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Agenda Item No

The Vale of Glamorgan Council

Cabinet Meeting: 20 May, 2013

Report of the Cabinet Member for the Environment and Visible Services

Waste Management and Cleansing - Recycling, Organic Waste and Household Waste Recycling Centre Contracts

Purpose of the Report

1. To advise Cabinet of the current position with a number of waste management contracts, to agree a further extension of the current recycling reprocessing contract and to agree a change in the operation of the recycling bring site service.    

Recommendations

1. That Cabinet note the proposals contained within this report for the future delivery of recycling reprocessing, organic waste treatment and the management of Council’s Household Waste Recycling Centres (HWRC’s).

2. That Cabinet agree to a further extension of the current recycling reprocessing and HWRC contracts with Biffa Municipal Waste Ltd for a period up to 1st October 2013.

3. That Cabinet agree to the termination of the current service arrangements with Biffa Municipal Waste Ltd for the servicing of the Council’s recycling bring sites.

4. That a future report be provided to Cabinet in the near future on the reduction of recycling bring sites.  

Reasons for the Recommendations

1. To advise members and to assist them in making the necessary decisions on contractual arrangements for these services proposed within a further report on this agenda.

2. To ensure the continuation of these services up until the commencement of the new contracts later this year.

3. To permit this service to be brought back ‘in house’ to enable financial savings to be made.

4. To enable Cabinet to consider and agree any reductions in recycling bring sites. 

Background

2. Over the past 12 months Officers have been working on a number of major procurement projects for the Council's continued and future waste management operations and treatment facilities. These include:

(i)   Future residual treatment - Project Gwyrdd

(ii) Biodegradable municipal waste treatment - Kitchen and Green Wastes

(iii) Future organic waste treatment   - Cardiff Partnership

(iv) Processing of recyclable municipal waste - Caerphilly Partnership

(v) Management and operation of HWRC's

3. These projects have been successfully completed in respect to ‘Kitchen and Food treatment’, ‘Processing of Recyclable Municipal Waste’ and the ‘management and operation of the Council's HWRC's’. However, due to a range of legal and contractual issues including ‘Transfer of Undertakings (Protection of Employment) Regulations’ (TUPE) implications, it has not been possible to present the majority of these procurement issues to Cabinet until now.

4. Cabinet are advised that to allow a continued service for the recycling of the Council’s municipal waste and the operation of its HWRC's from 1 April 2013 to the 3 June 2013 it was necessary for officers to seek Emergency Powers to waive Contract Standing Orders. [Cabinet Minute C11305 (e) and (f) refers].

Relevant Issues and Options

5. Council on 6th March 2013 agreed preferred bidder status for Viridor Waste Management Ltd and a number of other resolutions to formally progress Project Gwyrdd (Minute 949 refers).

6. This report therefore considers the outstanding contractual matters shown numbered (ii) - (v) in the background section of this report.

Biodegradable Municipal Waste Treatment - Kitchen and Green Wastes

7. This current contract with Cowbridge Composting Ltd was let following a procurement process with 3 bidders returned bids. This 3 year contract commenced on 1st April 2012, though due to an oversight in the waste management department this tender has not formally been accepted by Cabinet.

8. Cowbridge Compost Ltd; the incumbent contractor providing this service for the Council, submitted the lowest rates of all three bidders with their bid including a reduction of their previously contracted rate per tonne for treating the 'food' waste element, of £5 per tonne. This has resulted in the Council making a unit cost saving over the previous contract.

9. Cowbridge Compost has to date provided the Council with an excellent sustainable service with advantageous gates fees and the close proximity of its site to our collection points. Regrettably their treatment method of ‘In Vessel composting’ does not match the Welsh Government's preferred Anaerobic Digestion (AD) treatment technology. Officers are therefore in the process of procuring an alternative AD treatment arrangement, in partnership with Cardiff City Council, to treat the Council’s organic waste at the end of the current contract in 2015.  (2016 if extended).

10. It is proposed that Cabinet retrospectively accept the tender submitted by Cowbridge Compost Ltd, to enable compliance with standing orders and financial regulations, and the financial information in respect to this is contained within a further report on this meeting agenda. Due to commercial sensitivity it is necessary for this matter to be considered under Part II.      

Future Organic Waste Treatment - Cardiff Partnership

11. This procurement has now reached the end of the ‘Invitation for bidders to submit detailed solutions (ISDS) March 2013’ stage and will now continue to the next stage selection of Final Bidders. The Council's financial contribution to the overall procurement costs that will be met by Cardiff is based on the percentage of our contracted tonnage and estimated to be one sixth of the £1.8m (£300k) that Cardiff has budgeted, for carrying out this procurement. However, WG have formally confirmed that they will provide this Council with procurement support of up to £144k (based on the forecast proportional tonnage increase) to off-set an element of the Vale of Glamorgan's contribution to these procurement costs. (Min no C1844 refers)

12. To update Cabinet on the remaining stages of this procurement, the proposed future milestones for completion of this procurement are given in the table below. Cabinet will receive further reports as needed to progress this procurement to financial close.

Announcement of ISFT Select List

 7th August 2013

ISFT Dialogue (Rounds 1-5)

W/C 2nd Sept 2013 – W/C 25th Nov 2013

Final summary of technical solutions, commercial and affordability positions reported prior to close of dialogue.

29th Nov 13

WG Commercial Review complete (after 2nd Health-check)

W/C 16th December 2013 TBC

ISFT Dialogue formally closes and Final Tenders Issued

20th December 2013

Receive Final Tender Submissions

15th January 2014

Evaluation of Final Tenders

12th March 2014

8 weeks allocated

FBC for pre-preferred bidder completed.

15th March 14

Winning Tender approved by Full Councils (Cardiff and VoG)

18th April 2014

Preferred Bidder Announced

30th April 2014

Alcatel Standstill Period

30th April – 8th May 2014 (10 days)

Fine Tuning (PB stage)

30th April to 31st July 2014 (3 Months)

Contract Award

Commercial/Financial Close (simultaneous)

31st July 2014

Planning Determination

(16 weeks)

22nd December 2014

Construction Phase.

20th March – 31st March 2016

Commissioning Phase (3 months)

31st March 2016 – 30th June 2016

Service Commencement

30th June 2016



Processing of Recyclable Municipal Waste - Caerphilly Partnership

13. In January 2012 Caerphilly County Borough Council (CBC) placed an OJEU Notice with Buy4Wales for the procurement of a suitably qualified and experienced Contractor to provide a ‘Material Recovery Facility’ for municipal dry recycling materials from the following authorities:

  • Caerphilly County Borough Council (Lead Authority),
  • Blaenau Gwent County Borough Council,
  • Merthyr Tydfil County Borough Council,
  • Monmouthshire County Council and;
  • The Vale of Glamorgan Council.

14. Ultimately the tender process was completed in 2013 with only the Vale of Glamorgan Council and Caerphilly still participating within the procurement process which saw two bidders submit bids i.e. SITA and Amber Recycling. Cabinet should note that whilst our incumbent contractor, Biffa Municipal Ltd, participated within the procurement they did not ultimately submit a bid.

15. The winning bid for this contract was submitted by SITA UK Ltd whose bid was made up of a basic unit price per tonne plus a haulage charge to their recycling plant. It also included a rebate for the market value of the Council's recycling. Although this is an increased unit rate over that of the previous contract with Biffa it does represent best value compared to the other bid received and is more of a true reflection of the present recycling market. Additionally the location of the local transfer station (adjoining the Alps Depot), compared to our previous site in Cardiff, will offer savings on haulage, which will offset an element of the increased gate fee. The Council also incurred no costs other than staff time for carrying out this procurement process, though there is a requirement to pay Caerphilly CBC a 50p per tonne levy on each tonne of recycling which equates to approximately £24k over the duration of the contract period (assuming a 4 year contract period). 

16. Our partners within this procurement, Caerphilly CBC, have now accepted the SITA offer and have entered into a formal contract with them for the reprocessing of their dry recycling.

17. The Vale of Glamorgan Council will be required to enter into a Memorandum of Understanding (MoU) with Caerphilly CBC which will govern the relationship between the two partnering Council's during the contract period, setting out the roles and responsibilities of the respective Councils, including:

  • contract payments;
  • monitoring of contract performance;
  • enforcement of the contract terms and conditions
  • supply of performance and waste composition and recycled data
  • Referring Supplier performance issues to Lead Contracting Authority

    18. Under the provisions of the MoU Caerphilly CBC will manage overall contractual matters, including any disputes that might arise during the term of the contract. The Vale of Glamorgan Council will be responsible for the waste transfer arrangements at SITA’s transfer station in Wenvoe, though the Council will be invoiced for the full costs of the service.

    19. As advised, as Lead Authority Caerphilly CBC will receive a Royalty of 50p per tonne for every tonne of material received as part of this contract from the Vale of Glamorgan. Although all royalties payable will be made directly to Caerphilly CBC by the contractor on a monthly basis, under the MoU and contract the Council will also receive a Community Benefit payment from SITA of 60p per tonne (equates to an income of £29k over a 4 year contract term).

    20. It is proposed that Cabinet give delegated authority to certain officers to agree and sign the MoU, though as it will be necessary to provide Cabinet with commercially sensitive financial information in order to make this decision, the matter will be dealt with via a further report on this meeting agenda under Part II. 

    Management and Operation of HWRC's

    21. This 'in-house' procurement carried out in March 2013 resulted in 4 bidders submitting bids with the preferred bid being received by the Council's incumbent contractor Biffa Municipal Ltd.

    22. In addition to it being the most financially advantageous, the Biffa bid provides additional recycling materials and capacity over that offered in their previous contract with added performance conditions requiring them to take positive action to increase the recycling rates of the HWRC, which unfortunately at present are some of the lowest in Wales.

    23. It is proposed that Cabinet award the contracts for the operation of the Council’s HWRC’s to Biffa Municipal Waste Ltd, though as it will be necessary to provide Cabinet with commercially sensitive financial information in order to make this decision, the matter will be dealt with via a further report on this meeting agenda under Part II. 

    Collection of 'bring bank' recycling for reprocessing.

    24. This service has been delivered under agreement with Biffa Municipal Waste Ltd. though no formal contract is currently in place. The service was operated under contract until 2008 and subsequently for 2008/9 under emergency powers.  However, during 2009/10, 2010/11 and 2011/12 the service was provided without any formal contract agreement.

    25. Following the introduction of co-mingled kerbside collections, with its wider range of recyclable materials, the need for such an extensive number of bring banks has reduced.  It is now proposed that this service be brought 'in house' to introduce efficiencies of approximately £100k per annum (the sites will be serviced by our existing recycling collection vehicles) and to enable changes to be made to the numbers of sites.

    26. TUPE is likely to apply in this case as one member of staff works for Biffa Municipal Waste Ltd servicing the bring banks.  There may also be a cost for the provision of the wheeled bins currently necessary for this service. Whilst the Council has a significant stock of these wheeled bins, there may be a small shortfall in provision to cover all sites. Notwithstanding this, all costs will be met from within existing budgets.  

    27. The Director of Visible Services and Housing has targeted £100k in savings from rationalising this service in 2015/16. However it may be possible to bring this saving forward if members agree to a large scale reduction in the number of bring sites. This matter will be the subject of a future report to Cabinet.

    Resource Implications (Financial and Employment)

    28. As a number of the procurements contained within this report require the disclosure of sensitive financial information to enable Cabinet to take a decision. A further report on this agenda will consider these matters under Part II.

    29. The existing, but elapsed, contract conditions and payment mechanism for the two extended contracts will still apply during the period of the contract extension. There are no financial implications in addition to the contract cost that would have been incurred previously, save for an inflation increase, which would have been incurred should the contracts have still been in force post 1 April 2013.

    30. Whilst the procurement costs in respect to the Caerphilly CBC procurement have been limited to officer time there will be a one sixth contribution to Cardiff in respect to the Organics Contract in the sum of £300k, which will be offset partly by WG grant up to the value of £144k. All other 'in-house' procurements contained within this report have been carried out within the Council's Waste Management and Cleansing Division's Revenue Budgets.

    31. Costs will be incurred with the TUPE and wheeled bin purchasing arrangements for the former recycling bring site agreement with Biffa Municipal Waste Ltd. though these will be offset by the service savings made during 2013/14.  The Council currently pay Biffa Municipal Waste Ltd £108k per annum for this service. 

    Sustainability and Climate Change Implications

    32. The recycling of municipal household waste is considered to be a major contributor to achieving sustainable waste management and climate change reduction. Any cessation of the Council's recycling services, no matter how short, would have a negative impact on the Council's policies to improve both sustainability and climate change.

    Legal Implications (to Include Human Rights Implications)

    33. The Head of Legal Services will be required to progress the contractual arrangements for all contracts when they are agreed by Cabinet. For the purposes of this report this is restricted to the contract extensions up to 1st October 2013 for recycling re-processing and management of the Council’s HWRC’s.

    34. It is a legal requirement for parties to provide information 14 days before a transfer of a service under TUPE with the outgoing provider having a legal obligation to provide the incoming provider with specified information 14 days before a transfer of business takes effect.  Failure to follow this requirement could result in liability and claims against the Council. 

    35. The Council has signed an Inter Authority Agreement (IAA1) with Cardiff City Council in respect to the organic waste contract in pursuant to the powers in Section 101 of the Local Government Act 1972. The IAA defines the parties’ responsibilities and obligations during the procurement process. It is necessary to formally agree to a further IAA agreement (IAA2) at the end of the procurement to address the contractual arrangements and the parties’ responsibilities and obligations during the contract stage.

    Crime and Disorder Implications

    36. There are no crime and disorder implications associated with this report.

    Equal Opportunities Implications (to include Welsh Language issues)

    37. There are no equal opportunity implications as a result of this report.

    Corporate/Service Objectives

    38. It is a Corporate Priority to: Work with a range of partners to provide appropriate residual waste and recycling collection, treatment and disposal services and achieve the national recycling target of 58% (2015/16).

    Policy Framework and Budget

    39. This report is a matter for Executive decision by Cabinet.

    Consultation (including Ward Member Consultation)

    40. As waste management services are Vale wide no specific ward member consultation has been carried out.

    Relevant Scrutiny Committee

    41. Economy and Environment.

    Background Papers

    None.

    Contact Officer

    Clifford Parish, Operational Manager Waste Management and Cleansing –

    Tel: 02920 673 220

    Officers Consulted

    Accountant - Visible Services

    Operational Manager - Committee Reports

    Group Audit

     

    Responsible Officer:

    Miles Punter - Director of Visible Services and Housing.

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