Agenda item

Report of Corporate Director for Resident Services

Kara Gokova, Finance Business Analyst & Programming and Capacity Manager, presented the report, which detailed the proposal to create and implement a 5-year plan to replace existing fitness equipment and carry out any required fabrication changes to Council fitness facilities, providing fitness options for residents to benefit from improved mental and physical health and wellbeing and potentially impacting on employability, economic development and community cohesion.

Ms Gokova stated that NCC:

·  would work in partnership with Public Health to encourage key target groups to participate in sport and fitness and ensure equipment was ‘on trend’ and provided a good level of digital integration, in line with the Sports and Leisure Digital Strategy;

·  would, to aid with sales and retention of customers by maintaining membership sales growth in order to generate income and a balanced revenue budget, ensure equipment was relevant to customer demands in a competitive market, was well maintained and met all health and safety requirements, and was fit for purpose for local communities by offering a variety of machines accessible to all fitness levels and abilities;

·  set up a financial process which enabled a continued, sustainable, funded plan for ongoing kit replacement, and ensure best value through the procurement process.

Resolved to

(1)  note the addition of £1.5million to the Capital Programme 2022/23-26/27 and the use and drawdown of existing resources from the kit replacement reserve;

(2)  approve an annual transfer of up to £400,000 per annum from the Sports and Leisure revenue account into the earmarked kit replacement capital reserve, ensuring funds are available in advance of purchase;

(3)  delegate authority to the Director of Sports and Culture to procure and award contracts as required for:

(a)  supplier(s) of sport and leisure kit for a period of up to 5 years, together with an associated maintenance requirement for kit across all leisure sites, including kit replacement;

(b)  specialist/unique equipment;

(c)  minor works requirements within leisure centres;

(d)  other professional services/specialist requirements for leisure provision.

Reasons for recommendations

(i)  To enable a robust procurement & financial resourcing process to be taken over the 5-year duration of the kit replacement strategy (2022/23-26/27).

(ii)  To support required income generation to meet budget targets (Over £7 million per annum following removal of Covid related pressure funding).

(iii)  Ensure sustainability and best value of the business in a competitive market and to meet health and safety requirements.

Other options considered

(i)  Do nothing – The Service would not be able to compete effectively in a commercial environment. This would result in loss of members, reduced sales and limited offer available. This could also result in health and safety risks where no agreed maintenance plan in place and high costs for out of contract service repairs on machines.

(ii)  Maintenance contract only – There are estimated costs of £600K for just a maintenance only agreement on existing machines. Potential to lose members who are seeking more modern equipment being available. Maintaining income targets in a commercial environment would be effected where the industry norm is a 5-year replacement plan.

(iii)  Reduce the investment – This would mean an inferior offer to members either on quantity of machines available or the quality. This would impact on customer experience, customer retention and customer sales.

(iv)  Extend replacement or renewal programme – Due to COVID many sites are already past the initial 5-year industry standard replacement limit. Machines have already started to need repair more frequently with bills becoming higher now the previous maintenance contract has ended. It would be difficult to obtain maintenance agreements for longer than the standard 5 years. An extension to 6-7 years would incur higher costs within the tender to allow for the increased risk of repairs. Loss of those members seeking use of modern, high tech cardio and resistance machines during the latter stages of the replacement programme.

(v)  Leasing – Recent findings show leasing is no cheaper than buying and would lose the buy-back opportunities for sale of equipment at the end of the contract.