Agenda item

Report of Corporate Director for Growth and City Development

James Howe, Public Transport Operations Team Leader, presented the report and stated the following:

a)  the Council currently has a 25-year contract, let in 1999, for the supply and maintenance of street furniture with and without advertising, which is due to expire on 31 December 2024;

b)  street furniture in the terms of this contract is specifically bus shelters and Council information panels (CIPs), otherwise termed as Free-Standing Units (FSUs);

c)  the Council’s street furniture estate comprises of 213 advertising bus shelters, 619 non-advertising bus shelters and 27 free standing units, which are located in the city centre;

d)  the incumbent is contracted to supply and maintain the full estate and manage the analogue (paper) advertising aspect. The Council is not involved in the commercial aspect of selling advertising space on these advertising panels;

e)  as per the existing contract, the Council receives an advertising fee. This is off set against the cost to the Council of the on-going supply and maintenance of the bus shelters, resulting in the existing contract being cost neutral overall;

f)  Nottingham has a comprehensive, high quality public transport network that is supported by high quality infrastructure, including excellent passenger waiting facilities, such as bus shelters. These waiting facilities help citizens to complete their public transport journey in a safer and more comfortable manner, and consultation has identified this is important to them;

g)  none of the current advertising panels used within the estate are digital. The use of digital advertising panels has become more prevalent across the Out of Home Media industry in recent years, with technology advancing and becoming less costly;

h)  digitising an estate provides more opportunity for income generation as other local authorities have found in recent years when re-tendering for similar contracts. It provides for a more flexible and dynamic approach for advertisers and removes the laborious nature of physically posting new adverts and the associated costs that come with that (such as printing costs);

i)  a procurement process is necessary to tender for a new contract for the supply and maintenance of bus shelters and FSUs with and without an advertising concession;

j)  a new advertising concession will allow for the provision of digital advertising panels where appropriate, which will make this a more attractive opportunity for potential providers. This, in turn, should provide more income generation for the Council and thereby help alleviate budget pressures.

Resolved to

(1)  approve commencement of a tender process for a 15-year contract for the supply and maintenance of bus shelters with and without an advertising concession throughout Nottingham and of free-standing council information units with advertising panels within the city centre;

(2)  delegate authority to the Corporate Director for Growth and City Development, in consultation with the Corporate Director for Finance and Resources, of the preferred procurement strategy, financial performance model and finalised tender documents, and to sign and award a contract to the preferred supplier.

Reasons for recommendations

a)  The decision was made not to extend the contract with the incumbent as this would not be commercially beneficial to the Council and would not allow for the existing street furniture to be upgraded to provide digital advertising panels. The tender for the street furniture and the advertising concession will allow for an improved financial outcome for the Council in addition to providing an opportunity to upgrade passenger waiting facilities and have more aesthetically pleasing sleek and slimmer advertising assets in the city centre.

b)  The procurement approach and financial performance model which will feed into the tender specification are being developed. Delegating final project approval for the tender and the appointment of the supplier/s to the Corporate Director for Growth and City Development, in consultation with the Corporate Director for Finance and Resources, will ensure there is suitable project assurance in place and timely approvals to keep the project on track and to programme while maintaining governance. A timely appointment of the supplier/s well ahead of the contract with the incumbent expiring is important as it will allow for any exit agreement to be commenced and managed with the incumbent, if required.

c)  The table below identifies the key project timelines and approvals will be factored into each stage.

Other options considered

a)  Option 1 - to extend the existing JCDecaux contract was rejected as the tender exercise allows for bus shelters to be upgraded and replaced as required and it provides an opportunity to upgrade the contract to provide an increased income stream to the Council through new investment in digital advertising panels on both CIPs and bus shelters were appropriate.

b)  Option 2 - to complete a joint procurement exercise and have a joint contract with Nottinghamshire County Council for the provision of bus shelters and CIPs was rejected. Discussions took place with Nottinghamshire County Council colleagues to try and establish whether there would be an overall net benefit to undertaking a joint procurement exercise.

The County Council have a contract, with a different supplier to the City Council, for the supply of advertising and non-advertising bus shelters that is due to expire on 31 May 2025, which is 5 months after the City Council’s contract expires. The County Council contract does not include free-standing advertising units and they have no such contract for that kind of asset with any other supplier.

The initial benefit of a joint procurement would be to achieve a uniform look for the Robin Hood Network branded Greater Nottingham Bus Partnership area and maintain consistent high-quality standards across this key public transport network area. Resources could have been pooled to deliver the procurement more efficiently and to potentially increase the financial outcome for both Councils. However, upon further investigation and discussion amongst Council officers, suppliers and impartial advice from an advertising consultant, this option was rejected for the following key reasons:

·  having Robin Hood Network branding and a consistent high-quality standard of waiting facilities is still perfectly achievable should either Council procure independently;

·  there would be a guaranteed change of supplier as each Council has a different incumbent supplier, which would result in a definite demobilisation process and the added upheaval that this would bring, which would include constant disruption to different areas of the respective Council areas over a potential period of three years;

·  the existing contracts end five months apart, which adds a further complication in terms how that could be dealt with in a mutually acceptable fashion;

·  the City Council possesses the potentially more attractive advertising bus shelter sites and has the free-standing units. This could potentially mean the City Council not maximising its own opportunities from a financial viewpoint;

·  there would be an increasing number of stakeholders to engage with and it could be difficult politically to procure jointly. Officer views may also vary by authority and could lead unresolvable disagreements over how the tender process is undertaken;

·  the County Council may choose to consider extending their existing contract arrangements.

c)  Option 3 - to have separate contracts for the supply of shelters and maintenance from the advertising element was rejected as this option would involve buying, rather than leasing bus shelters and CIPs. Some local authorities purchase and own their own non-advertising shelters, but this requires much capital investment upfront. Advertising shelters are usually leased via an advertising concession contract, with the media owner managing the advertising on them;

Separating the supply of non-advertising shelters and advertising shelters would mean certain upheaval and added risk to the Council as there would be a definite need for a new supplier as our incumbent supplier only bids for contracts that include advertising. It would also require significant upfront capital expenditure and additional contracts to manage, in addition to potentially having to deal with a third supplier if the incumbent did also not win the bus shelter with advertising tender. The Council does not possess the necessary internal resources to maintain the non-advertising or advertising shelters. The advertising concessionaires have years of experience, expertise and a high number of regular advertising clients that highly trust and value their services. A local authority would not have the resources, experience or reputation to match their performance and there would be much less potential reward for a very high-risk strategy;

another consideration was whether existing shelters could be purchased. However, the incumbent has stated that their policy is that they can only provide the shelters if they hold the advertising concession contract and can maintain the shelters themselves. As a general stance, they do not permit other contractors or in-house Council teams to maintain their branded shelters to ensure they have sole responsibility for their own reputation.

d)  Option 4 – ‘do nothing’ was rejected as there is a requirement for shelters and CIPs once the current contract expires. Additionally, doing nothing would mean missing out on an opportunity to generate greater income for the Council.