Agenda Item No


The Vale of Glamorgan Council


Cabinet Meeting: 29 July, 2013


Report of the Cabinet Member for the Environment and Visible Services


Cardiff Organic Waste Partnership - Kitchen Food and Green Garden Waste Treatment Procurement


Purpose of the Report

1.         To report outcomes of a highly competitive and robustly dialogued and negotiated procurement process, at the Invitation to Submit Detailed Solutions (ISDS) stage.


1.         That Cabinet supports the progression of this procurement to the Invitation to Submit Final Tender Stage (ISFT).

2.         That this report be referred to the Economy and Environment Scrutiny Committee for information.

3.         That further reports be provided to Cabinet as necessary on this matter during 2014.

Reasons for the Recommendations

1.         To permit the successful bidders from the ISDS Stage to be invited to submit Final Tenders and for the procurement to then be taken to the Preferred Bidder Stage.

2.         To apprise Committee.

3.         To obtain the necessary authority to progress through the latter stages of the procurement process.


2.         Cabinet at its meeting on the 1 October, 2012 (Minute No's C1844 and C1845 refer) resolved:

(1)          That the potential arrangements to work in partnership with Cardiff Council on the project, to secure a sustainable, long term organic waste treatment solution was noted:

(2)          That a further more detailed report on this matter that included the Outline Business Case (OBC), for this partnership project be submitted to Cabinet.

Reason for Decisions:

(1)          To openly review the potential merits of a partnership with another local authority for the future treatment of its organic waste.

(2)          To have full access to the relevant financial data from both authorities to allow proper consideration of the business case and to agree, or otherwise, the partnership arrangements, whilst also permitting use of the necessary disclosure controls to protect sensitive data from another authority.


(1)          THAT the Final Draft 'Outline Business Case' (OBC) described in this report and attached at Appendix 1, for an Organic Waste Treatment Solution, initially predicated by Cardiff Council, upon a technology neutral assumption to be submitted to WG and be approved.

(2)          THAT the level of financial support required to meet the affordability envelope as detailed in the OBC for the (organic waste treatment) procurement be noted and proposals for the provision for the same through the standard budget setting processes agreed.

(3)          THAT the urgency procedure under Article 13.09 of the Council Constitution to enable agreement of the affordability envelope defined in Appendix 1 and paragraph 11, committing funding for an appropriate solution up to the maximum limit quantified, the actual budget requirement to be confirmed in the Final Business Case, though the maximum additional increase in the base budget in 2016 / 2017 would be circa £250k.

(4)          THAT delegated authority be granted to the Managing Director in consultation with the Director of Visible Services and Housing, The Leader and the Cabinet Member for Environment and Visible Services, to agree the Inter-Authority Agreement (IAA) proposed between Cardiff and the Vale.

Reasons for Decisions

(1)          To enable the Vale of Glamorgan Council to initially enter into a formal joint procurement arrangement for the treatment of biodegradable wastes for the period 2015 - 2030.

(2)          To ensure that future budgets are amended to reflect any increased financial demands of the new arrangements.

(3)          To enable the joint procurement process to proceed during October 2012 with an agreed affordability envelope.

(4)          To permit prompt agreement of the Inter-Authority Agreement between this Council and Cardiff Council on this project.

Relevant Issues and Options

3.         Following the agreement to work with Cardiff City Council to jointly procure future food and green waste treatment capacity in line with the Welsh Government's (WG) preferred strategy for treatment of organic waste, officers of the Council's Waste Management and Cleansing Division (WM&C) have worked on the ISDS stage of the project.  They have also been part of the procurement and dialogue team and Project Management Board, ensuring that the Council's interests are considered during all aspects of the procurement.

4.         Following the initial market testing and the Invitation to Submit Outline Submissions (ISOS) the four bidders taken forward who submitted detailed solutions at the subsequent ISDS Stage were all based on Anaerobic Digestion (AD) technologies for food waste, and Open Windrow Composting (OWC) technologies for garden green waste.

5.         The ISDS dialogue stage comprised the following 4 bidders:

·               Agrivert Limited

·               Keldar Biogen Renewables Cymru

·               G E Neco Wessex Water

·               Shanks Waste Management Limited

6.         The treatment solutions are to be at the following locations:

ISOS Bidder

Kitchen Food Treatment Facility

Green Garden Waste Facility

Agrivert Limited


Rover Way Cardiff (Neil's Soils),

Cardiff City Council's existing Open Windrow Compositing (OWC) facility at their Lamby Way landfill facility. 

Keldar Biogen Renewables Cymru


Dwr Cymru Welsh Water's Rover Way Sewage Treatment Plant site

Cardiff City Council's existing Open Windrow Compositing (OWC) facility at their Lamby Way landfill facility. 

G E Neco Wessex Water


Existing AD facility  Avonmouth

Cardiff City Council's existing Open Windrow Compositing (OWC) facility at their Lamby Way landfill facility. 

Shanks Waste Management Limited

New Inn, Pontypool

Cowbridge Compost  Ltd Site in Cowbridge


7.         The ISDS Bids were evaluated in accordance with the agreed and published evaluation methodology and the Public Contract regulations. The final two bidders will be selected by the evaluation process and agreed by the Project Board as recommended Final Tenders. The evaluation criteria for the procurement is attached at Appendix 1 and has been used by the Procurement Project Team to ensure that the selection of the bidders through the process resulted in the most sustainable and best value solutions being taken forward to the latter parts of the procurement process.

8.         The Council has already signed up to an IAA for carrying out the procurement stages;  but will need to consider, subject to a further report, a  second IAA (2) to cover the contract management, partner liabilities and payment mechanism following the completion of the procurement process.  Should the procurement be completed within the Council's Affordability Envelope, and subject to the Council not being exposed to disproportionate liability and the contractual rights and obligations appropriately flowing down to the Council; it is anticipated that any future decision would be positive.

9.         The 'Next Steps' in taking the procurement forward to financial close are as follows:

·               Complete (ISDS) Detailed evaluation stage process and derive Select List for Final Tenders. 2 No (ISFT stage) – July 2013;

·               In parallel, complete Final Tender (ISFT) documentation suite, reflecting the project’s commercial positions and continuing objectives of the project going forward. 

·               Develop communications plan in detail for the next stage, covering media and stakeholder engagement plans.

10.      Key Target Milestones of the procurement (depending on progress made by all parties in the final stage of negotiation and dialogue).

·               Commence Call for Final Tenders Stage – September 2013;

·               Preferred Bidder Announcement - summer 2014

·               Financial Close – Autumn 2014;

·               Planned Service Commencement January 2016;

·               Project Expiry (15 years) January 2031.

11.      The Council has already signed up to an OBC and IAA for this procurement, which provides a tool for the Partnership (and its stakeholders) to analyse the outcome of the procurement process and answer a number of questions about the proposed solution, including:

·               Does it address all of the Partnership’s requirements?

·               Does it represent good value for money?

·               Is it affordable?

·               Is it in line with National Waste Policy?

·               Is it a good fit with the Partners’ wider waste management strategies?

·               Is it environmentally sustainable?

·               Is the risk-profile appropriate?

·               Taking all the above into consideration, is it the right solution for the Partnership?

12.      Whilst it will be necessary to re-affirm the Final Business Case when the Preferred Bidder has been identified (following the completion of the ISFT) both these items will be matters to be determined within a subsequent report to Cabinet in 2014, which will also address the questions raised above in paragraph 12.

13.      Although the decision as to award the contract will be a matter for either Council, it should be noted that the IAA signed up to under Cabinet minute stated above contained the provision that if the proposed solution meets the output requirements and is within the Council's Affordability Envelope then damages will be payable should the Vale of Glamorgan withdraw from the procurement process or determine not to award a contract. Such liability in connection with any termination by the Council is capped at £1m.

Resource Implications (Financial and Employment)

14.      Gate fees for the service will not be known until Final Tenders are submitted. At OBC stage the affordability envelope assumed the maximum additional budget requirement of £250k in 2016 / 2017. The WG contribution reduces the price per tonne by a further 15%. Furthermore, only a proportion of the costs will be subject to indexation, which means that the cost of the service, will reduce on an annual basis, relative to inflation over the 15 year period. This makes the contract value more certain to the Council over this period.

15.      To date procurement costs incurred by the Council are:-

·               Officer time for participating in the procurement's dialogue and management  allocated to WM+C revenue budgets;

·               The costs of preparing the IAA, and the specific Vale of Glamorgan work undertaken by the advisors, amounts to £21k. This is in addition to the shared procurement cost with Cardiff

·               The procurement costs to 31st March 13, billed by Cardiff on a 1/6th basis, amount to £150k.

·               To date the Council has received grant of £44k of the total £144k grant. The remainder is to be paid in instalments at certain milestones of the procurement process.

·               The net cost in 2012/13 was therefore £127k. This cost was met by the Waste management revenue budget and no drawdown was required from the Visible Services Reserve.

·               As long as the procurement remains within budget the total procurement share for the Council is £300k plus £21k for work carried out to prepare the IAA and Vale specific work. If the full grant of £144k is received from the WG the net cost to the Council will be £177k. £127k was funded from 12/13 budgets, which would leave the remainder of £50k to be funded from the Visible Services Reserve.

Sustainability and Climate Change Implications

16.      AD facilities play a part in sustainable resource and waste management when used in an integrated waste strategy prioritising minimisation, reuse and recycling as well as generating energy from waste. It contributes to the principles of sustainable development should it be pursued in an integrated way through a sustainable, innovative and productive economy that delivers levels of employment, and a 'just society' that promotes social inclusion, sustainable communities and personal 'well being' in ways that help protect and enhance the physical environment and optimise resource and energy use.

17.      Modelling of the overall waste solution (including both food and green wastes) captures the transportation movements and mileage for both waste to the facility and the digestate produced travelling to end markets and show that the use of AD treatment results in a positive impact of climate change over other organic treatment options considering the energy generation and use of end product digested as a soil fertiliser.

Legal Implications (to Include Human Rights Implications)

18.      The procurement is being conducted in accordance with the Competitive Dialogue Procedure under the EU Public Sector Procurement Directive (2004/18/EC), implemented into UK law via the Public Contracts Regulations SI 2006/5 with effect from 31 January 2006.  The Project Board and Joint Committee had previously considered and approved all Procurement documentation (including the evaluation methodology) and short-listing of Participants during the Competitive Dialogue. The competitive dialogue process has advantages in that it enables the authorities to enter into dialogue with bidders as to the solutions available to meet their requirements, and disadvantages in that it is a resource intensive process that is costly to both the authorities and bidders.

19.      As an entity the partnership does not have the legal power to contract with the successful bidder so the contract will be made with one of the partner authorities (the Host Authority) pursuant to the Local Government (Contracts) Act 1997 on behalf of the other Partner Authorities.

20.      The Council has already signed up to an IAA(1) in pursuant to the powers in Section 101 of the Local Government Act 1972, and enshrined in this inter authority agreement are the Councils’ responsibilities and obligations during the procurement process.  It will be necessary to formally agree a further joint working agreement (IAA2) which will detail the contractual arrangements of the parties’ responsibilities and obligations during the contract stage.  A separate report will be presented to Cabinet to consider this matter.

21.      It should be noted that any planning permissions, consents, permits or the like that may be required in respect of the Final Bidders solution are a matter for the bidders and relevant Regulatory Authority (including any of the Partner Authorities in their capacity as local Planning Authority).  This report and recommendations proposed should not be seen as fettering the exercise of any Regulatory Authority’s statutory discretion or the exercise of any of their statutory functions.

Crime and Disorder Implications

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

Equal Opportunities Implications (to include Welsh Language issues)

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

Corporate/Service Objectives

24.      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

25.      This report is a matter for Executive decision.

Consultation (including Ward Member Consultation)

26.      As the proposed treatment facilities will be for organic waste collected Vale wide and there are no solutions proposed within the Vale of Glamorgan, no specific consultation has been carried out with Ward Members.

Relevant Scrutiny Committee

27.      Economy and Environment.

Background Papers



Contact Officer

Clifford Parish - Operational Manager, Waste Management and Cleansing

Tel: 02920 673220.


Officers Consulted

Accountant - Building and Visible Services

Operational Manager - Legal Services

Group Auditor - Audit


Responsible Officer:

Miles Punter - Director of Visible Services and Housing.