Hertfordshire defends £250m contract extension after retendering fears

Hertfordshire County Council is controversially planning to extended its highways maintenance contract with Ringway after officials cited market uncertainty caused by Brexit and that contractors are bidding more selectively and increasing margins.

Opposition councillors have criticised a decision by the authority’s Highways Cabinet Panel to recommend extending the council’s Highways Term Services contract for a further five years at an estimated cost of £246m without going out to tender and following criticism of Ringway’s performance.

A paper to the panel from Steve Johnson, head of highways contracts and network management, recommends taking up the option of extending the contract for a further five years after an initial seven-year term expires in October 2019. It explains that the contract requires the council to give a minimum of 18 months notice to do this.

Councillors were also asked to agree to five-year extension to a client support term contract with Opus-Arup at a cost of £75m.

The report states: ‘The overall performance of Ringway has improved since the start of the contract and continues to achieve overall good performance against the contractual PI’s.’

Among a number of other relevant factors, it argues that: ‘Soft market testing suggests that there are no alternative contract models emerging nationally that would be better for Hertfordshire. Indeed Hertfordshire’s almost unique approach to localism with its Highways Locality Budget and 78 clients, will be a constraining feature on choice of any future model.’

The report adds: ‘There is much uncertainly in the market with Brexit, the value of the pound and other major construction projects suggesting now is not the best time to go to the market [and] the market is suggesting that contractors are being more selective in which contracts to bid for, whilst increasing their margins.’

At a council meeting, Cllr Stephen Giles-Medhurst, leader of the Liberal Democrat group, put forward a motion arguing that the case for extension had not been satisfactorily made as the council’s Cabinet did not have details of how required service improvements would be achieved.  The motion was supported by Labour councillors but was defeated.

Cllr Giles-Medhurst said: ‘The contract is worth £250m but just two officers and one executive member will decide what is in it. It is clear to the Liberal Democrats that the Conservatives are too chicken to test the market and have fallen for Ringway’s promises to improve.’

Hertfordshire’s cabinet member for Highways, Conservative councillor Ralph Sangster, told Highways: ‘The proposal to extend the Ringway Contract has been recommended by a Management Board consisting of senior officers who have undertaken a 12-month review of the Service and the options available to the Council including re-procurement.

‘The Council also appointed an independent and eminently qualified external examiner who also reviewed all the evidence considered by the Management Board and came to the same conclusion that it would be in the best interest of the Council and the residents of Hertfordshire that the Ringway contract be extended for the period provided for in the contract.’

He added: ‘It is disingenuous of the opposition to suggest that councillors should make the final decision on the contract extension when they know full well that under the County Council constitution the Cabinet are responsible for taking such decisions.’

A spokesperson for Ringway told Highways that the company was unable to comment during the recontracting process.

 

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