Agenda item

Report from the Cabinet Member for Corporate Affairs and HR attached.

The Cabinet Member for Corporate Affairs and Human Resources presented the report which sought formal approval for the purchase and supply of the Council’s corporate gas supply in an initial four-year contract for the period 1^st April 2025 to 31^st March 2029, with an option to extend another two years to March 2031 and a further two years to March 2033.

Decision:

Cabinet:

1.    Approved the use of YPO appointed framework supplier for the supply of gas through the framework duration. The estimated contract spend with Corona Energy (YPO’s Framework corporate gas supplies) is £2.35m per annum (up to £9.4m over four years); and authorised the Executive Director of Operations to award the contract and facilitate the execution, implementation and operation of the contract.

Reasons for recommendation:

The proposed arrangements ensure that the Council has a compliant Gas supply contract in place and has tested the market for best value.

·         Market Research: As part of the evaluation process, other local authorities have been contacted through the Greater Manchester Combined Authority (GMCA) Energy Managers group for their opinion of the YPO gas supply contract other authorities have expressed their intent to access the same framework supplier.

Alternative options considered and rejected:

·         Procure our own energy by direct tender.

This is possible, but would involve a standalone UK procurement compliant tender to secure contracts directly with the selected utility provider(s) (or via a broker). This approach is unlikely to produce the best results due to the relatively small scale of the portfolio compared to that of most large purchasing organisations. In contrast, a Public Sector Buying Organisation such as YPO, can obtain good wholesale prices through aggregating the demand of a large number of public sector organisations. In addition, a direct tender would require the Council to engage additional resources (skilled utility traders and additional staff for contract management) and provide greater risk of exposure to utility price fluctuations. It was therefore determined as unviable.

·         Procure through a Private Sector based provider.

The Council would be required to invite tenders for a private sector Third Party Intermediary (TPI) to procure utility supply, but it would need to be sure that it would be getting best value through a truly aggregated contract. Full price transparency of all costs, including TPI fees and any commission paid by suppliers to the TPI would be needed. By aggregating the Council’s volumes, the TPI could access the gas retail market on our behalf, but we may only receive prices based on the supplier’s view of the market. A full UK Procurement Regulations Tender process would be required to engage with such a provider with all the associated resource and time implications this would entail. TPIs may have issues regarding business continuity in the present economic climate and are unlikely to be able to aggregate the council’s volume with other customers in a UK Procurement compliant manner or offer the same additional and social value as the YPO contract. Due to this level of complexity and lack of in-house resources to deliver this, this option was dismissed.