Ten fleets chosen to supply public
sector

List of approved suppliers to improve efficiency in procuring
100,000 lease cars
 
 
 

The Office of Government Commerce has drawn up a list of fleets
which in future will be allowed to bid for contracts supplying
lease cars to a large number of public sector bodies. 

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The 10 contract hire providers who made it through the selection
process are: Appleyard
Contracts Ltd, Arnold
Clark Finance Ltd, Arval UK
Ltd, Automotive
Leasing Ltd (a subsidiary of LeasePlan),
GE
Commercial Finance Fleet Services, Lex
Vehicle Partners Ltd, Lloyds
TSB autolease, Lombard
Vehicle Management, Masterlease
Ltd, and T C H Ltd.

The “Pan Government Collaborative Framework Agreement”, agreed
between the OGC and the NHS
Purchasing and Supply Agency (NHS PASA) as well as other public
sector bodies, will cover the supply of car leasing services to a
wide range of public sector organisations (PSOs) including local
councils, central government agencies and NHS trusts.

Already, 130 PSOs – including Firebuy, HM Prison Service,
Hertfordshire and Surrey County Councils and the Government Car and
Dispatch Agency – have signed up to the agreement, with more
expected to follow suit in coming months.

Public sector bodies will not be required to sign up to the
agreement, but it is anticipated that a large number will do
so.

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It is estimated that the agreement will cover between
75,000-100,000 vehicles, and will be worth up to £270m, calculated
on the basis of an average annual lease cost of £2,700 across a
fleet of 100,000 vehicles.

The agreement is to run until August 31 2010, at which time it
will be reviewed.

Selection process

The bidding process began in September 2006. An initial meeting
to invite fleets to tender attracted “between 30-40 attendees”, one
bidder said. By January 31 2007 this number had been whittled down
to 13, with the final 10 learning of their success in early
August.

Jennifer Davis, general manager of public sector at Automotive
Leasing told Motor Finance that the selection criteria for
the “comprehensive and thorough” bidding process were based “50 per
cent on competitive prices, 35 per cent on delivery of service, 10
per cent on quality of products and 5 per cent on environmental
impact”. UK-wide coverage was also vital. Davis added: “The bidding
process was entirely online via the Bravo e-tendering service,
which worked very well, and turned out to be very efficient and
open.”

The agreement builds upon the experience of NHS PASA in
administering tenders for fleet contracts, as it has managed the
fleet requirements for the NHS as a whole – amounting to some
35,000 vehicles – in this way for some time now.

Seven of the 10 companies – Appleyard, Arnold Clark, Automotive
Leasing, Lex, Lloyds TSB autolease, Masterlease and TCH – were
suppliers under NHS PASA’s previous framework. The other three
companies – Arval, GE Fleet and Lombard Vehicle Management – are
new to the agreement.

Administration reduced

The extension of the agreement to allow other PSOs to opt in to
the NHS PASA model was prompted by the 2004 Gershon report into
efficiency in the public sector. By channelling public sector
vehicle lease requirements through the NHS PASA-administered
framework, the OGC believes that the government can eliminate
unnecessary duplication of administration, saving PSOs which opt in
to the agreement time and money.

Steve Newton, category manager for fleet at the OGC explained:
“The 10 contract hire companies will lease out the cars as required
to public sector clients, with contract management handled by NHS
PASA – meaning that the burden of ensuring that they are getting
best value for money is taken on by a body which has considerable
experience and expertise in this matter. Through this deal, PSOs
will also be able to benefit from the excellent manufacturers’
terms achieved in the pan-government vehicle purchase deal
completed in December 2006, which was led by the Department of Work
and Pensions.”

Newton will be involved in visiting a wide variety of PSOs in
the next few months in order to explain the benefits of the
framework. In addition all bodies involved in shaping the framework
– including NHS PASA, HM Revenue & Customs and the OGC – will
promote the agreement to their own organisations.

The 10 selected fleets will also promote the framework to their
existing PSO clients to a greater or lesser extent, with Davis of
Automotive Leasing, which last year won contracts with 22 per cent
of NHS fleets under the old PASA system, confirming that her
company expected to be “very active” in promoting the agreement to
its public sector prospects and clients.

Flexible leasing

The OGC has calculated that the agreement will help to reduce
the cost of car leasing by 2-3 per cent for participating PSOs.

It said: “The framework also allows customers to restrict the
number of suppliers by providing for call-offs between an
organisation and its selected framework supplier or suppliers.
Sustainability can be addressed in the call-off selection process,
which allows customers to incorporate their own policies, including
environmental factors such as capped CO2 emissions, when selecting
suppliers.

“A flexibility option means that cars can be taken without
maintenance, with alternative payment profiles, including arrears
payments and lease terms of between one and five years.”

Public sector clients who opt in to the agreement will be able
to choose a provider via a website which sets out terms and vehicle
choice from the 10 approved fleet providers. Driver management
systems are agreed between fleet providers and PSO clients, as
previously.

Davis added: “Lessors may provide incentives for clients to go
sole-supply or to use the call-off process, which is a new
development that was not available under the terms of the old NHS
PASA framework.”

Clients may also be offered the chance to choose a
profit-sharing arrangement with their lessor, where residual values
and maintenance budgets will be examined at the beginning and the
end of the lease. If there is any surplus, a pre-arranged
percentage is given back to the PSO client.

Advantages for all sides?

The suppliers on the list will have access to a large number of
public sector clients, boosting business volumes as well as
reducing the costs associated with bidding. “In theory each PSO in
the UK could publish a tender for its fleet – necessitating large
numbers of bids to be submitted for public sector contracts,” Pete
Nolan, general manager of public sector at fleet company
Masterlease commented.

“In future, thanks to the agreement, this will be simplified as
the bodies in question will have all the information they need to
choose between contract hire suppliers.”

The public sector bodies will benefit from the DWP-negotiated
vehicle discounts, as well as the reduced administration and the
outsourcing of the complex business of contract management. The
taxpayer will also benefit as less public money is spent on
duplicating tenders, and administering fleet contracts.

Association reaction

Fleets which did not make the list still have the opportunity to
work in the public sector, as government bodies are not obliged to
be party to the agreement; only time will tell, however, the amount
by which they see their public sector income streams reduced – if
at all.

John
Lewis, director-general of the BVRLA
said: “There are many contract hire companies which may choose not
to bid for public sector business as they do not wish to operate in
that environment, due in many cases to the huge number of very
varied tenders on offer.

“The companies which have been chosen have not just been plucked
out of the air – NHS PASA and the OGC have gone to the marketplace
and found the operators they believe will be able to offer the best
service to public sector bodies.”

The BVRLA sees the agreement of the framework as a “positive
development”, Lewis said, which will make best use of government
resources. Prior to this there was a loose arrangement of
government fleet managers who would meet to share expertise, which
the BVRLA has in the past advised on fleet issues.

Lewis added: “Prices in the fleet market are already very keen
so if the agencies think they will get a 50 per cent price
reduction through this initiative they will be disappointed.
However they will be able to compare suppliers on a more equal
footing thanks to a commonality of terms and conditions to help
eliminate nasty surprises, for example at the end of a contract
term, which will in turn help to deliver maximum efficiency and
benefit to the taxpayer.”

Finance
& Leasing Association director-general Stephen
Sklaroff said: “This innovative leasing contract is good news.
Leasing is an attractive and efficient means of funding investment
in the public sector and should be used more.”