The Corporate Director – Education and Family Support, submitted a report, that provided an update on governance arrangements for the Mutual Investment Model (MIM), and requested that Cabinet considered agreeing to the proposals contained in paragraph 1.1 of the report.

         Section 3.1 and 3.2 of the report detailed Cabinet decisions in relation to the Band B schemes, and confirms the approved funding envelope of £68.2m.

The School Programme Manager confirmed, that MIM has been designed to finance major capital projects due to a scarcity of capital funding. It is based on traditional Public Private Partnership structures, but with the following core principles embedded which are detailed in the bullet points at 3.3 of the report.

Under the MIM, the private sector partners will build and maintain public assets and, in return, the Council, supported by funding from the Welsh Government, will pay a fee to the private partner, which will cover the cost of construction, maintenance and financing the project. At the end of the contract the asset reverts to the Council.

She added that Cabinet will be aware that the Welsh Government funding intervention rate for MIM schemes is 81%.

Since October 2019 WG has been running a procuring process for a private sector partner to work with it on the delivery MIM schemes, under the 21st Century Schools and Colleges Programme. It will be the only means of delivering revenue funded Band B projects. WG is in the process of appointing WG is in the process of appointing a private sector partner. The successful private sector partner and a subsidiary of the Development Bank of Wales will be required to form Welsh Education Partnership Co (WEPco), which will deliver infrastructure services.

She further reminded Members that Cabinet has previously determined to fund two schemes via MIM.

With regards to the Strategic Partnering Agreement (SPA), the Participants to the arrangements will be a number of local authorities and further education institutions. The Participants and WEPCo will enter into a Strategic Partnering Agreement (SPA) (Appendix 1 to the report referred).

The SPA provides for how the parties act together over the long term in a collaborative partnering, non-adversarial and open manner to support the effective planning, procurement and delivery of education and community facilities in Wales and the delivery of infrastructure services. The SPA is due to be executed in September 2020.

The initial term of the SPA is 10 years. This may be extended by 5 years by any one or more Participants. Under the SPA, WEPCo is required to provide partnering services to the Participants as detailed in paragraph 4.2 of the report.

Paragraph 4.3 then set out the services that WEPCo have exclusive rights to deliver to Participants in terms of project development, partnering services and project services for qualifying projects, which includes Band B. There was also an opportunity to deliver capital projects on a non-exclusive basis.

The School Programme Manager referred Cabinet to Appendix 2 of the report, which provided a more detailed summary of the SPA.

The Strategic Partnering Board (SPB), is the guardian vehicle of these commitments and will act as the primary mechanism for managing WEPCo's performance, she added.

The role of the SPB was set out in paragraph 4.10 of the report.

It was necessary that the Council appointed a representative to sit on the Board, with the attributes of the post holder being set out in paragraphs 4.11 and 4.12, with 4.13 detailing the operational arrangements for the Board.

A more detailed summary of the role of the Board is provided at appendix 3 of the report.

Paragraphs 4.15 to 4.19 of the report, then detailed the process for taking forward projects to WEPCo and how they will be dealt with.

Welsh Government are strongly encouraging Local authorities and  further education institutions to sign up to the arrangements with WEPCo via the SPA regardless of whether they have a MIM Scheme in place as WEPCo also offers Strategic Support Partnering Services which can assist Participants with estates planning or associated activities.

The SPA document was not yet in its final form, but it was not envisaged that the draft SPA will change substantially once a preferred bidder is approved. It was recommended that delegated authority is given to the Council’s Corporate Director, Education and Family Support, after consultation with the monitoring officer, to agree the final terms of the SPA and make any necessary minor amendments to it, as required.

Whilst there is a mechanism within the SPA that will allow for those Participants (named in the OJEU) to sign up after September 2020 by way of a deed of adherence (DoA), this will create several complexities as detailed in the bullet points under paragraph 4.23 of the report

If a Participant were to choose not to sign the SPA or the DoA and then wanted in the future to access Partnering Services or Project Services from WEPCo, it will not be able to do so in a procurement safe manner. The risks here were detailed at 4.25 of the report

Welsh Government’s Procurement Process for the delivery partner is provided in paragraphs 4.26 to 4.29

The School Programme Manager added, that the report was drafted during the standstill (Alcatel) period. WG had reported that all bidders had been advised of the outcome of the evaluation and WG had since concluded the process.

Approval to enter into the Strategic Partnering Agreement (SPA) is an executive function requiring a decision of the Cabinet. Paragraphs 4.31 to 4.39 of the report detailed the legal aspects here.

While there is no financial consequence in terms of agreeing to enter into the Strategic Partnering Agreement, it is important to note that MIM schools, if progressed to completion, will result in revenue budget pressures, which will be considered as part of the Medium Term Financial Strategy.

The Leader sought advice that Cabinet were not at this time agreeing to any specific Pathfinder Projects at this particular time and that this would be the subject of a further report to be received in due course.

The School Programme Manager confirmed that this was the case and that Feasibility Studies to be carried out during late autumn/winter would give rise to the above process.

RESOLVED:                        That Cabinet

 (a) Noted the progress of the Preferred Bidder Stage of the Competitive Dialogue Procedure under the Public Contracts Regulations 2015 as outlined in this report;

(b) Approved the execution, delivery and performance of the Strategic Partnering Agreement with the Welsh Education Partnership Co in September 2020 to facilitate the delivery of a range of infrastructure services and the delivery of education and community facilities;

(c) Approved the Strategic Partnering Agreement at Appendix 1 and summarised at Appendix 2 of this report so as to give effect to recommendation (b), subject to recommendation (d) below;

(d) Gave delegated authority to the Corporate Director, Education and Family Support, after consultation with the monitoring officer and Section 151 officer:

(i) to approve the final terms of the Strategic Partnering Agreement, including any amendments to the Strategic Partnering Agreement approved here as may be necessary, for reasons including but not limited to finalising any outstanding areas; and

(ii) to approve any further deeds and documents which are ancillary to the Strategic Partnering Agreement;

(e) Noted that in agreeing to the Strategic Partnering Agreement, it is not being asked to decide to proceed with any Pathfinder Project, and that nothing within the Strategic Partnering Agreement commits the Council to make any such commitment. Any decision to proceed with a Pathfinder Project will be reported back to Cabinet in future report(s) for decision. (Page 592 of the report)

(f) Approved the appointment of Cllr Dr Charles Smith, Cabinet Member for Education and Regeneration as ‘Participant Representative’ to sit on the Strategic Partnering Board (SPB).