Procurement notes for councils (Scotland)

Procurement notes for councils (Scotland) Reasons for establishing a car club in your area There are two main reasons for local authorities looking to establish a car club: 1. Community benefits of increasing the transport options available locally and supporting people looking to use more sustainable transport 2. Cost/administrative savings of a car club for business travel compared to using grey fleet (in some circumstances to complement or replace a pool fleet) Car club models There are a variety of possible models that are available to a local authority wanting a car club in its area. These include (requiring increasing degrees of commitment): A. Actively encouraging a car club operator to move into their area, e.g. by making it easy to secure on-street parking spaces, helping with promotion, but not signing up as a corporate member of the car club B. Becoming a corporate member of the car club and transferring some or all of the council s grey fleet use to a commercial car club operator by block-booking vehicles as required, or making ad-hoc bookings C. Outsourcing the council s pool fleet management to a commercial car club operator, in addition to ensuring that some vehicles are available for public use 24/7. (If no vehicles are available for public use, this is sometimes described as a closed car club.) D. The council running a car club scheme itself using a fleet of council-owned vehicles (e.g. the council enabling its existing pool cars to be used as car club vehicles using in-car telemetry and booking software, and administering the scheme itself) All councils in Scotland that currently procure car club services have outsourced this to a commercial operator. Several are looking at contracting out their pool fleet management to a car club operator and making some of the vehicles available on-street to the public (i.e. option C). Both these options transfer all the responsibility of running the scheme (booking, billing, insurance, maintenance, etc.) to the car club operator, therefore reducing the burden of administration and related costs for the local authority. Option D is the most complicated, and carries the most risk, and councils choosing to follow this route may encounter a variety of barriers e.g. in relation to insurance, if the vehicles are to be made available for use by members of the public but it does also have potential to generate additional revenue for the council. In order to fully realise the benefits of a car club, it is important when using this model that some of the vehicles are made available to the public 24/7 (not just outside working hours). 1

Level of council involvement required Historically, it has generally only been viable for commercial operators to launch in new areas with financial support from the local authority. This usually takes the form of: - The council providing and funding the required Traffic Regulation Orders (TROs) and the lining and signing of on-street parking bays for use by car club vehicles. - The council becoming a core user of the car club by block-booking some of the vehicles during office hours. However, the situation changes with developments in the market. It is recommended to enter into discussions with operators prior to going out to tender, to establish what level of council support would be required to attract an operator to your area. Procurement options for councils This is our understanding of current procurement options available. However, we recommend speaking to an expert in the area if further clarification is needed. If there is no money changing hands and the council is simply providing parking bays (and securing TROs/TMOs and lining and signing), there may be no need to go through a formal tender process. However, the council may choose to do so, in order to ensure they get the most suitable service for their area. There are a number of ways a council can procure a car club operator for their local area. Using an existing framework There are a number of organisations such as Scotland Excel and Crown Commercial Services who develop frameworks for products and services which councils can choose to sign up to e.g. Crown Commercial Services (Lot 5, Travel and Vehicle Hire) provides a template agreement for car club services. If this meets all the requirements then an operator s services can be procured without having to go to tender E-car, Enterprise Car Club, Zipcar and Co-wheels are all on the framework. Competitive Tender If the council does not wish to use the existing frameworks (as they may want to include certain specifications) they can go out to tender. Normally a council will put the tender on the Public Contracts Scotland portal which will then be flagged to anyone who has indicated they work within that sector. CoMoUK can help advertise tender opportunities on our website and also by emailing details to accredited operators. Contact info@como.org.uk for further details. If only one car club operator tenders, the Council can accept or reject that proposal. Quick Quote If there is no / low cost to the council, they may be able to do a quick quote, which is less detailed than a full tender and can be emailed to specific operators. Again, this is put on the Public Contract Scotland portal, but only chosen suppliers can see it. It only has to be available for a minimum of two weeks, which is shorter than normal tenders. 2

Being an authorised user Another company (or council) can include authorised users in their contract with a car club operator, which gives the council the right to work as part of the same contract without having to tender for their own operator. What to include in a tender document It is worth considering the inclusion of the following specifics in a tender document: The length of the contract (this varies, but three year contracts with the possibility to extend it for a further year and then another year are common) How many on-street bays the council will provide If there will be any charge for the use of these bays (bearing in mind that any charge may put off operators) Who will pay for the TROs/TMOs and lining and signing of the bays both initially and if the scheme later expands How future bays will be allocated (particularly important in a multi-operator situation) Reporting requirements Procedures for withdrawal of services (either from one bay or from an area entirely) Maintenance requirements and responsibilities Councils may also choose to specify additional requirements, such as the need to provide low emission or electric vehicles. If council staff or local residents frequently travel to other towns or cities in the area, you may want to consider which car club operators run schemes there as this will give members access to other vehicles locally. Whilst traditional car clubs require users to return their vehicle to the same bay at the end of their booking, using an operator who already has vehicles in the area may enable members to travel to neighbouring towns by public transport, accessing car club vehicles there for the final stage of their journey. If different operators run schemes in neighbouring towns, members will be required to register with multiple operators (and pay multiple membership fees) in order to access vehicles in these different locations. Car club members are typically owned by the operator, meaning that the operator controls their details, and has no obligation to share them with anyone else should the car club leave the area for any reason. Specifying that the council owns the members or that the operator must be willing to hand over the members at the end of the contract may put operators off tendering. However, it is worth being aware of this as a consideration. Single operator agreement The council can agree to only provide on-street parking for one operator. In small locations, it is unlikely that this would cause any problems. However, there may be circumstances whereby the council chooses not to restrict themselves and to instead allow two or more operators to provide services in the same area. The advantages and disadvantages of a tendered single-operator approach are examined below. 3

Advantages of a single-operator agreement In less attractive locations (e.g. smaller towns and rural areas), commercial operators are more likely to be attracted to launch if they are reassured that they will have exclusive rights to on-street parking bays (which means they are less likely to face competition from other operators). This is the simplest option for the council to administer. This is the most straight-forward option for the members, as they don t have to choose which car club to join, and will have access to all vehicles in the immediate area. Disadvantages of a single operator agreement This may limit development in other regions covered by the council. For example, operators (commercial or led by community groups) may be interested in different locations particularly if the council area covers several settlements. If a single operator agreement is reached with one operator, who only covers a limited area, this may prevent other car clubs from establishing in other areas or make it harder for these to thrive. This may prevent competition within the market (although competition for the market through tendering, should ensure the best possible service for members). 1 What will the cost be to the council? The sector is rapidly expanding, and different cost models are emerging. The extent to which councils will be required to contribute financially in order to attract an operator to their area will depend on how the sector is developing, as well as the location in question operators are likely to require less council support if the location is attractive (e.g. a large urban area with high-density housing and a distinct centre) and in the vicinity of other locations where they currently run car clubs. If the council wishes the car club operator to provide services in areas of the town/city that it currently considers less commercially viable, some financial support may be required. For traditional back-to-base models, the council typically pays for the TROs and the lining and signing of the bays. There will also be the associated staff cost of processing these, which should be taken into account. These costs will be incurred at the start of the process, and again when the scheme expands (although the contract may state that the operator needs to cover these costs during periods of expansion). However, these are not on-going costs. If these are the only costs to the council, it is possible that the council would not need to tender for a car club operator, but could award the spaces directly to the preferred operator. If the council chooses to block-book vehicles, there will be a cost for this (although this can usually be offset by the reduction in grey fleet costs and the associated administration). It may also be possible to negotiate a revenue-share scheme, whereby any profit made by the operator is shared with the council, although this model has not been fully tested yet. In theory, this 1 In areas attractive to operators, there may be sufficient demand to allow competing operators to exist. In this case, the council may prefer to share the bays between them. This initially happened in Inverness. Alternatively, other operators may choose to use other parking models e.g. in Glasgow, although Co-wheels has the council contract, Enterprise Car Club operates in direct competition using off-street bays. In London, flexible one-way car club schemes mean that vehicles can be left in any legal parking space within a set area so dedicated bays are not required. 4

would provide the council with an added incentive to support and promote the scheme, to the benefit of the operator. However, it is unlikely that a new car club will generate a profit until it has been running for a few years. Tendering v. awarding bays directly to an operator Depending upon the procurement rules of the individual council, there may be certain circumstances when the local authority is not required to tender for a car club operator (e.g. if there is no on-going cost to the council, or if it is not planning on using the car club vehicles itself). The main advantages and disadvantages of tendering are detailed below. Advantages of tendering for a car club operator Tendering provides the opportunity to fully compare the different options and assess the best fit for local circumstances. It creates a more formalised relationship between the council and the operator(s). If the tender is open to all operators, any supportive funding given to the successful bidder will not be classed as De Minimis State Aid (which could enable the operator to access more funding). It can provide the operator and the council with the security of a long-term agreement that allows both to invest more fully in the scheme and increases its chance of success. It provides certainty over the cost of using the car club vehicles and competition for the market may bring down prices. It makes it more difficult for a competing car club to get established in the area which can be an advantage as a plurality of services may confuse members who are just getting to grips with the car club concept. Disadvantages of tendering for a car club operator Tendering can increase the timescale needed to get a scheme launched. It increases the administrative burden to the council when setting up a scheme. It may commit the council to using a single operator for a fixed period of time. Depending upon the criteria used, a tender may reduce the council s ability to support an existing car club in the area. It makes it more difficult for a competing car club to get established in the area, and competition within the market may bring down prices. Retendering Retendering for an operator allows a council the opportunity to review the terms of their agreement, and to make sure that both they and the members get best value for money. A key consideration when re-tendering should be who owns the current car club members, and it is important for the council to be clear on the situation before going out to tender: If the council owns the members, this means that should the council choose to award the contract to a different operator when they re-tender, that the members can be transferred at the same time. 5

If the operator owns the members, this may cause difficulties if the contract is awarded to someone else at the re-tendering stage. If the incumbent operator chooses to leave, they may be willing to hand over their members. However, they may stay, in which case there may be disruption to the service as the current scheme will have to relocate all its vehicles to off-street bays, and the new scheme will have to recruit members from scratch. In this case, it is recommended that a long lead-in period is allowed for the transition, to minimise the disruption caused to members. Contact details For more information and tailored advice on setting up a car club in your area in Scotland, please contact: Susan Jeynes, CoMobility Specialist 0131 243 2792, scotland@como.org.uk 6