Private contractors want piece of Chch action

The Christchurch City Council will consider negotiating with its own firm, City Care, for the renewal of $32 million worth of maintenance contracts rather than put the tender on the open market.

The proposal, which city councillors will debate on Thursday, has outraged the New Zealand Contractors' Federation, which has called it anti-competitive and unfair.

The contracts cover services provided by City Care such as water and waste disposal, facilities maintenance and parks upkeep.

Several contracts have expired or are due to expire, and council staff have recommended an independent panel be set up to negotiate with City Care as the council's preferred option.

The panel would be appointed by council chief executive Tony Marryatt and headed by an external consultant. If a deal could not be struck, the contracts would then be put out to open tender.

Roading contracts are not part of the proposal and will remain an open-tender process.

Mayor Bob Parker said the council had legal advice that the planned tendering process could successfully negotiate two legal issues the management of conflicts of interest and the council's legal obligation under the Local Government Act that its business be carried out in an open, transparent and democratically accountable manner.

"It's not unusual (for this to happen) with councils and it's not unusual for this to happen with private business," he said.

"Value for money is the core to this whole thing. In those sorts of areas, you are balancing the tension between taking the safest line and, to use the Auditor-General's words, the ability to seize an opportunity where you can see an opportunity.

"The idea is to get a competitive price out of this process but retain all the intellectual property, retain the jobs and retain the overall ability of a community-owned asset which is also a strategic asset."

City Care, a council-controlled trading organisation, has held the city's maintenance contracts since 1999. The contracts have not previously been put out to public tender.

Parker said City Care was performing extremely well, and the council and city would benefit if its own company was a sound, financially strong organisation.

The council will consider three options on Thursday bringing the council's maintenance back in-house, putting the contracts to open tender or following the staff recommendation to negotiate initially with City Care.

A report for councillors said the in-house option would involve a significant investment in capital and resources, would see a drop in dividends from City Care to the council and could result in redundancies.

It said redundancies among City Care's 900-plus staff would be inevitable if the contracts were put to open tender and City Care missed out, but that course might be the one that best met the council's statutory obligations.

The report said dealing with City Care would support a council-controlled business, would maintain the more than $1m dividend it paid to the city each year, would avoid redundancies and support the community.

New Zealand Contractors' Federation executive officer Malcolm Abernethy said the council had failed to consult adequately with contractors, having sent out only an email to the industry about the proposed move.

"It's in some respects a last-minute attempt to mollify the industry by giving the appearance of consultation," he said.

"We're not necessarily opposed to negotiated contracts, and in fact in many instances they work very well. However, in this instance the Christchurch City Council would be negotiating with City Care basically it is negotiating with itself and it appears that it is doing that with the idea of protecting work for itself or its own company."

Abernethy said City Care was openly bidding for work in other cities and should face the market in its own town.

Not to have an open tender was anti-competitive and would not necessarily be the most cost-effective solution for ratepayers.

- © Fairfax NZ News