Contracting services - New ways to work

Government spending cuts have forced both public and private groups to exploit new ways of contracting, says Jez Abbott.

ISS manages Home Park as part of a contract with Royal Borough of Windsor & Maidenhead - image: ISS
ISS manages Home Park as part of a contract with Royal Borough of Windsor & Maidenhead - image: ISS

Last October, when the Government revealed details of its comprehensive spending review, there was little doubt among industry commentators that the huge financial pressures on local authorities to come would drive growth in the markets for outsourcing grounds care and other green services.

It was also, many in the business predicted, an opportunity to push new thinking. Tony Hewitt, executive chairman of Glendale owner Parkwood Holdings, told HW at the time: "This is not a short-term measure. We will need a strategic review of all departments. We will have to work hand in hand with public bodies."

He envisaged new methods of procurement - and possibly transfer of assets. In future, companies might take over parks, finding uses for under-utilised buildings such as changing rooms or old sheds or creating new revenue streams by exploiting public golf courses or renting out parks to circuses and funfairs. He explained: "We have access to funds from the financial markets. We need imagination and good marketing, but we can achieve great things."

There are also potential risks, commentators warn, if authorities' stock response to huge financial pressures is to bundle park upkeep with street cleaning and other general services. Ground Control head of contracts Neil Huck is one who believes these will become the norm.

There are other worries too - for instance, about what exactly is expected of managers in the "Big Society" era where an authority wants to tap into the volunteer army the Cameron coalition hopes to muster.

Huck points out: "You will have to train them, which could make volunteers uneconomic". He adds: "My experience is people will not volunteer or will do so for a short period, and how do you deal with someone doing a skilled job on sophisticated equipment?"

One way of softening the blow of grounds care costs, immune to the gravitational pull of recessional retail price cutting, is long-term contracts of up to 10 years.

"This is becoming common in the South East but will spread. If you have a restricted budget it makes more sense to have longer-term contracts because short-term contracts are hard to budget for machinery. Some items cost up to £50,000 and you need a reasonable payback," says Huck.

Another issue, as big as volunteering, is pensions. Final salary schemes are a "huge burden in contracting" and likely to test the negotiating mettle of groups such as BALI and unions as council employees transfer to the contractor payroll, Huck predicts. "Big Society" and its signature spending cuts could stir up disputes as councils and companies grapple with new ways of contracting.

But while budget squeezes are likely to result in fewer trims of grass and smaller teams, contractors can still thrive, says Huck, citing the A11 in East Anglia, a 10-mile road in an environmentally sensitive area given the Government go-ahead recently. This contract, like others, could be self-monitoring, where contractors audit their own work on behalf of their clients.

This could help local authorities to trim costs, he suggests, but it could also prove a minefield because budget cuts will almost inevitably lead to lower standards in some cases. ISS managing director Phil Jones says monitoring and managing services in-house is an area that councils have been reluctant to tread. Some will almost certainly have to do so now.

"Compulsory competitive tendering brought in the downward spiral of costs, standards and skills but it didn't bring a review of the cost of managing in-house," he says. "One area where local authorities have been loath to look at is those costs of managing parks and gardens services." And the few that have dared to try have often found the cultural shift too mind stretching, he adds.

"Two local authorities recently came together to offer a contract jointly but reserved the right to evaluate the service separately and make their own decisions - in effect going back to how they worked before. Local authority has neither evolved enough nor is it at a stage in its culture for working that closely together. 'Big Society' suggests there's a mood to go this way.

"But there is a lack of expertise to effect the change. Perhaps we are not yet mature enough as an industry. It's easy to say councils have had this coming, but I feel sympathy. For years they have had to work in a certain way and now we all have to react to new circumstances and a new culture that pull in an entirely new direction."

Jones says green service providers (he hates the job-and-finish drabness of the term "contractor") and talks of "collaboration" and service-delivery "partnerships" with clients. The need to find savings, was not born with "Big Society", and Jones reckons "99 times out of 100 we will be able to find collaborative ways of achieving savings".

New cultural territory

But he fears this new cultural territory could lead to a bureaucratic array of "arms-length organisations" and "special-purpose vehicles" to keep on top of green service provision the "Big Society" way. This is especially the case with transfer of assets such as parks, which might wash with Joe Public.

"Is transferring ownership such a big step from concessions in a park or from privatised schools? I don't think so. This is about consultation with users and not just working with the authority. I can't see councils selling off parks but they may lease them to be run as business concerns with very tight constraints on what's delivered and to whom."

But over-zealous asset transfers could backfire, says Glendale's Hewitt. "Assets always have liabilities and those liabilities are generally related the long-term preservation or maintenance, requiring money."

The scope for expansion is strong despite council cutbacks: "More than three-fifths of services in the north of England are done in-house. It's quite likely that as local authorities look to make savings they may turn to the private sector for partnership-type arrangements to preserve services at a lower cost."

The principle seems to work. Outsourcing accounts for 15 per cent of all public expenditure and has grown by 22 per cent over six years. The trend is expected to grow, with contracts becoming larger, more flexible, longer-term and more performance based, says Hewitt. Some analysts, he adds, forecast "a new golden age of outsourcing".

But this can only be achieved with transparent business relationships, says Mike Hallas, development director at Sodexo Land Technology, which recently won a grounds upkeep contract for Gosport Borough Council on top of housing association and Ministry of Defence work. Emphasis must lie in "partnerships" and "shared pain".

English Landscapes says it will achieve this kind of partnership bonding in a new five-year contract that it has just won with Basildon District Council. Around 30 staff will transfer. English Landscapes battled for the contract against the council's in-house team, and is expected to save the authority around £300,000 a year.

Chief executive Nick Temple-Heald says trust and partnership will be fostered by investment in training, apprenticeships and green recycling initiatives in a deal that captures to a tee the essence and ethos of the "Big Society". "We will save money while at the same time improve the quality of services through this new contract," he insists.

IN-HOUSE PRACTICAL SKILLS TRAINING

Last month one the UK's biggest grounds upkeep companies launched in-house practical skills approved by land-based skills council Lantra. Then came the deluge - around 200 staff at ISS signed up to skill up.

Managing director Phil Jones says such hands-on training will be crucial to the success, and maybe the survival, of parks services after the Government's public-sector spending cuts. ISS, he insists, "stands alone" in being the first company to deliver this type of training in-house.

"A natural assumption with the comprehensive spending review is that if parks services shrink so will skill levels because training will be cut," he says. "One way of delivering as good, if not better, service for less money is to have more efficient, properly skilled staff."

Courses, starting in April, are for new starters and existing staff keen to improve skills. A six-unit module covers basic health and safety, border maintenance, turf upkeep and hard-surface maintenance. Staff learn about handheld machinery, planting and after care tasks.

This initial course will be followed by higher-level training for experienced operators, supervisors and managers. Staff are grilled not only by the company's technical trainers - ISS employs two Lantra-registered instructors plus a trained internal verifier.

Lantra industry partnership manager David Winn hails this as "a proactive training policy", while Robin Jackson, ISS landscaping compliance manager, says Lantra accreditation offers a "genuine externally assured award" for staff across the ISS empire.

ISS is one of the largest suppliers of grounds maintenance services in the UK, employing more than 1,600 core and seasonal staff in 40 depots. Course uptake for the lucky 200 will cover five ISS regions, but cost benefit is a grey area.

Addressing a recent green skills seminar, Jones was put on the spot when delegates asked how the finances of increased training stacked up. "I felt embarrassed because we don't have any cost-benefit figures," he recalls. "It's because we want it to happen - this has nothing to do with data."

He continues: "I firmly believe training is what we should be offering. Setting standards will help not only our company but the grounds maintenance industry by producing good practical results, encouraging the retention of staff and giving our employees real transferable skills."


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