The Vale of Glamorgan Council

Cabinet Meeting: 1 October, 2018

Report of the Cabinet Member for Social Care, Health and Leisure

Leisure Management Contract Extension

Purpose of the Report

To advise Cabinet of the arrangements for activating the 5 year extension clause contained within the Council's Leisure Management contract with Legacy Leisure and to consider the said extension along with certain amendments to the current contract provisions.

Recommendations

That the information is noted and considered so that a decision on this matter can be taken under Part II of this Cabinet agenda.

Reasons for the Recommendations

To explain the principles of the extension to allow for a decision to be taken on this matter under Part II.

Background

A contract for the provision of Leisure Centre management services commenced with Parkwood Leisure on 1st August 2012 for a period of ten years. Contained within the contract was the provision to extend the contract by a further five years should both parties wish to do so. Whilst during the course of the contract a variation was agreed that allowed the contract to be sub-contracted to Legacy Leisure the five year extension provision remains active. Parkwood Leisure / Legacy Leisure have confirmed that they would now like to activate the five year extension clause and officers of the Council have held a number of meetings with their representatives.
The Leisure Management contract has been a success for both parties with the Council benefiting from an improved service at a significantly reduced cost, with the financial security of a fixed cost for the provision of the service. The service remains, as far as known, the only Council Leisure Centre service where there is a positive revenue return in Wales. The model adopted by the Vale of Glamorgan was also the only example of best practice highlighted in the Welsh Audit Report, Leisure Services: delivering with less, published in December 2015.
However, and understandably, there have been a number of issues that have arisen during the course of the first 6 years of the contract and the activation of the extension does provide the opportunity to review these and make a number of variations that provide clear direction for both the Council and the Contractor moving forward.

Relevant Issues and Options

These issues include Car Parking, Changing Room improvements and refurbishments, Holm View Leisure Centre, new 5-a-side facility at the Colcot Sports Centre, future use of existing facilities at the Colcotand issues surrounding fees and charges.
The contractor has consistently, since the commencement of the contract, expressed frustration at the disruption caused to its business with the present Car Parking arrangements in place at Barry and similarly in Cowbridge. The Draft Parking Strategy suggests the inclusion of the Car Parks at Barry and Cowbridge within the revised contract area. Legacy Leisure are not looking to generate income from these areas but to protect the space for Leisure Centre customers and this will be basis of the new agreement.
The Upgrading of the wet and dry changing rooms at Penarth Leisure Centre and the wet changing rooms at Barry Leisure Centre is a priority that the Contractor requires confirmation will be completed as this provides an opportunity to increase usage. This scheme has unfortunately been delayed due the appointment of a framework contractor and then, following a restricted tender procurement, no bid was submitted within the budget available. However following an open retendering exercise a contractor has now been appointed and work has commenced. Therefore certainty can now be given that these works will be completed.
There are also a number of issues surrounding the future of provision at Barry Sports Centre and the requirement to finalise arrangements for the management of the new 5-a-side provision. It is proposed to bring the new 5-side Centre into the main contract as part of the extension negotiations. However due to uncertainties with the new school developments in this area it is further proposed that a clause be inserted into the extension agreement that states that the contractor will not be disadvantaged by the opening of new facilities on the school sites in the immediate vicinity of the Colcot Sports Centre. This is particularly relevant to the existing sports Hall and Full size ATP both of which could be replicated on the new school site.
The contractor, as the Council did before, struggled to find the right mix of usage at Holm View having initially investing heavily in a new bodybuilding gym. Unfortunately, this did not prove popular in attracting high numbers of customers and this gym has subsequently been relocated to Barry Leisure Centre where membership has increased. Legacy Leisure now wishes to return Holm View to the Council's control, which given that Holm View was always a cost within the contract, will increase the Council's return from the contract. However the Council will have a surplus building and will be again responsible for all operating costs, including National Non Domestic Rates, whilst a decision about its future is made. This is an issue that will need to be progressed separately.
The contractor has also constantly highlighted the problems they have encountered within the condition in the contract relating to price increase of core activities. Originally the contractor was only allowed to increase prices in line with CPI which has fallen significantly behind RPI and has seen prices in the Vale of Glamorgan facilities remain lower than neighbouring facilities. They are now requesting that this clause be relaxed but understand new clauses will be required to ensure prices remain competitive with neighbouring facilities.

Resource Implications (Financial and Employment)

The Council has allocated a significant level of capital funding to upgrade the changing rooms in Barry and Penarth Leisure Centres and a budget of £1.9m was approved for this scheme, which also included an allocation for the replacement of the hall floor in Barry Leisure Centre. The Changing Room contract was recently awarded to a local contractor, G Oakley and Sons, with works now underway.
The part 2 report provides further financial details relating to activating the extension clause.
It should also be noted that the cost of retendering the contract will be significant and whilst further savings could in theory be possible this is deemed unlikely. The situation is also further complicated by the enforcement of the workforce code which means that the cost reduction margins on any newly tendered contacts are likely to be greatly reduced.

Sustainability and Climate Change Implications

Many of the improvements carried out as part of the Condition Survey works at the commencement of the contract have increased the effectiveness and efficiency of major items of plant within the Leisure Centres. This is intrinsically linked to the Council's sustainability and climate change objectives. The works on the changing facilities will also increase energy efficiency.

Legal Implications (to Include Human Rights Implications)

It will be necessary for the Monitoring Officer and Head of Legal and Democratic Services to agree and execute all contractual and lease variation documentation in relation to the proposed lease extension.

Crime and Disorder Implications

The provision of quality leisure facilities is proven to reduce crime in an area.

Equal Opportunities Implications (to include Welsh Language issues)

The Contract is compliant with the Council's Equal Opportunity Policies.

Corporate/Service Objectives

The Well-being Outcome 4: An Active and Healthy Vale:

Objective 7: Encouraging and promoting active and healthy lifestyles. Work in partnership to deliver a range of activities through our leisure and community facilities and parks to increase levels of participation and physical activity. Policy Framework and Budget

Policy Framework and Budget

This matter is within the policy framework and budget.

Consultation (including Ward Member Consultation)

No ward member consultation has taken place as the Leisure Management Contract delivers services across the whole of the Vale of Glamorgan.

Relevant Scrutiny Committee

Healthy Living and Social Care

Background Papers

None.

Contact Officer

David Knevett, Operational Manager, Leisure and Tourism.

Officers Consulted

Financial Accountant - Visible Services

Operational Manager;

Head of Neighbourhood services and Transport

Committee Reports

Operational; Manager : property

Operational Manager - Accountancy

Responsible Officer:

Miles Punter, Director of Environment and Housing