Approval sought to proceed with OJEU tender process for vehicle removal and storage contracts

Report: 11
Date: 21 September 2006
By: Commissioner

Summary

This report sets out the rationale for the MPS to seek approval to replace existing Service Level Agreements for the recovery and storage of vehicles and commence the Official Journal of European Union (OJEU) tender process (Invite Expression of Interest) to implement 5-year contracts by sector (cluster of boroughs) from 1 July 2007. This report does not seek increased funding.

A. Recommendations

Members are invited to:

1. Approve commencement of the OJEU tender process (Expression of Interest).

B. Supporting information

Introduction

1. In November 2002, the MPS made a commitment to the Finance Committee to develop a cost efficient vehicle recovery and examination service. One aspect of the business development programme is to place the business on a sound contractual footing. The core business remains as published in 2002, with one additional category ‘Seized under Police powers’. Business demands continues to increase in response to MPS priorities and the introduction of new legislation.

Existing arrangements

2. Following the termination of the outsourced contract, the Vehicle Recovery and Examination Service (VRES) has managed vehicle recovery on behalf of all MPS operations through a Service Level Agreement with over 30 commercial recovery operators. The Agreement is demand led, with work going to the nearest available approved operator.

3. Operators gain additional business benefit from being on the MPS authorised list for removals when members of the public (having been involved in a collision or breakdown) ask for police assistance. In such cases, operators recover their costs direct from the public (or their agents).

4. The disadvantages of the current process are:

• The absence of a formal contractual arrangement potentially exposes both parties.
• Although the rates charged by each operator are specified and consistent, these prices have not been fully tested on the open market.
• The inefficiency in the recovery of vehicles should an operator refuse to attend.
• The absence of penalty payments for poor service by an operator.
• Without a long-term contractual arrangement, operators are unwilling to invest in their infrastructure to improve the service they provide.
• The onus is on the MPS to find a garage from the list to recover a vehicle; the current process requires more operators than are necessary.

Market Testing and In-house Storage Benefits

5. Outside the existing Service Level Agreement, VRES has tendered for specific police operations (e.g. ‘Operation Recover’ – recovery of stolen vehicles). This resulted in savings per vehicle recovered when benchmarked against existing SLA costs. Furthermore, VRES has been able to negotiate an across the board discount against the original Agreement for this financial year. Both provide an indication that tendering for the whole business will lead to reduced costs.

6. In seeking to achieve best value, VRES and MPS Procurement Services have evaluated other ACPO Force arrangements and taken into account the National Audit Report, which was critical of some ‘free’ schemes.

7. Efficient use of existing in-house vehicle storage facilities available at Charlton (shortly to be followed by the commissioning of a second site at Perivale) has enabled the VRES to make year on year savings on external storage cost when compared against growth in recovery demands.

8. The MPS requirement for external storage will be limited to categories of vehicles that police have to remove from the highway but are not required for subsequent police examination.

9. Competition will provide additional leverage to the MPS.

Proposal

10. The key aims in requesting approval to commence the OJEU process are:

• To provide the MPA and MPS with a sound contractual base.
• To achieve best value through competitive tendering.
• To bring the number of operators to a manageable level, whilst taking account of business resilience and geographical demands.
• To eliminate the onus upon the MPS of searching through a list of operators for each recovery.
• To give operators a long term commitment to enable them to invest in their infrastructure to optimise service delivery.

11. User views will continue to be collated through in depth consultation.

12. A borough based contract is proposed as the best way forward, allowing:

• The opportunity for small and medium sized companies to bid.
• Standard and specialist recovery requirements to be met.
• A rapid service based on distance travelled and traffic conditions. (Speed of service reduces officer waiting time and optimises traffic flow to the benefit of the public as well as the greater economy of London).
• Increased resilience and business continuity.

13. It is proposed to split the MPS into 8 sectors or borough clusters for standard vehicle recoveries. Specialist recovery requirements will be offered by quadrant. Detailed contract specifications will be drawn up in readiness for the OJEU bidding process.

Abbreviations

ACPO

Association of Chief Police Officers

MPA

Metropolitan Police Authority

MPS

Metropolitan Police Service

OJEC

Official Journal of the European Union

VRES

Vehicle Recovery and Examinations Service

C. Legal implications

1. It is confirmed that the proposal complies with all relevant EU and UK Government procurement directives and is within the powers of the MPA.

2. Any significant risks will be identified and relevant clauses included to minimise or manage the risk before approval to award contract(s) is sought.

D. Race and equality impact

1. Equal opportunity and diversity issues will be fully safeguarded through the tendering process.

E. Financial implications

1. The annual expenditure with commercial operators for 2005/2006 was £1.3m for vehicle recovery and £1.1m for storage. Directly related cost recovery amounted to £0.4m.

2. Once the new pound at Perivale is opened VRES will be able to double capacity appropriate to MPS priorities and related cost recovery income streams. Expansion of the Central Operation and Territorial Policing operational initiatives (seizure of vehicles from uninsured/unlicensed drivers etc) are likely to lead to volume increases of over 25% for the first year, 15% in year 2 and 10% in year 3. The existing budget, cost recovery potential, pound space and savings against third party contractor costs, will dictate the level of growth. For years 4 and 5 annual growth stabilises as the Highways Agency assumes responsibility for vehicle collision recovery from motorways and the major arterial road network.

3. Whilst the key objective is regularising the relationship with recovery operators, a secondary outcome is the potential to achieve savings. Market testing has provided an indication as to the extent of such potential. However, the precise saving cannot be quantified until the conclusion of the bidding stage.

4. Exempt Appendix 1 sets out projected expenditure and related costs recoveries (based on existing Agreement rates) for the entire contract period of 5 years (3+2). The total net cost to the MPS will be met from existing allocated budget.

F. Background papers

None

G. Contact details

Report author: Stephen Ditchburn, VRES, MPA

For more information contact:

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

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