Councillor Paul Osborn, Leader of the Council, made the urgent decision to abandon the procurement process for the Highways, Street Lighting and Associated Infrastructure Works Contract, and to extend the existing contract with JB Riney for 18 months, with the option to extend for a further two years in one-year increments, subject to cabinet approval. This decision was made because awarding a contract following the competitive process did not represent value for money at this time. The Leader also agreed that a report will be submitted to the cabinet for approval of a future procurement strategy for securing the longer-term commissioning of highway street lighting and associated infrastructure works.

Highways, Street Lighting and Associated Works Contract

Councillor Paul Osborn approved the abandonment of the current procurement process for the Highways, Street Lighting, and Associated Infrastructure Works Contract, and approved the extension of the current Highways Works Contract to commence on 1 October 2025 for a period of 18 months, with the option to extend by a further two years in one-year increments based on existing terms and conditions, as required, subject to cabinet approval. The Strategic Director of Culture, Environment and Economy was authorised, following consultation with the Portfolio Holder for Finance and Highways, to agree the final terms of the extension and enter into the contract. A report will be submitted to cabinet for approval of a future procurement strategy for securing the longer-term commissioning of highway street lighting and associated infrastructure works.

The council is required to maintain its highways and related assets to ensure safe passage for highway users under the Highways Act 1980¹. The Local Government Act 1999² requires the council to make arrangements to achieve best value in the exercise of its functions when considering a service provision.

The council had commenced a competitive procurement process following authority from cabinet in 2024. During the evaluation, officers were concerned that bidders had adopted differing approaches to the tender, including in relation to interpretation of terms which were not explicitly defined. Officers also noted that the weighting in the pricing schedule was leading to unintended consequences, in that the lower weighted non-core elements were coming out much higher than under the current contract.

Officers completed a financial evaluation of the highest bidder against the current contract and determined that based on planned work for the next few years, it would be significantly more expensive and would not deliver value for money. The council had the lawful option to extend the current contract and officers are of the view that this is appropriate to demonstrate compliance with the council's best value duty.

Abandonment of a competitive procurement process is not a decision which should be taken lightly. As a contracting authority, the council is required to act in a lawful and fair manner, act transparently and treat bidders equally and without discrimination. This requires the council to take a properly informed and reasoned decision following the correct governance route and for this decision to be transparently communicated to all bidders.

The cost of running the procurement process to date has been around £130,000, mainly spent on consultancy fees. The appointment of consultants to help develop a specification and evaluate tenders for a contract of this level of importance, size and value is normal and the council will need to do the same for a future exercise at a later date.

Typically, highways works term service contracts are an agreement between a highways works contractor and the council for the provision of highways works and services, that do not guarantee that any works, or services will be commissioned by the council, who will commission on a call-off basis³. Typically, based on the last three financial years figures, the value of works commissioned via the current highways works contract is approximately £16m per annum.

The funding sources for these maintenance and improvement activities is from both revenue and capital budgets, including internal sources and external sources, such as Department of Transport (DfT), Transport for London (TfL), section 106 contributions⁴ and Community Infrastructure Levy (CIL)⁵ from developers in relation to planning permissions for developments, as well as funding from successful bids to various government departments and other external bodies, etc.

The report stated that the proposals do not adversely impact upon anyone with protected characteristics as defined by the Equalities Act 2010⁶.

The reasons for the recommendations were outlined in the report:

The recommendation to abandon the procurement is based on a financial evaluation of the cost of the new contract compared with extension of the existing arrangement which demonstrates that awarding a contract following the competitive process does not represent value for money at this time. In addition abandonment provides an opportunity for the Council to review its requirement for highways, street lighting and associated infrastructure works across all Council services to ensure these align with its strategic outcomes. A refreshed procurement strategy for procurement will be presented to Cabinet for approval. In the interim the Council can extend the existing contract and is satisfied that this represents value for money.

The alternative option of awarding the contract to the highest-ranking bidder was considered but deemed not to deliver value for money.