Agenda item

(Leisure & Community Services Portfolio Holder) To consider the attached report (C-036-2015/16).

(1)        That, as recommended by the Portfolio Holder Advisory Group for Leisure Management, the Business Case and Procurement Strategy for the Council’s new Leisure Management Contract be agreed, which would:

            (a)        be through a Design, Build, Operate and Manage contract for a period        of 20 years and deliver a new build replacement for Waltham Abbey    Swimming Pool;

            (b)        be based on the affordability levels identified seeking to maximise   return on investment;

            (c)        consider a detailed variant Business Case to include operating costs         for a potential new Leisure Centre development at North Weald, with the            option to either replace or retain Ongar and Epping Sports Centres;

            (d)        enable the market to present options which were commercially more         favourable to the Council; and

            (e)        utilise the evaluation criteria within the Procurement Strategy to select        the best future management partner; and

(2)        That, in accordance with the Business Case and Procurement Strategy, the existing Leisure Management Contract with Sports & Leisure Management Limited be extended by one year from 3 January 2016 on the existing terms and conditions, and with a three month break clause included.

The Portfolio Holder for Leisure & Community Services presented a report on the Business Case and Procurement Strategy for the new Leisure Management Contract.

The Portfolio Holder reminded the Cabinet that, in December 2014, the Council had adopted a new Leisure and Cultural Strategy. The Strategy identified the future need and defined the role that the District Council might play, in the provision of opportunities for people to lead healthier lives. The most significant direct investment in leisure, was the provision of the four Sports/Leisure Centres, currently managed under contract on the Council’s behalf by Sport and Leisure Management Ltd (SLM).  The ten year contract was due to expire in January 2016. 

The Portfolio Holder reported that, in preparation for a new contract, the Council had been considering, through the work of the Portfolio Holder Advisory Group for Leisure Management, the level of service to provide in future and the best procurement and contractual options in order to deliver the Council’s Key Objectives.  The Council had engaged RPT Consultants to support the process, and they had been working with the multi-disciplinary Officer project team to develop a Business Case and Procurement Strategy. These were presented to the Portfolio Holder Advisory Group on 17 September 2015. Cabinet approval of the Business Case and Procurement Strategy was being sought, as recommended by the Portfolio Holder Advisory Group.  In addition, agreement for a contract extension with SLM, the current management partner, for up to a year on the existing terms and conditions was also being proposed.

The apparent contradiction of offering a contract for 20 years, with the repayment cost of new and upgraded facilities being based upon a 30 year payback period – both of which were significantly longer than the Council’s Medium Term Financial Strategy – was highlighted. The Deputy Chief Executive confirmed that the Medium Term Financial Strategy was only for 4 years; however, the 20 year contract period would allow the contractor to earn a return on their investments in the Council’s facilities. The Contract would have break clauses. The Council’s Consultant added that the Leisure Facilities would still have a useful economic life when the 20 year contract period expired, hence the borrowing costs could be spread over the longer period of 30 years.

Concerns were expressed about the possible closure of Epping Sports Centre. The Deputy Chief Executive stated that Epping Sports Centre was no longer fit for purpose, and the provision of enhanced leisure facilities had been an outcome from the masterplanning exercise undertaken for North Weald. If a new Centre was built at North Weald then it would be equidistant between Epping and Ongar, and would not be dependent on any new development at North Weald. The Council’s Consultant added that the provision of a new Sports Centre in North Weald was currently a variant bid and further details regarding its viability would emerge as part of the competitive dialogue process. The Deputy Chief Executive commented that the use of funding from the Community Infrastructure Levy would be an option for the provision of the new facility in North Weald, assuming the Levy was pursued by the Council, and if it was to happen then it would be completed in the next three to five years.

Members queried whether there was any flexibility in the terms of the proposed new contract, and whether the potential new Centre in North Weald would have enhanced facilities. The Consultant stated that the contract would include rolling five-year Service Development Plans to give flexibility to both the Council and the contractor, and it was intended to provide significantly enhanced facilities at any potential new Centre in North Weald.

The Consultant informed the Cabinet that the competitive dialogue process would clarify the level of management fees that the Council would be required to pay, which could involve receiving fees from the contractor rather than paying them. The Deputy Chief Executive advised the Cabinet that the Council would be involved in dialogue with the new Ongar Academy concerning the use of Ongar Leisure Centre. There was a natural synergy with the co-location of the Academy and the Leisure Centre, and it was expected that there would be some leisure provision for residents on the site in the future.

The Leader of Council reminded the Cabinet that the previous Leisure Management Contract had been a resounding success, and the new Contract represented an exciting opportunity for local residents. No decisions had yet been taken about the provision of Leisure/Sports facilities by the Council, but the competitive dialogue process would enable the options available to the Council to be discussed and firm proposals to emerge from the bidders.

Decision:

(1)        That, as recommended by the Portfolio Holder Advisory Group for Leisure Management, the Business Case and Procurement Strategy for the Council’s new Leisure Management Contract be agreed, which would:

            (a)        be through a Design, Build, Operate and Manage contract for a period        of 20 years and deliver a new build replacement for Waltham Abbey    Swimming Pool;

            (b)        be based on the affordability levels identified seeking to maximise   return on investment;

            (c)        consider a detailed variant Business Case to include operating costs         for a potential new Leisure Centre development at North Weald, with the            option to either replace or retain Ongar and Epping Sports Centres;

            (d)        enable the market to present options which were commercially more         favourable to the Council; and

            (e)        utilise the evaluation criteria within the Procurement Strategy to select        the best future management partner; and

(2)        That, in accordance with the Business Case and Procurement Strategy, the existing Leisure Management Contract with Sports & Leisure Management Limited be extended by one year from 3 January 2016 on the existing terms and conditions, and with a three month break clause included.

Reasons for Decision:

To ensure that the Council could continue to operate and maintain its facilities and achieve maximum value for money from the delivery of Sports and Leisure opportunities to its residents.

Other Options Considered and Rejected:

The Council had previously determined that a management contract with a suitably, experienced external private sector operator or Leisure Trust, was the best means of achieving its Key Objectives for the management of its Leisure Facilities.  There were alternative options, such as the establishment of an in-house Leisure Trust or re-adopting direct management at the end of the current contract. However, these would present greater financial risks to the Council.