Welcome to: Operator Information Meeting Thursday 25 th June 2009 EU Tenders for Local Bus Service Contracts

Introductions Chris Saffell Team Leader – Contracts Arnold Lupunga Procurement Officer – Corporate Resources

Agenda How will EU tenders work? What will be different? Award Criteria De Minimis exceptions Conditions of Contract Forthcoming tenders Questions and Answers

How will EU tenders work? Not a Framework Open procedure for each contract Business as usual Existing standing list

So what will be different OJEU notice for each tender process ITT within 4 days of notice Minimum 36 days to return tenders Notification of Intended Award 10 day standstill period before contract award Award notice in OJEU

Award Criteria Must publish award criteria in tender Lowest price vs. Most Economically Advantageous Tender (MEAT) Current Practice Transparency, fairness So what will the Council go for……

………MEAT Standard Method to determine MEAT Award to lowest price for vehicle option 3 If difference between lowest price for vehicle option 3 and 2 is less than 15% of revenue, award for vehicle option 2 If difference between lowest price for vehicle option 2 and 1 is less than 10% of revenue, award for vehicle option 1 Higher quality vehicle generates extra revenue. Is it enough to cover extra cost?

Example (standard method) Lowest tender vehicle option 1: £85k Lowest tender vehicle option 2: £75k Lowest tender vehicle option 3: £71k Revenue: £30k Difference between lowest price for vehicle options 3 and 2 is £4K But option 2 will generate 15% revenue (£4.5k) Therefore option 2 is better value Difference between lowest price for vehicle options 2 and 1 is £10k But option 1 will only generate 10% revenue (£3k) Therefore award contract for vehicle option 2

And now its your turn

But there is an exception For an existing contract awarded for vehicle option 1 Publish current contract price in tender Award criteria – lowest price for vehicle option 1 if not more than 3% greater than current contract If more than 3%, use standard method to determine MEAT Some protection against reduction in vehicle quality

Example (current vehicle option 1 contract) Lowest tender vehicle option 1: £85k Lowest tender vehicle option 2: £75k Lowest tender vehicle option 3: £71k Current contract price (vehicle option 1): £83k Lowest tender vehicle option 1 only 2.4% more than current price Therefore award contract for vehicle option 1 If lowest tender vehicle option 1: £90k Use standard method Award for vehicle option 2

De Minimis Exemption from need to tender EU overrides UK 1 st test - EU exempt –Total contract value less than £54,327 (no more than 20% of all LBS contracts) or –Passenger fare income is greater than the subsidy provided under the contract 2 nd test – UK TA85 exemption –Contracts with any operator not exceed 25% of value all LBS contracts

Contract Procedure Rules (CPR) Contract value >£1k and <£50k over full life –Exempt where:- Service can only reasonably be provided by varying or extending route of existing commercially operated service or Early morning, evening or Sunday service required to supplement daytime commercially operated service and commercial operator provides best value for Council and passengers Contract value >£50k –No standing exemption –Any case where contract awarded without inviting tenders needs Cabinet approval

Conditions of Contract EU tenders – new C of Cs (Schedule 2) Already consulted Existing contracts – retrospective sign up to new C of Cs

And Finally OJEU notice placed for 1 st EU tenders Tenders go out this week CircleLine, 45, 99 Contracts start end October 09 Further tenders (148, CH/Racecourse P&R) OJEU, ITT mid/late Sept Start end Jan 10

Q & A