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Q&As - Leisure customer forums June 2019

teal bullet How customers can get involved

teal bullet What will change

teal bullet Reasons for doing the review

teal bullet Finance

teal bullet Evaluation of tenders and checking their performance

teal bullet The procurement processes


How customers can get involved

Q1 - Please can you advertise the next customer forums more robustly and think about electronic and non-electronic methods?

Yes, we will ensure that the next set of customer forums in the autumn are fully publicised using all methods including better use of notice boards and information to be available at instructor led classes.

Q2 - Can customers access all the documents and reports regarding the procurement process and provider presentations?

Any documents that the council can make available they will do, but there will be some commercially confidential information that will be kept confidential.

Q3 - How will these customer forums work, when will you next see customers and update us again?

We will have further customer forums at the end of 2019, once we have received the bids from any potential bidders.  Early in 2020, if we have a shortlist of preferred bidders, we will ask them to make presentations to our stakeholders including customers.

Q4 - Will customers be welcome to attend and have an input on the bidding consultations?We would like to get a chance to vote on whom to pick. Put the choice in our hands too?

Customers will have an opportunity to attend the shortlisted bidder presentations. We will be asking for customer feedback after the sessions and will consider that feedback along with other evaluation information before any recommendation is made to Panel, Cabinet and Council.


What will change

Q5 - With regards to current clubs, school bookings and other external activities, will these bookings be guaranteed with the new provider and a clause put into protect the prices from not going up too much?

Bookings by the adjacent schools will be protected and price increases will be limited to CPI (Consumer Price Index).  All other bookings will transfer as they are to the new provider.  Over time any new provider will want to review the bookings as we do now.

Q6 - Will the Council still own the buildings and be responsible for building maintenance and refurbishment costs, and the provider will manage the staff and equipment and be in charge of timetables and programmes? Will all current staff carry over to the new provider?

The Council will own the buildings and continue to be directly responsible for the building maintenance and refurbishment costs.  The provider will manage the staff and all the equipment and internal maintenance of the building.  The provider will be responsible for pricing and timetables.  Staff will TUPE transfer to the new provider under their current pay, terms and conditions.

Q7 - If the Council will still be liable for the maintenance costs surely this will mean a loss for the Council still? Does the Council not have a separate budget for Building Maintenance costs?

We are looking for a fee to be paid to the Council to cover the full cost of the maintenance of the buildings. All costs associated with the maintenance of the Leisure Centres, are charged to the Leisure Centres.

Q8 - Will current staff be kept and if there are redundancies, who will shoulder this cost? Surely this and the pension liabilities would put off a new provider?

If staff spend more than 60% of their time on the Health and Leisure service, then they would TUPE transfer to the new provider.  

Any bidder will take into account any pension liabilities when they submit their financial bid.

Q9 - We are worried prices will go up and our price for life will not be honoured. How will you stop this happening?

Price for life will transfer to the new provider, if the provider wants to review this benefit, they will need to go through a full consultation process as we would have to, if we wanted to make changes to the price for life scheme.


Reasons for doing the review

Q10 - What background work have you done to come to the conclusion that going out to tender for a private provider is the best option? And what other models have you looked at to get to this point? Have you used a Consultant?

The Member Task and Finish group was set up in March 2018, they did a number of tasks including looking at all the different models including Partnering, Employee Mutual and Arm's Length Trading Company. 

LINKS: (when link has opened, click on 'Agenda Reports Pack' to open a PDF of the whole report, you can then search or scroll down for the Leisure report) 

·       September 2018 meeting:

https://democracy.newforest.gov.uk/ieListDocuments.aspx?CId=510&MId=6696&Ver=4

·       Cabinet December 2018 meeting:

https://democracy.newforest.gov.uk/ieListDocuments.aspx?CId=133&MId=6562&Ver=4

·       March 2018 Panel meeting:

https://democracy.newforest.gov.uk/ieListDocuments.aspx?CId=132&MId=6445

LINK: Information and reports that detail the work of the Task and Finish group

 

Q11 - Have any other councils in the UK kept their leisure services in-house and are successfully running them? Could you not learn from them and use that to keep the service in-house?

Yes, but they are in the minority.  The in-house team is regularly in contact with other in-house leisure teams.   LINK:March 2018 report (details current providers in the area) -

Q12 - Surely the current in-house management staff, with many years of experience that are here now, would be able to run the centres and bring this experience you are looking for?

There is considerable knowledge and experience within the in-house teams of running our 5 Health and Leisure centres, this will be very important to any new partner.  We believe that some of the external providers have extensive experience that covers sites outside of the New Forest that they can bring to our health and leisure provision and add value.

Q13 - What income streams are available to these other providers that NFDC cannot access?

Because of the size and scale of their organisations and status as not-for-profit or charities, they may be able to get increased funding from Sport England.


Finance

Q14 - What is the financial situation of the Health & Leisure Provision currently? If the service is breaking even and even potentially set to make profit this financial year, as was mentioned at the meetings, why is the Council still looking to go out to Tender? Surely you should not be looking at making a profit as this service is for the community?

The Health and Leisure service should fully cover its costs. The budgeted position is in operational surplus, but this isn't large enough to cover the annual cost of building maintenance and cover the support service costs that are attributable to Leisure.  We have recently commissioned a full condition survey of all sites and are planning our 10-year costs, this will be known and included in our specification.

Q15 - If a profit is made from this new partnership will it be fed back into the Council and ultimately the services or will it be kept by the council and used elsewhere?

The fee received by the Council will be used to fund the building maintenance programme of the 5 sites.  If the fee exceeds the building maintenance costs, then the Council will ring fence this for Health, Leisure and community related activities for residents across the New Forest. 

Q16 - How will the new provider run the centresas a viable & profitable business without affecting the current service, especially if it will inherit our operational and staff costs? 

We believe the new provider will have considerable economies of scale which the current in house team do not have, which will allow it to operate more efficiently and at less cost. 

Q17 - Will the new provider be paying us a fee to run the centres?

Yes, our expectation is that the provider pays us a fee to manage the centres.

Q18 - How much are the yearly Building Maintenance costs? Could we not fund this through council tax increases or membership price rises, even just for those on very low price for life rates? Maybe charge clubs/external providers slightly more to increase revenue?

Building maintenance costs can typically range between £500k - £1m per annum.  We regularly review prices and the general feedback from customers has been that we are at the top end as far as price.   Council Tax increases are already assumed in the financial planning of this Council to make a valuable contribution towards the provision of the services that the Council provides.  We also have to remember that the users of the Leisure Centres represent a small percentage of the overall residents of the New Forest who pay Council Tax.

Q19  - How much is it costing to undertake this review?

Initial Budget of £50k for external expertise to support the procurement process.  In addition we have spent £26k on a full condition survey of all five health and leisure centres.


Evaluation of tenders and checking their performance

Q20 - How will you evaluate the providers' bids? Will you just be looking for the cheapest or will there be a minimum level of service the council will expect the new provider to offer?

There is a detailed specification and any provider will be assessed against this, the evaluation will be based on cost and quality, with quality taking priority.

Q21 - If we go to a new provider how will you ensure they keep to their promises and deliver a consistent and adequate service as per the contract?

The specification document details the performance standards we require, how we will monitor performance and what penalties will apply.

Q22 - How will you monitor and evaluate the partner when the contract has started, and they are running the centres? Will you know if they reduce staffing or programmes, especially nonprofit making ones like the Active Lifestyles programmes?

The Active Lifestyles programme will be protected as part of the specification and therefore any changes will need to be agreed with the Council.  There will be a contracts manager role within the council who will monitor the contract with weekly meetings with the providers on site.

Q23 - If we as customers and/or you as a Council do not like what is happening with the new partner, can you intervene, and worst case take back the centres?

The council will be monitoring the provider, if the provider does not fulfil the specification and sufficient improvement has not been made, then there is a clause in the contract that the Council can intervene and take back the management of the provision.


The procurement processes

Q24 - When is the deadline for the process to be completed? Is it April 2020? 

There is no deadline.  If we find a preferred bidder then the proposed timeline is for Cabinet and Council to consider any recommendation in April 2020, with implementation taking at least a further 3 months.

Q25 - If the new provider is likely to be a not-for-profit organisation, why would they invest in our services? What would they gain from this as it would put them out of pocket?

Not-for-profit means they have no shareholders or investors who are expecting a return.  Instead, any surpluses they make from the contracts they run are re-invested back into the services, or in some instances go towards their charitable purposes.  As part of the bidding process, the provider will have to detail their financial projections, including the level of investment they would make in the New Forest Health and Leisure centres.

Q26 - Have you looked at providers who have delivered the model after a certain amount of time, e.g. going through the process at the start, 2 years, 5 years afterwards etc? Did you see the results of customer surveys? Where things have gone wrong with other providers was it quite quick afterwards or within a certain period of time?

The task and finish group visited a number of sites and asked a range of questions which included customer feedback. One of the key learnings from authorities where it had gone wrong was to do with the clarity of the contract and specification.  Yes, the sites we spoke to varied from organisations that were just about to start a contract to others who had partnerships for a considerable amount of time.

Q27 - Will you consider a trial with just one site and see how it goes before committing to giving all five sites to a new provider?

No, we are looking for a provider to run all five sites

Q28 - If you do not find a new provider what are the alternatives? Will you consider setting up an Arm's Length Trust or keeping the In-House management team as now?

If we do not find a preferred bidder we will continue to run the services in-house or look at setting up an alternative delivery model established by NFDC

 

 

 

Updated: 4 Jul 2019
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