 The successful service provider will be required to have appropriate levels of

insurance in accordance with Standing Orders on Procurement and Contracts. 8.3 The successful service provider will also be required to comply with the County

9. Crime and Disorder Act Implications

9.1 Not applicable

10. Human Rights Act Implications

10.1 Not applicable

Peter Lewis

Executive Director Corporate Resources and Services

Contact: Jessica Coleman Contracts Officer 0330 22 8560 Background Papers