Agenda item

[Report of the Director of Environment and Neighbourhoods. To be introduced by the Cabinet Member for Neighbourhoods.]

 

This report seeks Cabinet approval for an extension to the Parking IT managed service contract with the incumbent provider for two years and for the award of a contract for provision of a replacement system to the preferred contractor for a contract period of 10 years, with an option to extend for a further 5 years.

The Cabinet Member for Neighbourhoods introduced the report which sought approval to the extension to the Parking IT managed service contract with the incumbent provider, Civica UK Ltd, for two years and also sought agreement for the award of a contract for provision of a replacement system to a preferred contractor, Supplier D, for a contract period of 10 years pursuant to CSO 9.07.1(d), with an option to extend for a further 5 years. These proposed decisions would provide a cost effective updated parking system, moving away from a paper based system of issuing permits, to a modernised electronic system, significantly reducing delays and allowing for a better customer experience.

 

The Cabinet Member emphasised the need to have cost effective parking systems which took advantage of new technologies to give residents the service they expected, entering this new contract would facilitate this. It was noted that remaining with the current provider would cost an additional £300k per annum and would not enable the Council to meet £348k of savings allocated to the FOBO [Front Office and Back Office] savings programme. The report set out the reasons for recommending, concurrently operating the existing Civica system with the new provider’s system for a period of 2 years and the Cabinet Member highlighted that the Council would need a backup system as cover until April 2020 and also as a safety measure in case of delays with the start date of the new contract. This decision would protect the customer offer and maximise the PCN recovery process with £4.6m of income to be collected this finacial year.

 

In response to questions from Councillor Morris, the following was noted:

 

 

• With regards to the length of the contract extension, two years was the minimum extension required and started from November 19 before the new system starts in April 2020. The Cabinet  Member explained that a  warrant on a PCN fine lasted 18 months and given the  Council would be issuing fines on the  Civica system  until 31^st of March, it would  needs to remain in place to  capture  the warrant process and allow  fines to be collected. Therefore, two years was acceptable in this context.

 

• Civica was holding fines on IT software but the Council maintained the responsibility to enforce these fines locally.

 

• Migration of the system had been explored, prior to the tendering exercise being taken forward. This was through a comprehensive soft market exercise. The Council had listened to key market suppliers on the plans for this data migration exercise. Taking account the significance of the data transfer, it was felt that there would be risks connected to PCN migration and more detailed permit holder migration. Some suppliers felt they could manage this risk easily but others described this as  a high risk , particularly in permit migration given the condition of existing data in terms of duplication and cleanliness of data. There was also a high risk that customer accounts would not have been as clean as possible and residents taking a new permit or renewing on the 1^st of April would have had a less pleasant customer experience.

 

• In relation to the PCN data, each stage of PCN process was considered to make sure the migration covered each stage and it was felt better not migrating   existing data and keeping this on the Civica system. This would provide clean PCN data which gives the council a better opportunity to do a good job and make sure cases are progressed as soon as possible. The new system would start taking forward new PCNs issued after April 2020.

 

 

 

Further to considering exempt information at item 22,

 

RESOLVED

 

1)    To approve, pursuant to Contract Standing Order 10.02.1 (b), the extension of the Civica CE parking IT managed service contract for two years at a cost of £1m in year one, which includes a one off £0.25m licence cost, and £0.8m in year 2 for a total cost of £1.8m; and

 

2)    To approve, pursuant to CSO 9.07.1d), the award of a contract to preferred supplier D for ten (10) years at a cost of £2.91m with an option to extend for an additional five (5) years, exercisable at the sole discretion of the Council, at a further cost of £1.44m for a total cost of £4.35m.

 

Reasons for decisions

 

Introduction of PMIS

 

Parking Services require a new Parking Management IT System (PMIS) to underpin and be at the centre of a transformed service, which will deliver a much improved and enhanced customer experience. Additionally, the new PMIS will streamline back office processes, improving customer response times. These improvements cannot be achieved through the continued use of the Civica system.

 

Based on the offer received from the preferred supplier, the new IT system will offer the service in the region of £0.3m per annum savings or £3m over the initial 10-year term of the contract. There are also a further £0.348m per annum of Customer Service savings identified with the introduction of new PMIS due to the enhanced digital offer.

 

Whilst the option for making a paper-based permit application will remain, residents able and willing to make applications on-line will benefit significantly through the use of automated checks and the ability of the Council to issue the permit instantaneously.

 

The system automatically verifies residency online. Applicants only have to upload proof of vehicle ownership (it is not possible to check this against the DVLA record automatically) for audit and fraud prevention purposes. Permits are still issued ‘virtually’ immediately. This means that resident vehicle details are loaded onto the Council’s approved database at the point the permit is issued. Automatic Number Plate Recognition (ANPR) technology is used to ascertain whether a vehicle is legally parked or not. There is no need for paper permits nor all the associated resources which create delays and have high associated costs.

 

Retaining Civica – 2 Years

 

Because the “lifetime” of unpaid PCNs is up to 2 years and because of the very high risks of data migration, running 2 systems alongside each other is ideal. PCNs will be issued with a new prefix from the new system from April 2020. New permit applications will also be processed from then onwards. All legacy permit and PCN data will remain on the Civica system until it is turned off in 2021. Data protection and GDPR matters can be planned and managed appropriately.

 

Switchover to a new system alone upon expiry of the Civica contract would not be possible without a significant loss of income and a further risk of reputational damage. There would not be sufficient time to tender for some 3^rd party services e.g. Pay by Phone that are provided under the PMIS contract.

 

In order to cut off Civica, prior to 2 years elapsing, and move to a new system, both PCN and permit data would have to be migrated. After investigating, Officers noted the Council’s permit data contains records that would make migrating the data a challenging prospect; the migration of PCN data may be more straightforward, but risky and undesirable none the less.

 

Whilst there are additional costs associated with some parallel running, an analysis of costs of unpaid PCNs within the current system now and the fact that substantial numbers of PCNs that would need to be written off without parallel running, supports the recommendation to run both systems concurrently for 2 years:

 

The total current value of unpaid PCNs within the Civica system is:

2016/17 £1.8m

2017/18 £7.8m

2018/19 £8.4m

2019/20 £4.6m

Total £22.6m (as of report date)

 

If the decision were not to run 2 systems in parallel, and the recommendation not to migrate data is accepted, the Council would have to write off any unpaid PCNs upon expiry of the Civica contract. Even allowing for recovery that would take place prior to the expiry date, the Council would lose far in excess of the costs of running Civica for 2 years (Civica costs are shown in section 4.9 below). Other benefits include:

 

• A 2-year extension of the Civica contract and parallel running would ensure we maximise recovery and allows us to carry appropriate archiving or deletion of old data.
• The parking industry acknowledges that a change of IT system will inevitably result in loss of income due to various reasons, including losing challenge/representation and formal appeal information and having no other option other than to cancel cases. This risk is eliminated, and income protected and allows for a well-planned and orderly shutdown of the Civica PMIS.
• There would be no requirement to migrate permit data: migrating permit data would carry a very high risk due to duplicate data currently existing for the same permit holders. Running a new system with “clean data” from “go live” is highly desirable. A 2-year Civica extension would allow existing permits to run their course; after 1 April 2020 first time applicants and residents renewing their permits would apply for a new permit on the new system. This would be very likely to attract very positive feedback from residents and other stakeholders alike.

 

The table below illustrates the cost of running Civica and the new PMIS over 3 years. Whist the Civica costs will only be incurred if the recommendation to parallel run is accepted, this report highlights the risks of not parallel running and the likely loss of income (estimated at £13m pa in section 5, 14); it can be seen that this likely loss of income is over £11m higher than the cost of running Civica for 2 years.

 

	Year 1	Year 2	Year 3	Total
Civica CE Licence Fixed and variable	£624,064	£624,064	0	£1,248,128
Civica Re-licence cost one off	£250,000	0	0	£250,000
Camera licence**	£142,047	£146,309	0	£288,356
Total Civica	£1,016,111	£770,373	0	£1,786,484
New PMIS	£403,110*	£278,410	£278,410	£959,930
Camera Licence New PMIS **	0	0	£146,309	£146,309
Total new PMIS	£403,110	£278,410	£424,719	£1,106,239
Total Civica and new PMIS	£1,419,221	£1,048,783	£424,719	£2,892,723

 

 

*Includes implementation and bespoke development costs

 

** The unattended traffic enforcement camera licensing costs are applicable to both systems. Currently these are paid through Civica. However, these arrangements are being reviewed as part of a wider CCTV maintenance contract.

 

The expectation is that the annual contract costs will remain at £278,410 for years 4 through to year 10.

           

Alternative options considered

 

Extend the existing Civica CE Contract and do not tender

 

The move to a virtual permit system is considered to be one of the most, if not the most important part of the parking transformation programme. Whilst Civica could provide a paperless permit solution, the Civica enforcement solution and in particular the software application to allow the Council’s Civil Enforcement Officers (CEOs) to issue Penalty Charge Notices (PCNs) has already failed separate User Acceptance Tests (UATs) and is not deemed suitable in its current form to provide the robust enforcement solution required to support a transition to virtual permits.

 

Civica charges for or does not have modules that other systems (including the one proposed) include as standard.

 

The Civica system includes a removal module; this works inefficiently, and one part does not work properly. The proposed system includes a far more detailed and effective module which will maximise opportunities and improve income through a more effective work flow process, especially allowing the Council to deal with those vehicles that accumulate high numbers of PCNs and fail to pay, as well as those without registered keepers, making recovery very difficult.

 

Civica’s current delivery schedule does not include enhancements to some of the modules the Council considers key e.g. PCN and permit workflow.

 

Had this option been recommended then the Council would have to choose between transitioning to virtual permits, without the necessary enforcement solution - this would present an exceptionally high risk of catastrophic loss of PCNs and associated income - or delay the implementation of virtual permits and the Council would have to continue to bear the cost of resourcing the existing customer service models and associated pressures. Neither option is considered acceptable.

 

Extend the existing Civica CE Contract for 2 years and do not implement the new PMIS

 

Whilst the Council would not incur the costs of parallel running the transformation programme would be delayed.

 

The equipment that the Council’s Civil Enforcement Officers (CEOs) use is considered “end of life” and needs replacing urgently. New equipment would have to be procured via a contract with Civica. This would cost more than buying through the new provider and the Civica software that sits on it has failed the Council’s user acceptance tests twice.

 

Prior to the expiry of an extended contract the Council would need to retender with all the associated costs.

 

All of the points listed from 5.2 to 5.6 would also apply to this option and thus this option is not recommended.

 

Implement and go live with the new PMIS at the point the Civica contract expires (December 2019)

 

This would require both PCN and permit data migration. This was deemed to have too much risk for the reasons outlined above. The Council’s soft market testing research and existing intelligence about each of Civica’s competitors and systems revealed that more development would be required for go live. The time available between contract award and go live includes this important development time and also sufficient time for training, summarised as follows:

 

April 2019 – Commence tender process

September 2019 –Cabinet decision on new IT supplier

October 2019/March 2020 – Mobilisation, testing, training

April 2020 – Operational go live of new IT system

 

Having a replacement permit regime, new policies and work processes carries the highest risk, given the shift from paper to virtual which would be an entirely new operating model for enforcement, front office and back office. The worst-case scenario would be not having workable enforcement and/or the ability to issue a permit from the expiry of the Civica contract, resulting in reputational damage and risk of the Council not being able to issue parking permits or manage parking through being able to issue PCN’s; this would have associated road safety implications. In the absence of a new IT system, the financial risk would be in excess of £13m per annum.