Approval for Additional Funding to Procure Major Foam Tender

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A decision made (08.12.2008) to approve additional funding to enable the procurement of a Major Foam Tender.

Decision Reference: MD-TR-2008-0140
Decision Summary Title:	Additional Funding Request for Purchase of Major Foam Tender.		Date of Decision Summary:	01/12/08
Decision Summary Author:	Nick Collins Finance Manager Decision Support.		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Additional Funding Request for Purchase of Major Foam Tender.		Date of Written Report:	01/12/08
Written Report Author:	Nick Collins, Finance Manager, Decision Support		Written Report : Public or Exempt?	Public
Subject: Approval for additional expenditure of up to £175,700 from Jersey Airport’s Trading Fund to cover additional costs of procuring a Major Foam Tender.
Decision(s): The Minister approved additional expenditure of up to £175,700 from Jersey Airport’s Trading Fund to enable the procurement of a Major Foam Tender before 31 December 2008.
Reason(s) for Decision: To ensure compliance with financial direction 3.1 and the Public Finance (Jersey) Law 2005.
Resource Implications: Up to £175,700 depending on the Euro exchange rate at the time of fixing the purchase contract.
Action required: Finance Manager, Decision Support to notify the Assistant Minister for Economic Development of the Minister for Treasury and Resources approval of the additional expenditure.
Signature:		Position: Senator T A Le Sueur, Minister for Treasury and Resources
Date Signed: 8 December 2008		Date of Decision: 8 December 2008

Approval for Additional Funding to Procure Major Foam Tender

TREASURY AND RESOURCES MINISTER

additional funding request for purchase of major foam tender

1. Purpose of Report

The Assistant Minister for Economic Development has requested the Minister for Treasury and Resources to approve a request from Jersey Airport for an additional £175,700 expenditure from their Trading Fund in 2008 to cover the additional costs of the Major Foam Tender.

2. Background

Under Financial Direction 3.1 and the Public Finance (Jersey) Law 2005 the approval of the Minister is required for any additional expenditure from a Trading Fund which was not approved as part of the Annual Business Plan.

The Airport requires Category 7 fire cover meaning it needs a minimum number or 2 operating Major Foam Tenders (MFT). At the Airport’s Engineering Management Team meeting 49/2008 it was identified that the decision made in 2004 to operate on 3 instead of 4 MFTs can leave the Airport in a vulnerable position. This conclusion was made apparent by 3 breakdowns in the 12 months to April 2008 reducing the cover to the minimum requirement of 2 MFTs. Should one of these final 2 sustain even a puncture it would temporarily restrict the movement of any aircraft requiring Category 7 fire cover.

The estimated sum of £420,000 included in the 2008 Budget for the replacement of a Major Foam Tender was based on the purchase price of the two previously purchased vehicles with an allowance for inflation. Following the States requirement for formal tender process involving Strategic Procurement and including an independent specialist - Martin Gautier, Principal Engineer, Support Services, Transport and Technical Services, the tendered price was €693,050 (supplier’s preferred currency) which equated to £579,735 as at 27 November 2008 with a rate of 1.19546 €/£. This is an increase over the budgeted amount of £159,735 reflecting market conditions rather than an increase in vehicle specification and does not contain any non essential modifications. The Airport have stated in their report that due to there being a limited pool of suppliers, pricing is dependant on demand at the time. In order to mitigate any unfavourable movements in the exchange rate between the decision date and the order date, Jersey Airport is seeking up to an additional 10 percent on the £159,735 taking the requested sum to £175,700.

It should be noted that the chosen tender was not the cheapest; the lowest tender, which was from the supplier of the previous 2 vehicles, was in the sum of £472,000. However, they did not meet the preset criteria on quality. In addition, the Airport’s evaluation of the two vehicles purchased from them is that they have become increasingly unreliable and there have been problems with availability of essential replacement components.

Finally, If the order is not placed before the year end, the Airport have stated the price of the Tender will rise by €27,000 (£22,585 at the above rate).

The Airport Finance Director in an email dated 4 December 2008 has stated that the Trading Fund will have sufficient funds to cover the additional expenditure.

4. Recommendation

That the Minister approves the additional expenditure of up to £175,700 from the Jersey Airport Trading Fund in order to commit to the order of the Major Foam Tender.

5. Reason for Decision

To ensure compliance with financial direction 3.1 and the Public Finance (Jersey) Law 2005 and enabling Jersey Airport to procure the Major Foam Tender in accordance with Engineering Management Team Decision Papers 36/2008 and 49/2008 at the best available price.

States Treasury Nick Collins, Finance Manager Decision Support

11 December, 2008 for decision 8 December 2008