MORE than £3m of “disputed items” remain to be resolved over Herefordshire Council’s service provision contract with Amey which ended last month.

The risk to the council in relation to these disputed items could impact on both capital and revenue budget planning. Some of the impact, however, will be absorbed within the 2013-14 budgets managed by Amey through the Managing Agent Contract agreement formed out of two contracts renegotiated in 2009.

In total, the council paid £38.5m to Amey Wye Valley over 2012-13 up from £32m in 2011/12.

New council budget papers reveal the disputed items risk. Following the adjudication of a sample of disputes earlier this year, talks are now taking place between the council and Amey to evaluate the impact of this ruling.

The council currently expects some £885k of income from Amey - for which provision has been made in the previous years’ outturns - and additional expectation of £166k for the five months to August 31.

Earlier this year, Amey missed out on the council’s £200m public realm contract covering the likes highways, parks, street cleaning and street lighting. The contract went to Balfour Beatty which took over on September 1.

Public realm was one of the council’s first private sector partnership initiatives. In 2003 the council entered into a contract with national construction and engineering firm Jarvis PLC for the provision of contract services worth around £13m a year over 10 years.

The contract involved establishing a joint venture company called Herefordshire Jarvis Services (HJS) with staff transferred over from the council’s former commercial services arm.

Just a year later Jarvis saw its share price plummet and started talking about breaking up the company to survive.

A proposed sale of HJS that all parties came to rely on fell through and the council had to prepare contingency plans to keep key services running until Amey agreed to buy the 80 per cent share Jarvis had in HJS with the council keeping its 20 per cent.

Amey Wye Valley took over the contract in August 2007 and soon had to cover much of the £2m-plus HJS was found to owe sub-contractors, suppliers and other creditors, a debt that caused considerable tension within the county’s business community.

In 2009 elements of the council’s two contracts with Amey - the other entered into after a company providing the council with technical services was taken over by Amey - were re-negotiated to form a single Managing Agent Contract through which Amey Herefordshire would deliver an “end to end” highways, parks and public rights of way service.

Through this partnership Amey also got to deliver a range of support services such as printing, catering, courier operations and fleet maintenance.