The message that local authorities can make big savings by outsourcing the management of their leisure facilities has been received loud and clear. Activity in the leisure outsourcing market has increased markedly since last year; so much so that it seems appropriate to continue with the theme.
The proportion of leisure facilities operated directly by local authorities looks set to rapidly reduce from around 60 per cent to perhaps 40 per cent over the next couple of years. Councils managing in-house will be in the minority.
Over the next six months there will be a feast of opportunities presented to the contractor market. The question for a local authority is how best to present their portfolio.
How they do this is fairly straightforward. Leisure contractors will base their decision on whether to bid for a particular contract on a number of criteria. Geographical location and the size of portfolio are two factors that a council can’t do much about.
What councils do have control over, however, is the amount of preparation they do before going out to market. If contractor bidders are suspicious that very little thinking has been done before launching the process – a ‘let’s see what the market comes back with’ approach – then councils may ?nd themselves with limited interest in their portfolio.
A client with a clear idea of what they want is more attractive because the risk of delays and additional bidding costs are considered so much lower. The other factor councils have control over is how they procure their operator. Local authorities are highly risk-averse. They don’t want to risk making a bad decision, particularly by choosing the wrong contractor partner to deliver their ser vice. It’s this risk aversion that has contributed to the ever-increasing pace of the juggernaut that is competitive dialogue, which appears to have become the default mode of travel for local authority of?cers in getting to their procurement destination.
The reason it’s become so popular is that it provides plenty of opportunity for councils to discuss, debate, and challenge prospective partners. The problem with competitive dialogue is that it can be expensive and time-consuming.
The recent Review of Competitive Dialogue by HM Treasury (November 2010) recommended how to improve the public procurement process generally. Given the imperative for councils to achieve better value for money and shorten delivery times, the review refers to the 2008 guidance advising that competitive dialogue should only be used where a project is “particularly complex”.
There are a few examples either currently in the market or about to be launched that are patently not complex but still insist on using the competitive dialogue route. Indeed it’s even being used by those local authorities who are merely re-tendering an existing leisure management contract for which they have a clear idea of what outcomes they want to achieve.
So what? Why should local authorities care? Well, given that there are going to be unprecedented numbers of opportunities in the market over the next few years, bidders may consider those councils using the shorter restricted procedure or negotiated procedures to be more attractive bets.
Councils preferring competitive dialogue for seemingly no good reason risk attracting less interest and jeopardising their chances of achieving best value for money.
The message is therefore that using competitive dialogue shouldn’t necessarily be considered the low-risk procurement option.
One ?nal point: we’re seeing a number of council briefs issued to leisure procurement consultants where time is of the essence in securing an operator. Councils are under pressure to deliver savings early. However, this hasn’t deterred some from expressing a clear preference for competitive dialogue, a process which doesn’t lend itself to a shorter timeframe.
There are likely to be some very attractive leisure portfolios coming onto the market soon. Through outsourcing its leisure service and making a long term contractual commitment, a council can secure two key objectives: signi?cant annual cost savings and the sustainability of its leisure facilities. Local authorities should ensure they help maximise the potential of achieving these two objectives through their choice of an appropriate – and attractive – procurement route.
Chris Marriott
*Director*
*Venues & Events*
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