Paul McGarry, Head of futureMerton, introduced the item highlighting that the report provides a summary of the re-procurement process for the highways contract from now until the commencement of the new contract in October 2019. A draft scope is also included. This will be developed into a more detailed specification and therefore members’ views on the scope are sought.

The contract is currently held by FM Conway – it is in the last year of a two year contract extension. Soft market testing activity has already taken place from which it has concluded that the contract renewal will be determined through a full procurement process with full exposure to the market to test best value. The length of the contract will be for seven years initially with the option to extend by a further three years.

As part of the early stages of the procurement process there has been liaison with neighbouring boroughs to explore the option of joint commissioning. Richmond and Wandsworth already have a shared contract as do Sutton and Kingston. As these contracts have already commenced and their timing is fixed, there isn’t an option for Merton to join either of them at this stage.

In response to member questions, the following clarification was provided:

·         (Paul McGarry) The proposed length of the contract has been determined by what is typical in the market. Also, to allow the timing of the contract to come in-line with those jointly commissioned contracts already commenced by neighbouring boroughs;

·         (Paul McGarry) Merton’s highways are all subject to an ongoing programme of inspections with frequency determined by use – the busiest are inspected monthly with the least busy inspected annually. These inspections inform the programme of planned capital works. The material with which potholes are filled is robust. However, further derogation of the road surface will typically happen around this infill. Reported potholes are assessed. This will determine if the hole will be filled or the whole road resurfaced through the capital programme;

·         (Chris Lee, Director Environment & Regeneration) Highways maintenance is funded from both revenue and capital budgets. Typically, there is a £660K revenue spend on potholes. This is for day-to-day repairs that cannot be capitalised due to accountancy rules. The capital spend is £2.5m a year on road and footway surface renewal with additional funding for road junctions and changes to road layouts. Contractors are making their own capital investments in equipment to deliver these highway contracts. This is also a key factor in determining the length of the contract as time is needed to defray the capital investment;

·         (Paul McGarry) Consideration is being given to introducing a risk based approach to highways maintenance. However, this will be influenced by London Councils given a change of approach by DfT and will only be effective if adopted across all London boroughs;

·         (Paul McGarry) Merton’s highways are the council’s largest physical  asset; if all our roads, footpaths and cycle paths were laid end-to-end they stretch from Merton to Barcelona. Whilst potholes result in damage on the top surface of the borough’s highways, this is only the cosmetic, the key part of the road structure that determines its integrity is the subsurface which is surveyed annually with radar. Many factors affect the quality of Merton’s highways but ice has done a lot of damage recently with the severe winter in 2017/18;

·         (Paul McGarry) The decision not to pursue a competitive dialogue but instead to go through a full procurement process is based on the current contract having been held over the longterm and a market perception that the current contractor could have advantage. A full procurement process will allow all interested parties to have the same information and discussions with the council;

·         (Paul McGarry) Quarterly meetings are held with utility companies to plan and permit their works. However, given the age of the infrastructure, emergency works are often required that cannot be planned. These also have to be permitted. The Council does issue fines to utility companies where works go over their permitted time or where the utility company hasn’t obtained a permit to carry out work;

·         (Paul McGarry) The 28 day requirement to rectify a defect to the highways surface commences as soon as this is known/reported;

·         (Chris Lee) In comparison with other London Boroughs, the condition of highways in Merton is good. The percentage of highways that fall below the standard required is measured annually. A sharper decline in the quality of Merton’s highways was seen before winter 2017/18. As a result the Capital Programme has been adjusted;

·         (Chris Lee) Technology used to make repairs is continuing to improve and there is a constant focus on how to reduce costs;

·         (Paul McGarry) The estimated £2m reduction in TfL funding between 2017/18 and 2018/19 for Highways Service and Works is a result of the budget having been previously increased by major schemes and special projects such as Mitcham town centre where the funding was received from Transport for London; and

·         (Paul McGarry) Private landowners are responsible for maintaining surfaces on private forecourts even where these abut the public highway. The Council can issue enforcement notices to ensure works are undertaken if there is a credible danger to public safety.

RESOLVED: that the more detailed specification and outcome of the full procurement process return to scrutiny at its February meeting for pre-decision scrutiny (before this progresses to Cabinet for its decision).