COB-RGB        

 

 

 

 

Supplementary Item

 

 

 

26 June 2019

 

 

 

 

 


ALL INFORMATION AVAILABLE IN VARIOUS FORMATS ON REQUEST

city@busselton.wa.gov.au

 

 


CITY OF BUSSELTON

supplementary Items FOR THE Council MEETING TO BE HELD ON 26 June 2019

TABLE OF CONTENTS

 

ITEM NO.                                        SUBJECT                                                                                                                              PAGE NO.

8....... CONFIRMATION AND RECEIPT OF MINUTES. 3

Committee Meetings. 3

8.3.... Minutes of the Finance Committee meeting held 20 June 2019. 3

9....... RECEIVING OF PETITIONS, PRESENTATIONS AND DEPUTATIONS. 3

9.1.... Petitions. 3

12..... Reports of Committee. 4

12.1        Finance Committee - 20/06/2019 - FINANCIAL ACTIVITY STATEMENTS - PERIOD ENDING 31 MAY 2019. 4

12.2        Finance Committee - 20/06/2019 - BUDGET AMENDMENT REQUEST / REVIEW... 29

12.4        Finance Committee - 20/06/2019 - ACCOUNTING TREATMENT OF DEPOSITS AND BONDS. 33

14..... Engineering and Work Services Report. 38

14.1        AWARD OF TENDER RFT02-19 PROVISION OF CLEANING SERVICES TO CITY OWNED FACILITIES. 38

 


Council                                                                                      3                                                                         26 June 2019

8.               CONFIRMATION AND RECEIPT OF MINUTES

                   Committee Meetings

8.3             Minutes of the Finance Committee meeting held 20 June 2019

                   RECOMMENDATION

                   That the Minutes of the Finance Committee meeting held 20 June 2019 be noted.

 

9.               RECEIVING OF PETITIONS, PRESENTATIONS AND DEPUTATIONS

9.1             Petitions

                   A petition was received 12 June 2019, to cease the current use of Reserve 12493, Lot 4842 (Yungarra Drive, Quedjinup) and revegetate, received from Mr Colin Fredrick Bussell, as the promoter of the petition containing 67 signatures.

 

                   Copies of the Petition received has been provided to all Councillors.

 

                   RECOMMENDATION

 

                   That the Petition received 12 June 2019, to cease the current use of Reserve 12493, Lot 4842 (Yungarra Drive, Quedjinup) and revegetate, be received and referred to the CEO to prepare a report to the Council.

 


12.             Reports of Committee

12.1           Finance Committee - 20/06/2019 - FINANCIAL ACTIVITY STATEMENTS - PERIOD ENDING 31 MAY 2019

SUBJECT INDEX:

Budget Planning and Reporting

STRATEGIC OBJECTIVE:

Governance systems, process and practices are responsible, ethical and transparent.

BUSINESS UNIT:

Finance and Corporate Services

ACTIVITY UNIT:

Financial Services

REPORTING OFFICER:

Acting Manager Financial Services - Jeffrey Corker

AUTHORISING OFFICER:

Director Finance and Corporate Services  - Tony Nottle

VOTING REQUIREMENT:

Absolute Majority

ATTACHMENTS:

Attachment a   Statement of Financial Activity - Period Ended 31 May 2019

Attachment b    Investment Report for the month of May 2019  

 

This item was considered by the Finance Committee at its meeting on 20 June 2019, the recommendations from which have been included in this report. 

 

PRÉCIS

 

Pursuant to Section 6.4 of the Local Government Act (‘the Act’) and Regulation 34(4) of the Local Government (Financial Management) Regulations (‘the Regulations’), a local government is to prepare, on a monthly basis, a statement of financial activity that reports on the City’s financial performance in relation to its adopted / amended budget.

 

This report has been compiled to fulfil the statutory reporting requirements of the Act and associated Regulations, whilst also providing the Council with an overview of the City’s financial performance on a year to date basis for the period ending 31 May 2019.

 

BACKGROUND

 

The Regulations detail the form and manner in which financial activity statements are to be presented to the Council on a monthly basis; and are to include the following:

 

§   Annual budget estimates

§   Budget estimates to the end of the month in which the statement relates

§   Actual amounts of revenue and expenditure to the end of the month in which the statement relates

§   Material variances between budget estimates and actual revenue/ expenditure/ (including an explanation of any material variances)

§   The net current assets at the end of the month to which the statement relates (including an explanation of the composition of the net current position)

 

Additionally, and pursuant to Regulation 34(5) of the Regulations, a local government is required to adopt a material variance reporting threshold in each financial year. At its meeting of 25 July 2018, the Council adopted (C1807/138) the following material variance reporting threshold for the 2018/19 financial year:

 

“That pursuant to Regulation 34(5) of the Local Government (Financial Management) Regulations, the Council adopts a material variance reporting threshold with respect to financial activity statement reporting for the 2018/19 financial year as follows:

 

·    Variances equal to or greater than 10% of the year to date budget amount as detailed in the Income Statement by Nature and Type/ Statement of Financial Activity report, however variances due to timing differences and/or seasonal adjustments are to be reported on a quarterly basis; and

·    Reporting of variances only applies for amounts greater than $25,000.”

 

STATUTORY ENVIRONMENT

 

Section 6.4 of the Act and Regulation 34 of the Regulations detail the form and manner in which a local government is to prepare financial activity statements.

 

RELEVANT PLANS AND POLICIES

 

There are no plans or policies directly relevant to this matter.

 

FINANCIAL IMPLICATIONS

 

Any financial implications are detailed within the context of this report.

 

LONG-TERM FINANCIAL PLAN IMPLICATIONS

 

Any long term financial implications are detailed within the context of this report.

 

STRATEGIC COMMUNITY OBJECTIVES

 

This matter principally aligns with Key Goal Area 6 – ‘Leadership’ and more specifically Community Objective 6.1 - ‘Governance systems, process and practices are responsible, ethical and transparent’.

 

The achievement of the above is underpinned by the Council strategy to ‘ensure the long term financial sustainability of Council through effective financial management’.

 

RISK ASSESSMENT

 

Risk assessments have been previously completed in relation to a number of ‘higher level’ financial matters, including timely and accurate financial reporting to enable the Council to make fully informed financial decisions. The completion of the monthly Financial Activity Statement report is a control that assists in addressing this risk.

 

CONSULTATION

 

Consultation is not applicable in relation to this matter.

 

OFFICER COMMENT

 

In order to fulfil statutory reporting requirements, and to provide the Council with a synopsis of the City’s overall financial performance on a full year basis, the following financial reports are attached here to:

 

§   Statement of Financial Activity

This report provides details of the City’s operating revenues and expenditures on a year to date basis, by nature and type (i.e. description). The report has been further extrapolated to include details of non-cash adjustments and capital revenues and expenditures, to identify the City’s net current position; which reconciles with that reflected in the associated Net Current Position report.

 

§   Net Current Position

This report provides details of the composition of the net current asset position on a full year basis, and reconciles with the net current position as per the Statement of Financial Activity.

 

§   Capital Acquisition Report

This report provides full year budget performance (by line item) in respect of the following capital expenditure activities: 

·   Land and Buildings

·   Plant and Equipment

·   Furniture and Equipment

·   Infrastructure

 

§   Reserve Movements Report

This report provides summary details of transfers to and from reserve funds, and also associated interest earnings on reserve funds, on a full year basis.

 

Additional reports and/or charts are also provided as required to further supplement the information comprised within the statutory financial reports.

 

COMMENTS ON FINANCIAL ACTIVITY TO 31 MAY 2019

 

The Statement of Financial Activity for the period ending 31 May 2019 shows an overall Net Current Position “Surplus” of $4.1M. The following summarises the major variances in accordance with Council’s adopted material variance reporting threshold that collectively make up the above difference:

 


Description

2018/2019
Actual

2018/2019
Amended
Budget YTD

2018/2019
Amended
Budget

2018/19
YTD Bud Variance

2018/19
YTD Bud Variance

 

$

$

$

%

$

Revenue from Ordinary Activities

 

Other Revenue

1,072,055

326,826

362,981

228.02%

745,229

Profit on Asset Disposal

103,947

82,137

82,137

26.55%

21,810

 

 

 

 

 

 

Expenses from Ordinary Activities

 

 

 

 

Materials & Contracts

(14,909,912)

(18,454,420)

(20,225,500)

19.21%

3,544,508

Depreciation

(20,253,479)

(17,519,304)

(19,070,922)

-15.61%

(2,734,175)

Asset Adjustments as per Changes to Regulations (OAG)

(1,147,545)

0

0

0

(1,147,545)

Insurance Expenses

(713,980)

(591,974)

(698,808)

-20.61%

(122,006)

Other Expenditure

(2,603,180)

(4,329,729)

(4,862,439)

39.88%

1,726,549

Allocations

1,838,344

1,574,778

1,723,162

-16.74%

263,566

Loss on Asset Disposals

(46,370)

(33,134)

(34,577)

-39.95%

-13,236

 

 

 

 

 

 

Non-Operating Grants, Subsidies and Contributions

4,265,125

16,502,588

32,471,094

-74.15%

(12,237,463)

 

 

 

 

 

 

Capital Revenue & (Expenditure)

 

 

 

 

Land & Buildings

(1,093,178)

(16,626,044)

(17,986,501)

93.42%

15,532,866

Plant & Equipment

(2,735,555)

(6,462,900)

(6,900,100)

57.67%

3,727,345

Furniture & Equipment

(318,768)

(771,258)

(890,640)

58.67%

452,490

Infrastructure

(20,386,022)

(34,435,366)

(37,644,708)

40.80%

14,049,344

Proceeds from Sale of Assets

773,141

974,550

1,045,950

-20.67%

(201,409)

Proceeds from New Loans

2,730,000

3,150,000

3,150,000

-13.33%

(420,000)

Advances to Com. Groups

0

(150,000)

(150,000)

100.00%

150,000

Transfer to Restricted Assets

(1,155,151)

(505,326)

(551,000)

-128.60%

(649,825)

Transfer from Restricted Assets

8,652,354

11,663,540

14,530,252

-25.82%

(3,011,186)

Transfer from Reserves

5,400,819

12,958,790

27,075,171

-58.32%

(7,557,971)

 

Revenue from Ordinary Activities:

YTD actual income from ordinary activities is $700K more than expected when compared to YTD budget with the following items meeting the material variance reporting threshold being;

 

1.    Other Revenue is $745K better than YTD budget.  In part this variance is due to better than expected returns on the sale of scrap metal by $240k. IT lease buybacks reflect additional income of $544k which is offset by additional expenses in the IT leasing account 3381. There are many other variances however they are all below the reporting threshold.

2.    Profit on asset disposal is $22k better than YTD budget. This line item is an accounting book entry to recognise profit on asset disposal and as a consequence will not affect the City’s “cash” position.

 

Expenses from Ordinary Activities

Expenditure from ordinary activities, excluding depreciation, allocations and asset adjustments as per amended regulations (i.e. remove assets less than $5k from assets register and place in portable and attractive register), is $6.1M less than expected when compared to YTD budget with the following items meeting the material variance reporting threshold;

 

1.    Materials and Contracts:

The main items affected are listed below:

 

Cost Code

Cost Code Description / GL Activity

Variance
YTD
$

Finance and Corporate Services

 

10250

Information & Communication Technology Services

(461,279)

10300

Records

32,749

10251

Business Systems

56,645

10500

Legal and Compliance Services

79,469

 

 

 

Community and Commercial Services

 

10630

Property and Business Development

29,872

B1361

YCAB (Youth Precinct Foreshore)

35,101

11151

Airport Operations

42,760

10590

Naturaliste Community Centre

51,543

10380

Busselton Library

70,247

10600

Busselton Jetty Tourist Park

92,831

 

 

 

Planning and Development Services

 

10925

Preventative Services - CLAG

38,439

10931

Protective Burning & Firebreaks-Reserves

47,548

10820

Strategic Planning

64,608

10830

Environmental Management Administration

69,846

11170

Meelup Regional Park

108,270

 

 

 

Cost Code

Cost Code Description / GL Activity

Variance
YTD
$

Engineering and Works Services

 

M9998

Street Side Spraying Urban Areas

(39,152)

C8500

Cycle Ways Maintenance Busselton

(37,727)

G0031

Dunsborough Waste Facility

(36,895)

M0005

Ludlow-Hithergreen Road

(34,014)

G0030

Busselton Transfer Station

(33,732)

M9970

Tree Removal and Clean-up

(26,161)

11300

Sanitation Waste Services  Administration

25,371

R0750

Barnard Park Ovals

28,004

12600

Street & Drain Cleaning

28,008

10115

Major Projects Administration

29,700

R0822

Lavender Park (Provence)

30,094

R0821

Avignon Park (Provence)

30,853

11162

Busselton Jetty - Underwater Observatory

34,816

F9999

Footpaths Maintenance

36,330

G0010

Domestic Recycling Collections

36,884

G0034

External Waste Disposal

37,768

 

 

 

Engineering and Works Services

 

B1000

Administration Building- 2-16 Southern Drive

39,079

R0820

Almond Green Park (Provence)

42,715

11108

Rural Intersection (Lighting) Compliance

43,768

11106

Street Lighting Installations

49,472

R2001

Tree Planting - Urban Verges

57,270

G0033

Green Waste

58,560

A6004

Pedestrian Bridge (Port Geographe)

58,663

B1514

Asbestos Removal & Replacement

68,750

12620

Rural-Tree Pruning

75,617

R0004

Busselton Foreshore Precinct (not including Skate Park)

76,659

G0032

Rubbish Sites Development

91,663

11301

Regional Waste Management Administration

110,000

A9999

Miscellaneous Bridge Maintenance

115,676

11101

Engineering Services Administration

126,577

M9999

Road Maintenance Bal Of Budget

351,421

11160

Busselton Jetty

649,266

B1401

Old Butter Factory

801,570

 

2.    Depreciation:

There is an overall variance in depreciation of $2.7M, however it should be noted that this is a non-cash item and does not impact on the City’s surplus position.  The variance can be attributed to the final adjustments made at year end for donated assets, Airport infrastructure additions and Fair Valuation of infrastructure assets being completed post budget adoption and the increase in valuation was unable to be included in the 2018/2019 budget.


3.    Asset Adjustments as per Changes to Regulations:

Amendments to Regulation 17A will now exclude assets in a local Government annual financial report if valued under $5000. Regulation 17 (5) states “An asset is to be excluded from the assets of a local government if the fair value of the asset as at the date of acquisition by the local government is under $5 000”.

 

A full review has now been conducted and in consultation with the Office of Auditor General and the City auditors an accepted methodology has been now endorsed in order to ensure that the City’s financial reports do not contravene the requirement of the amended Regulations. It was determined that all assets equal to or below the $5k threshold will be removed from the asset register and placed in the City’s portable and attractive register in order to assist in stock takes and the security of City’s property. The exception to this, is where assets fall below the $5K threshold, but form part of “parent” asset (i.e. an asset that is made of many individual components that are all required in order to function as a unit) then these assets will remain within the asset register and be capitalised accordingly.

 

The end result of this process initiated the expensing of assets in accordance with Regulations to the amount of $1,147,545.

 

4.    Insurance:

There is a year to date variance in insurance costs of $122K. This is a timing issue only which relates to the fleet management business unit insurance budget being projected to occur in period 12 (i.e. June) whereas the actual expenditure was incurred in period 1 (i.e. July). 

 

5.    Other Expenditure:

There is an YTD variance in other costs of $1.7M less than year to date budget.   The main items affected are listed below:

 

Cost Code

Cost Code Description / GL Activity

Variance
YTD

Executive Services

 

10001

Executive Services

52,926

Finance and Corporate Services

 

10618

Winderlup Court Aged Housing

52,357

10700

Public Relations

63,188

10000

Members of Council

81,299

Community and Commercial Services

 

12631

Peel Terrace Building & Surrounds

(33,216)

10540

Recreation Administration

35,758

10548

Half Iron

42,350

10530

Community Services Administration

133,798

11156

Airport Development Operations

1,375,000

Planning and Development Services

 

10942

Bushfire Risk Management Planning - DFES

(39,283)

10805

Planning Administration

45,590

Engineering and Works Services

 

G0042

BTS External Restoration Works

(226,517)

11160

Busselton Jetty

25,000

B1223

Micro Brewery - Public Ablution

110,000

 

With regard to the $1.375M variance associated with the Airport marketing incentive, it is not anticipated that this expense will be incurred this year. However this will not constitute a saving as this cost is reserve backed, hence if expenditure is not incurred, then it follows that the transfer from reserve will also not be processed. All other items above have been classified as timing differences.

 

6.    Allocations

In addition to administration based allocations which clear each month, this category also includes plant and overhead related allocations. Due to the nature of these line items, the activity reflects as a net offset against operating expenditure, in recognition of those expenses that are of a capital nature (and need to be recognised accordingly). It should be noted that performance in the category has no direct impact on the closing position.  

 

7.    Loss on Sale of Assets

Loss on asset disposal is $13k higher than YTD budget. This line item is an accounting book entry to recognise loss on asset disposal and as a consequence will not affect the City’s “cash” position.

 

8.    Non-Operating Grants, Subsidies and Contributions:

Non-Operating Grants, Subsidies and Contributions are less than YTD budget by $12.2M with the main items impacting on the above result being the timing of the receipt of funding which is also offset with less than anticipated capital expenditure at this time;

 

Cost Code

Cost Code Description

Variance
YTD

Finance and Corporate Services

 

10239

Contributions - Public Art (Percent for Art)

(1,073,747)

10240

Contributions - Contribution to Works

(150,405)

10250

Capital Grants-Other (Federal)

140,044

Community and Commercial Services

 

C6099

Capital Grants-Other (Federal)

(8,946,609)

10900

Donated Assets

37,000

C6086

Capital Grants-Other (Federal)

675,556

Planning and Development Services

 

B9109

Hithergreen Building Renovations

(68,886)

B1013

Dunsborough Bushfire Brigade

(178,300)

B1024

Willyabrup Bushfire Brigade

(178,300)

B1015

Hithergreen District Bushfire Brigade

(465,200)

B1026

Yallingup Rural Bushfire Brigade

(597,600)

Engineering and Works Services

 

C3168

Capital Grants-Other (Federal)

(308,221)

S0051

Capital Grant-Department of Main Roads

(258,337)

S0064

Capital Grant-Department of Main Roads

(172,225)

S0035

Capital Grant-Department of Main Roads

(165,000)

C0049

Capital Grants - Other (State)

(157,443)

C2528

Capital Grants - Other (State)

(125,000)

C3112

Capital Grants - Other (State)

(100,000)

C3150

Contributions - Capital Activities

(96,715)

S0069

Capital Grant-Department of Main Roads

(86,112)

C2523

Capital Grants - Other (State)

(75,000)

C2512

Capital Grants - Other (State)

(55,000)

D0017

Capital Grant-Department of Main Roads

(46,500)

F1018

Capital Grants - Other (State)

(32,087)

S0068

Contributions - Capital Activities

74,500

W0026

Capital Grant-Department of Main Roads

120,000

 

9.    Capital Expenditure

As at 31 May 2019, there is a variance of -58% or -$33.8M in total capital expenditure with YTD actual at -$24.5M against YTD budget of -$58.3M.

 

The airport development makes up for $14.5M (main variance relates to the Airport terminal $11.8M), Busselton Tennis Club infrastructure $1.38M, Plant and Equipment $3.7M, Council roads initiative projects $0.9M, Eastern link Busselton traffic study $2.5M, Dunsborough land purchase for parking $1.3M, Main roads projects $1.4M, parks, gardens and reserves $685K, sanitation infrastructure $1.2M, beach restoration $1.1M, Busselton Senior Citizens $678K, Dunsborough cycleway CBD to Our Lady of the Cape School -$154K (i.e. over YTD budget), furniture and equipment $452K, Busselton jetty tourist park upgrade $208K, beach front infrastructure $72K,  Geographe Leisure Centre pool relining $50K, energy efficiency initiatives (various buildings) $84K, boat ramp construction $362K, major projects Lou Weston oval $625K, Busselton foreshore infrastructure $770K, Busselton foreshore buildings $219K, bridge construction $222k, and depot wash down facility upgrade $100k.

 

These items of under expenditure also assists in explaining the above current YTD shortfall in Non-Operating Grants.

 

The attachments to this report include detailed listings of the following capital expenditure (project) items, to assist in reviewing specific variances.

 

10.  Proceeds from Loans/ Advances to Community Groups

As at 31 May 2019, there is a variance of $420K which relates to the budgeted drawdown of loans that has now mainly occurred, however to a lesser extent than anticipated. The two main loans raised that varied from the budget are;

 

·    Busselton Tennis Club loan budgeted to drawdown $1.5M, however actual drawdown was $1.25M (variance $250k) ; and

·    Air Freight Hub Stage 1 loan budgeted to drawdown $1.5M, however actual draw down was $1.48M (variance $20k);

 

With regard to the self-supporting loan for community groups, it is not expected that this will occur, hence the contra entry “advances to community groups” as a consequence will also not be required. The transactions associated with self-supporting loans is ordinarily cost neutral to the City, therefore this transaction will have no effect on the City’s net current position.

 

11.  Transfer to Restricted Assets

There is a YTD variance for transfer to restricted assets of $649k more than year to date budget.   The reason for this is as follows:

·    Transfer to deposits and bonds of $1M as opposed to a budget of $0. These funds do not have a budget allocation as they are not able to be reliably measured and will be subject to a Council report in June 2019;

·    Transfer to contributions to works has fallen short of anticipated budget by -$150K,

·    Transfer to restricted grants (interest) has fallen short of budget by -$200k.

 


12.  Transfer from Restricted Assets

There is a YTD variance for transfer from restricted assets of $3M less than year to date budget.   The reason for this is as follows:

·    Transfer for Airport noise mitigation of $869k will not proceed this year and has been relisted on the 2019/20 budget;

·    Transfer for Airport marketing of $1.5M will not proceed this year and has been relisted on the 2019/20 budget;

·    Transfer for unspent loans relating to Busselton Tennis Club is under budget by $955K.

 

13.  Transfer from Reserves

There is a YTD variance for transfer from reserves of $7.5M less than year to date budget.   The reason for this is mainly due to the need to do a full analysis at the end of year in order to determine the authorised final expenditure that can be recouped in accordance with the purpose of the reserve. Traditionally the City has made any transfers possible during the year (once acquisitions/ works are completed) with the bulk of the transfers being made in June.

 

Investment Report

As at 31st May 2019 the value of the City’s invested funds totalled $71.95M, down from $73.95M as at 30th April March. The decrease is due to the withdrawal of funds from Term Deposits as required to meet expenditure.

 

During the month of April five term deposits held with four different institutions totalling $13.5M matured. Three, totalling $7.5M; were renewed for a further 110 days at 2.26% (on average). Two, totalling $6.0M; were closed to provide readily available cash for the coming months.

The balance of the 11am account (an intermediary account which offers immediate access to the funds compared to the term deposits and a higher rate of return compared to the cheque account) increased by $4.0M with funds from closed term deposits temporarily held there.

 

The balance of the Airport Development ANZ accounts remained steady.

 

The RBA left official rates on hold during May but decreased them by 0.25% in June. Term deposit renewal rates had been pricing in a drop for some weeks and returns are noticeably lower. The drop will decrease the return on cash accounts including the 11am account. Financial markets are predicting further falls. The Interest return on Council’s investments will fall accordingly.

 

Chief Executive Officer – Corporate Credit Card

Details of monthly (April to May) transactions made on the Chief Executive Officer’s corporate credit card are provided below to ensure there is appropriate oversight and awareness of credit card transactions made.

 

Date

Amount

Payee

Description

 

 

No expenses recorded during the period

 

 

CONCLUSION

 

As at 31 May 2019, the financial performance for the City of Busselton is considered satisfactory based on the information received from directorates and the recent budget review.

 

OPTIONS

 

The Statements of Financial Activity are presented in accordance with Section 6.4 of the Act and Regulation 34 of the Regulations and are to be received.  Council may wish to make additional resolutions as a result of having received these reports.

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

 

Not Applicable.

 

COMMITTEE RECOMMENDATION AND OFFICER RECOMMENDATION

That the Council receives the statutory financial activity statement reports for the period ending 31 May 2019, pursuant to Regulation 34(4) of the Local Government (Financial Management) Regulations


Council

15

26 June 2019

6.1

Attachment a

Statement of Financial Activity - Period Ended 31 May 2019

 


 


 


 


 


 


 


 


 


 


 


 


 


Council

27

26 June 2019

6.1

Attachment a

Statement of Financial Activity - Period Ended 31 May 2019

 


Council

28

26 June 2019

6.1

Attachment b

Investment Report for the month of May 2019

 


Council                                                                                      29                                                                      26 June 2019

12.2           Finance Committee - 20/06/2019 - BUDGET AMENDMENT REQUEST / REVIEW

SUBJECT INDEX:

Budget Planning and Reporting

STRATEGIC OBJECTIVE:

Governance systems, process and practices are responsible, ethical and transparent.

BUSINESS UNIT:

Finance and Corporate Services

ACTIVITY UNIT:

Financial Services

REPORTING OFFICER:

Acting Manager Financial Services - Jeffrey Corker

AUTHORISING OFFICER:

Director Finance and Corporate Services  - Tony Nottle

VOTING REQUIREMENT:

Absolute Majority

ATTACHMENTS:

 

 

This item was considered by the Finance Committee at its meeting on 20 June 2019, the recommendations from which have been included in this report. 

 

PRÉCIS

 

This report seeks recommendation of the Finance Committee to Council for the approval of budget amendments as detailed in this report.  Adoption of the Officers recommendation will result in no change to the City’s current amended budgeted surplus position of $0.

 

BACKGROUND

 

Council adopted its 2018/2019 municipal budget on Wednesday, 25 July 2018 with a balanced budget position.

 

Since this time Council has been advised of certain expense changes that have impacted the original budget and Council is now being asked to consider budget amendments for the following key areas/projects:

 

1.    West Street Drainage

 

STATUTORY ENVIRONMENT

 

Section 6.8 of the Local Government Act 1995 refers to expenditure from the municipal fund that is not included in the annual budget. In the context of this report, where no budget allocation exists, expenditure is not to be incurred until such time as it is authorised in advance, by an absolute majority decision of the Council.

 

RELEVANT PLANS AND POLICIES

 

There are multiple plans and policies that support the proposed budget amendments.

 

FINANCIAL IMPLICATIONS

 

Budget amendments being sought will result in no change to Council’s budget surplus position of $0. 

 

LONG-TERM FINANCIAL PLAN IMPLICATIONS

 

There are no Long Term Financial Plan implications in relation to this item.

 


STRATEGIC COMMUNITY OBJECTIVES

 

This matter principally aligns with Key Goal Area 6 – ‘Leadership’ and more specifically Community Objective 6.1 - ‘Governance systems, process and practices are responsible, ethical and transparent’.

 

RISK ASSESSMENT

 

There is a risk to the City, as there is with all projects undertaken, that the final cost could exceed budget. If this looks to be the case Council will be notified so a suitable offset / project scope back can be identified.

 

CONSULTATION

 

No external consultation was considered necessary in relation to the budget amendments.

 

OFFICER COMMENT

 

The Officer recommends the following requested budget amendment to the Finance Committee for consideration and recommendation to Council.

 

1.    West Street Drainage

 

This budget amendment seeks to transfer $30,000 of the Glenmeer Ramble Drainage Project budget (D0020) to a new project titled West Street Drainage.

 

During a high rainfall event in May 2018 localised flooding occurred on West Street adjacent the recently developed Aldi and Kmart complex. Stormwater from the road (West Street) and overflow from the new carpark inundated 100 (Lot 16) West Street causing flood damage to the property. A design to bypass the flow of stormwater through to the existing wetland has been completed. These mitigation works are estimated to cost in the order of $30,000. Due to the high risk of further stormwater flooding these works have been identified as urgent.

 

The drainage work at Glenmeer Ramble scheduled for this financial year have been postponed and relisted in the 2019/2020 budget.         

 

Planned Expenditure Item

Officers propose that the 2018/2019 adopted budget be amended to reflect the following funding changes, shown in Table 1.

 

Table 1:

Cost Code

Description

Current Budget

Change

Resulting Proposed Amended Budget

Expenditure

 

 

 

 

541.D0020.3035.0000

Glenmeer Ramble drainage project  - Wages

$11,780

-$6,431

$5,349

541.D0020.3280.0000

 Glenmeer Ramble drainage project – Contractors

$28,520

-$15,337

$13,183

541.D0020.6180.0000

Glenmeer Ramble drainage project  - Overheads

$15,000

-$8,232

$6,768

 

Total from Glenmeer Ramble

$55,300

-$30,000

25,300

541.D0022.3035.0000

West Street Drainage  - Wages

0

$6,431

$6,431

541.D022.3280.0000

 West Street Drainage  project - Contractors

0

$15,337

$15,337

541.D022.6180.0000

West Street Drainage  project  - Overheads

0

$8,232

$8,232

 

Total to West Street

$0

$30,000

$30,000

 

 

 

 

 

 Net Total 

$55,300

0

$55,300

 

CONCLUSION

 

Council’s approval is sought to amend the budget as per the details contained in this report. Upon approval the proposed works will be planned, organised and completed.

 

OPTIONS

 

The Council could decide not to go ahead with any or all of the proposed budget amendment requests.

 

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

 

Should the Officer Recommendation be endorsed, the associated budget amendment will be processed within a month of being approved.

 

 

COMMITTEE RECOMMENDATION AND OFFICER RECOMMENDATION

 

That Council endorse the requested budget amendment outlined in Table 1 below resulting in no change to an amended budget surplus position of $0.

 

Table 1:

 

Cost Code

Description

Current Budget

Change

Resulting Proposed Amended Budget

Expenditure

 

 

 

 

541.D0020.3035.0000

Glenmeer Ramble drainage project  - Wages

$11,780

-$6,431

$5,349

541.D0020.3280.0000

Glenmeer Ramble drainage project – Contractors

$28,520

-$15,337

$13,183

541.D0020.6180.0000

Glenmeer Ramble drainage project  - Overheads

$15,000

-$8,232

$6,768

 

Total from Glenmeer Ramble

$55,300

-$30,000

25,300

541.D0022.3035.0000

West Street Drainage  - Wages

0

$6,431

$6,431

541.D022.3280.0000

 West Street Drainage  project - Contractors

0

$15,337

$15,337

541.D022.6180.0000

West Street Drainage  project  - Overheads

0

$8,232

$8,232

 

Total to West Street

$0

$30,000

$30,000

 

 

 

 

 

 Net Total 

$55,300

0

$55,300

 

 

 


Council                                                                                      34                                                                      26 June 2019

12.4           Finance Committee - 20/06/2019 - ACCOUNTING TREATMENT OF DEPOSITS AND BONDS

SUBJECT INDEX:

Budget Planning and Reporting

STRATEGIC OBJECTIVE:

Governance systems, process and practices are responsible, ethical and transparent.

BUSINESS UNIT:

Finance and Corporate Services

ACTIVITY UNIT:

Financial Services

REPORTING OFFICER:

Acting Manager Financial Services - Jeffrey Corker

AUTHORISING OFFICER:

Director Finance and Corporate Services  - Tony Nottle

VOTING REQUIREMENT:

Simple Majority

ATTACHMENTS:

Nil

 

This item was considered by the Finance Committee at its meeting on 20 June 2019, the recommendations from which have been included in this report. 

 

PRÉCIS

 

As a result of the interim audit of the City’s affairs recently conducted by the Office of the Auditor General (OAG), it has been identified in the draft Interim Audit Report that in their opinion the City is accounting for the receipt of funds for deposits and bonds incorrectly.

 

The City’s current treatment is in accordance with Council resolution C1004/115 from April 2010 and is so disclosed in the City’s stated significant Accounting Policies contained within the Annual Financial Report. This resolution required that the funds were to be held in the City’s Municipal Account. As a result, the City earnt interest from the funds.

 

The OAG Interim Audit report identifies that in their opinion these funds are to be held in Trust, and if interest is earnt that it be paid to the person/persons who lodged the payment. If enacted, this change will result in the loss of interest earnings to the City on an ongoing annual basis. Based upon the balance of funds held as at 31 May, this annual loss is in the region of $70K per annum.

 

As the current treatment is in accordance with a prior Council resolution, Council will be required to review its previous decision as to the Accounting treatment of these funds into the future. As any changes need to be effective 30 June for Accounting and Budgetary purposes, this guidance is sought as soon as practicable.

 

BACKGROUND

 

At the Council meeting of 14 April 2010, via the Audit Committee meeting held 11 March 2010; the issue of the treatment of Deposits and Bonds paid to the City was considered.

 

At the time staff had identified that the existing treatment of Deposits and Bonds as part of the City’s Municipal Funds was no longer appropriate. This was supported in writing by the City’s then Auditor. Accordingly it was recommended by staff that the City’s accounting treatment of deposits and bonds should be amended so that all existing, and any new deposits and bonds; were to be recognised as part of the City’s Trust Fund.

 

After discussions with staff and the Auditor at the March 2010 Audit Committee meeting, in due course and contrary to the staff recommendation, Resolution C1004/115 was passed that stated:

 

1.    That Council continues the accounting treatment for deposits and bonds as part of the Shire's Municipal Fund, subject to 2 and 3 below.

 

2.    The deposits and bonds be brought to account as part of the restricted funds in the Municipal Fund.

 

3.    In the Annual Financial Report the deposits and bonds are disclosed as being restricted and additional commentary provided in Note 1A indicating that the Council considers the requirement of control to have been met by the accounting treatment described.

 

4.    That Council notes the requirement for monies held as cash in lieu of public open space to be recognised and reported as part of the Shire's Trust Fund.

 

As a result of the Interim Audit conducted in May 2019, the Officer of Auditor General (OAG) has found that the City’s treatment of deposits and bonds remains inappropriate. In their draft Interim Management Letter, which has only been informally received by email at this point in time; the OAG found that:

 

“We noted that the City has been holding Bond and Security deposit monies within its municipal fund and recognising an asset on the Statement of Financial Position along with a corresponding liability. Interest earned on these funds has been retained by the City.

 

The City has no control of these funds until a damage event occurs. Consequently, they do not meet the definition of an asset in accordance with Australian Accounting Standards, and should not be reflected on the City’s Statement of Financial Position. Any interest earned on these funds also should not be reflected in the City’s accounts.

 

The Local Government Act 1995 (Act) requires:

 

Where money or other property is held in the trust fund, the local government is to —  in the case of money, pay it to the person entitled to it together with, if the money has been invested, any interest earned from that investment;

 

This finding is rated as significant by the OAG, and as per their advice has the following implication:

 

Assets and Liabilities are both overstated by the value of Bond and Security deposits. In retaining interest earned on invested trust fund moneys, the City is keeping and utilising moneys that it is not entitled to under the Act.

 

As a further consequence, the recognition of trust moneys on the Statement of Financial Position is not compliant with Australian Accounting Standards.

 

The OAG makes the following Recommendation:

 

To facilitate accurate reporting for 30 June 2019 the City should:

•             report bond/security monies as trust funds in the Notes to the financial report

•             reliably estimate past interest earned that is payable to persons entitled to receive it.

 

The Local Government Act 1995 (Act) states:

 

Where money has been held in the trust fund for 10 years it may be transferred by the local government to the municipal fund but the local government is required to repay the money, together with any interest earned from its investment, from that fund to a person claiming and establishing a right to the repayment.

 

The City needs to account and manage trust fund moneys in accordance with the Act.

The City should undertake the necessary steps to identify any obligations it has to return moneys that it has incorrectly retained from the current and previous years.”

 

Accordingly, the issue of the treatment of Deposits and Bonds is once again tabled with Council to seek guidance as a result of the OAG finding.

 

STATUTORY ENVIRONMENT

 

The Local Government Act includes reference to Financial Reports (Section 6.4), Municipal Funds (Section 6.7) and also Trust Funds (Section 6.9). However, the Act and associated Regulations are not specific in respect of the accounting treatment for deposits and bonds.

 

Previously, the Shire’s Auditor has clarified that whilst Australian Accounting Standard AASB1004 (Contributions) does not specifically relate to deposits and bonds, it does provide commentary and guidance on the concept of “control” (a determinant in assessing whether funds are to be held in trust or otherwise).   

 

RELEVANT PLANS AND POLICIES

 

The City’s Long Term Financial Plan will be impacted as identified in the relevant section following.

 

FINANCIAL IMPLICATIONS

 

As the change will be effective 30 June it will have Nil impact upon the 2018/19 budget, other than that, funds will be accounted for in a different section of the accounts in the year end reports. As at 31 May the balance of the applicable funds was $2.851M. This pool of funds is cash backed in its entirety, with the majority being Roadworks Bonds ($1.916M) and Town Planning Bonds ($697K). Other categories of bonds held include Building Bonds, Crossover Deposits, Hall Deposits, Kerb & Verge Deposits, Key Deposits, Sundry Liabilities and Unclaimed Monies; which together total $238K.

 

The change will however have effect upon the 2019/20 Budget and those into the future, as outlined in the following section relating to Long-Term Financial Plan (LTFP) Implications. Additionally, as interest may need to be paid retrospectively on currently held deposits and bonds, a further expense may be incurred. Initial calculations suggest this liability could be in the region of $250K.

 

LONG-TERM FINANCIAL PLAN IMPLICATIONS

 

The current adopted LTFP includes income from the interest earnt on the deposit and bonds funds. If the funds are relocated to trust as per the OAG report, then based upon the balance as at 31 May of $2.851M the City’s interest earnings will reduce by approx. $70K per annum (based upon a notional interest rate of 2.5%). When adopted, the current draft LTFP will need to be adjusted to allow for this reduction in income.

 

STRATEGIC COMMUNITY OBJECTIVES

 

This matter principally aligns with Key Goal Area 6 – ‘Leadership’ and more specifically Community Objective 6.1 - ‘Governance systems, process and practices are responsible, ethical and transparent’. The achievement of the above is underpinned by the Council strategy to ‘ensure the long term financial sustainability of Council through effective financial management’.

 


RISK ASSESSMENT

 

A formal risk assessment of the proposal has not been conducted at this time. If Council chooses to not agree to the change in accounting treatment the City will risk receiving further negative audit findings. Additionally the City will risk having the payee of a bond or deposit that is currently held take action against the City to recover their funds and interest. Accepting the recommended change that is in accordance with the OAG finding will result in the loss of income as detailed.

 

CONSULTATION

 

Consultation is not applicable in relation to this matter.

 

OFFICER COMMENT

 

Once finalised and formally received, the complete OAG Interim Management Letter will be tabled with the City’s Audit Committee at the next available opportunity. However, in order to enact the change effective June 30 staff are tabling this report directly with Council (via the Finance Committee) so as to be in the position to make the required changes in a timely manner.

 

As acknowledged by the OAG in writing to the reporting Officer, the treatment of deposits and bonds across the Local Government industry has not been consistent, and through their auditing regime it was apparent that many Local Governments were accounting for the monies differently. The OAG did approach the Department of Local Government for their input, however they were unable to make a decision on this. Therefore the Auditor General has now stated her position in how she believes these monies should be accounted for, and the wording in the City’s draft Interim Audit report is the standardised wording they are now utilising.

 

As such the City is not alone with this finding. The resolution of Council in 2010 was made contrary to staff and Auditor recommendation at the time, however it was not invalid due to the lack of clarity on the proper treatment available at the time.

 

As the OAG is now responsible for the audit of all Local Government authorities across the State, standardisation of accounting principles can be enacted. Whilst it must be acknowledged that the City will see a reduction in annual interest earning income, failure to apply their findings will result in ongoing negative Audit Reports which may impact Council.

 

CONCLUSION

 

The finding of the OAG is significant. Whilst acknowledging the City will forgo interest earnings as a result of altering its accounting treatment of the funds, refusal to do so will likely result in further negative findings from the OAG. In the opinion of staff, the City must change its accounting treatment of deposits of bonds to align with the requirements of the Office of the Auditor General, and therefore with current Industry practice. Therefore, the City’s accounting treatment of deposits and bonds should be altered so that they are included in Trust.

 

OPTIONS

 

Council may not agree with the findings of the OAG and therefore not agree to change the accounting treatment of funds held for Deposits and Bonds.

 

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

 

If a change to the Accounting treatment of the funds held in the City’s accounts for deposits and bonds is approved, the funds will be relocated to Trust effective 30 June 2019.

 

OFFICER RECOMMENDATION

 

That the Council:

 

1.    Endorses an amendment to the current accounting treatment for deposits and bonds such that all existing, and any new, deposits and bonds are recognised and reported as part of the City’s Trust fund;

 

2.    Continue to liaise and negotiate with the Officer of the Auditor General in relation to the treatment of interest earnings on funds held; and

 

3.    Agree that in a timely manner, a systematic review be undertaken of all deposits and bonds held, ensuring that where the conditions for the return of a bond have been met that they be duly refunded.

 

 

COMMITTEE RECOMMENDATION AND ALTERNATIVE OFFICER RECOMMENDATION

 

That the Council:

 

1.    Advise the Officer of the Auditor General that based on peer legal advice the Council believes that no fiduciary relationship exists in respect of bond payments in the context within which they are collected by the City.

 

2.    Agree that the CEO will liaise and negotiate with the Office of the Auditor General in relation to the treatment of interest earnings and the holding of deposits and bonds within the City’s Municipal Fund as a result of receiving peer legal advice; and

 

3.    Agree to amend the current treatment for deposits and bonds from the 1st July 2019 so that the deposits and bonds are reported as part of the City’s Trust fund until a final outcome is determined between the Officer of the Auditor General and the City of Busselton.

 

4.    Amend the Timeline for Implementation of Officer Recommendation from 30th June 2019 to the 1st July 2019.

 

 

Reason:                  Officers believe that a fiduciary relationship is non-existent; Officers agree to the suggested treatment in the interim until clarification is sought; and negotiation and discussion should occur between the OAG and the City.

  


Council                                                                                      39                                                                      26 June 2019

14.             Engineering and Work Services Report

14.1           AWARD OF TENDER RFT02-19 PROVISION OF CLEANING SERVICES TO CITY OWNED FACILITIES

SUBJECT INDEX:

Award Of Tender RFT02-19 Provision Of Cleaning Services To City Owned Facilities

STRATEGIC OBJECTIVE:

Assets are well maintained and responsibly managed.

BUSINESS UNIT:

Major Projects and Facilities

ACTIVITY UNIT:

Facilities

REPORTING OFFICER:

Manager Major Projects and Facilities - Meg  Delahoy

AUTHORISING OFFICER:

Director, Engineering and Works Services - Oliver Darby

VOTING REQUIREMENT:

Absolute Majority

ATTACHMENTS:

Attachment a   Confidential Attachment A - RFT 02-19 - Tender Evaulations, Panel Consensus Score Sheets and Recommendation Report for Council  

  

Attachment A is confidential under Section 5.23 - 2(c) of the Local Government Act 1995 in that it deals with "a contract entered into or which may be entered into, by the local government". Copies have been provided to Councillors, the Chief Executive Officer and Directors Only.

 

PRÉCIS

 

The Council is requested to consider the tenders received in response to Request for Tender RFT02-19 Provision of Cleaning Services to City Owned Facilities (the Tender). The Tender has now closed and tender submissions have been received and evaluated. This report summarises the submissions received and recommends that the Council endorse the outcome of the evaluation panel’s assessment and delegate authority to the CEO to negotiate and agree final terms and conditions and award a contract for a finalised contract price to the following tenderers:

·    Bellrock Cleaning Services Pty Ltd as trustee for the Bellrock Cleaning Services Trust for Separable Portion 1 and Separable Portion 4; and

·    Jenni and Michael Eddington ATF Ocean Air Trust T/A Ocean Air Carpet Care for Separable Portion 2 and Separable Portion 3.

 

BACKGROUND

 

The City of Busselton's Building/Facilities Maintenance Working Budget includes provision for the scheduled cleaning services to all City-owned Facilities administration/ office buildings (internal and external), halls, ablutions, change rooms and BBQ hotplates.

 

The City invited suitably qualified and experienced contractors to make submissions to enter into a Contract for the provision these services separated into the following separable portions:

1.    SP1  City Owned Buildings – Internal

2.    SP2  City Owned Ablution Blocks and Change rooms

3.    SP3  City Owned BBQ Hotplates and Surrounds

4.    SP4  City Owned Buildings – External/Façade for Administration Building, Busselton Library, YCAB, CRC, Art Geo and Old Court House

 

Tenderers were offered the opportunity to submit tenders for all Separable Portions or any combination thereof. Each separable Portion was to be submitted for the entirety of the Requirements of that Separable Portion.

 

The City of Busselton is committed to maintaining high levels of cleanliness at all City owned facilities. The tendered documentation outlined the service expectations, specifications and standards associated with providing cleaning services to City owned facilities. A requirement was also included for the Contractor to maintain a log of facility conditions pre and post cleaning including photos. These records are to be maintained by the Contractor for a minimum period of ninety days from date of works and made available to the City at their request within this period.

 

STATUTORY ENVIRONMENT

 

The contract value is greater than $500,000, therefore, in accordance with section 5.43(b) of the Local Government Act 1995, read with Delegation 3J, the tender must be accepted by the Council and will require a report to the Council.

 

In terms of Section 3.57 of the Local Government Act 1995 (Act) a local government is required to invite tenders before it enters into a contract of a prescribed kind under which another person is to supply goods and service. Part 4 of the Local Government (Functions and General) Regulations 1996:

 

·    requires that tenders be publicly invited for such contracts where the estimated cost of providing the required goods and/or service exceeds $150,000; and

·    under Regulations 11, 14, 18, 20 and 21A provides the statutory framework for inviting and assessing tenders and awarding contracts pursuant to this process.

 

With regard to the Tender, City officers have complied with abovementioned legislative requirements.

 

RELEVANT PLANS AND POLICIES

 

The City's purchasing policies and its occupational health and safety, asset management and engineering technical standards and specifications were all relevant to the Tender, and have been adhered to in the process of requesting and evaluating tenders.

 

FINANCIAL IMPLICATIONS

 

This contract is funded by the City of Busselton’s Building/Facilities Maintenance Working Budget.

 

The estimated total value of the procurement for the full contract term of three (3) years is $2,865,000 excluding GST. The estimated total value over the full contract term of three (3) years, plus the optional two (2) one (1) year contract extensions is $4,850,000 excluding GST. 

 

The budget estimate is based on current contract rates and forecast number of cleans, with prices indexed based on estimated annual CPI increases of 1.5%. The budget estimate for the total Contract, including all extension options is broken down annually as follows:

 

Financial Year

Projected budget

FY18/19

$907,800

FY19/20

$941,000

FY20/21

$955,000

FY21/22

$969,000

FY22/23

$985,500

FY23/24

$999,500

Total

$4,850,000.00

As part of the Tender process, tenderers were requested to provide itemised costs under the four separable portions. The recommendation delegates to the CEO the ability to negotiate the final contract terms. It is proposed that final terms be agreed, subject to awarding a contract for a contract price not exceeding the budget.

 

The recommendation is for a total contract price of $2,548,558 for the full contract term of three (3) years. This contract price is approximately 11% less compared to the budget estimate. It is also approximately 8% less than the expenditure for the FY18/19. The reduction is primarily due to comparatively lower tendered rates for BBQ cleaning and internal building cleaning.

 

LONG-TERM FINANCIAL PLAN IMPLICATIONS

 

The costs associated with this project have been included in the City’s Long Term Financial Plan and therefore the Officer’s recommendation does not give rise to any long term financial plan implications.

 

STRATEGIC COMMUNITY OBJECTIVES

The officer’s recommendation primarily aligns with the following Key Goal Area/s and Community Objective/s of the City of Busselton’s Strategic Community Plan 2017:

 

Key Goal Area 1 - COMMUNITY: Welcoming, friendly, healthy

1.3 A community with access to a range of cultural and art, social and recreational facilities and experiences.

 

Key Goal Area 6 - LEADERSHIP: Visionary, collaborative, accountable

6.4 Assets are well maintained and responsibly managed.

 

RISK ASSESSMENT

 

An assessment of the potential implications of implementing the Officer's recommendation has been

undertaken using the City's risk assessment framework, with the intention being to identify risks which, following implementation of controls, are identified as medium or greater.  There are no such risks identified, with the preferred tenderers assessed as being capable of delivering the services to a suitable service level and in line with the agreed cleaning schedule.

 

CONSULTATION

 

The Tender was advertised in the West Australian newspaper and the City of Busselton tenders website (Tenderlink) on Saturday 9 March 2019. The closing time and date for lodgement of a response was 2:00 p.m. on Thursday 4 April 2019.

 

Reference checking of the preferred Tenderers has been undertaken.

 

OFFICER COMMENT

 

The City received a total of eight submissions as follows:

Bellrock Cleaning Services Pty Ltd as trustee for the Bellrock Cleaning Services Trust

Jenni and Michael Eddington ATF Ocean Air Trust T/A Ocean Air Carpet Care

DMC Cleaning Corporation Pty Ltd ATF Panich Family Trust T/A Delron Cleaning

Brigade Facilities Management Pty Ltd

CSCH Pty Ltd T/A Charles Service Company

Fernview Holdings Pty Ltd T/A Delron Cleaning Busselton

Office Cleaning Experts Pty Ltd T/A OCE Corporate Cleaning

Paradigm Cleaning & Professional Services Pty Ltd

The compliance criteria specified for this Request were:

 

(a)       Compliance with and completion of the Price Schedule;

(b)      Compliance with the Specification as contained in this Request for Tender; and

(c)       Compliance with City of Busselton OSH Requirements.

 

These criteria were not point scored.  Each submission was assessed on a Yes / No basis as to whether a criterion was satisfactorily met.

 

Paradigm Cleaning & Professional Services Pty Ltd were non-compliant for all separable portions and their submission was not evaluated. 

 

Jenni and Michael Eddington ATF Ocean Air Trust T/A Ocean Air Carpet Care were non-compliant for Separable Portion 1 and Separable Portion 4 and their submission was not evaluated for these two separable portions.

 

The tender assessment was carried out by a tender evaluation panel in accordance with normal practice.

 

Tenders were evaluated using the tendered prices and information provided by tenderers in response to the qualitative criteria specified in the Tender.  A scoring and weighting system was used to assess the tendered prices and the responses against the qualitative criteria.

 

The following weightings were applied to the qualitative criteria and to price:

·  Relevant Experience                                         15%

·  Local Benefit                                                          5%

·  Key Personnel skills and experience             5%

·  Respondent’s  Resources                                10%

·  Demonstrated Understanding                      20%

·  Occupational Health and Safety                     5%

 

The City adopted a best value for money approach to this Tender. This means that, although price will be a consideration, the Tender containing the lowest price will not necessarily be accepted, nor will the Tender ranked the highest in relation to the qualitative criteria. The extent to which a tender demonstrated greater satisfaction of each of the qualitative criteria resulted in a greater score. The tendered prices were then assessed together with the weighted qualitative criteria and the tenders scored and ranked to determine the most advantageous outcome to the City.

 

The tender evaluation resulted in two (2) tenderers being considered to be the most advantageous to the City. The Evaluation Panel recommends that the below Tenderers be appointed for each separable portion:

·    Bellrock Cleaning Services Pty Ltd as trustee for the Bellrock Cleaning Services Trust be awarded SP1:  City Owned Administration/Office Buildings at a contract value of $945,422 for the full contract term of three (3) years.

·    Jenni and Michael Eddington ATF Ocean Air Trust T/A Ocean Air Carpet Care be awarded SP2:  City Owned Ablution Blocks and Changerooms at a contract value of $1,200,787 for the full contract term of three (3) years.

·    Jenni and Michael Eddington ATF Ocean Air Trust T/A Ocean Air Carpet Care be awarded SP3:  City Owned BBQ Hotplates and Surrounds at a contract value of $245,187 for the full contract term of three (3) years.

·    Bellrock Cleaning Services Pty Ltd as trustee for the Bellrock Cleaning Services Trust be awarded SP4:  City Owned Administration/Office Buildings – External/Façade” at a contract value of $157,161 for the full contract term of three (3) years.

 

The total value of the procurement for the full contract term of three (3) years is $2,548,558. This is $316,488 less than the budget estimate for the full contract term of three (3) years. The reduction is primarily due to comparatively lower tendered rates for BBQ cleaning and internal building cleaning.

 

The attached confidential Tender Evaluation and Recommendation Report (Attachment A) provides the detailed evaluation outcome.

 

CONCLUSION

 

The tender evaluation panel has completed their assessment of the Tender in line with the City's tender process and Officers now recommend that Council endorse the outcome of the evaluation panel’s assessment and delegate authority to the CEO to negotiate and agree final terms and conditions with and to award a contract for the following separable portions:

 

·    Bellrock Protective Services Pty Ltd as being the best valued tender submission in relation to Separable Portion 1 and Separable Portion 4; and

·    Jenni and Michael Eddington t/a Ocean Air Carpet Care & Commercial Cleaning as being the best valued tender submission in relation to Separable Portion 2 and Separable Portion 3.

 

OPTIONS

 

The Council may consider the following alternate options:

 

1.    To award the Tender to an alternative tenderer/s. In the view of the Officers this could result in the Tender being awarded to a Tenderer that is not most advantageous to the City.

 

2.    To not award the Tender. This would mean going back out to tender, resulting in significant delays to the contract award and potential significant delays to the provision of cleaning services to City owned facilities. The current interim contract would also need to be extended with the Contractors who are currently engaged to provide these services.

 

For the reasons provided in this report, the abovementioned options are not recommended.

 

If any Councillor is minded to either of the above options, Officers can assist on the drafting of a suitable alternative motion.

 

TIMELINE FOR IMPLEMENTATION OF OFFICER RECOMMENDATION

 

The selection of the preferred tenderers can be made immediately after the Council has endorsed the Officer's recommendation. Subject to negotiation and agreement on scope and budget the successful Tenderers will then receive formal written notification. All tender applicants not selected as preferred will also be notified at this time.


 

 

OFFICER RECOMMENDATION

 

That the Council:

 

1.    Endorse the outcomes of the City’s tender evaluation panel’s assessment in relation to tender RFT02/19 Provision of Cleaning Services to City Owned Facilities, which recommended the following tenders as the most advantageous to the City:

 

a.       Bellrock Protective Services Pty Ltd in relation to Separable Portion 1 and Separable Portion 4; and

 

b.    Jenni and Michael Eddington t/a Ocean Air Carpet Care & Commercial Cleaning in relation to Separable Portion 2 and Separable Portion 3. (Preferred Tenderers)

 

2.    Delegate power and authority to the CEO to:

 

a.       Negotiate and agree with the Preferred Tenderers variations in accordance with Regulations 20 and 21A of the Local Government (Functions and General) Regulations 1996 subject to such variations not to exceed the overall project budget;

 

b.       Negotiate and agree with the Preferred Tenderers the final terms and conditions of the respective contracts (including rates/contract prices); and

 

c.     Pursuant to resolutions 2.a and b. enter into contracts with the Preferred Tenderers for supply of the relevant goods and services.