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Agenda Item No

 

The Vale of Glamorgan Council

 

Extraordinary Scrutiny Committee (Environment and Economy): 28 February, 2013

 

Report of the Director of Visible Services and Housing

 

Prosiect Gwyrdd Partnership - Residual Waste Treatment Procurement - Final Bidder and Joint Working Agreement (JWA2)

 

Purpose of the Report

1.             To update Committee on progress with the Prosiect Gwyrdd Partnership following the announcement of the 'Preferred Bidder' Viridor, and to seek views on the proposed Joint Working Agreement (JWA2) between the 5 partnership authorities and the Host Authority required for the contract with the final successful bidder. 

Recommendations

1.             That Committee note the contents of the report and the proposal to report the Final Bidder and Final Business Plan (FBP) to Council on the 6 March 2013.

2.             That Committee consider the draft Joint Working Agreement (JWA2)

Reasons for the Recommendations

1.             To advise Committee.

2.             To allow Council to consider any comments that this Committee may wish to make in respect to the JWA2.

Background

2.             Cabinet held on the 4 February 2013 (Min No C1996 refers):

                RECOMMENDED

                (1)       T H A T the procurement process to date be noted.

                (2)       T H A T a further report be presented to the Scrutiny Committee in February 2013 detailing the

                            identity of the preferred bidder and the proposed inter-Authority agreement between all

                            partners for the contract term.

                (3)       T H A T the report be referred to Cabinet for consideration.

                Reasons for recommendations

                (1)       To update Committee on the project as it progresses to the final stages of procurement.

                (2)       To allow this Committee to consider matters further prior to a report on the project being

                            presented to the meeting of Council in March 2013.

                 (3)       To update Cabinet and to advise of any comments made by this Committee on this progress

                             report.

 

3.             Cabinet, having considered the recommendations of the Scrutiny Committee (Economy and Environment

                 RESOLVED – T H A T the recommendations of the Scrutiny Committee be noted.

                 Reason for decision

                 To allow the Scrutiny Committee and Cabinet to consider matters further prior to a report on the

                 project being presented to the meeting of Council in March 2013.

 

4.             Council held on the 30 June 2009 (minute158 refers) received a report to approve participating in partnership with the four other Prosiect Gwyrdd Partners to seek the procurement of a future residual waste treatment solution for all residual waste which could not be reused, recycled or composted. This report highlighted that Prosiect Gwyrdd had identified that a fundamental risk to any waste procurement project was the availability of a suitable site that had reasonable opportunity of obtaining full planning permission although other risk aspects were financial, regulatory, procurement, design, political planning, construction and commissioning, operational and environmental.  Council was advised that all procurement decisions would be overseen by a Joint Committee which would be taken forward by an Officer Project Board (as detailed in Schedule 1 of the JWA1) with a fully resourced project team to deliver the complex procurement stages.  Prosiect Gwyrdd had taken three years to reach the procurement stage and it was likely to take a further five to six years before any solution was operational:

                 RESOLVED - T H A T the proposals of the Cabinet as set out in Cabinet Minute No. C463, 3rd June

                 2009, be approved:

                 (1)       T H A T it be agreed that the three conditions, as set out in Appendix A of the report dated

                            17th December, 2008 that approved the Outline Business Case (OBC) for Prosiect Gwyrdd,

                             had been satisfied.

                 (2)       T H A T the OBC Health Check Addendum 2009, as appended to the report, which represented

                             the revised Outline Business Case for Prosiect Gwyrdd be approved.

                 (3)       T H A T the proposed strategic approach to procurement for Prosiect Gwyrdd be approved,

                            which included:

                             (i)         proposals to develop the evaluation criteria and weightings that will be a matter for

                                         the joint committee to determine following stakeholder consultation

                             (ii)        is premised upon a publicly owned site being made available to bidders (note well

                                         that this does not preclude bidders putting forward proposals based at other

                                         locations/sites within their control) and that the site proposed be Tatton Road,

                                         Newport subject to:

  • Newport City Council agreeing to the same. 
  • All five authorities  agreeing to the terms and conditions pursuant to which such site is to be acquired or an option secured, which terms will address how the same is to be financed by the five authorities and what is to happen at the end of the project life.

                (4)       T H A T the procurement costs as provided in paragraphs 62 to 68 of Appendix A - Common

                            Report to Preferred Bidder stage for the Project be approved. 

                (5)       T H A T that the Council proceed with the procurement on the basis of affordability range

                            contained in appendix G and that the financing options set out in paragraphs B be approved.

                (6)       T H A T the Council enters into a Joint Working Agreement (JWA1) with the other authorities, in

                            the form set out in appendix D to this report and that pursuant thereto and amongst other

                            things:

                            (a) a Joint Committee, with the delegated authority set out in the JWA1 be established

                                       and that the Cabinet Members with responsibility for the time being for waste

                                       management and financial matters be appointed to represent this authority on the

                                       Joint Committee;

                            (b) subject to Cardiff Council agreeing the same, that Cardiff Council will act and shall have

                                        full authority to act on behalf of all the authorities as Lead Authority for the

                                        procurement process;

                            (c) that the decision as to award of contract will be a matter for each authority, though it

                                        should be noted that the JWA contains provision that if the proposed solution meets

                                        the output requirements and is within the Affordability Envelope then damages will be

                                        payable should an authority withdraw from the procurement process or determine not

                                        to award a contract, with such damages being capped at £3,000,000;

                            (d) a Project Board comprising of officers from each authority will be established with the

                                       delegated authority set out in the JWA1.

                (7)       T H A T stakeholder consultation on the Project be carried out in accordance with the approach

                            set out in appendix OBC Health Check Addendum, appendix B.

                (8)       T H A T the procurement for Project Gwyrdd be commenced subject to:

                            (a) JWA 1 being concluded by all authorities;

                            (b) the matters set out in recommendation 3 (ii) is agreed by all authorities;

                             and

                             (c) Cabinet receiving confirmation from WAG that the WPPO Scrutiny panel is satisfied

                                          that the terms and conditions of the funding package (see WAG letter dated 30.3.09

                                          appended to this report as OBC Health Check Addendum, appendix B.) have been

                                           met prior to posting OJEU Notice.

                (9)       T H A T the matter be reported back to Council when a decision is sought to award the

                           contract or before hand if the Joint Committee wishes to refer any matter back to Council.

                (10)     T H A T the report be referred to the Scrutiny Committee (Corporate Resources) for approval.

                (11)     T H A T the final commitment that will be required to achieve the recycling and composting

                           levels approaching 65% be approved.

                (12)     T H A T the report and all comments received from this Committee and the Scrutiny Committee

                            (Corporate Resources) be referred to Cabinet and then Full Council for approval.

                 (13)     T H A T the Council's existing Waste Strategy be updated to reflect the Welsh Assembly

                            Government's emerging policy.

                 (14)     T H A T a presentation on all technologies available to provide Residual Waste Treatments be

                            made to all Members of the Council.

                 Reasons for decisions

                 (1)       To confirm compliance with the requirements of Minute No C269 resolved by Cabinet on 17th

                             December, 2008.

                 (2)       To ensure that Cabinet/Committee are satisfied that the OBC Health Check represents the

                             revised outline business case for Prosiect Gwyrdd.

                 (3)       That the proposed Procurement Strategy and land actuations proposals are accepted.

                 (4)       That the equal sharing of procurement costs is acceptable.

                 (5)       That procurement is carried out where it is consistent with the OBC affordability range and

                             finance options.

                 (6)       That the Joint Working Agreement (JWA1) is acceptable and jointly entered into with the other

                             Prosiect Gwyrdd local authorities.  With the setting up of a Joint Committee, lead procurement

                             authority and compensation clauses for any partner authority deciding to not more to award

                             of contract at the end of the procurement process.

                 (7)       That appropriate Stakeholder Consultation is carried out.

                 (8)       That subject to the specified conditions that the procurement of a residual treatment solution

                             for the Prosiect Gwyrdd local authorities is commenced.

                 (9)       That a further report be brought to Council following or during the procurement process in

                            order to consider Award of Contract.

                 (10)     To ensure consideration of the report details by the appropriate Scrutiny Committee.

                 (11)     To ensure that sufficient resources are available to meet WAG's future recycling and

                             composting targets.

                 (12)     To obtain an Executive and Full Council decision, to enable this Council's involvement in the

                             project to continue.

                 (13)     To ensure that the Council's information is updated.

                 (14)     In order that all Members can be apprised of up to date technologies available to provide the

                             service.

Relevant Issues and Options

5.             Prosiect Gwyrdd having reached the 'Final Tender' stage and evaluated the bids confirmed that there were two strong detailed bids from Veolia and Viridor.  Following close of dialogue and final assessment the resulting final bids from these companies a 'Preferred Bidder' was announced on the 1 February 2013.

6.             The Prosiect Gwyrdd, Officer Board strongly supports the award of 'Preferred Bidder' status to Viridor Waste Management Ltd (Viridor) having carried out a procurement process that was highly competitive and firmly negotiated. This resulted in a very good price with evaluation scores showing that at the start of the new service (in April 2016) the tendered gate fees will be considerably lower than the price each Partner would be paying for their waste disposal if they had continued with their current arrangements.

7.             Final Tenders were evaluated in accordance with the agreed and published evaluation methodology and the Public Contract Regulations and Viridor selected by the Project Board as recommended Preferred Bidder.

8.             Following this, only matters of fine-tuning and clarification shall be settled during the Preferred Bidder Stage. A 'Preferred Bidder' letter confirming the purpose, permitted scope and the matters for fine tuning will be issued to Viridor, and the terms must be accepted by Viridor, as a condition of their appointment as 'Preferred Bidder. In particular, Viridor will be put on notice that any breach of the terms of the Preferred Bidder letter will entitle the Partnership to revoke Viridor’s status as 'Preferred Bidder' without any liability for costs or losses. The Partnership shall progress the contractual documentation to the point that they are capable of execution by the Partnership within the stated parameters of the 'Preferred Bidder' letter. The Contract is anticipated to be signed in July 2013.

9.             The Council has already signed up to a Joint Working Agreement (JWA1) (Cabinet minute No. C463 refers), that enshrined, in an inter authority joint working agreement, the parties’ responsibilities and obligations during the procurement process. It is now necessary to formally agree to a further Joint Working Agreement (JWA2) which will enshrine the contractual arrangements of the parties’ responsibilities and obligations during the contract stage. A copy of the JWA2 is attached for Committee's consideration as  Appendix 1 to this report.

10.        The process to approve the Preferred Bidder appointment to award the contract and to enter into the JWA2 is as follows:

(i) On the 30th January 2013 - Project Board met to review the tender evaluation and to recommend the Preferred Bidder to the Joint Committee.

(ii) On the 7th February 2013 - Joint Committee meeting recommended the Preferred Bidder to the Partner Authorities.

(iii) On the 13th February 2013 - Joint Scrutiny panel meeting to scrutinise the Joint Committee decision.

(iv) Between the 26th February 2013 and 6th March 2013 - Full Council meeting for each Partner Authority to appoint the Preferred Bidder and approval to enter into the Project Agreement (subject to only minor amendment). The process for the approval and sign off of the FBC and the second Joint Working Agreement (JWA2) will be dealt within the same procedure and timeline as above.

11.        Within the Council report, delegated authority will be requested for the Council's Managing Director, in consultation with the Leader, to authorise the Project Senior Responsible Officer (SRO) to award the contract, and it will be proposed that each Partner Authority Director or Project Board member will be given delegated authority to enter into the JWA2, subject to minor amendments.

12.        All the recommendations within the report to Council on the 6 March 2013 are common to all the reports being taken to the 5 individual Prosiect Gwyrdd authorities, albeit slightly amended to reflect the Vale of Glamorgan's Schedule of Delegation.

13.        Following implementation of the JWA2 a Contract Manager will be appointed to oversee and manage the Contract and the JWA2 at an operational level. They will be the main interface with the contractor and the Partner Authority Representatives with a direct line into the Host Authority. A Contract Management Board will oversee and manage the Contract and JWA2 on behalf of the Joint Committee in the interests of the Partner Authorities at the directorate strategy and senior officer level. A Joint Committee will oversee the contract and JWA2 in the interests of the Partner Authorities and electorate at a strategic corporate and member level and will carry out those functions allocated to the Joint Committee in the JWA2 as "Joint Committee Matters".

Resource Implications (Financial and Employment)

14.        The Prosiect Gwyrdd Procurement is fully financed by the 5 partnering Council's along with Welsh Government procurement grant support. It is controlled by a fully resourced Project Team and Project Director to deliver the complex procurement stages and the Vale of Glamorgan's contribution to overall cost of the procurement is as follows:

Vale of Glamorgan's Prosiect Gwyrdd Procurement Financial Contribution

 

 

£

07/08

10,353

08/09

43,293

09/10

4,873

10/11

128,479

11/12

229,237

12/13 projected

194,440

 

610,675

 

N.B. The Project was heavily financed by Welsh Government grant in the earlier years.

 

15.        Since the project’s inception all partnering Councils have contributed equally to the cost of project revenue expenditure after applying the approved level of grant funding. Partner contributions relating to the previously proposed acquisition of the optional site in Newport were based on a projected tonnage basis rather than being shared equally.

16.        Additional officer time is spent attending Prosiect Gwyrdd Officer Sub Groups, Project Board Meeting and Member's Joint Committee and Scrutiny Panel meetings. These costs are all met through existing Council Revenue Budgets.

17.        The early indication is that the contract price for the Vale of Glamorgan will be well below the figure indicated in the outline business case and will therefore represent a real term saving for the Vale of Glamorgan.  

Sustainability and Climate Change Implications

18.        EfW facilities can play a part in sustainable resource and waste management when used in an integrated waste strategy prioritising minimisation, reuse and recycling as well as energy generation from waste. It contributes to the principles of sustainable development when pursued in an integrated way through a sustainable, innovative and productive economy that delivers high 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.

19.        Compared to coal or oil-fired power stations, EfW emits less fossil CO2. EfW facilities actually help to reduce greenhouse gas emissions by diverting waste away from landfill (decomposing waste produces large amounts of the greenhouse gas, methane, which is 20 times more damaging to the environment than CO2). On average the treatment of one ton of municipal waste in an EfW facility results in a carbon saving of at least 232kg (CO2 equivalent).

20.        The WRATE (Waste and Resources Assessment Tool for the Environment) software to compare the environmental impacts of different municipal waste management systems has demonstrated that by adopting this treatment solution the proposal will provide an annual net benefit predicted carbon saving of 51,392 t

Legal Implications (to Include Human Rights Implications)

21.        Competitive dialogue procedure is being used with the procurement carried out in accordance with the EU Public Sector Procurement Directive (2004/18/EC).  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 can be costly to both the authorities and bidders. The procurement is presently at the final bidder stage.

22.        As an entity, Prosiect Gwyrdd does not have the legal power to contract with the final successful bidder so the contract will be made with the host authority (the lead authority) to be dictated geographic by the location of the successful bidder's plant.

23.        The Council has already signed up to a Joint Working Agreement (JWA1) in pursuant to the powers in Section 101 of the Local Government Act 1972, that enshrined in an inter authority joint working agreement, the parties’ responsibilities and obligations during the procurement process. It is necessary to formally agree to a further joint working agreement (JWA2) which will enshrine the contractual arrangements of the parties’ responsibilities and obligations during the contract stage. It is proposed to report details of the JWA2 to all partnership Councils and this will form part of the Common Report that will be considered by all partnership Council's in Feb/Mar 2013 and considered at the Vale's Council Meeting on the 6 March 2013.

Crime and Disorder Implications

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

Equal Opportunities Implications (to include Welsh Language issues)

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

Corporate/Service Objectives

Improvement Objective 27:

26.        It is a Corporate Priority to:

Work with partners to develop a sustainable community which maximises opportunities for economic growth social improvement and environmental regeneration and protection.

Improvement Objective:

protect and enhance the Vale’s natural and built environment.

ACTIONS:

R5 Increase waste recycling rates to 50% and reduce levels of residual waste (2013).

R6 Progress a regional residual waste treatment facility/facilities through Prosiect Gwyrdd (2014).

Improvement Objective 33:

To make best use of our assets and to procure good, sustainable services and facilities.

Policy Framework and Budget

27.        This report is a matter for decision by Full Council.

Consultation (including Ward Member Consultation)

28.        As the proposed Commitment is 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

29.        Economy and Environment.

Background Papers

Detailed background papers are available at www.prosiectgwyrdd.co.uk

 

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 Audit.

 

Responsible Officer:

Miles Punter - Director of Visible Services and Housing.

 

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