Welcome to:

Operator Information MeetingThursday 25th 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 it’s 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• 1st 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

• 2nd 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 1st 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