Content

Salford City Council – Record of
Decision
 
I Paul Dennett, City
Mayor, in exercise of the powers
contained within the Council Constitution, do hereby approve:
 
·     
the award of the contract to
extend the current LTA by the +2 option for the insurance programme
in respect of the City Council’s Liability, Property and
Motor fleet insurance arrangements, as
outlined in the table below:
 

Detail required

Answers

Title/Description of Contracted
Service/Supply/Project

Approval to extend the current LTA by the +2 option
for the insurance programme in respect of the City Council’s
Liability, Property & Motor fleet insurance
arrangements.

Name of Successful
Contractor

AIG Europe, AXA, HSB, QBE, Aon Protect,
Convex

Supplier Registration Number

(to be supplied by Corporate
Procurement)

Type of organisation

(to be supplied by Corporate
Procurement)

Private Limited Company

Status of Organisation

(to be supplied by Corporate
Procurement)

Non-SME

Contract Value (£)

£1,650,000 Estimated + 12% IPT
(insurance premium tax) per annum

Contract Duration

36 months

Contract Start Date

01/02/2022

Contract End Date

31/01/2027

Optional Extension Period 1

 24
months

Optional Extension Period 2

Who will approve each Extension
Period?

Procurement Board (extension >
£150k)

Contact Officer (Name &
number)

Cheryl
Dale

Lead Service Group

Service Reform &
Development

How the contract was procured?

(to be supplied by
procurement)

Mini competition

Framework Details (where
applicable)

(procurement body, framework reference
& title, start/ end date

YPO Insurance Framework 978 30 July 2019
- 29 July 2024 OJEU Ref 2019/S 106-259145

Funding Source

Revenue Budget

Ethical Contractor (EC): Mayor’s
Employment Charter

 

EC: Committed to sign Charter

details of joint Charter for GM and
Salford Employer Charter sent to suppliers

EC: Accredited Living Wage
Employer

yes, for all bidders

 
The
Reason is implementing
the +2 year contract extension option provides the Council with
robust insurance arrangements prior to re-tendering of the contract
in future years.  Currently, there are a number of factors
influencing the insurance market, including high inflation/interest
rates which, if the council were to re-tender prior to the expiry
of the current 3 year term, may be financially
disadvantageous.
 
Options considered and rejected
were:
1. Do nothing. This is not
an option as the Council is required to have sufficient insurance
and risk mitigation arrangements in place.
2. Re-tender for insurance
arrangement prior to the end of the 3 year term. Due to the
instability within the market currently, the Council cannot be
assured that tenders would be submitted or that any submitted would
appropriately meet the needs of the Council. Insurance tenders
are not guaranteed to make savings. There is a risk of premiums
invited at tender being higher than the incumbent’s renewal
invite. By approving the +2 year contract provisions, the Council
would allow for cost effective financial planning, supporting the
councils medium term financial strategy through effective budget
projections and management, and would confirm the Councils
insurance arrangements for the immediate future.
 
Assessment of Risk:
Insurance cover is purchased as
a risk transfer mechanism where the authority feels there is too
great a risk in funding a potential occurrence.
 
The source of funding
is: the Revenue
Budget.
 
Legal Advice obtained: Supplied by Tony
Hatton
The
current contract was awarded in 2022 for a potential 5 year period
following a procurement process in accordance with the Public
Contract Regulations 2015 and the renewals are made in accordance
with the existing arrangements. It is an established principle that
an existing public contract is capable of being extended
(or modified providing any modification does not
affect the overall nature of the contract),
and CSO’s also allow for contract extensions to be made,
where the parties agree and where the original contract makes
provision for such an extension of the original term.
 
When
the contract was originally awarded it was clear in the contract
documents that the original term would be subject to a potential
extension of two years. Accordingly any risk that the award would
be subject to realistic challenge by an aggrieved provider is
extremely low, and the option to extend within the contract is now
being properly exercised.
 
As
noted in the report, the Council proposes to renew the insurance
cover on its main classes of business as detailed in the report in
respect of its Property, Liability and Motor insurances under the
terms of these existing arrangement with the Council’s
insurance broker (and direct insurers).
 
In
accordance with the CSOs, where the value of any contract or
extension is above £1 million, then approval should be made
by City Mayor on the recommendation of the procurement
board.
 
Financial Advice
obtained: Supplied By
Leanne Wrigley 0161 793 3354  Date:
15th May 2024.
Sufficient funds have
been built into the 2024/25 revenue budget projection to cover the
increase in renewal costs as detailed in the above report.
Expenditure Code: 1581 CP.
 
Procurement Advice obtained:
Supplied by: Emma Heyes, Category Manager
The Council awarded the
Long-Term Insurance Agreement in January 2022 following a
competitive tender process via Yorkshire Purchasing
Organisation’s Insurance Placement DPS framework.
 
The contract period as
advertised in the tender documents was for an initial period of
three years with the option to extend for a further 24-month
period. The contract commenced on 1st February 2022 and
expires on 31st January 2025.  The LTA agreement covers all classes of insurance
and renewals during the contract period.
 
This request to extend the LTA
for a period of 24 months is therefore compliant with and
permissible under the original tender award.
 
During the course of the
24-month extension period, the Council must re-tender the services
ready for a new contract to be in place for February
2027.
 
HR Advice obtained:
N/A
 
Climate Change Implications
obtained:
We currently find ourselves in
a less competitive market than previous years due environmental
factors. Climate change has resulted in the insurance market
receiving a increase of property damage claims. Dues to the
on-going war in Ukraine and conflict in the Middle East this has
resulted in huge supply chain issues increasing the cost of claims
spend.
 
The following documents have
been used to assist the decision process:
·     
Record of Decision dated 12/1/22
·     
Procurement Board Report – Insurance Tender
12/2/22
 
Contact Officer: Cheryl Dale – Insurance
Manager
Telephone number: TEL NO: 0161 607 6985
 
This matter is also subject to
consideration by the Lead Member for Finance and Support Services.
The Lead Member has been consulted and is supportive of the
proposed expenditure.
 
 

Signed: Paul Dennett          Dated: 26 June
2024
           
    City Mayor
 

FOR DEMOCRATIC SERVICES USE
ONLY
 
*          
This decision was published on 12 July 2024
*          
This decision will come in force at 4.00 p.m. on 19 July 2024 unless it is called-in in accordance
with the Decision Making Process Rules.