Award for the provision of vehicle fuel charge card facilities

Report: 14
Date: 15 December 2011
By: Director of Customer and Commercial Services on behalf of the Commissioner

Linked to exempt item 25

Summary

The Government Procurement Service (GPS (formerly known as OGC Buying Solutions)) set up a Framework for the provision of fuel cards which commenced on 23 August 2009 for an initial period of two years until 22 August 2011. The Framework provided that GPS had the right to extend the Framework for a further year on up to two occasions.

GPS extended the Framework Agreement on 13 July 2011 for a period of two years until 23 August 2013.

Paragraph 7 of the Framework Agreement permits the contracting authority (MPA) to either make a direct award to a supplier on the Framework or to conduct a further competition. It was agreed at MPS Contracts Board on 25 October that a direct award would be made for a 5 month contract until 22 January 2012, with a competition during that time to facilitate the award of a two year contract from 23 January 2012.

This report seeks approval to award a two year contract to Arval, following the completion of a compliant competition and evaluation through the Framework. The total cost for the two year period, based on estimated fuel consumption is £23m (£11.5m per annum).

A. Recommendations

That:

1. Members approve the award of a two year contract commencing on 23 January 2012 for the provision of vehicle fuel charge card facilities. The estimated cost of fuel for the two year period is £23m.

B. Supporting information

Background

1. The MPS has a requirement to fuel approximately 6,000 vehicles not only within the Metropolitan Police District but throughout UK and overseas. A variety of fuels are required, the most common of which are unleaded petrol and diesel. The provision of a credit card sized fuel card, administered by the contractor, is necessary to enable fuelling of the MPS fleet from both agency fuel sites and MPS bulk fuel installations. The contract includes the provision of information to allow the comprehensive management of the vehicle fleet across all areas of policing.

2. The MPS is entitled to and has used the GPS Framework to conduct a compliant competition and evaluation of the five suppliers on the Framework. The suppliers on the framework are Arval, BP Oil, Key Fuels, Shell UK and Total UK.

Procurement Strategy Information

3. In order to ensure value for money, the decision was made at the Contracts Board meeting held on 25 October 2011 to undertake a competition with the five suppliers on the GPS Framework.

4. Appendix 1 contains details of the key information relating to the procurement strategy.

Tendering process

5. The tendering process for the award of the Framework was conducted by GPS.

6. The process for evaluation of the further competition was conducted by the MPS through the Framework.

7. In line with the terms and conditions of the GPS Framework agreement, in order for the MPS to undertake a further competition the same evaluation method had to be followed as that used in the original Framework award. GPS provided the MPS with the necessary documents detailing the evaluation method used for award of the Framework.

8. Following receipt of the responses from GPS for each supplier on the Framework, the MPS evaluation team used the Framework evaluation method in order to ensure compliance.

9. Evaluation scores are contained in Exempt Appendix 2.

10. To summarise the evaluation, Arval were best able to meet the MPS requirements in terms of ‘go-anywhere’ coverage, comprehensive management information provision and rebates. The rebate is given on every litre of fuel the MPS draws at over 900 sites within London, with further rebates from two specific suppliers. Platts price deals (a recognised index which is based upon the market price of oil) still do not offer sufficient coverage across the MPS to be considered for this contract currently.

General Contract Information

11. This contract is owned by Transport Services.

12. This contract compliments the use of the six Bulk Fuel Sites operated by the MPS. The Bulk Fuel sites are located at:

1. Alperton Traffic Unit
2. Catford Traffic Garage
3. Chadwell Heath Traffic Unit
4. Peel Centre, Hendon
5. Lambeth
6. Merton Traffic Garage

13. The fuel for these six sites is purchased in bulk from a different contract awarded in June 2010 under another GPS Framework that allows Authorities to purchase fuel, in contrast to the GPS Framework being used for this requirement, which is for the purchase of Fuel Card Services.

14. Where economical in terms of travel time, MPS employees are being encouraged by Transport Services to use the Bulk Fuel sites, which provides the potential to benefit from the lower bulk fuel costs.

15. GPS has provided a template document for the MPS to review and complete, that will form the call-off contract between the service provider and the MPA.

C. Other organisational and community implications

Equality and Diversity Impact

1. The procurement process required bidders to declare their existing policies and initiatives and future actions with regard to promoting a working environment that actively encourages equal opportunities and non-discrimination on the grounds of race, gender, disability, sexual orientation, religion or belief and age.

2. The equality and diversity record of the Arval is of a calibre commensurate with the GPS requirements, aspirations and reputation. The Contract ensures compliance with all equality and diversity related matters and includes setting up a mechanism to monitor performance in respect of equal opportunities and diversity throughout the lifetime of the contract.

Consideration of Met Forward

3. In line with the Procurement Strategy, which underpins and supports the delivery of the Procurement element of Met Support by improving the MPS infrastructure, driving out waste, improving value for money and concentrating resources on fighting crime, this agreement will both drive out waste and improve value for money by engaging a specialised company to provide fuel card services to the MPS, delivering discounts on fuel purchased and minimising time wasted by police officers or staff refueling vehicles by having 99% coverage of refueling locations across London. This is particularly important during the Olympic period, which this contract will cover.

4. In addition, this contract supports the objective of procuring services in collaboration, as by using the GPS Framework the MPS is participating in an agreement that was tendered on behalf of and is available for use by the entire public sector and, as such, has an approximate spend across all its users of £300M per annum, which in turn directly influences the competitive discounts available.

Financial Implications

5. The cost of fuel over the intended two year agreement is estimated to be £23m. Fuel costs are met primarily from centralised budgets in Customer and Commercial Services with small budgets held locally in business groups.

6. Fuel consumed is reducing within the MPS, approximately 250,000 litres for the first four months of the current year (2011/12). However, although volatility in the fuel markets and continuous price increases (15% since July 2010) make it difficult to forecast an exact spend for future years, the figure of £23m for two years is the best estimate based on current spend.

7. The GPS Framework offers excellent purchasing power as it aggregates spend across all its users, circa £300M per annum.

Legal Implications

8. DLS supports the recommendation for the award of a contract from 23 January 2012 to 22 January 2014 as compliant with EU and UK Procurement Law.

Environmental Implications

9. The specific impacts are set out at Appendix 4. Although there are implications in terms of exhaust emissions of vehicles, these are not directly related to the purchase of fuel but the use and composition of the vehicle fleet itself. Therefore, the implication of awarding this contract is that there is no impact in terms of environmental factors.

Risk (including Health and Safety) Implications

10. A risk assessment was carried out and no risks were highlighted in the potential award of this agreement.

Definitions

• GPS Government Procurement Service
• OGC Office of Government Commerce

D. Background papers

• None.

E. Contact details

Report authors:  Steve Abbott, Transport Services; Daniel Green, Procurement Services

For more information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

Appendix 1: B1 Procurement Route

Appendix 3: B6 Contract Information

Appendix 4: C1 Environmental Implications

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