Street Lighting Private Finance Initiative – Selection of Preferred Bidder

To provide an update on the Street Lighting PFI Procurement and to recommend the appointment of a preferred bidder’ and associated recommendations relative to the procurement, following the evaluation of the final tenders. Appendices A, B and C which are confidential and contain exempt information not for publication by virtue of paragraph 3 of Part 1 of Schedule 12A to the Local Government Act 1972. (Information relating to the financial or business affairs of any particular person (including the authority holding that information) will be provided to Cabinet Members separately as background information. 

 

Cabinet is recommended to:

i) appoint the Bidder with the highest Final Tender evaluation score as the Preferred Bidder as detailed in confidential Appendix A of this report, which summarises the key elements of the two bids and the Final Tender evaluation outcome subject to the acceptance by the Bidder of the terms of the Preferred Bidder Letter.

ii)  confirm that the Central Management System (CMS) as detailed in  confidential Appendix B and  proposed by the Preferred Bidder should form part of the clarification with the Preferred Bidder with a view to deciding whether it is being included in the Contract.

iii) authorise the Acting Executive Director : Environment Services, following  consultation with the Cabinet Member for Growth, Infrastructure and Strategic Planning, to sign the Preferred Bidder Letter with the Bidder appointed pursuant to recommendation (1) once any outstanding issues have been addressed.

iv)  request a further report be brought to Cabinet prior to the award of the Contract and to note that one of the criteria for formal award of Contract will be confirmation of funding from the Department for Transport.

v) approve the Final Business Case in Appendix C and to delegate to the Acting Executive Director: Environment Services and in consultation with the Corporate Director: Finance Property and Performance the authority to make any necessary amendments to it and to submit the Final Business Case to the Department for Transport for final funding approval.

vi) approve the Final Business Case in Appendix C and to delegate to the Acting Executive Director: Environment Services and in consultation with the Corporate Director Finance Property and Performance the authority to make any necessary amendments to it and to submit the Final Business Case to the Department for Transport for final funding approval.

vii)    authorise the Acting Executive Director: Environment Services in consultation with the Cabinet Member for Growth, Infrastructure and Strategic Planning and the Head of Legal Services to take any further actions necessary to give effect to the above decisions and ongoing procurement arrangements prior to award of the Contract.

viii)  note the procurement process to date and the proposed timetable and arrangements for the remaining stages of the procurement.

Following Cabinet approval of an Outline Business Case (OBC) for Private Finance Initiative (PFI) credits in January 2007 and a further approval of a revised OBC in May 2008, the Council was awarded £57.2 million in PFI credits by the Department for Transport (DfT) on 16 September 2008.  The PFI credits are to replace about 80% of the Council’s street lighting stock together with all its illuminated signs and bollards. This much needed investment is necessary because over many years there has been a national under investment in street lighting.  As a result there is a significant backlog and a high percentage of street lighting columns beyond their design life of 25 years.  Failure to procure this work through the PFI process would put significant risk on the authority as a result of the need to replace lamp columns as they become a safety risk to highway.

 The final stage in the current procurement process is the Invitation to Submit Final Tenders (ISFT) and following further detailed dialogue with the two remaining bidders, dialogue was closed on 14th April 2010 and Final Tenders were received on 12th May 2010. Final Tenders were evaluated using a set of pre-agreed evaluation criteria and weightings.
The Preferred Bidder stage is the final stage before Financial Close. The Bidder and its Funders participate in the Preferred Bidder discussions and the continuing tendering exercise at their own risk and expense as they have done throughout the earlier stages. The Council is not, at this stage giving any commitment to enter into a contract with the Bidder and it reserves the right to withdraw the Bidder’s status as Preferred Bidder at any time. Once Cabinet has approved the appointment of the preferred bidder, the project team and the preferred bidder will work toward financial close.  It was envisaged that a further report will come forward to the October 2010 Cabinet recommending the award of the contract and then will be reported for information to the full Council meeting in December 2010.

It was indicated that the original recommendations included in error the same recommendation at v and iv.  In addition there was a request which was agreed that the original v should be amended to include the Head of Legal Services as an additional officer required to be involved in the delegation consultation.