Independent panel to negotiate Council contracts

11 September 2008

Christchurch City Council will appoint an independent panel to negotiate three of the Council’s maintenance contracts with its current contractor, City Care Ltd.

Councillors today voted to limit Council’s initial negotiations on the contracts to City Care, a Council Controlled Organisation (CCTO) and one of the Council’s strategic assets owned by Christchurch City Holdings (CCHL) . Mayor Bob Parker and Councillors Barry Corbett and Sue Wells, who are directors of CCHL, did not vote or take part in the debate.

City Care has held these contracts which total $32 million since 1999. The contracts for parks and gardens maintenance, water and waste and facilities maintenance, expire between now and 2011.

The independent panel to be appointed by the Chief Executive and Council’s Audit and Risk Management Committee will be made up of internal and external members and will be chaired by an external consultant. This panel will follow the Auditor General’s Procurement Guidelines for Public Entities.

Council will be advised on the outcome of the negotiations with City Care before the contracts are signed. The contracts will only go to the market for competitive tender if Council can not negotiate suitable terms and conditions with City Care.

The proposal is in the best interests of the Council, Council Chief Executive Tony Marryatt says. “Council and the city’s ratepayers benefit when its strategic assets such as City Care are strong, financially sound organisations.”

City Care has an annual turnover of $110 million and employs more than 900 full-time staff. Its dividend for the 2008 financial year was $1.48 million and the forecast for the year ahead is $1.646 million.

Frequently answered questions

1/ Why is Council taking this step to renegotiate with City Care before going out for open tender?

City Care has been successfully carrying out these contracts for Council since 1999. The company has the staff with the skills, expertise and resources to continue offering the city a high quality cost-effective service.

This proposal is in the best interests of the Council group. Council and the city’s ratepayers benefit when its strategic assets such as City Care are strong, financially sound organisations.

2/ Is this just not looking after your own company? It is important that Council’s strategic assets are strong financially sound organisations. This is no different to what occurs in the commercial world.

3/ How do we know that Council will be getting value for money by dealing only with City Care? The report recommends that the CEO will appoint a panel of internal and external members, chaired by an external consultant to negotiate with City Care. This panel will provide an independent assessment that any terms and conditions agreed on by Council and City Care will give the city value for money.

4/ Is City Care performing well for Council? Yes, extremely well.

5/ Will the decision be made in the public arena? Yes Council will consider the report at this Thursday’s Council meeting. Commercially sensitive information will be discussed in the public excluded section

6/ Does this set a precedent and mean that City Care will receive other Council contracts without these contracts going for open tender? These are parks, water and waste and facilities maintenance contracts. Our roading contracts go out for competitive tender.

7/ How does this benefit the ratepayers/residents of Christchurch? City Care has an annual turnover of $110 million and employs more than 900 full-time staff. Its dividend for the 2008 financial year was $1.48 million and the forecast for next year is $1.646 million. The Council group of companies contributed a dividend of $34 million for the 2008 financial year. This dividend contributes to the annual operating and capital programmes costs to Council reducing the annual rates required to its residents.

8/ What will happen if the negotiations with City Care are not successful? The proposal is that the contracts will go to the market for competitive tender if Council can not negotiate suitable terms with City Care.

9/ Would the City Care operation and the jobs of staff there have been under threat? Obviously any loss of contract would have an impact on the business, to what extent is unknown at this stage.

For more information contact:

Diane Keenan 9418999

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