Finance and Audit Committee - City of Ryde · Benchmark 8.74% 7.80% ... Agenda of the Finance and Audit Committee Meeting ... The Chief Financial Officer as Council’s Responsible

Finance and Audit Committee

AGENDA NO. 05/08

Meeting Date: Tuesday, 25 November 2008 Location: Committee Room No. 2, Fifth Floor,

Civic Centre, 1 Devlin Street, Ryde Time: 5.00pm

NOTICE OF BUSINESS Page

1 CONFIRMATION OF MINUTES ...................................................................... 1

2 INVESTMENT REPORT – OCTOBER 2008.................................................... 2

3 ANNUAL TENDERS – Tender for Hire of Plant........................................... 25

4 TENDER FOR THE SUPPLY AND DELIVERY OF MULTIFUNCTION POLES (MFP) FOR MACQUARIE PARK RAILWAY STATION - (Corner Lane Cove Road and Waterloo Road, Macquarie Park) ............................ 30

5 GOVERNANCE FRAMEWORK – Procurement Activities.......................... 34

Finance and Audit Committee Page 1

Agenda of the Finance and Audit Committee Meeting No. 05/08, dated 25 November 2008. Page 1

1 CONFIRMATION OF MINUTES RECOMMENDATION: That the minutes of the meeting of the Finance and Audit Committee No. 04/08 held on 21 October 2008, be confirmed.



2 INVESTMENT REPORT – OCTOBER 2008 Report prepared by: Chief Financial Officer Report dated: 21 November 2008 File No. COR2008/164 Report Summary This report provides details of Council’s performance against the benchmark for returns of its investment portfolio for the month of October 2008, the financial year to date and the rolling 12 month period. Council’s return for October 2008 is as follows: Oct 2008 12 Mths YTD Council Return 3.78% 5.81% 6.22% Benchmark 8.74% 7.80% 7.90% Variance -4.96% -1.99% -1.68% The above results reflect the volatility that has been present in the global investment markets for the last 12 months. While Council’s return to date is below benchmark, Council’s income from interest on investments exceeds the budget year to date by $66,000 however, given the significant cuts to interest rates by the Reserve Bank, it is projected that Council’s forecasted income from interest on investments may need to be adjusted down as part of the December 2008 review of the implementation of the 2008-2012 Management Plan. This report includes the current estimated market valuation of Council’s investment portfolio with a commentary on significant events in the global financial markets. A summary on movements in ratings on investments within Council’s investment portfolio and actions taken by Council Officers in managing Council’s investment portfolio is also provided. All Council’s investments comply with the Minister for Local Government’s investment Order dated 15 August 2008 and Council’s investment Policy except for the following investments whose credit ratings are now below the Minister’s Order:

Investment Rating Maturity • Grange IMP - Quartz CDO A- neg watch 20/12/2010

- Merimbula CDO C/DR2 20/06/2013 - Glenelg CDO BBB 22/12/2014 - Scarborough CDO BB- 23/06/2014 - Torquay CDO BB 20/06/2013

• Alpha CDO BBB 20/03/2012 • Oasis CDO BBB- 04/09/2014 • Covent Garden CDO CCC 20/09/2012 • Constellation CDO CCC 20/03/2012 • Rembrandt CPDO CCC 02/11/2016 • Palladin CDO D 20/06/2010



ITEM 2 (continued) All the above investments have been previously reported to Council through the Investment Report and the weekly Councillor Information Bulletin and Councillor Workshops / Briefings with the exception of Covent Garden. Council officers were advised on 11 November 2008 that Covent Garden has been downgraded to CCC. Under the Minister’s Order, Council is required to divest itself of these investments as soon as practicable. With the exception of the investments in the Grange IMP, these investments were purchased with the intention of holding them to maturity. Council officers continue to work closely with Oakvale Capital Limited to manage Council’s Investment Portfolio and seek viable options to exit the above investments. Report The Chief Financial Officer as Council’s Responsible Accounting Officer is required to report to Council on a monthly basis on Council’s Investment Portfolio and to certify that the Investments are held in accordance with Council’s Investment Policy and Section 625 of the Local Government Act. Investment Performance Commentary Council’s investment portfolio as at 31 October 2008 was as follows: October 2008

Cash/Term Deposits $55.2M 58.8% Floating Rate Notes $ 6.0M 6.4% CDO $ 7.0M 7.4% CPDO $ 1.0M Managed Funds $ 3.0M 3.2% Other Financial Products $ 6.5M 6.9% Total Cash Investments $78.7M Property $15.1M 16.1% Total Investment Portfolio $93.8M

The volatility and turmoil in financial markets has continued to impact on Council’s investment portfolio, both in respect of returns and market valuations of Council’s structured products (CDOs, CPDO and capital Protected Notes). Whilst returns are below benchmark for October by 1.99% on a rolling 12 months basis, the returns are generally in line with budget projections. With the Reserve Bank cutting interest rates by 100 basis points in November 2008 and the expectation of further cuts in interest rates, this budget is being closely monitored and any budget adjustments will be reported as part of the Quarterly Review of the implementation of the 2008-2012 Management Plan.



ITEM 2 (continued) Advice has been received of the following rating migrations since the last monthly investment report was submitted to Council:

Name of Product

Face Value

$

Rating at Issue Date

Current Rating as at

30/9/08

Alpha 1,000,000 AAp NRi

BBB NRI

31/10/08

Covent Garden 2,000,000 AA

CCC 11/11/0

8 The key investments to note in this report are as follows:

Palladin CDO $2 million AA now CCC Commonwealth Bank As reported to the Committee of the Whole meeting of 4 November 2008, Council has now received formal advice from the Commonwealth Bank that this investment has defaulted. Council is still awaiting a formal response from the Commonwealth Bank from

the most recent meeting held with the bank on this investment. As a result, this investment is recorded at zero value in the investment report. Constellation CDO $1 million Floated AAA now CCC National Australia Bank As reported to the Finance and Audit Committee meeting of 21 October 2008, this investment has incurred 6 credit events and whilst no formal notification has been received from the NAB, it is understood that the CDO will unwind as at 22 December 2008. Council is still awaiting a formal response from the National Australia Bank from the most recent meeting held with the bank on this investment. As a result, this investment is recorded at zero value in the investment report. Rembrandt CPDO $1 million AAA now CCC Local Government Financial Services As reported to the Committee of the Whole meeting of 4 November 2008, Council had received formal advice from LGFS dated 28 October 2008 that the investment had reached its cash out point and was being unwound with an anticipated return of 8 cents in the $1. Subsequently LGFS advised by letter dated 30 October 2008 that following City of Ryde’s representations, given the advanced negotiations to protect this investment, they had instructed ABN



AMBRO to suspend the unwinding process whilst all options are explored.



ITEM 2 (continued) It is understood the LGFS Board has considered this matter however at the time of writing this report no further information has been forthcoming. A further update will be provided at the Finance & Audit Committee should additional information be received. This investment has been valued at $80,000 in the investment report.

Oasis CDO $1 million AA now BBB- Commonwealth Bank

This CDO pays 140 bps above the 90 day BBSW. The investment was rated AA when purchased on 4 September 2006 with a maturity of 4 September 2014. This CDO suffered 4 credit events in September /October 2008 in respect of Fannie Mae, Lehman Brothers, Washington Mutual and Kaupthing Bank. Standard & Poors downgraded the investment to BBB- on 29 September 2008. The investment can withstand approximately 1 further credit event before principal is impacted based on an average weighting of 1%. Meetings and discussions have been held with the Commonwealth Bank on this investment. The current illiquid market conditions and pricing of the investment are severely restricting the ability of the manager, Societe Generale Asset Management, to make substitutions to protect the investment. This investment has been valued at $184,000 in the investment report.

Covent Garden CDO $2 million AA now CCC

Societe Generale

This CDO pays 120 bps above the 90 day BBSW. The investment was rated AA when purchased on 6 July 2007 with a maturity of 20 December 2012. This CDO suffered 6 credit events in September /October 2008 in respect of Fannie Mae, Freddie Mac, Lehman Brothers, Washington Mutual, Glitnir Bank and Kaupthing Bank. Council is still awaiting formal notification of the credit events for Glitnir Bank and Kaupthing Bank which is expected in the near future. Societe Generale were in the process of changing the rating of the investment from Fitch to Standards & Poors however they have put this action on hold following the recent market turmoil until the market settles.



ITEM 2 (continued) Council officers arranged to meet with Societe Generale on 10 November 2008 to discuss the status of this investment and following on from this meeting, Council was advised on 11 November 2008 that the Fitch Rating Agency had downgraded the rating on this investment from AA to CCC. The investment can withstand approximately 1 further credit event depending upon market recovery before principal is impacted. The current illiquid market conditions and pricing of the investment severely restrict the ability to make substitutions to protect the investment.

This investment has been valued at $136,000 in the investment report. Alpha CDO $1 million AA now BBB

ABN AMRO This CDO pays 250 bps above the 180 day BBSW. The investment was rated AA when purchased on 11 April 2006 with a maturity of 20 March 2012. This CDO suffered 4 credit events in September /October 2008 in respect of Fannie Mae, Freddie Mac, Washington Mutual and Lehman Brothers which impacted the principle portfolio. Standard & Poors downgraded the investment to A- on 15 October 2008 and then to BBB watch negative on 31 October 2008. The income pool has not experienced any credit events and continues to pay coupon. The investment can withstand approximately 9 further credit events before principal is impacted. This investment has been valued at $390,000 in the investment report.

Focus Note $500K AA

Westpac Bank

Council has also been advised that its $500K investment in the Westpac Principal Protected Focus Note has moved into a zero coupon bond as part of its capital protection mechanism. This investment was purchased on 20 December 2006 and will mature in December 2012 The Westpac Focus Note invested in the BT Wholesale Focus Australian Share Fund has been significantly impacted by the volatility in the financial markets. Whilst Council will not receive any more coupons from this investment, it will receive the full face value of its investment on maturity. Council received a total of $33K in interest on this investment.

This investment has been valued at $408,000 in the investment report.



ITEM 2 (continued) Grange IMP Since Lehman Brothers filed for bankruptcy, Council has been unable to obtain valuations for the CDO in the IMP. As an interim measure Council has written down the value of the CDOs within the IMP by 15% ($285K) to reflect the estimated decline in theses products since mid September 2008 following the global turmoil in the financial markets.

As part of the Grange IMP, Council held a $50K ANZ Principal Yield Cure note which had a call date of 17 October 2008. The Note was called on this date and Council received full repayment of the $50K principal.

Financial Security Reserve Council at its meeting of 7 October resolved to create an $8 million Financial Security Reserve to protect Council against any future fallout from the global financial crisis. This reserve has been created from the $25 million interest on investments that has been earnt over the past six (6) years that has assisted Council in the creation and building of its Reserve Funds. The creation of the $8 million Financial Security Reserve is seen as a prudent measure that will protect Council from any impact from the global financial crisis. The maturity date of the investments below the Ministers Order are as follows:

Investment Maturity

Date Quartz * 2010/11 Alpha 2011/12 Covent Garden 2011/12 Merimbula * 2012/13 Torquay * 2012/13 Scarborough * 2013/14 Glenelg * 2014/15 Oasis 2014/15 Rembrandt 2016/17 Defaulted/Unwinding Palladin 2009/10 Constellation 2011/12 *Grange / Lehman IMP

The net exposure of these investments which are below the Minister’s Order is approximately $7.2 million.



ITEM 2 (continued) These investments have been downgraded due to a combination of the current paralysis in the financial credit markets and the various rating agencies (Standards & Poors, Fitch, Moodys) changing their rating methodology. Due to the lack of liquidity and confidence in the global financial markets, it is extremely difficult for Fund Managers to implement any viable exit strategies from reference entities they deem to be at risk. Having regard to the Department of Local Government’s Circulars on Council’s Investments and the Ministers Investment Order, Council’s officers have reviewed these investments within the guidelines of the Circular and sought advice from its independent advisor. Oakvale Capital Limited have confirmed their previous recommendation, that given market conditions and the limited options available, Council should continue to hold these investments. Oakvale Capital Limited will, through their continued review of both Council’s portfolio and the market, provide Council with options and on-going advice on Council’s portfolio. Economic Commentary The Reserve Bank of Australia cut the official interest rate by 100 basis points in October, the biggest cut in the official interest rate since 1992, and followed that with a 75 point cut in November. Globally, the Federal Reserve, European Central Bank and four other central banks lowered rates by 50 points in October, in a coordinated and unprecedented effort to ease the effects of the current economic crisis. Whilst moves around the globe in October to shore up financial systems provided a measure of calm to the markets, there are still a number of issues that are likely to arise going forward.

1. Corporates that will struggle to get access to capital at a reasonable price. 2. Rising default rates. 3. Slow economic growth. 4. Hedge Funds deleveraging and selling assets. 5. Retail selling of assets as they move back to cash. 6. Inflation as a result of governments pumping money into their respective

economies. Manufacturing in the US contracted in October at the fastest pace in 26 years as the credit crisis deepened and companies reduced orders. The US Institute for Supply Management's factory index dropped to 38.9, worse than anticipated by economists surveyed by Bloomberg News and the lowest level since September 1982. At a corporate level, Standard & Poors worst case view for the next 12 months is a 9% default rate.



ITEM 2 (continued) S&P predict that losses on Alt-A loans of five-years or more with fixed interest rates will rise from 35% to 40%. Alt-A loans are loans made to supposedly more credit worthy borrowers, and are a far larger market than the sub-prime market. The core of the capital in the banking system is directly tied to securities whose value is tied to the price of U.S. houses. With U.S. house prices falling, more mortgage owners are underwater, more are in default, and more will be foreclosed on. Legal Issues As previously reported to Council, Piper Alderman have been engaged to provide advice on legal options available to Council in relation to its investments. Council’s Property Investment Portfolio At 31 October 2008, the following properties were held as part of Council’s Property Investment portfolio:

• 2 Dickson Avenue, West Ryde • 1a Station St, West Ryde • 8 Chatham Road, West Ryde • 202 Rowe St, Eastwood (commercial) • 226 Victoria Rd, Gladesville (commercial) • West Ryde Car Park Site • Herring Road Air Space Rights

Types of Investments: At Call refers to funds held at a financial institution, and can be recalled by Council either same day or on an overnight basis. A Floating Rate Note (FRN) is a longer term investment issued by a financial institution with a variable interest rate. The adjustments to the interest rate are usually made quarterly, and are tied to a certain money market index such as the Bank Bill Swap Rate. A Floating Rate CDO or Collateralised Debt Obligation (CDO) is an investment backed by a diversified pool of one or more classes of debt. These investments are for longer terms and offer a higher rate of interest. Credit ratings are assigned to these investments as detailed in the portfolio. A Constant Proportion Debt Obligation or CPDO is an investment in an index of debt securities, similar in theory to a CDO. The investment index is periodically rolled, whereby the Special Purpose Vehicle buys protection on the old index, and sells protection on the new index. Credit Rating Information Credit ratings are generally a statement as to an institution’s credit quality. Ratings ranging from AAA to BBB- (long term) are considered investment grade. A general guide as to the meaning of each credit rating is as follows:



ITEM 2 (continued) AAA: the best quality companies, reliable and stable AA: quality companies, a bit higher risk than AAA A: economic situation can affect finance BBB: medium class companies, which are satisfactory at the moment BB: more prone to changes in the economy B: financial situation varies noticeably CCC: currently vulnerable and dependent on favourable economic conditions to

meet its commitments CC: highly vulnerable, very speculative bonds C: highly vulnerable, perhaps in bankruptcy or in arrears but still continuing to pay

out on obligations D: has defaulted on obligations and it is believed that it will generally default on

most or all obligations



ITEM 2 (continued)

INVESTMENT SUMMARY AS AT 31 OCTOBER 2008

Issuer Investment NameInvestment

Rating

Invested at 31-Oct-08

$000's

Annualised Period

Return (%)

12 Month Average Return

on Current Investments (%)

Return since 01

July 2008% of Total Invested

Indicative Market Value ** $000's

% Market Value

Westpac 1. Westpac 12_2013 AA- 1,000 8.49 8.27 8.49 1.27 1,000 100.00%CBA 2. CBA 02_2014 AA- 1,000 8.45 8.18 8.45 1.27 984 98.44%Thunderbird Investments plc 3. Balmoral AA AA 1,000 8.76 9.11 9.07 1.27 985 98.48%CBA 4. Shield Series 21 AA 500 0.00 -3.72 0.00 0.64 586 117.25%ANZ 5. ANZ Subordinated AA- 2,000 7.88 8.06 8.05 2.54 1,937 96.86%Merrill Lynch 6. Merrill Lynch & Co A 1,000 7.88 8.26 8.29 1.27 920 91.98%Select Access Investments (no 2) Ltd 7. Titanium AAA AAA 2,000 8.34 8.65 8.66 2.54 1,440 71.98%Alpha Financial Products 8. Alpha BBB 1,000 10.11 10.24 10.67 1.27 390 39.00%Helix Capital 9. OASIS BBB- 1,000 8.88 9.22 9.19 1.27 184 18.40%Westpac 10. FOCUS Note AA 500 4.12 -5.24 5.37 0.64 408 81.66%CBA 11. ELD Series 2 AA 500 3.00 3.82 3.00 0.64 498 99.52%Westpac 12. Camelotfund AA 500 0.00 -3.72 0.00 0.64 427 85.38%Grange 13. Grange IMP A 3,029 -63.41 -11.81 -16.35 3.85 3,029 100.00%AB Svensk Exportkredit 14. Global Protected

Property Note VII AA+ 1,000 0.00 0.00 0.00 1.27 830 83.00%Script Securitisation Ltd 15. Constellation CCC+ 0 7.76 9.00 8.98 0.00 0 0.00%Longreach 16. Longreach CPWF AAA 2,000 2.01 2.01 2.01 2.54 1,874 93.70%C.L.E.A.R. plc 17. Palladin D 0 0.00 7.83 6.13 0.00 0 0.00%Rembrandt Australia Trust 18. Rembrandt CCC 1,000 0.00 8.69 6.78 1.27 80 8.00%CBA 19. ELD Series 4 AA 500 3.00 3.01 3.00 0.64 486 97.29%Obelisk Trust 2007-3 20. Covent Garden CCC 2,000 8.19 9.02 9.02 2.54 136 6.78%ANZ 21. ANZ 3 YEAR

SENIOR AA 1,000 7.91 8.18 8.18 1.27 1,000 100.00%Credit Suisse First 22. Trident AA- 1,000 0.00 0.01 0.01 1.27 852 85.17%Bankwest 23. Bankwest Term

Deposit AA- 8,477 7.75 8.01 7.95 10.77 8,477 100.00%ANZ 24. ANZ Term Deposit AA 10,000 7.61 7.77 7.72 12.71 10,000 100.00%NAB 25. NAB Term Deposit

AA 8,000 7.43 7.77 7.68 10.17 8,000 100.00%Westpac 26. Westpac Term

Deposit AA 8,102 7.77 7.82 7.81 10.30 8,102 100.00%Westpac 27. Westpac At Call AA 20,587 6.31 6.38 6.38 26.16 20,587 100.00%

TOTALS/WEIGHTED AVERAGES 78,695 3.78 6.07 5.84 100 73,312

**Market valuations are indicative prices only, and do not necessarily reflect the price at which a transaction could be entered into.# Valuations unavailable as at report date and are the most recently published price

Return including Matured/Traded InvestmentsWeighted Average Return 3.78 5.81 6.22

Benchmark Return: UBSA 1 Year Bank Bill Index (%) 8.74 7.80 7.90Variance From Benchmark (%) -4.96 -1.99 -1.68

Investment Income Sources and Purposes for Investments$000's as at 31 Oct 2008 $000's

This Period 161 Externally Restricted - Section 94 14,131Externally Restricted - Other 11,474

Financial Year To Date 1,539 Unexpended Grants and Contributions 2,192Budget Profile 1,473 Internally Restricted - Liability Reserves 16,026Variance from Budget - $ 66 Internally Restricted - Revenue Reserves 42,661

General Fund -7,789

*Monthly returns when annualised can appear to exaggerate performance



ITEM 2 (continued) Certificate of the Chief Finance Officer

I certify that as at the date of this report, the investments listed have been made and are held in

Grange IMP - Quartz CDO A- neg watch - Merimbula CDO C/DR2 - Glenelg CDO BBB - Scarborough CDO BB- - Torquay CDO BB

Oasis CDO BBB-ALPHA CDO BBBCovent Garden CCCRembrandt CCCConstellation CCCPalladin D

Richard Nankivell Date

compliance with Council's Investment Policy and applicable legislation, with the exception of the following investments:

21 November 2008



ITEM 2 (continued) Council’s Investment Powers Council’s investment powers are regulated by Section 625 of the Local Government Act, which states:

(1) A council may invest money that is not, for the time being, required by the council for any other purpose. (2) Money may be invested only in a form of investment notified by order of the Minister published in the Gazette. (3) An order of the Minister notifying a form of investment for the purposes of this section must not be made without the approval of the Treasurer. (4) The acquisition, in accordance with section 358, of a controlling interest in a corporation or an entity within the meaning of that section is not an investment for the purposes of this section.

Council’s investment policy requires that all investments are to be made in accordance with:

• Local Government Act 1993 - Section 625 • Local Government Act 1993 - Order (of the Minister) dated 31 July 2008 • The Trustee Amendment (Discretionary Investments) Act 1997 – Sections

14A(2), 14C(1) & (2) • Local Government (Financial Management) Regulation 1993 • The Code of Accounting Practice and Financial Reporting • Investment Guidelines issued by the Department of Local Government

Following the release of the Cole Report on the Review of NSW Local Government Investments, the NSW Government adopted all the recommendations of the report which include:

• Amendments to the Ministerial Order. • Grandfathering existing investments that are excluded by the proposed

changes to the Ministerial Investment Order. • Excluding the manufacturers and distributors of investment products from

acting as investment advisors to councils. • Suspending investments with specific credit ratings until December 2009. • Ensuring councils are more fully aware of their obligations under the Local

Government Act 1993 and the NSW Trustee Act 1925 and • Issuing investment policy guidelines for councils.

The Minister for Local Government has issued a revised Order which was gazetted on 15 August 2008 in line with the recommendations of the Cole Report. The Department of Local Government is currently preparing guidelines aimed at assisting Council’s in developing a comprehensive investment policy.



ITEM 2 (continued) Council Officers will work with its investment advisor, Oakvale Capital Limited to develop a revised draft Investment Policy which will be submitted to the Finance & Audit Committee for consideration following release of the DLG guidelines. Council’s Investment Committee which is made up of senior staff meets on a regular basis to review investment performance and to consider recommended investment opportunities. Overview of Investments A brief overview of all investments held by the City of Ryde is provided;

1. Westpac FRN (AA-) Floating Rate Note issued by Westpac. Pays 47 bps over 90 day BBSW. This investment was purchased on 18 December 2003. First call date for this note is on 18 December 2008, with legal maturity on 18 December 2013. No fees are payable by Council on this investment.

2. CBA FRN (AA-)

Floating Rate Note issued by the CBA. Pays 43 bps over 90 day BBSW. This investment was purchased on 10 February 2004. First call date for this note is on 10 February 2009, with legal maturity on 10 February 2014. No fees are payable by Council on this investment.

3. Balmoral (AA)

CDO with a portfolio of 3 AA rated OECD government bonds and 36 AAA rated asset backed securities paying 130 bps over 90 day BBSW. This investment was purchased on 12 March 2004. The investment is for 5 years and matures on 4 March 2009. No fees are payable by Council on this investment.

4. CBA - Shield Capital Protected Series 21 (AAp)

Council invested in the Shield Capital Protected Hedge Fund Note on 24 March 2004. This is a medium to long term investment (3-7 years) and matures on 28 February 2011. The investment is capital guaranteed by CBA on maturity. The note is linked to the performance of a diversified fund of hedge funds, being Colonial First State Wholesale Global Diversified Strategies Fund. The target return at maturity is anticipated to be over 10% pa annualised. This is a volatile investment that has active market exposure. No fees are payable by Council on this investment.

5. ANZ Subordinated (AA-)

Floating Rate Note issued by the ANZ bank, paying 41 bps over 90 day BBSW. This investment was purchased on 29 June 2004. First call date for this note is 21 May 2009, with legal maturity on 21 December 2014. No fees are payable by Council on this investment.



ITEM 2 (continued)

6. Merrill Lynch (A+) Floating Rate Note issued by Merrill Lynch, paying 40bps over 90 day BBSW. This investment was purchased on 9 November 2004. This FRN matures 9 March 2010. No fees are payable by Council on this investment.

7. Titanium (AAA) CDO with a portfolio of a minimum of 100 investment grade names, paying 80 bps over 90 days BBSW. This investment was purchased on 14 June 2005. The investment is for is 5.5 years and matures on 14 December 2010. No fees are payable by Council on this investment.

8. FRN Alpha (Originally AA now BBB) This is a CDO that pays 250 bps above 180 day BBSW. This investment was purchased on 11April 2006. The investment is for 6 years and matures on 20 March 2012. The CDO containing 2 separate portfolios, a capital portfolio and an income portfolio. The 2 portfolios are managed to maintain ratings stability. The CDO was previously downgraded to A- on 25 September 2008 and has now been downgraded to BBB watch negative on 31 October 2008. No fees are payable by Council on this investment.

9. OASIS (Originally AA now BBB-) This is a CDO that pays 140 bps above 90 day BBSW This investment was purchased on 4 September 2006. The investment is for 8 years and matures on 4 September 2014 .This is a CDO that is actively managed by Société Générale. The CDO was downgraded to BBB- on 29 September 2008. No fees are payable by Council on this investment.

10. FOCUS Note (AAp)

This investment was purchased on 20 December 2006. This is a medium to long term investment (3-7 years) and matures on 20 December 2012. The capital of the investment is guaranteed by Westpac on maturity. This investment consists of a dynamically managed portfolio comprising investments in the BT Focus Australian Share Fund, and aims to outperform the S&P/ASX 300 Accumulation Index by 5% over a 3 to 5 year horizon. This note has had an annualised return of 3.62% since inception, with short term returns anticipated to be volatile. This note also pays a biannual contingent coupon of 180 day Bank Bill swap rate (currently approximately 8.00%). Westpac receive a principal protection fee of 0.90 p.a., an upfront structuring and distribution fee of 2.50%. BT Financial Group receives a management fee of 0.60% p.a., and a performance fee of 15%. The performance fee is only paid if the performance of the fund before fees exceeds the S&P/ASX Accumulation index plus the management fee. Monthly returns, when annualised can appear to exaggerate performance. On 28 October 2008 advice was received that the recent volatility in the global financial markets had triggered the capital protection mechanism in this investment with 100% of the portfolio now invested in a zero coupon bond . Council will not receive any further coupon payments between now and the December 2012 maturity date but will receive the full face value of the investment at maturity.



ITEM 2 (continued)

11. ELD 2 (AAp) This investment was purchased on 22 December 2006. The investment is for 3 years maturing 22 December 2009. This note provides Council with a variable return based on the performance of a reference basket of stocks selected from the ASX 100. Minimum return is 3.00% p.a., and returns are capped at 13.50%. The actual return for each year to be calculated in December. The return for the first year was 7.91%. No fees are payable by Council on this investment.

12. Camelotfund (AAp)

This investment was purchased on 1 March 2007. The investment is for 5 years and matures 25 January 2012. This investment is in a fund that provides opportunity to diversify into a foreign exchange strategy with low correlation to other products and asset classes. Short term (i.e. monthly) returns on this note will be volatile. The SPV set up by Westpac receives a distribution fee of 2% of the note value, and the manager receives a management fee of 1% p.a., and a performance fee of 15% above 6M BBSW. Westpac receives a capital protection fee of 1% p.a. times NAV. This investment is capital protected by Westpac.

13. Grange (Lehman Brothers) IMP (Min A Rating)

This is a portfolio of FRNs, CDOs and Bank issued securities managed by Grange Securities on Council’s behalf. Lehman Brothers have cancelled the management agreement, and this portfolio is currently static. The IMP comprises the following investments: Investment Maturing Call Date Quartz CDO 20/10/2010 20/12/2008 Flinders CDO 20/03/2012 20/03/2009 Torquay CDO * 20/06/2013 20/06/2009 Merimbula CDO 20/06/2013 Scarborough CDO * 23/06/2014 23/06/2009 Glenelg CDO * 22/12/2014 22/06/2009 Adelaide Bank FRN * 02/04/2014 02/04/2009 AAA (Berryl) Global Bank Note 20/09/2014 HSBC FRN * 22/09/2016 22/09/2011 * If not called an additional margin paid

14. Global Protected Property Note VII (AAp+) This investment was purchased on 13 March 2007. The investment is for 4.5 years and matures on 20 September 2011. It is a capital guaranteed investment which provides Council with a return on maturity based on the performance of three international property funds. It is anticipated that performance at the commencement of this investment will be low, with returns geared heavily towards the end life of the investment. This note was invested in as a result of a swap out of the earlier series VI note, in which Council realised a profit of $237K capital profit after 9 months. Capital protection fee of 1.1% to Svensk Export Kredit.



ITEM 2 (continued)

15. Constellation (Floated AAA now CCC+) This is a CDO that is paying 130 bps above 90 day bps. This investment was purchased on 11 April 2007. The investment is for 5 years and matures 20 March 2012, but may be called by the issuer as at March 2011. This investment was previously downgraded from AA to A, and in late October 2007 was downgraded further to ‘A-’. Further advice was received in mid November 2007 that this investment had been put on negative watch, implying further downgrades of this note may occur, and this occurred in early March 2008, when the note was downgraded to BBB+ and then BBB on 1 April 2008. The note was then downgraded to BBB- effective 26 May 2008. The note was downgraded to CCC+ on 26 September 2008. The note experienced six (6) credit events in September and has now defaulted and is in the process of being unwound. It is understood that the effective unwind date will be 22 December 2008. No fees are payable by Council on this investment.

16. Longreach Capital Protected Wholesale Fund (AAAp)

This investment is in property, infrastructure and utilities. This investment was purchased on 16 May 2007. The investment is for 5 years and matures on 16 May 2012. The Fund Manager’s expectation is a target range of 8% to 10% pa over the life of the investment. Council receives a minimum coupon of 2% pa. There is a fee of 0.95% pa payable of the capital protection amount, plus a performance fee of 25% if the fund performs at or above UBS Bank Bill Index + 4%.

17. Equity Linked Deposit Series 4 (AAp)

This note is almost identical to the structure of the ELD 2 (No 12) above, except that returns are based on the performance of a reference basket of resource stocks. This investment was purchased on 5 June 2007. The investment is for 3 years and matures on 5 June 2010.Minimum return is 3.00% pa, and returns are capped at 11.50% with the actual return for each year to be calculated in June. No fees are payable by Council on this investment.

18. Palladin (Originally AA now D) This is an actively managed CDO paying 100 bps over 90 day BBSW. This investment was purchased on 7 June 2007 The investment is for 3 years and matures 20 June 2010. The note was downgraded from AA to BBB- at the end of April 2008. The note was downgraded to CCC- on 30 September 2008. Council has been advised that Sigma Finance, the provider of the collateral has ceased trading and is in the process of filing for bankruptcy. On 3 November 2008 the Commonwealth Bank advised that the Palladin Investment had formally defaulted and as a result the investment is valued at zero in the Investment Portfolio. No fees are payable by Council on this investment.



ITEM 2 (continued) 19. Rembrandt (Originally AAA now CCC)

This is a Constant Proportion Debt Obligation (CPDO) paying 190 bps over 90 day BBSW with exposure to credit spreads in the iTraxx and DJ Investment Grade Indices. This investment was purchased on 20 June 2007. The investment is for 9.5 years and matures on 2 November 2016 The portfolio is rebalanced and repriced every 6 months. There is an arrangement fee of 1% on this investment, plus 29 bps p.a. of the NAV. The note was downgraded from AAA to BBB+ on 21 February 2008 and then to BB+ effective 12 March 2008. This investment was considered by Council at its meeting of 1 April 2008 to invest further funds to protect this investment. Council resolved not to proceed with the new investment. The note was downgraded to CCC on 22 September 2008. On 28 October 2008 advice was received that the note had breached the 10% cash out point and the unwinding of the investment had commenced. Subsequently LGFS advised on 30 October 2008 that the unwind has been suspended while options were being explored.

20. Covent Garden (Originally AA now CCC)

This is a managed CDO paying 120 bps over 90 day BBSW. This investment was purchased on 6 July 2007. The investment is for 5 years and matures on 20 September 2012. Advice was received on 11 November 2008 that this investment has been downgraded to CCC. No fees are payable by Council on this investment.

21. ANZ 3 Year Senior Debt (AA) Floating Rate Note issued by the ANZ bank, paying 32 bps over 90 day BBSW. This investment was purchased on 18 September 2007. The investment is for 3 years and matures on 18 September 2010. No fees are payable by Council on this investment.

22. Trident (AAp-) This investment was purchased on 30 May 2007. The investment is for 4 years and matures on 30 May 2011 The investment which is capital protected has exposure to a basket of bond funds, with a coupon paid 6 monthly of 50% of the positive performance of the funds, with the other 50% being reinvested. There is a distribution fee charged upfront of 2%, plus a principal protection fee of 0.95% p.a. of the portfolio value, plus a leverage charge of USD 30 day LIBOR +0.50% p.a. on any leverage amount.

23. Bankwest Term Deposit (AA-)

This investment is a 90 day term deposit with Bankwest, paying 7.53% (7.75% annualised) and matures11 December 2008. No fees are payable by Council on this investment.

24. ANZ Term Deposit (AA) This investment is a 90 day term deposit with ANZ, paying 7.40% (7.61% annualised) and matures on 15 December 2008. No fees are payable by Council on this investment.



ITEM 2 (continued)

25. NAB Term Deposit (AA) This investment is a 90 day term deposit with NAB, paying 7.23% (7.43% annualised) and matures on 13 December 2008. No fees are payable by Council on this investment.

26. Westpac Term Deposit (AA)

This investment is a 90 day term deposit with Westpac, paying 7.55% (7.77% annualised) and matures on 14 November 2008. No fees are payable by Council on this investment.

27. Westpac At Call Account (AA) This investment is an at call account, paying the short term money market rate. These funds are used for operational purposes.

0.01.02.03.04.05.06.07.08.09.0

10.011.0

Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08Month

YTD

Wei

ghte

d A

vera

ge R

etur

n (%

)

12 Mth ReturnBenchmarkMonthly Annualised



ITEM 2 (continued)

>365 days <365 daysFRN's $4.0M $2.0MCDO's $6.0M $1.0M

CPDO's $1.0M $0.0MOther $6.5M $0.0M

Mgd Funds $0.0M $3.0MCash $0.0M $55.2M

Less Than 180 Days

180 Days to 365 days

More Than 365 Days

0 20,000 40,000 60,000 80,000

Term Deposit

Direct Investment

Managed Cash Plus

Fund

Managed Cash Fund

0% 10% 20% 30% 40% 50%

0% 5% 10% 15% 20% 25%

Westpac

CBA

Thunderbird Investments plc

ANZ

Merrill Lynch

Select Access Investments (no 2) Ltd

Alpha Financial Products

Helix Capital

Grange

AB Svensk Exportkredit

Script Securitisation Ltd

Longreach

C.L.E.A.R. plc

Rembrandt Australia Trust

Obelisk Trust 2007-3

Credit Suisse First

Bankwest

NAB

Portfolio % With Institution

0% 10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

AAA to AA-

A+ to A

A- to BBB

Low/Unrated

Permitted Actual



ITEM 2 (continued)

50,000

60,000

70,000

80,000

90,000

Oct-07 Nov-07

Dec-07

Jan-08

Feb-08

Mar-08

Apr-08

May-08

Jun-08

Jul-08 Aug-08

Sep-08

Consultation Council business units consulted included:- • Finance Unit Internal Workshops held:- • Councillor Workshop 2 October 2008 • Councillor Briefing 14 October 2008 External public consultation included:- • Ryde City View – 12 November 2008

Article on Global Financial Crisis – City of Ryde’s response Council officers have regular discussions & meetings with Investment Issuers and Council’s Investment Advisor Oakvale Capital Limited to monitor the impact of market conditions on the performance of Council’s investments and the economic outlook going forward. Critical Dates The Chief Financial Officer as Council’s Responsible Accounting Officer is required to report to Council on a monthly basis on Council’s Investment Portfolio and to certify that the Investments are held in accordance with Council’s Investment Policy and Section 625 of the Local Government Act. Management Plan Budget / Linkages This project forms part of the 2008/2009 Operational Budget for the Finance Unit. Relationship to Key Outcome Areas

People This matter has no direct relationship to this key outcome area. However interest on investments represents a significant source of Council’s income and contributes to the funding of a range of services and initiatives in the key outcomes for People.



ITEM 2 (continued)

Assets This matter has no direct relationship to this key outcome area. However interest on investments represents a significant source of Council’s income and contributes to the funding of a range of services and initiatives in the key outcomes for Assets.

Environment This matter has no direct relationship to this key outcome area. However interest on investments represents a significant source of Council’s income and contributes to the funding of a range of services and initiatives in the key outcomes for Environment.

Governance This project meets the following key outcomes for Governance (set out on page 75 of the Management Plan 2008-2012):

G3 Review of best practices approaches on Governance to enhance the delivery of

services to the community. G5 Compliance with all legislative requirements and statutory obligations. The Chief Financial Officer as Council’s Responsible Accounting Officer is required to report to Council on a monthly basis on Council’s Investment Portfolio and to certify that the Investments are held in accordance with Council’s Investment Policy and Section 625 of the Local Government Act. Council’s investment portfolio provides a significant source of Council’s income through interest on investments and contributes to the funding of a range of services and initiatives across all Council’s in key outcomes areas. Council has budgeted to earn $3.71 million in interest from investments during the 2008/09 financial year. Financial Impact Whilst Council’s returns are under the rolling 12 months benchmark, the actual returns are generally in line with budget projections. Council is concerned over a number of investments as detailed in the report and at its meeting of 7 October resolved to create an $8 million Financial Security Reserve in October 2008 to protect Council against any future fallout from the global financial crisis. This reserve has been created from the $25 million interest on investments that have been earnt over the past six (6) years that has assisted Council in the creation and building of its Reserve Funds.



ITEM 2 (continued) Council has budgeted to earn $3.71 million in interest from investments during the 2008/09 financial year and as at 31 October 2008 has earned $1.539 million, exceeding the year to date budget by $66K. However due to the global turmoil in the financial markets, interest rates are forecast to decline and this will be monitored and reported in future reports. Policy Implications There are no policy implications through the adoption of the recommendation. The recommendation is consistent with Section 625 of the Local Government Act, which deals with the investment of surplus funds by Council’s. Other Options Not Applicable Conclusion This report provides details of Council’s performance against the benchmark for returns of its Investment portfolio for the month of October 2008 and actions taken by Council Officers as a result of the deepening crisis in global financial markets. Whilst returns are in line with budget predictions, the escalation of the volatility in the global financial markets has placed further risk on the principal of some of Council’s investments. The creation of the $8 million Financial Security Reserve is seen as a prudent measure that will protect Council from any impact from the global financial crisis. Council Officers in conjunction with Oakvale Capital Limited are closely monitoring developments in the financial markets and keeping Council fully informed of significant developments as they occur through the monthly Investment report and Councillor briefing sessions. RECOMMENDATION: That the report of the Chief Financial Officer, dated 21 November 2008, on Investment Report – October 2008, be received and endorsed by Council. Report prepared by Richard Nankivell Chief Financial Officer Report approved by Roy Newsome Group Manager – Corporate Services



3 ANNUAL TENDERS – Tender for Hire of Plant Report prepared by: Plant & Fleet Coordinator and Manager – Waste & Fleet Report dated: 24 October 2008 File No. COR2008/678

Report Summary This report is to advise the Council on the Tenders received for hiring of plant and to recommend acceptance of Tenders to be placed on preferred contractors list up to 31 October 2009. Background The plant owned by Council is not sufficient to carry out Councils work program. A plant hire tender is invited annually for various categories of plant and are placed on a preferred contractors list. Plant are hired on “as required” basis, from the preferred contractor list in the absence of Council plant. The Plant hire rates have been forwarded to Councillors CIRCULATED UNDER SEPARATE COVER – CONFIDENTIAL. Pursuant to Section 10A (2)(d)(i) of the Local Government Act 1993, these documents are listed as confidential as they concern the receipt and discussion of commercial information of a confidential nature that would, if disclosed, prejudice the commercial position of the persons who supplied it. Report Council has recently called tenders (COR-RFT-12/08) for the provision of hire plant included in Council’s Construction and Maintenance Programs. Tenders were advertised in the Sydney Morning Herald on 16, 17 & 20 September 2008. Twenty nine (29) tenders were received for fourteen (14) different categories of plant. The tenders were assessed by a panel, consisting of three (3) Council Officers. Tenderers were selected and evaluated on the following selection criteria: • Legal Status Of Entity • Conformity to the Documentation • Insurance • Referees • Tender Price • Proposed personnel including Sub - contractors • OHS&R • Previous Experience • Organisational Structure - technical/ financial capability • Demonstrated understanding of Council requirements • Conformity to EPA requirements and past records It should be noted that several tenderers were unable to submit all financial and insurance details required. This situation, however, will be rectified prior to the execution of contracts.



ITEM 3 (continued) Tender prices were called for a total of fourteen (14) categories of plant as follows.

Category of Plant Description 1 Graders 2 Front end Loaders 3 Backhoes 4 Excavators 5 Water Carts 6 Skid Steer Loaders 7 Skid Steer Loader and Truck combination 8 Bogey Tip Truck 9 Bogey Truck and Dog

10 Eight wheeler Truck 11 5 -8 tonne Tipper with Canopy suitable to cart woodchip 12 Rollers 13 Cranes 14 Elevated Platforms

The assessment panel has placed the Tenders into the following categories: Category A: Preferred Contractors Tenderer Category of Plant A & A Hire Services 3, 4, 6,7, 8 Acclaimed Excavations Pty. Ltd. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10,12,13 Active Excavation Works 4, 6, 8 Active Hire Group Pty. Ltd. 12, 14 Active Tipper Hire Pty. Ltd. 4, 6, 7, 8, 9 Advance Plant Hire Pty. Ltd. 3, 4, 5, 6, 8 Allard’s Plant Hire Pty. Ltd. 1, 2, 3, 4, 5, 6, 8, 9, 12, 14 Anova Constructions Pty. Ltd. 3, 4 Barron Transport Pty. Ltd. 6, 7 Bennett Excavations Pty. Ltd. 4, 6, 7 Boom Sherrin 14 Complete Hire 12, 14 Conplant Pty. Ltd. 12 Dinamo Pty. Ltd. 3, 4, 6, 8, 9 G V R D Chong Pty. Ltd. 11 Hickey’s Earthmoving Pty. Ltd. 4,10 Ken Coles Excavations Pty. Ltd. 3, 6, 8 L G S Plant Hire 4 Lion Earthworks Pty. Ltd. 4, 8, 9 M P Schultz Excavations 4, 8, 9 Mike’s mini Machines 4, 6, 8, 9 Online Plant Hire Services Pty. Ltd. 1, 3, 4, 6,7, 12 Raygal Pty. Ltd. 4, 5, 6, 7, 8, 9 Scape Constructions Pty. Ltd. 4, 6, 8, 9 Stephensons Cranes 13



ITEM 3 (continued) T F Group Pty. Ltd 4, 5, 6, 8 V M C Truck & Plant Hire 6, 7 Vanra Pty. Ltd. 6 W D Elliotts Earthmoving Pty. Ltd. 4 Category B: Late Tenderer Universal Mobile Tower Works awarded to Contractors under this contract are carried out on an “as required” basis, following consideration at the time of the following factors: • Type of Work • Price • Availability • Previous Workmanship • Relevant Expertise • Previous Service provided to residents • Previous compliance to safety requirements Consultation Internal Council business units consulted included:- • Operations unit, Public Works. • Waste & Fleet, Public Works Critical Dates There are no critical dates or deadlines to be met. Management Plan Budget / Linkages Contractors will be used on a number of Capital works project and Maintenance programs as identified in the Management Plan 2008-2012. This project forms part of the 2008/2009 Operational Budget for the Public Works Group Relationship to Key Outcome Areas

People This matter has no direct relationship to this key outcome area.

Assets This project meets the following key outcomes for Assets (set out on page 56 of the Management Plan 2008-2012):

o Delivery of Capital Works Program on time and budgetary requirements o Delivery of Maintenance programs in accordance with agreed service

levels



ITEM 3 (continued)

Environment This project meets the following key outcomes for Environment (set out on page 67 of the Management Plan 2008-2012):

o All contractors are required to abide by Council’s environmental policies and procedures


o Open tender process with best financial outcome to the Council. Financial Impact Each engagement of a contractor from the Contractor list will be funded from approved Capital works projects or Maintenance programs. Total Council expenditure on external plant hire over 12 months is estimated at $12M. Policy Implications There are no policy implications through adoption of the recommendation. Other Options The current system of inviting annual tenders provides an open and transparent process of engaging contractors on an “as required “ basis. This ensures competitive rates and better financial outcome. Conclusion The tendered rates for hiring of plant are considered competitive and that the preferred list of contractors satisfy Council’s selection criteria. RECOMMENDATION: (a) That the report of the Co-Ordinator – Plant & Fleet Management, dated 24

October 2008 on Tender for Hire of Plant, be received and noted. (b) That the tenders for hiring of plant until 31 October 2009 from the following

tenderers be accepted on an “as required “ basis for the indicated category of plant:

Tenderer Category of Plant A & A Hire Services 3, 4, 6,7, 8 Acclaimed Excavations Pty. Ltd. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10,12,13 Active Excavation Works 4, 6, 8 Active Hire Group Pty. Ltd. 12, 14 Active Tipper Hire Pty. Ltd. 4, 6, 7, 8, 9 Advance Plant Hire Pty. Ltd. 3, 4, 5, 6, 8 Allard’s Plant Hire Pty. Ltd. 1, 2, 3, 4, 5, 6, 8, 9, 12, 14 Anova Constructions Pty. Ltd. 3, 4 Barron Transport Pty. Ltd. 6, 7 Bennett Excavations Pty. Ltd. 4, 6, 7 Boom Sherrin 14 Complete Hire 12, 14



ITEM 3 (continued) Conplant Pty. Ltd. 12 Dinamo Pty. Ltd. 3, 4, 6, 8, 9 G V R D Chong Pty. Ltd. 11 Hickey’s Earthmoving Pty. Ltd. 4,10 Ken Coles Excavations Pty. Ltd. 3, 6, 8 L G S Plant Hire 4 Lion Earthworks Pty. Ltd. 4, 8, 9 M P Schultz Excavations 4, 8, 9 Mike’s mini Machines 4, 6, 8, 9 Online Plant Hire Services Pty. Ltd. 1, 3, 4, 6,7, 12 Raygal Pty. Ltd. 4, 5, 6, 7, 8, 9 Scape Constructions Pty. Ltd. 4, 6, 8, 9 Stephensons Cranes 13 T F Group Pty. Ltd 4, 5, 6, 8 V M C Truck & Plant Hire 6, 7 Vanra Pty. Ltd. 6 W D Elliotts Earthmoving Pty. Ltd. 4

(c) That the preferred contractors be advised that the work will be allocated to them

on an “as required” basis, following consideration at the time of the following factors: type of work, price, availability, previous workmanship, relevant expertise, previous service provided to the residents and previous compliance to safety requirements.

(d) That the late tenderer be advised of the Council’s decision. Report prepared by: Paul Chandrakumar Co-Ordinator Plant & Fleet Management George Dedes Manager – Waste & Fleet Report approved by: Kim Woodbury Group Manager Public Works



4 TENDER FOR THE SUPPLY AND DELIVERY OF MULTIFUNCTION POLES (MFP) FOR MACQUARIE PARK RAILWAY STATION - (Corner Lane Cove Road and Waterloo Road, Macquarie Park)

Report prepared by: Project Manager (Civil) Report dated: 21 November 2008 File No. COR-RFT- 13/08 Report Summary This report is to advise Council on the Tenders received for the Supply and Delivery of Multifunction Poles for the Macquarie Park Railway Station. The poles are a part of the major works to underground all electrical and services including landscaping and granite paving around the new railway station located at the corner of Lane Cove Road and Waterloo Road, Macquarie Park. Background As part of the Capital Works Program, Council is carrying out public domain improvements along the frontages of the new Macquarie Park Railway Station on the corner of Lane Cove Rd and Waterloo Rd. The Tender is for the procurement of multifunction street lights (MFP) and accessories in accordance with the power and lighting design drawings and specification prepared by GHD on Council’s behalf. The MFP must be delivered in time for the poles to be erected before paving and other landscaping works are undertaken. Report Council has recently called tenders (COR-RFT- 13/08) for the Supply and Delivery of fourteen (14) Multifunction Poles and their accessories for Macquarie Park Railway Station. Tenders were advertised in the Sydney Morning Herald on 14, 18 and 21 October 2008. Tenders closed on 4 November 2008. Three (3) tenders were received for the nine (9) items listed in the returnable schedules. Tenders were received from: • Fyntrim Pty Ltd • Hub Street Equipment Pty Ltd • Streetscape Pty Ltd The Tender Evaluation Report is CIRCULATED UNDER SEPARATE COVER- Confidential and ON FILE. Pursuant to Section 10A (2) (d) of the Local Government Act 1993, these documents are listed as confidential as they contain commercial information of a confidential nature that would, if disclosed, prejudice the commercial position of the persons who supplied it. Furthermore, it is considered that discussion in an open meeting would, on balance, be contrary to the public interest as it could affect Council’s ability to secure the preferred tenderers. The tenders were assessed by a panel, consisting of four (4) Council Officers. Tenderers were selected and evaluated on the following selection criteria:



ITEM 4 (continued) Tender Submission: • Price • Conformity to the Documentation • Demonstrated understanding of Council’s requirements. Product Suitability: • Product Quality • Aesthetics • Referees • Delivery of Multifunction Poles. Organisational Capacity • Company Structure – Technical and Financial capability • OHS&R • Insurance • Legal Status of the Entity • After Sales Service. The panel has assessed that the Tender from Streetscape Projects Pty Ltd with their “Smartpole” products to be the most meritorious Tender submission for Macquarie Park Railway Station project with the overall highest score when evaluated against the Tender Evaluation Criteria. Consultation Internal Council business units consulted included:- • Access Unit • Catchments Unit • Parks Unit Internal Workshops held:- • Not Applicable City of Ryde Advisory Committees consulted included:- • Not Applicable External public consultation included:- • Not Applicable Critical Dates Council is working with Transport Infrastructure Development Corporation (TIDC) to complete all the public domain works prior to the opening of the railway line, later this year. Delivery of the poles will be required by January 2009. Relationship to Key Outcome Areas

People This project meets the following key outcomes for People (set out on pages 32-33 of the Management Plan 2008-2012):



ITEM 4 (continued) P1 A vibrant city that is healthy, physically attractive, economically strong and

engages its community through cultural and social activities. P2 A city that plans for people by identifying their diverse needs and involving them

in decision making to improve their quality of life. The new multifunction poles and granite paving at the station will create a more visually attractive public domain, whilst meeting the needs of rail commuters and pedestrians.

Assets This project meets the following key outcomes for Assets (set out on page 60 of the Management Plan 2008-2012):

A1 Well designed streets and paths where motorists, cyclists and pedestrians feel

safe. A3 A high standard of visual appearance as there is no litter or graffiti, and we care

for our infrastructure and public areas. A high quality and durable public domain will be provided outside the Macquarie Park Station. The design of the public domain has been developed to complement the design of the station and consideration given to the usability of the site.

Environment This project meets the following key outcomes for Environment (set out on page 71 of the Management Plan 2008-2012):

E2 Attractive streets, public places and buildings through better planning and

design which is responsive to community expectations and our local environment.

Governance This matter has no direct relationship to this key outcome area.

G3 Incorporation of best practice approaches in the delivery of services to the

community. G5 Compliance with all legislative requirements and statutory obligations. This project has been designed by accredited designers and approved by Energy Australia. Financial Impact This project is funded under the Town Centre Upgrades (Renewal) Program 2008/2009. The tendered amount of $178,754 is under Council’s estimate for these specific works of $180,000.



ITEM 4 (continued) This project is a complex project involving the coordination of many organisations (i.e. Council, TIDC, RTA, and the various utilities). The site is difficult due to the large amount of underground services and heavy vehicular and pedestrian traffic volumes. Accordingly, it is anticipated that under the contract arrangement, variations of up to 10% of the contract value could be incurred, if delivery problems are experienced. The on-going cost of maintaining this project can be included in future operational budgets. Management Plan Budget / Linkages This project is from the Management Plan (Assets/Capital Works/Town centre Upgrades) listed on page No. A-8 of the Management Plan 2008-2012. Conclusion Three (3) Tenders received for this project. The tender that scored the best against the evaluation criteria was submitted by Streetscape Projects Pty Ltd. It is recommended that their tender be accepted. RECOMMENDATION: (a) That the report of the Manager – Public Works, dated 21 November 2008 on

Supply and delivery of Multifunction Poles (MFP) for the Macquarie Park Railway Station, be received and noted.

(b) That the tender submitted by Streetscape Projects Pty Ltd for Contract COR-

RFT-13/08 – Supply and delivery of Multifunction Poles (MFP) for the Macquarie Park Railway Station, in the amount of $178,754 (excl GST) be accepted.

(c) That the unsuccessful tenderers be advised of Council’s decision. Report prepared by: Peter Nguyen Project Manager- (Civil) Andrew Cooper Manager – Access Report approved by: Mr Kim Woodbury Group Manager Public Works



5 GOVERNANCE FRAMEWORK – Procurement Activities Report prepared by: Manager Risk and Audit Report dated: 20 November 2008 File No. COR 2008/578

Report Summary This report is to advise Council of the governance framework in place that guides and supports Council’s procurement activities. This report is provided to Council following the late report to Council’s Committee of the Whole on 18 November 2008 in respect of the NSROC Tender 7/08 – Supply, Supply and delivery and Supply Delivery and Laying of Asphaltic Concrete and Associated Works. The first part of the report provides Council with an outline of the general governance framework relating to Council’s procurement activities with the second part specifically addressing the procedures for the opening of tenders/quotations in relation to Council procurement. Background The City Of Ryde’s procurement philosophy is to acquire goods, services and equipment on a best value for money basis through the application of consistent and ethical policies and procedures that comply with all legislative requirements. The City Of Ryde engages in a large number of procurement activities on an annual basis. The complexity of the procurement ranges from daily purchasing of goods and services through Council’s preferred supplier network to the administration and placement of large scale tenders. Report 1. General Governance Framework – Procurement Activities Council’s procurement activities are controlled through a Procurement Governance Framework. This framework consists of a number of policies and guidelines which have been designed to encompass legislative requirements. The framework is constantly evolving to cater for upgrades in available technology as well as changes in underlying legislative and policy requirements. Council has introduced a number of key initiatives in recent times and is planning to develop these and other projects that will result in a greater level of governance in the procurement framework. These key projects include: - Recent Introduction of on-line requisitioning - Ongoing revisions to the procurement policy - Introduction of an electronic tender box in the short term - Introduction of Tendering guidelines - Continual enhancement of the staff intranet procurement site to include

standard pro-forma procurement documents An outline of the key governance components in relation to the procurement framework is summarised below:



ITEM 5 (continued) Council’s Policy framework The City Of Ryde has developed two policies covering procurement. These are: - City Of Ryde Procurement Policy (all levels of procurement) - City Of Ryde Sustainable Procurement Policy

These policies are meant to be complementary of each other with the Procurement Policy having been adopted in 2005 and the Sustainable Procurement Policy in 2007. The procurement policy has been since supplemented by a number of ongoing enhancements and revisions and is also supported through various procedures. These policies encompass all legislative requirements under the Local Government Act 1993 (i.e. section 55 pertaining to tendering) as well as the Local Government (General) Regulations pertaining to tendering. Continuing Procurement Education Council has instituted a number of initiatives related to procurement education. These include: - Establishment of a specific procurement section on Council’s staff intranet - Promotion of procurement initiatives through Council’s intranet site and via

Council’s staff newsletter - General procurement and one on one education sessions - Update sessions and advice to all staff utilising Council’s intranet site - Specific education to Service Unit Managers on procurement issues - Education sessions on the Sustainable Procurement Policy - Demonstrations of range of sustainable products - With the introduction of on-line requisitioning (purchasing), training sessions

have been conducted covering all users of the system Promotion of Procurement initiatives and education on the Staff Intranet The staff intranet has a dedicated “Procurement Spot” which is designed to assist staff at all levels in the procurement process. This includes contact details for key staff as well as a range of procurement templates designed to assist council in complying with best practice. The main aspects of the procurement spot include: - Key Contacts including areas of expertise and responsibility - Policy documents - Listing of key providers - Alternate Procurement Options – including Department of commerce contracts,

Local government Procurement (LGP) sourced contracts and NSROC preferred suppliers

- An extensive range of Procurement Templates designed to assist Council officers engaged in procurement activities in meeting best practice and as recommended the Independent Commission Against Corruption and the Department of Local Government



ITEM 5 (continued) Centralised handling/registration for Major Procurement The City Of Ryde currently maintains a centralised register for all major procurement. This is for procurement where the total expenditure will be greater than $50k. This register is maintained by the Manager Risk and Audit who allocates the procurement activity a central number i.e. COR-RFT-10/08. This number then appears as a central reference in all documentation. Any procurement that exceeds the $50k estimate is directed to Council’s tender box. This is opened at set times in the presence of at least 3 independent officers Other Initiatives • On line requisitioning At the commencement of the 2008/09 financial year, Council moved to utilising the Technology One solution as its core financial system. As a result of this, Council is now utilising on-line requisitioning. This has resulted in improvements in internal control (i.e. through improved reporting and monitoring tools) and efficiency of processing. • Probity Advisor For any contract involving expenditure in excess of $1,000,000 or where the issue is contentious, consideration will be given to the appointment of a probity advisor to oversee the administration of the Tender/Expression of Interest process. A probity advisor has been appointed to a small number of such projects in recent times. 2. Specific procedures for the opening of submissions in relation to Council

procurement. This part of the report deals with specific procedures for the opening of procurement submissions received into Council’s tender box. It was apparent that an administrative error occurred in the application of these procedures which resulted in the late report to Council’s Committee of the Whole on 18 November 2008 relating to NSROC Tender 7/08 – Supply, Supply and delivery and Supply Delivery and Laying of Asphaltic Concrete and Associated Works. Council has one central tender box located in the Civic Centre. The responsibility for the administration of the tender box is allocated to the Manager Risk and Audit. All Council generated formal procurement (i.e. where the estimated total expenditure is greater than $50,000) is directed to Council’s tender box. Council’s policies direct all persons procuring items in excess of this value to obtain a central tender, quotation or Expression of Interest number from the Manager Risk and Audit at the initial planning stage of the procurement. They are then allocated a number from a register maintained by the Manager Risk and Audit i.e. COR-RFT-XX/08. The closing date is also noted in the register and an appropriate venue is booked for the opening of the tender box. All procurement activity through Council’s Tender Box is generally allocated a standard closing time of 2pm on a Tuesday.



ITEM 5 (continued) At this time the tender opening panel (consisting of the Manager Risk and Audit and 2 other officers independent of the procurement process) invite any persons present for the opening to attend the venue for the opening. The tender box is taken to the room and opened in view of any persons wishing to be present for the opening. The procurement documents are opened and a listing is compiled of all opened procurement documents. Council’s procurement documents include a requirement for the respondents to lodge an original and at least one other copy. Both of these are stamped on the opening page with a “City Of Ryde – Tender Box Opening Panel“ by the panel with all members of the panel initialling the stamp. The original is also reviewed and any schedules showing apparent pricing or other conditions affecting pricing are also stamped and initialled by the panel. In the case of tenders or Expressions of Interest (where the expenditure is greater than $150,000) a listing of tenders received is displayed on Council’s website and on the notice board in the public foyer of Council’s Civic centre. The originals of the submissions received are then sent to Council’s records section for registration and filing. The copies are then distributed to the initiating officer for the evaluation and determination of a preferred provider. Given the recent circumstances relating to the tender as reported to the Committee of the Whole on 18 November 2008, all staff involved in the tender opening process have been reminded of the need to take care with every aspect of the tender opening process. Consultation Not applicable Management Plan Budget / Linkages Council’s Procurement activities impact on a large number of areas of the management plan 2008-2012. Relationship to Key Outcome Areas

People This matter has no direct relationship to this key outcome area.

Assets This matter has no direct relationship to this key outcome area.

Environment This matter has no direct relationship to this key outcome area.



ITEM 5 (continued)


G5 Compliance with all legislative requirements and statutory obligations. Council’s governance framework over its procurement activities complies with the requirements of the Local Government Act 1993 and regulations. Financial Impact There is no financial impact through adoption of the recommendation Policy Implications There are no policy implications through adoption of the recommendation Other Options Not Applicable RECOMMENDATION: That the report of the Manager Risk and Audit, dated 20 November 2008 on the Governance Framework – Procurement Activities, be received and noted. Report prepared by: John Schanz Manager Risk and Audit Report approved by: Roy Newsome Group Manager Corporate Services

Documents

Finance and Audit Committee - City of Ryde · Benchmark 8.74% 7.80% ... Agenda of the Finance and Audit Committee Meeting ... The Chief Financial Officer as Council’s Responsible