Purpose

n line with Section 4.1 of Lincolnshire County
Council’s Contract and Procurement Procedure Rules (CPPRs),
an exception is being sought to award a Treasury Advisory Contract
to Link Treasury Services Limited.
For contracts of this value, the CPPR’s stipulate that at
least four written quotations should be sought, with a minimum of
two quotations obtained from local suppliers.

In this instance, the required service falls within a highly
specialised market that lacks both local and national providers
specifically catering to public sector bodies. Through market
engagement, we have identified two known suppliers offering
dedicated Treasury Advisory Services to the public sector. Link
Treasury Services (LTS), our incumbent provider, holds the dominant
market share. The other provider, a smaller organisation, offers a
more bespoke service that is predominantly tailored to the needs of
smaller District Councils rather than larger County Councils

LTS has consistently delivered high-quality service to the Council.
Their 'house style' for creditworthiness assessments and investment
counterparty advice has been integrated into the Council's
financial strategies, providing a robust framework that has
effectively shielded the Council from exposure to bank
failures.

A notable example of LTS’s contribution is the
Council’s savings of £1.324 million (NPV) in interest
costs over a 42-year period. This was achieved through the
rescheduling of a £10 million RBS LOBO loan into PWLB
borrowing, resulting in annual savings of £32,500. LTS played
a critical role in facilitating this process, serving as an
intermediary between RBS and the Council and offering expert
guidance on the optimal timing for replacement borrowing.

Moreover, by utilising LTS’s creditworthiness methodology to
create an authorised lending list, the Council has implemented
strong afeguards for lending to low-risk counterparties. This
approach has greatly reduced the likelihood of significant
investment losses with high-risk counterparties.
The Council has pre-agreed terms and conditions with LTS, which
they have confirmed will remain applicable to the new contract.
Under the Commercial Team’s guidance, we intend to award a
three year initial contract, with the option to extend for 2
periods of 12 months. The total contract cost will be
£81,425, excluding VAT. This aligns with the current budget
and, when benchmarked against the limited market and factoring in
transition costs, demonstrates a strategic benefit.

Decision

Approval to award via exception the new
Treasury Advisory Contract to Link Treasury Services
Limited.

Alternative options considered

Option 1: To reprocure the contract through an
RFQ procedure was considered but ultimately rejected due to the
limited market and the specialised nature of the services. Market
engagement identified two suppliers, though one primarily caters to
smaller district councils. Supporting data shows that, of 83
authorities surveyed, 46% have contracts with Link Treasury
Services. When focusing specifically on County authorities, the
data indicates that 100% have contracts with Link Treasury Services
providing additional reassurance that LTS are the most suited
supplier.

Option 2: Discontinuing the advisory services was considered but
ultimately deemed unsuitable. Given the critical need for such
services and the inherent risks within the financial sector,
maintaining this support provides essential safeguards.
Additionally, it aligns with the Council's constitution and
statutory requirements.