Agenda item

Report of Senior Head of Community.  Cabinet lead member: Councillor Steve Wallis.

(1) Start of a public procurement process advertised in OJEU for a joint venture with a private sector partner approved.

(2) Senior head granted delegated authority to take all decisions during the joint venture procurement process, up to and including the selection and appointment of the private sector partner [where appropriate in consultation with the chief finance officer and lawyer to the council].  Delegation to include the detailed development, management and approval of the public procurement process to be followed and of all the procurement documentation required to deliver the project and the development and approval of all the contractual documentation to appoint the private sector partner.

(3) Senior head granted delegated authority to agree the inclusion in the joint venture structure of other local authority and public body partners within Kent, Surrey and Sussex.

10.1 Cabinet considered the report of the senior head of community and Eastbourne Homes Limited managing director looking to see how the council could take a leading local role in addressing energy and sustainability issues and provide income to the council.  Appendix 1 to the report listed the types of projects that could be considered, e.g. a public sector backed energy supply company, energy generation such as solar or CHP (combined heat and power) and commercial greenhouses.  Lewes District Council’s cabinet  was due to consider a similar report at their meeting on 4 July 2016.

10.2 Following a market engagement exercise carried out via a Europe-wide advertisement, interviews were held with 3 major companies which confirmed:-

• A desire to work jointly with EBC to deliver the long term sustainability aims, including energy and food.
• That the costs of development, investment, risk and returns could be shared.
• That heat networks, energy generation plant, demand management to balance the national grid, and commercial greenhouses were financially viable and could provide an income to the council.
• The anticipated internal rate of return/return on investment (IRR/ROI) threshold ranged between 6-15%.
• There is no need for an expensive upfront masterplan - sites and business plans could be developed jointly as and when required;
• The council’s long term thinking was in line with the need to tackle energy and food supply, waste and sustainability.
• Flexibility in approach to structuring the arrangements.
• That the approach should be phased – starting with key projects first and building up capacity and market value over time.

10.3 Officers from the Department of Energy and Climate Change had observed the market engagement exercise and were positive about the council’s approach and long-term thinking.

10.4 It was proposed that the council set up a joint venture which at its top level was through a ‘strategic partnership agreement’ (SPA) as this gave  the greatest flexibility for the long term aims. The SPA would act as an enabling body for the individual projects that would sit beneath it.  The SPA would be procured through a competitive procedure with negotiation and in place by June 2017.  It was anticipated that the commercial partner would need to be a significant market player and have a turnover of at least £50 million.  Each individual project that sat within the SPA would be reported to cabinet to enable approval of a business plan, and the necessary capital allocation.

10.5 The key elements of the SPA that the council would be looking to secure were set out in the report and included 50:50 public:private split where appropriate and the opportunity to build in potential for other councils or public bodies to be able to participate and use the business planning process.  It is suggested that this be limited to within Sussex, Surrey and Kent.

10.6 A detailed legal analysis was given in the report covering procurement and the council’s powers to undertake the proposed activities.  External advice might be required for assessing some technical elements of the procurement process at an estimated cost of no more than £10,000.  Once the joint venture had been set up, external legal advice might be required to verify bespoke contracts.  The council had set aside a budget of up to £50,000 each year for the next three financial years to assist with these external costs.  It was anticipated that any expenditure would be shared equally between the council and any other public sector partner/s in the joint venture.

10.7 Resolved (key decision): (1) That the start of a public procurement process advertised in OJEU for a joint venture with a private sector partner be approved.

(2) That the senior head of community and Eastbourne Homes Limited managing director be granted delegated authority to take all decisions during the joint venture procurement process, up to and including the selection and appointment of the private sector partner [where appropriate in consultation with the chief finance officer and lawyer to the council].  The delegation to include the detailed development, management and approval of the public procurement process to be followed and of all the procurement documentation required to deliver the project and the development and approval of all the contractual documentation to appoint the private sector partner.

(3) That the senior head of community and Eastbourne Homes Limited managing director be granted delegated authority to agree the inclusion in the joint venture structure of other local authority and public body partners within Kent, Surrey and Sussex.