18 August 2020
Media: Local Democracy Reporter
Topic: Complaint about street lighting contract tender process
Enquiry
I've had this email come across my desk and I'd like to invite the council to respond to it.
Could the council (and mayor, as she is mentioned) please provide comment
David Sefton:
I recently tendered the 10 Year Maintenance and upgrade contract for the Rotorua Street Lighting network.
I was unsuccessful in my bid to win this contract.
The Rotorua Lakes council instead opted to award the contract to McKay who are a Whangarei based company.
My tender was 100% compliant with the tender documentation and technical requirements of the tender - and I was also $248000.00 cheaper than McKay's.
A lot of local business owners who I regularly chat with are absolutely flabbergasted at the outcome, particularly when RLC is pushing - Local , Local, Local, ... [I want to] hopefully get the ratepayers of Rotorua to understand what is going on behind the scenes.
I had offered employment contracts, subject to winning this contract, to 5 additional staff (including the 2 employed by the incumbent provider) to resource this contract. These include Linemen, Electricians and traffic management staff, all of whom reside locally. The 2 traffic management staff are redundant hospitality workers who we were to retrain for this role.
I also had ready to push go on the procurement of 2 new utes from Rotorua Mazda, and the build of a traffic management truck from MBY Engineering, both local businesses who desperately need these deals in the current climate.
Techlight who is my preferred supplier is based in Rotorua, and supports the local economy. The Directors of techlight reside in Rotorua and return profits to the region.
McKay will purchase the new light fittings from NB Smartcities, who is 50% owned by the incumbents director - is this a conflict?
My intention was if I had won the contract to repurpose 2 existing staff to the contract - I will no longer require these staff as I do not have the contract. I have so far given one his termination letter - possibly another next week.
In my submission for the contract I only referenced contracts that were relevant to street lighting. I believe that others presented contracts that were multi million dollar contracts. Seftons have delivered several multi million dollar contracts in recent years successfully, and evidence of these would have been provided if requested.
I had intended to purchase a second yard in Rotorua if I had won this contract, meaning Seftons would be contributing near $20K per annum in rates locally.
At this stage I have to fight for every dollar we earn, I have tendered this contract at absolute rock bottom single digit margin to attempt to get some breathing space with a long term contract bringing surety of revenue. I am rapidly losing my faith in the industry and wonder why I bother being in business. The perceived benefits of being a business owner just don't exist anymore. My Grandfather, father and I have trained over 120 Apprentices in Rotorua since 1961, and it leaves me wondering when will the city give back to Seftons? We have had a maintenance contract with council for the last 7 years, but do not receive maintenance works on a regular basis. I even lowered my rate for a qualified electrician in the last tender in a desperate bid to secure work, this has not succeeded. Yet the council continue to engage 1 or 2 man operators with no resource or expertise whatsoever to bring to the table.
I own and operate an electrical contracting business that has more than sufficient resource and capability to deliver the street light contract, I do not own a marketing company. It would be superficial to have our capability judged on factors that purely relate to gloss, smoke and mirrors.
Last financial year I sponsored, from the small profits earned by my Mum and Dad business, over $29000 to local sports clubs, kohangas, marae, school fundraisers etc
McKay have also been included in the new consortium to manage the waste water treatment plant - this work was never offered to locals.
the council are pushing Tatou Tatou & Go Local - and they don't practice it themselves!!
When I first found out the outcome of the tender and the values etc involved - I did ask for a meeting with Mayor Chadwick - it was absolutely impossible to get anywhere near her for a please explain or to put across my side.
Instead I was offered a meeting with Geoff Williams (CE), Peter Dine and James Simpson of RLC. I took along Ray Wells from Techlight as well to support me.
It basically became very obvious very quickly over our one and a half hour meeting that none of them could see any wrongs had been done.
I believe that McKay basically had a better / glossier presentation and essentially gave this image that they were so much better than anybody else. The reality is they are wiring the sky city conv centre and doing Auckland transports lighting - which looks fantastic - but is completely irrelevant - as none of those staff (on the ground or management) would be involved locally anyway. As it sits at the moment McKay are currently advertising for a local manager as they don't have one (or at least were at the time of tender) Although I am not privy to their tender submission - it would be very interesting to see if any of it was fabricated!!
The council claimed that the tender was weighted 60% Price, 35% relevant experience / methodology and 5% track record. Under the NZTA procurement guidelines (this project is funded by NZTA) the territorial authority can set the criteria, inclusive of local influence if they see fit. In this tender no consideration was offered for locally based companies / return of proceeds to district etc.
Response
Reporter was informed that as the mayor has no involvement in tender processes she is unable to comment and that comments from the CE cover off why this was referred to him:
From CE Geoff Williams:
Multiple factors are taken into consideration in assessing tenders and this was a fair and open tender process with clear criteria, against which tenders were evaluated.
Our procurement process is based on best practice principles, which includes a weighting towards local services and suppliers.
Mr Sefton has received feedback and we have offered further guidance regarding tendering.
Council is committed to supporting the local economy and local businesses. However, we also need to ensure the best possible outcomes and value for our ratepayers and wider community.
While we understand Mr Sefton's disappointment, it is unfortunate he has chosen to attack the process and outcome of what was a rigorous procurement process.
Tender evaluations is not a function of the mayor. It is an operational process carried out by an appropriately skilled panel, the make-up of which is dependent on the type of services or supplies being procured.
Myself and other staff met with Mr Sefton to hear his concerns, discuss the process and give feedback. We also then undertook a tender review to ensure the process had been fair and robust and I am satisfied that it was.
Both Sefton Electrical and McKay, which has a Rotorua branch and employs locals, are existing council contractors. We genuinely value good working relationships with our contractors and an offer to Mr Sefton to provide further guidance and support still stands.