Extraordinary

         Meeting Notice and Agenda

 

An Extraordinary Meeting of the Bega Valley Shire Council will be held at Council Chambers, Biamanga Room, Bega Valley Commemorative Civic Centre, Bega on
Monday, 8 May 2023 commencing at 12:00pm to consider and resolve on the matters set out in the attached Agenda.

 

 

 

To:

Cr Russell Fitzpatrick, Mayor

Cr Liz Seckold, Deputy Mayor

Cr Tony Allen

Cr Cathy Griff

Cr Mitchell Nadin

Cr Helen O’Neil

Cr David Porter

Cr Joy Robin

Cr Karen Wright

 

Copy:

Chief Executive Officer, Mr Anthony McMahon

Director, Assets and Operations, Mr Ian Macfarlane

Director,  Community, Environment and Planning, Mrs Emily Harrison

Director, Business and Governance, Mrs Iliada Bolton

Manager Communications and Events, Ms Kellie Dodge

Executive Officer (Minute Secretary), Mrs Jackie Grant

 

 

 

 


Live Streaming of Council Meetings

Council meetings are recorded and live streamed to the Internet for public viewing.  By entering the Chambers during an open session of Council, you consent to your attendance and participation being recorded.

The recording will be archived and made available on Council’s website www.begavalley.nsw.gov.au. All care is taken to maintain your privacy; however as a visitor of the public gallery, your presence may be recorded.

Publishing of Agendas And Minutes

The Agendas for Council Meetings and Council Reports for each meeting will be available to the public on Council’s website as close as possible to 5.00 pm on the Thursday prior to each Ordinary Meeting.  A hard copy is also made available at the Bega Administration Building reception desk and on the day of the meeting, in the Council Chambers.

The Minutes of Council Meetings are available on Council's Website as close as possible to 5.00 pm on the Monday after the Meeting.

1.      Please be aware that the recommendations in the Council Meeting Agenda are recommendations to the Council for consideration.  They are not the resolutions (decisions) of Council.

2.      Background for reports is provided by staff to the Chief Executive Officer for  presentation to Council.

3.      The Council may adopt these recommendations, amend the recommendations, determine a completely different course of action, or it may decline to pursue any course of action.

4.      The decision of the Council becomes the resolution of the Council, and is recorded in the Minutes of that meeting.

5.      The Minutes of each Council meeting are published in draft format, and are confirmed by Councillors, with amendments  if necessary, at the next available Council Meeting.

If you require any further information or clarification regarding a report to Council, please contact Council’s Executive Assistant who can provide you with the appropriate contact details

Phone (02 6499 2222) or email execassist@begavalley.nsw.gov.au.

 


Ethical Decision Making and Conflicts of Interest

A guiding checklist for Councillors, officers and community committees

Ethical decision making

·      Is the decision or conduct legal?

·      Is it consistent with Government policy, Council’s objectives and Code of Conduct?

·      What will the outcome be for you, your colleagues, the Council, anyone else?

·      Does it raise a conflict of interest?

·      Do you stand to gain personally at public expense?

·      Can the decision be justified in terms of public interest?

·      Would it withstand public scrutiny?

Conflict of interest

A conflict of interest is a clash between private interest and public duty. There are two types of conflict:

·        Pecuniary – regulated by the Local Government Act 1993 and Office of Local Government

·        Non-pecuniary – regulated by Codes of Conduct and policy. ICAC, Ombudsman, Office of Local Government (advice only).  If declaring a Non-Pecuniary Conflict of Interest, Councillors can choose to either disclose and vote, disclose and not vote or leave the Chamber.

The test for conflict of interest

·        Is it likely I could be influenced by personal interest in carrying out my public duty?

·        Would a fair and reasonable person believe I could be so influenced?

·        Conflict of interest is closely tied to the layperson’s definition of ‘corruption’ – using public office for private gain.

·        Important to consider public perceptions of whether you have a conflict of interest.

Identifying problems

1st      Do I have private interests affected by a matter I am officially involved in?

2nd     Is my official role one of influence or perceived influence over the matter?

3rd      Do my private interests conflict with my official role?

Local Government Act 1993 and Model Code of Conduct

For more detailed definitions refer to Sections 442, 448 and 459 or the Local Government Act 1993 and Bega Valley Shire Council (and Model) Code of Conduct, Part 4 – conflict of interest.

Agency advice       

Whilst seeking advice is generally useful, the ultimate decision rests with the person concerned.Officers of the following agencies are available during office hours to discuss the obligations placed on Councillors, officers and community committee members by various pieces of legislation, regulation and codes.

Contact

Phone

Email

Website

Bega Valley Shire Council

(02) 6499 2222

council@begavalley.nsw.gov.au

www.begavalley.nsw.gov.au

ICAC

8281 5999

Toll Free 1800 463 909

icac@icac.nsw.gov.au

www.icac.nsw.gov.au

Office of Local Government

(02) 4428 4100

olg@olg.nsw.gov.au

http://www.olg.nsw.gov.au/

NSW Ombudsman

(02) 8286 1000

Toll Free 1800 451 524

nswombo@ombo.nsw.gov.au

www.ombo.nsw.gov.au

 

Disclosure of pecuniary interests / non-pecuniary interests

Under the provisions of Section 451(1) of the Local Government Act 1993 (pecuniary interests) and Part 4 of the Model Code of Conduct prescribed by the Local Government (Discipline) Regulation (conflict of interests) it is necessary for you to disclose the nature of the interest when making a disclosure of a pecuniary interest or a non-pecuniary conflict of interest at a meeting. 

The following form should be completed and handed to the Chief Executive Officer as soon as practible once the interest is identified.  Declarations are made at Item 3 of the Agenda: Declarations -  Pecuniary, Non-Pecuniary and Political Donation Disclosures, and prior to each Item being discussed:

Council meeting held on __________(day) / ___________(month) /____________(year)

Item no & subject

 

Pecuniary Interest

 

   In my opinion, my interest is pecuniary and I am therefore required to take the action specified in section 451(2) of the Local Government Act 1993 and or any other action required by the Chief Executive Officer.

Significant Non-pecuniary conflict of interest

   – In my opinion, my interest is non-pecuniary but significant. I am unable to remove the source of conflict. I am therefore required to treat the interest as if it were pecuniary and take the action specified in section 451(2) of the Local Government Act 1993.

Non-pecuniary conflict of interest

   In my opinion, my interest is non-pecuniary and less than significant. I therefore make this declaration as I am required to do pursuant to clause 5.11 of Council’s Code of Conduct. However, I intend to continue to be involved with the matter.

Nature of interest

Be specific and include information such as :

·        The names of any person or organization with which you have a relationship

·        The nature of your relationship with the person or organization

·        The reason(s) why you consider the situation may (or may be perceived to) give rise to a conflict between your personal interests and your public duty as a Councillor.

If Pecuniary

  Leave chamber

If Non-pecuniary  (tick one)

 Disclose & vote        Disclose & not vote          Leave chamber

Reason for action proposed

Clause 5.11 of Council’s Code of Conduct provides that if you determine that a non-pecuniary conflict of interest is less than significant and does not require further action, you must provide an explanation of why you  consider that conflict does not require further action in the circumstances

Print Name

 

I disclose the above interest and acknowledge that I will take appropriate action as I have indicated above.

Signed

 

NB:  Please complete a separate form for each Item on the Council Agenda on which you are declaring an interest.


Extraordinary Council

8 May 2023

 

Agenda

1       Apologies

2       Declarations

Pecuniary, Non-Pecuniary and Political Donation Disclosures to be declared and tabled.

3       Staff Reports – Assets and Operations

3.1               Bega Valley Regional Gallery - Construction Update.............................. 7

  

 

 


Extraordinary Council

8 May 2023

 

 

Staff Reports – Assets and Operations

 

08 May 2023

 

3.1              Bega Valley Regional Gallery - Construction Update........................ 7


Extraordinary Council 8 May 2023

Item 3.1

 

3.1.   Bega Valley Regional Gallery - Construction Update     

This report provides an update on the construction contract for the Bega Valley Regional Gallery (RFT 2122-014) with Lloyd Group Pty Ltd upon them entering voluntary administration and provides recommendations for the next steps to progress the project to completion.

Director Assets and Operations  

Officer’s Recommendation

1.    That Council notes this report and that contract RFT 2122-014 has been terminated in accordance with the general conditions of contract.

2.    That Council reconfirms its commitment to complete the Bega Valley Regional Gallery upgrade project at best value for money.

3.    That Council assumes the role of Principal Contractor to deliver the remaining works for the Bega Valley Regional Gallery upgrade and notes the associated risks in completing the project.

4.    That in accordance with section 55.3(i) of the Local Government Act 1993, Council resolves to enter into direct negotiations and a contract due to extenuating circumstances, remoteness of locality and the unavailability of competitive or reliable tenderers with various sub-contractors to complete the works for the Bega Valley Regional Gallery upgrade project.

5.    That authority is delegated to the Chief Executive Officer to enter into direct negotiations and to execute all necessary documentation with various sub-contractors to complete the works for the Bega Valley Regional Gallery upgrade project.

6.    That should there be a funding shortfall for the project the Chief Executive Officer be delegated to identify additional funding sources to be utilised to complete the project through either budget reductions in other areas or utilisation of reserves with  a report on where funds are sourced from to be reported to a future council meeting.

 

Executive Summary

Council accepted the tender RFT 2122-014 on the 25 October 2021 with Lloyd Group Pty Ltd (the Contractor) for the Bega Valley Regional Gallery Redevelopment for $3,726,837.00 including GST.

On 31 March 2023 Council was formally advised in writing from Deloitte that the Contractor had entered voluntary administration and they were appointed as the administrators.

Council officers sought legal advice on Councils contractual position including any liabilities and in accordance with the general conditions of contract provided notice for contractor default and then terminated contract RFT 2122-014 on 26 April 2023.

Council is now in the position whereby it can step in and employ others to complete the works in accordance with the general conditions of contract.

It is recommended that Council assumes the role of Principal Contractor and engages the existing site manager to coordinate works on site and directly contracts with the various existing sub-contractors to complete the project.

Background

Council accepted the tender RFT 2122-014 on the 25 October 2021 with Lloyd Group Pty Ltd (the Contractor) for the Bega Valley Regional Gallery Redevelopment for $3,726,837.00 including GST.

The Project had a contractual completion date of the 28 October 2022 and was substantially behind the contract program largely due to the inability of the Contractor to procure materials and source sub-contractors in a timely manner.

Over the last six months Council continued to work with the Contractor including meeting with their directors on several occasions to try to ensure the project could get back on track in a collaborative manner to see the project complete.

An official opening for the gallery was scheduled for the 24 April 2023 and was deemed very possible with good progress on site during the last six months. A range of commissioning inspections were scheduled for the week commencing 5 April 2023 with the design consultants along with pre-defect inspections working towards the scheduled gallery opening at the end of April 2023.

On 31 March 2023 Council was formally advised in writing from Deloitte that the Contractor had entered voluntary administration and they were appointed as the administrators.

Further written correspondence from Deloitte was received on 4 April 2023 and 5 April 2023 noting that they had engaged with the Contractors directors to explore options to complete the project but were unable to identify a way to complete the project.

Council was then advised that the Contractor will cease performing works as of 5pm on Wednesday, 5 April 2023 and that there would be no further involvement at the site from the Contractor from that time onwards.

Council officers sought legal advice on the contractual position including any liabilities and in accordance with the general conditions of contract provided notice for contractor default and then terminated contract RFT 2122-014 on 26 April 2023 under the general conditions of contract for:

1.    abandoning the carrying out of the works

2.    suspending progress of the carrying out of the work in whole or part without written agreement of the Principal

3.    significantly failing to achieve scheduled progress.

Council is now in the position whereby it can step in and employ others to complete the works in accordance with the general conditions of contract.

This report outlines various options for Council consideration to complete the upgrade works to the Bega Valley Regional Gallery and associated risks.

Options

There are several options available to Council to complete the construction works, each with their own sets of risks as follows:

 

1.    Procure an alternative Principal Contractor – this option would involve Council procuring a head contractor to complete the project on Councils behalf. This option would involve Council entering into a similar contract as RFT 2122-014 to complete the project and the contractor would assume the risks and liabilities for a fee to complete the project.

 

This option would involve a new principal contractor requiring time to become familiar with the project and understand works required to be completed and then procuring the necessary sub-contractors to complete the project, all of which would come at substantial additional cost and time to Council.

 

2.    Council assumes the role of Principal Contractor (recommended option) – this option would mean that Council assumes the role of principal contractor, engages the existing site manager to coordinate works on site and directly contracts with the various existing or potentially new sub-contractors to complete the project based on best value for money principles.

This option would be the most cost and time efficient way for Council to complete the project but means Council assumes the risk and liabilities for completing the project. Council has direct engagement with the design team (engineers and architects) and an internal project manager with the necessary experience and skills to manage the subcontractors and complete the project.

3.    Other options as raised by Councillors.

Community and Stakeholder Engagement

Engagement undertaken

No broader community and stakeholder engagement has been undertaken other than a media release advising that the Contractor has entered voluntary administration and that the official opening of the gallery has been postponed as Council considers its position and next steps.

Engagement planned

Further community and stakeholder engagement will be undertaken once further direction is received from Council on its proposed way forward with this matter.

Financial and Resource Considerations

The project is currently funded by Building Better Regions Fund- Round 4 (BBRF) of $1,676,771 and an allocation of from the 2021/22 budget for a Council Loan Facility of up to $2,530,000 with an overall available project funds of $4,206,771 (excluding GST).

As at 31 March 2023, the adjusted contract sum for RFT 2122-104 was $3,599,996.84 (excluding GST) which included approved variations totalling $211,963.20 (excluding GST). Of this $2,947,051.83 has been certified and paid to the contractor in the form of monthly progress claims in accordance with the general conditions of contact.

There is currently $652,945.01 (excluding GST) remaining in the existing contract commitments for incomplete or unfinished work which can be reallocated to pay for the outstanding works to complete the project.

In addition to this Council currently hold two unconditional undertakings in the form of bank guarantees as security on the completion of the contract which are being considered as a funding source for any potential shortfall.

At this point in time, it is difficult to determine if the remaining funds are adequate to allow for the completion of the project until further negotiations with the various sub-contractors to complete the remaining works are undertaken as they are no longer held to their tendered costs now that the contractor has become insolvent.

While staff have had some level of communication with subcontractors post Lloyd Group moving into administration, it is not privy to all of the existing subcontracting arrangements with the Contractor and therefore cannot substantiate exactly who is owed what at this point.

In terms of resources should Council assume the role of Principal Contractor this would involve additional internal staff resources that would need to be re-allocated to this project and may impact on the timing for the delivery of other planned capital works projects for Council.

There is potential that the existing remaining budget will be insufficient to complete the project. Should this be the case it is recommended that the Chief Executive Officer be delegated to identify potential sources to fund the shortfall either out of budget reductions in other areas or reserves.

 

Item

$ Excl GST

Expenditure Detail

 

RFT 2122-104 Contract Commitment

$3,388,033.64

Other Project Costs (Insurances, Design Fees, PM Fees & Project Contingencies and other project costs)

$818,737.40

Total Expenditure

$4,206,771

 

 

Source of Funds

 

BBRF Round 4

$1,676,771

Council Loan Facility (2021/22 Budget)

$2,530,000

Total income available

$4,206,771

 

 

Total Project Capital Cost

$4,206,771

Total Available Construction Funding

$4,206,771

Project Funding Shortfall

$0.00 = total expense – total income

Financial Option Impacts | Life Cycle Costing

Ongoing Financial Impacts

$ Excl GST

Capital Investment | Renewal, Upgrade, New

$4,206,771

Annual maintenance and operational costs

$300,000

Depreciation costs

$140,000

User charges (annual income)

N/A

Legal /Policy

Council sought legal advice regarding its position in relation to the contract RFT 2122-104 and the Contractor entering into voluntary administration prior to terminating the contract. 

To proceed with the recommended option where Council assumes the role of Principal Contractor, Council will be required to enter into direct negotiations with the existing sub-contractors to complete the works.

To proceed it is recommended that Council progress in accordance with section 55.3(i) of the Local Government Act 1993 as follows:

55 Requirements for tendering

(3) This section does not apply to the following contracts;

(i) a contract where, because of extenuating circumstances, remoteness of locality or the unavailability of competitive or reliable tenderers, a council decides by resolution (which states the reasons for the decision) that a satisfactory result would not be achieved by inviting tenders.

In this instance Council asserts that the Contractor entering into Administration constitutes ‘extenuating circumstances’.

Council had Principal arranged insurance in place for Contract RFT 2122-014 through Statewide Mutual which is due to expire on the 14 May 2023 with a contract value of $3.7million. Officers are currently working with our insurers to extend this insurance to 30 June 2023 to ensure the project has sufficient insurance coverage in place.

As Council already has contract works insurance in place this enables Council to either assume the role of Principal Contractor or appoint an alternative contractor with relative ease, however given the short timeframe available for project completion it is recommended that  it would be expedient to progress via a direct negotiation pathway.

Impacts on Strategic/Operational/Asset Management Plan/Risk

Strategic Alignment

The Bega Valley Regional Gallery (BVRG) stimulates, develops and enhances the diverse visual culture of the region through viable, accessible, dynamic and relevant exhibition, education and collection programs. The BVRG is an important resource for Bega Valley Shire’s artistically rich and diverse community and works collegiately with fellow professional arts organisations who collectively deliver engaging and innovative programs of both artistic and educational excellence.

The Bega Valley Regional Gallery upgrade forms part of the Delivery Program 2022-25 and Operational Plan 2022-23

This report seeks Council to reconfirm its commitment to deliver this project for best value for money.

Environment and Climate Change

There are no environment and climate change impacts associated with this report.

Economic

The impact of the delay in the completion of the Bega Valley Regional Gallery has impacted on the delivery of the program of touring exhibitions and programming planned for the gallery.

These delays have broader impacts across the Shire in relation building opportunities to create and deliver events and programming that adds strong outcomes in the emerging cultural tourism economy.

Risk

There are several risks associated with the contractor entering voluntary administration and the subsequent delay in the completion of the Bega Valley Regional Gallery upgrade project.

These can broadly be separated into two categories; the operational and reputational impact for Bega Valley Regional Gallery, and the project specific risks in completing the project.

The delayed delivery of the upgrade project for the Bega Valley Regional Gallery now renamed the South East Centre for Contemporary Art (SECCA) will impact on its ability to undertake its core business in facilitating the building of opportunities to create and deliver events and programming that adds strong outcomes in the emerging cultural tourism economy.

The risk in relation to the delivery of the physical built infrastructure associated with the contractor entering voluntary administration can be summarised as follows:

1.    Time to complete – at this stage it is difficult to estimate the time required to complete the project until further negotiations are undertaken with the existing subcontractors and any material and or labour supply issues are identified.

2.    Negotiations with subcontractors – ideally Council would seek to enter into agreements with the existing site manager and subcontractors to complete the outstanding works pending reaching mutually acceptable commercial terms for all parties.

3.    Budget implications – there is currently some remaining available budget to complete the works. At this stage it is difficult to estimate if the budget is sufficient to complete the project until further negotiations with the existing subcontractors and any commercial matters are resolved.

4.    Quality – overall the quality of the works completed on the project has been of a high standard however with a loss of continuity on site this will need to be carefully managed through to completion.

5.    Warranties and as-built information – some warranties and security was lost when the contractor went into voluntary administration, however using the same subcontractors will give some level of cover for this.  Council has directly engaged the architectural bd engineering consultant to allow for continuity of the design and build. In addition, it holds unconditional undertakings in the form of bank guarantees which could be used to offset this financial risk.

6.    Resources - should Council assume the role of Principal Contractor this would involve additional internal staff resources that would need to be re-allocated to this project and may impact on the timing for the delivery of other planned capital works projects for Council.

7.    Scope reductions – should it emerge that the current available budget is insufficient to complete the project there are several options to reduce the scope which include the shade structure to the main entry and landscaping to the rear courtyard which could be excised from the project without impacting the function of the gallery.

8.    Insurances – Council obtained Principal arranged insurance for the works and as such is able to assume the role of Principal Contractor, Council has sought an extension to the current policy till the end of the financial year.

Social / Cultural

The BVRG/SECCA stimulates, develops and enhances the diverse visual culture of the region through viable, accessible, dynamic and relevant exhibition, education and collection programs. It is an important resource for Bega Valley Shire’s artistically rich and diverse community and works collegiately with fellow professional arts organisations who collectively deliver engaging and innovative programs of both artistic and educational excellence.

Attachments

Nil