Appendices 2, 3, 4 and 7 to this item include exempt information pursuant to Paragraph 3 of Part 1 of Schedule 12A of the Local Government Act 1972. If the Scrutiny Committee wishes to discuss matters relating to the information set out in Appendices 2, 3, 4 and 7 to the report, it will be necessary for the Scrutiny Committee to pass a resolution to exclude the press and public from the meeting (as set out at agenda item 12).

Cabinet, at its meeting on 24 January 2024, will consider a report from the Executive Director (Communities and People) seeking authority for the procurement and award of a new leisure management contract. Cllr Chewe Munkonge, Cabinet Member for Leisure and Parks, Peter Matthew, Executive Director (Communities and People) and Ian Brooke, Head of Community Services, have been invited to present the report and answer questions. The Committee is asked to consider the report and agree any recommendations.

Cllr Chewe Munkonge, Cabinet Member for Leisure and Parks presented the report which sought Cabinet’s authority for the award of a new leisure management contract.  He highlighted that the contract with the current leisure service provider was due to expire on 29 March 2024, and that it was not feasible for the Council to deliver this service in-house, therefore a formal procurement process had commenced, of which the outcomes were provided within the report.

A member of the public made an oral address to the Committee and expressed their concerns regarding the preferred bidder. The Chair of the Scrutiny Committee thanked the member of the public on behalf of the Committee, and advised that the Committee would take their comments into account during consideration of the item.

Emma Jackman, Head of Law and Governance, provided legal advice to the Committee regarding procurement legislation and the procurement process undertaken by the Council in relation to the contract.

Cllr Munkonge, Cabinet Member for Leisure and Parks, Peter Matthew, Executive Director (Communities and People), Ian Brooke, Head of Community Services and Emma Jackman, Head of Law and Governance responded to comments and questions from the Committee as follows:

·       As per procurement legislation, reputational damage could not be considered as grounds for disqualification of potential suppliers from entering or winning the bidding process. Information regarding the mandatory grounds for disqualification was provided to the Committee.

·       There were no discretionary grounds for exclusion found as specified in procurement legislation.

·       Due diligence had taken place as part of the procurement process and would continue throughout the pre-contract and negotiation discussions between the Council and the recommended supplier. No significant areas of concern had been found to date.

·       The Council had used the Sport England leisure procurement framework as part of the procurement process.

·       A strengthened client function would be implemented to support the contract, with default regimes that would trigger direct payments to the Council.

·       As part of the negotiation process, fees and charges would be reviewed to ensure that Council residents were provided value for money and accessibility in relation to leisure services across the city.

·       The obligation to pay management fees would be built into the contract, with legal recourse as stated in the confidential appendices.  The bidders had been tested in their history of making those payments, of which the preferred bidder had been successful in that criteria.

·       There were a number of schedules built into the contract, these include default and termination which enable the Council to break the contact if triggers were hit around poor performance.

·       The future of the Ice Rink could not be specifically considered within the contract as it had not yet been decided, however there would be some flexibility in the contract to account for this.

Cllr Shaista Aziz raised concerns about a lack of information provided to the Committee by officers in response to questions and did not consider that the legal advice provided was sufficient to address concerns raised by Members in the meeting.

The Committee recorded its grave concerns about the award of the contract to the proposed provider, however noted that there was no viable alternative option given the risk of legal challenge and associated financial risk if the Council did not award the contract to the winning bidder.

The Committee resolved to make the following recommendations on the report to Cabinet:

1. That the Council publishes, in the public domain, a more detailed breakdown of the higher costs in relation to the in-house proposal, particularly in respect of expenditure and staffing.
2. That the Council reports back to the Scrutiny Committee as soon as possible with an update on the arrangements established for the effective commissioning, delivery and management of the leisure services contract – including the arrangements established to ensure a smooth transition to the new provider.
3. That the Council takes account of lessons learned through the leisure services contract procurement process and takes measures to ensure that future procurement exercises for large-scale tenders are started sufficiently in advance so as to allow for adequate, meaningful and timely Member involvement and to allow the Council time to pause and reassess its options if required – including the option to abandon the process and re-tender.
4. That the Council makes representations to Central Government expressing the need for greater transparency in local authority procurement processes for Members, to better enable them to act in the best interests of the communities and residents that they represent.
5. That the Council publishes indicative evaluation matrices for future procurement exercises on the Council website, setting out what the Council is looking for from prospective bids.
6. That the Council publishes the principles of social value weightings in procurement exercises on the Council website.
7. That the Cabinet requests that Serco Leisure Ltd, if awarded the leisure services contract, attends a Q&A meeting with Members to explicitly respond to the concerns raised by the Scrutiny Committee; and follows this up in writing to be circulated to all Members for information.
8. That the Cabinet provides a written response to the public address delivered at the Scrutiny Committee meeting in relation to the report, which can be shared with the public speaker and the Scrutiny Committee.

Cllrs James Fry, Lizzy Diggins, Mike Rowley, Lubna Arshad and Mohammed Altaf-Khan left the meeting and did not return.