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Sewage Treatment Works: Sludge Thickener - Phase 2: Contract Approval: Various budget transfers

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A decision made 26 November 2013:

Decision Reference: MD-T-2013-0100

Decision Summary Title :

Sludge Thickener Project

Date of Decision Summary:

22 November 2013

Decision Summary Author:

Capital Accountant

Decision Summary:

Public or Exempt?

Public

Type of Report:

Oral or Written?

Written

Person Giving

Oral Report:

N/A

Written Report

Title :

Approval to sign the Contract for the Sludge Project with Doosan Enpure Ltd and Approval for Various Budget Transfers into the Sludge Thickener Project Head of Expenditure (Q00BP11004)

 

Date of Written Report:

22 November 2013

Written Report Author:

Capital Accountant

Written Report :

Public or Exempt?

Public

Subject:  Approval to sign the contract for the sludge project with Doosan Enpure Ltd and approval for various budget transfers into the sludge thickener project head of expenditure (Q00BP11004)

 

Decision(s):  The Minister for Transport and Technical Services approved:

  • The awarding of the Sludge Thickener Phase 2 contract to Doosan Enpure Limited at the tender price of £8,039,385.
  • A budget transfer totalling £4,479,000 from TTS Infrastructure capital head of expenditure (Q00RL10011) and £51,094.04 from TTS Sewage Treatment Works capital head of expenditure (Q0000C2666) to TTS Sludge Thickener capital head of expenditure (Q00BP11004).

 

Reason(s) for Decision:  The reasons for this decision are twofold:

  • To enable the completion of the Sludge Thickener Project and provide the Island with a fit for purpose Sludge Thickener Plant.
  • To provide funding for this project to commence in line with the Public Finances Jersey Law (2005) and the States of Jersey approved procedures.

 

Resource Implications:  Other than those detailed in the report there are no further financial or manpower implications.

Action required:

  • Doosan Enpure Ltd to be notified of the award of the Phase 2 contract.
  • The Finance Director to request the Minister for Treasury and Resources to approve the budget transfer from capital to capital as referred to in this report

 

Signature:

 

 

Position:

Date Signed:

 

Date of Decision (If different from Date Signed):

 

Hide report
Sewage Treatment Works: Sludge Thickener - Phase 2: Contract Approval: Various budget transfers

TRANSPORT AND TECHNICAL SERVICES DEPARTMENT

 

APPROVAL TO SIGN THE CONTRACT FOR THE SLUDGE PROJECT WITH

 

DOOSAN ENPURE LTD AND APPROVAL FOR VARIOUS BUDGET TRANSFERS

 

INTO THE SLUDGE THICKENER PROJECT HEAD OF EXPENDITURE

 

(Q00BP11004)

 

 

  1. Purpose of Report

The purpose of this report is to seek the approval of the Minister for Transport and Technical Services (TTS) for the following:

 

  • Award the contract for the Sludge Project Phase 2 to Doosan Enpure Ltd
  • Approval of various budget transfers (stated below) into the Sludge Thickener Project Head of Expenditure to provide funding for the completion of this project.

 

 

  1. Background – Appointment of Doosan Enpure Ltd

As stated in the attached report, on 21 July 2011 TTS invited five pre-qualified contractors to tender for Phase 2 of the Sludge Project. Following the tender process Enpure Ltd were selected as the preferred contractor on 04 November 2011 (MD-T-2011-0113).

 

However, Enpure Ltd encountered financial difficulties and subsequently went into administration on 03 September 2012.

 

As stated within the accompanying report TTS have reviewed all the options available and it was deemed that only two options were possible, a) re-tender the Contract, b) negotiate with the Original Tenderers.

 

Following discussions within the project board and with advice from the Treasurer it was agreed that TTS would follow option 2. Following negotiations with the original tenderers Doosan Enpure Ltd were identified as the preferred contractor and are recommended to the Minister for appointment at a re-negotiated contract price of £8,039,385.

 

 

  1. Background – Allocation of Funding of Sludge Project

The Sludge Project Board had previously agreed to transfer additional funding from other TTS capital heads of expenditure to the Sludge Project in order to fund various enhancements to the project which would enable the plant to run in a more efficient and cost effective manner. These enhancements included the inclusion of a CHP unit, Gas Scrubber and a move to a pasteurisation process.

 

At the point in which Enpure Limited went into administration, TTS also ring-fenced an additional sum of capital for use in restarting the project. This ring-fenced sum will also require transferring into the Sludge Project Head of Expenditure to allow Phase 2 to progress.

 

The table below sets out the amounts of capital to transfer to the existing Sludge Thickener Capital Vote:

 

 

 

Finally, to provide extra contingency an amount of £400,000 has been identified and ring-fenced within the Ash Cell rolling vote in 2013 and, subject to States approval in the budget debated in December 2013, will be instead identified within the Liquid Waste Capital vote in 2014.

 

 

  1. Discussion

Finance Direction No.3.6 ‘Variations to Heads of Expenditure’ sets out the procedures for the transfers between revenue and capital heads of expenditure  and states that budget transfers in excess of £1,000,000 require the approval of the Minister for Treasury and Resources and the relevant Minister party to the transfer. Authority to approve non-contentious budget transfers under £1,000,000 has been delegated to the Treasurer of the States.

 

 

  1. Recommendation

The Minister is recommended:

 

  • To accept and award the contract to Doosan Enpure Ltd at the tender price of £8,039,385.
  • To approve a budget transfer totalling £4,479,000 expenditure from TTS Infrastructure capital head of expenditure (Q00RL10011) and £51,094.04 from TTS Sewage Treatment Works capital head of expenditure (Q0000C2666) to TTS Sludge Thickener capital head of expenditure (Q00BP11004).

 

  1. Reason for Decision

The reasons for this decision are twofold:

 

  • To enable the completion of the Sludge Thickener Project and provide the Island with a fit for purpose Sludge Thickener Plant.
  • To provide funding for this project to commence in line with the Public Finances Jersey Law (2005) and the States of Jersey approved procedures.

 

 

 

 

 

  1. Resource Implications

The Sludge Thickener Head of Expenditure (Q00BP11004) will increase by £4,530,094.04, whilst the Infrastructure Capital Head of Expenditure (Q00RL10011) will decrease by £4,479,000 and the Sewage Treatment Works Capital Head of Expenditure (Q0000C2666) will decrease by £51,094.04. This will have no overall impact on States Expenditure.

 

 

  1. Action Required

Doosan Enpure Ltd to be notified of the award of the Phase 2 contract.

 

The Finance Director to request the Minister for Treasury and Resources to approve the budget transfer from capital to capital as referred to in this report

 

 

 

 

Written by:

Capital Accountant – TTS Finance

Approved by: 

Director of Finance

Attachments

Report

 

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