Lead Member – Councillor Dan Morris, Portfolio Holder for Highways

Lead Officer – Andy Wilde

RESOLVED:

That Cabinet:

1.     Approved the recommended amendments to the conditions of the contract and the commercial arrangements as set out in Section 7.5 of this report.

2.     Authorised the implementation of the amendments via a deed of variation to the current contract between the Council and the Contractor for a period of 12 months from 1st April 2025.

3.      Give delegated authority for the Executive Director of Place to explore and agreed further contract amendments, in consultation with the Portfolio Holder for Highways and Transport.

The Portfolio Holder for Highways introduced the report which recommended a one-year extension of the Highways Term Maintenance Contract with Kier Transportation, highlighting significant service improvements and cost efficiencies. The extension would ensure service continuity and allow time to develop a future operating model.

Members noted that:

·       This financial year had seen an increase in productive output on repairs of 46% (50% of which were carried out within five days) with no budget increase.

·       The average cost to the council of repairing a pothole has fallen by 66% in the past four years and is now below the national average.

·       The percentage of the right first-time, permanent repairs, was now at 96%. This is the highest level ever as a unitary council.

·       The mixed economy model has been beneficial, with spending on the contract 50% below previous levels while maintaining economies of scale for larger purchases like tarmac.

·       The new ‘hybrid’ model has received industry recognition for being at the leading edge of national best practice, with Shropshire winning both “Team of the Year” and also the “Collaborate Partnership Award” at the Department for Transport Special Recognition awards in October this year.

Members raised concerns about the contract's performance and queried whether alternatives to the current contract had been considered. Criticism was also expressed regarding insurance claims issues and the fixed overhead payments. The Portfolio Holder acknowledged the challenges with insurance claims and overhead costs but emphasised that the overhead figure was the lowest in the country for Kier contracts.

Members sought clarification on the mixed economy model, the use of direct labour, and the incentive payments structure. The Assistant Director for Highways and Transport explained that the mixed economy model includes direct labour through agency arrangements and contracts with other contractors. He mentioned that the incentive payments were linked to key performance indicators (KPIs) to drive performance and that these payments would be phased out in the extension.

Praise was given for the flexibility and control provided by the mixed economy model, highlighting its positive impact on road safety and cross-portfolio work.

RESOLVED:

That Cabinet:

1.     Approved the recommended amendments to the conditions of the contract and the commercial arrangements as set out in Section 7.5 of this report.

2.     Authorised the implementation of the amendments via a deed of variation to the current contract between the Council and the Contractor for a period of 12 months from 1st April 2025.

3.      Give delegated authority for the Executive Director of Place to explore and agreed further contract amendments, in consultation with the Portfolio Holder for Highways and Transport.