Agenda Item No

 

The Vale of Glamorgan Council

 

Scrutiny Committee (Economy and Environment): 27th May, 2009

 

Report of the Director of Environmental and Economic Regeneration

 

Prosiect Gwyrdd - A Regional Partnership for the Procurement of a Residual Waste Treatment Solution

 

Purpose of the Report

1.             To seek approval to participate in partnership with the other Prosiect Gwyrdd Partners to seek the procurement of a future residual waste treatment solution for all residual waste that can not be reused, recycled or composted.

2.             It should be noted that while the following recommendations within this report are common to all the reports being taking to the five individual Prosiect Gwyrdd authorities and are worded to reflect full approval of Committee are only being asked to support these recommendations at this time.

Recommendations

1.             To agree that the three conditions, (as set out in Appendix A) of the report dated 17th December that approved the Outline Business Case ('OBC') for Prosiect Gwyrdd that those conditions have been satisfied

2.             To approve the ‘OBC Health Check Addendum 2009’ appended at Appendix B to this report that represents the revised outline business case for Prosiect Gwyrdd.

3.             Approves the proposed strategic approach to procurement for Prosiect Gwyrdd which includes:-

(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 is known as Tatton Road, Newport.  This recommendation being 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.             Approves the procurement costs as provided in paragraphs 62 to 68 of Appendix A - Common Report) to Preferred Bidder stage for the Project. 

5.             Approves that the Council proceed with the procurement on the basis of affordability range contained in appendix G and agree that the financing options set out in paragraphs B are approved

6.             To approve that 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 (and in his or her absence the Cabinet Members with responsibility for the time being for waste management and financial matters be entitled to act in such capacity);

(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.             That stakeholder consultation on the Project is carried out in accordance with the approach set out in appendix OBC Health Check Addendum, Appendix B.

8.             To approve that 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.             The matter be reported back to Council when decision is sought to award the contract or before hand if the Joint Committee wishes to refer any matter back to Council.

10.        That this report be referred to the Corporate Resources Scrutiny Committee for approval.

11.        To approve the final commitment that will be required to achieve the recycling and composting levels approaching 65%.

12.        That this report and any comments received from the Economy and Environment and Corporate Resources Committees be referred to Cabinet and then Full Council for approval.

Reasons for the Recommendations

1.             To confirm compliance with the requirements of Minute No C269 resolved by Cabinet on the 17th December, 2008.

2.             To ensure that Cabinet/Committee are satisfied that the OBC Health Check represent 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.

Background

3.             Cabinet on the 17th December, 2008 resolved that the collaborative partners forming Prosiect Gwyrdd (minute C269 refers):

RESOLVED -

 

(1)  T H A T the final draft OBC be approved for submission to WAG based upon the affordability gap described within the report for a Residual Waste Treatment Solution predicated upon a technology neutral assumption.

 

(2)  T H A T the approved OBC would remain valid subject to the following three conditions:

 

(i)  The Procurement being premised upon a publicly owned site being made available to bidders and as such maintaining discussions with WAG was necessary until a public authority contractually committed to securing an option in the Partnership's control but that it be noted that this would not preclude a privately owned site being brought forward by a bidder.  

(ii)  WAG providing sufficient comfort that they fund the partnership to at least a minimum level of funding over the life of Prosiect Gwyrdd as per the OBC and that its decision be made prior to 31st March, 2009.

(iii)  The other partner authorities also approving the OBC with the same conditions applying.

 

(3)  T H A T, if any of the three conditions in Resolution (2) above were not all met by 31st March, 2009, Cabinet approval for OBC would automatically lapse and the Vale of Glamorgan Council would consider alternative options for residual waste treatment outside the scope of Prosiect Gwyrdd.

 

(4)  T H A T the Director of Environment and Economic Regeneration in consultation with the Director of Legal, Public Protection and Housing Services and Cabinet Members for Visible and Building Services and Legal and Public Protection be authorised to extend existing Memorandum of Understanding between partnership Councils to 31st March, 2009 to facilitate further joint working arrangements pre-procurement.

 

(5)  T H A T if the conditions in Resolution (2) above were met, a further report would be submitted to Cabinet for recommendation to the Council to seek a full decision in respect of Prosiect Gwyrdd including:

 

·               the final affordability envelope

·               the proposed governance arrangements and formation of a Joint Committee

·               the lead Authority for procurement

·               the final Joint working Agreement and

·               evaluation criteria for the procurement process

 

(6)  T H A T a full Stakeholder Consultation Strategy be further developed including the launch of the Prosiect Gwyrdd Website.

 

(7)  T H A T the re-establishment of the previous joint trans-boundary Scrutiny Committee arrangements be re-established.

 

Reasons for decisions

 

(1)  To allow the OBC to be submitted to WAG as a basis for financial support for Prosiect Gwyrdd to reduce the affordability gap.

 

(2)  That Cabinet approval is conditional on WAG meeting all the conditions needed to comply with the OBC.

 

(3)  That WAG is aware that Prosiect Gwyrdd will end should they fail to confirm funding support by 31st March, 2009.

 

(4)  To allow the existing Memorandum of Understanding to be extended as required to allow continual partnership working.

 

(5)  To obtain the necessary authority to progress the procurement stage of the project.

 

(6)  To ensure full stakeholder consultation.

 

(7)  To allow the Scrutiny Committee (Economy and Environment) to continue its previous work in respect of the procurement process.

 

4.             This report addresses a number of these recommendations and seeks endorsement of a procurement strategy to pursue a residual treatment option.  It also addresses the outline contract specification, optional site acquisition and affordability position.  The report is being submitted to all 5 partnering authorities over the next few months with all individual reports based on the full Common Report 2 which is attached for consideration as Appendix 1 to this report.  It is recommended Members consider the full common report that provides a more detailed description of the relevant issues.

Relevant Issues and Options

5.             The Authority is presently fully committed to the Prosiect Gwyrdd Partnership and is not considering any other option for future residual waste treatment.  Our current contract with Biffa Waste Services for landfilling residual waste will terminate in 2018 and it is unlikely that there will be any appropriate alternative to Prosiect Gwyrdd that will provide further disposal provision after this date.  Prosiect Gwyrdd has taken three years to reach the procurement stage and is likely to take a further 5 to 6 years before any solution is operational.  Officers are of the belief that no other procurement option will deliver a successful outcome before 2018.

6.             Prosiect Gwyrdd is a path finder project in Wales for the Wales Assembly Government (WAG) Residual Waste Treatment Procurement Programme and supports the 'Making the Connections Agenda' showing clear economies of scale and joint working benefits.  It's size is increasingly attractive to the market and should result in reduced gates fees over smaller or single authority procurement options.

7.             WAG has made it clear through its future strategic direction papers that resources  are expected to be directed towards local authority policies which are based on very high levels of recycling and composting.  The most recent paper (Towards Zero Waste, April 2009,) proposed specific targets that are expected to be adopted and also, it is anticipated, will be given statutory backing.  These are set out below:

·     2009/10 - 40% (of which 15% is composting, not food specific)

·     2012/13 - 52% (of which 12% is a food specific target)

·     2015/16 - 58% (of which 14% is a food specific target)

·     2019/20 - 64% (of which 16% is a food specific target)

·     2024/25 - 70% (of which 16% is a food specific target)

·     Maximum amount of residual waste of 150kg per household per annum by 2024/25

·     Reduce the amount sent to landfill to 10% by 2019/20

·     Reduce amount sent to landfill to 5% by 2024/25

·     Maximum amount of MSW subject to EfW of 30% (tapered from 42%).

 

8.             The revised waste strategy for Wales published on the 29 April, 2009 for public consultation is consistent with the emerging National Waste Strategy and is a condition of future WAG funding.  Given the direction of travel that has been set out not only is Prosiect Gwyrdd compliant with future policy, but well placed for any funding allocations.

9.             While the Prosiect Gwyrdd procurement process will be technology neutral, with the final solution being determined during the Competitive Dialogue stages, it is likely that some of the bidder solutions proposed will entail a thermal treatment component.  Any proposal of this nature will require heat plan submission.  The competitive dialogue process will allow consideration of all available and emerging technologies that meet the output specification requirements.  This will fully allow a range of possible solutions to be considered and evaluated.  The Outline Business Case (OBC) has been considered from a technology neutral starting point and the procurement will continue to be conducted on the same basis.

10.        The strategy for procurement sets out all of the key principles for the Project and the strategic elements contained in this report.  The draft procurement plan sets out how the procurement is expected to be delivered.  The key matters that will drive out the final delivered solution are set out in the Output Specification.  The Outputs prescribe:

·     The level of biodegradable diversion, and the level of recycling to be achieved

·     Securing and maintaining markets for all products and by-products from the facility

·     The level of Facility Design service we require, how that the facility will be delivered and the works involved

·     Climate Change and Emissions Standards

·     Environmental Consideration and Nuisance Control during construction and operation

·     Environmental Management of the operational phase including

·     Waste types and delivery controls

·     Public facilities (such as visitor centres) and

·     Continued Stakeholder Engagement requirements during delivery and operations

·     Social and Corporate Responsibility.

 

11.        The procurement phase is just over 24 months from placing of the OJEU notice to the selection of the preferred bidder and that is believed to be adequate to complete the competitive dialogue process. In summary, the indicative timetable is therefore as follows:

Activity	Financial Year
Submit OBC to WAG	Winter	2008/09
Conditions met	Spring	2009/10
WAG Approve the O~BC and Funding	Spring	2009/10
Decision to proceed	Summer	2009/10
Place OJEU	Autumn	2009/10
Commence competitive Dialogue	Winter	2009/10
Select Preferred Bidder (Full Council Report)	Autumn	2011/12
Planning Starts	Autumn	2011/12
Contract Close	Spring	2012/13
Construction Starts	Autumn	2012/13
Gates Open	Autumn	2015/16

 

A full master project timetable is included in the OBC Health Check Addendum 2009 contained in Appendix B of Appendix 1.

 

12.        The Project has identified that a fundamental risk to any waste procurement project is the availability of a suitable site that has a reasonable opportunity for obtaining full planning permission.  The preferred approach for all waste procurement projects, in line with national guidance, is for the relevant local authority(s) to acquire sites in line with the adopted Development Plan and/or the relevant Regional Waste Plan or where they are confident the proposal will accord with a development plan currently in preparation.  This way the Project will maximise the competitive potential during the tendering process by providing interested parties with a potentially suitable location upon which to base their solutions.  As such the Partnership is seeking to bring forward an Optional Site within local authority control.

13.        It should be noted that this approach does not prevent bidders putting forward other sites under their control as part of their bid. Bidders could evaluate the Optional Site against any other site they consider they have access to, and formulate their solutions accordingly.  The Project evaluation methodology would ultimately judge the merits of each proposed solution during the evaluation stages of the procurement.

14.        While a procurement of this nature will have significant risks, the main risk aspects anticipated are: financial, regulatory, procurement, design, political, planning, construction and commissioning, operational and environmental.  The key financial and legal risks are discussed in subsequent sections, the other key project risks that remain high are:

·     A failure to obtain planning and permitting permissions (either on the Optional Site or any other site(s) proposed by potential preferred bidder;

·     Financial climate worsens and the funding strategy fails;

·     Significant timetable delays;

·     Managing risk throughout the project is key to robust delivery of the Project’s benefits, therefore updating mitigation strategies and identification of new risk will continue throughout.

Resource Implications (Financial and Employment)

15.        The procurement decisions, while overseen by the Joint Committee, will be taken forward by an officer Project Board as detailed in Schedule 1 of the JWA1 provided as Appendix D of Appendix 1, with a fully resourced Project Team working to deliver the complex procurement stages.  With the lead authority governance model, once the waste management contract has reached financial close, the benefits and obligations of the contract will be passed back by the Lead Authority to the other four authorities.  Issues around the risk of these arrangements (the Lead Authority role) are dealt with under legal implications.

16.        Central to the development of the affordability model is an assumption that the WAG would provide financial support to Prosiect Gwyrdd. Prosiect Gwyrdd received formal notification from WAG on 30 March, 2009 (letter provided in Appendix B) of the terms under which they will be providing funding to joint working Local Authority residual waste treatment projects in Wales.  The letter confirmed that WAG would provide support based on 25% of the Shadow Tariff's projected Gate Fee for the project and instructed the Partnership to complete its "OBC Health Check" review and present it with updated cost projections for the project based on its terms and conditions.

17.        The outcome of the Partnership's OBC Health Check review and modelling of the WAG's funding terms and conditions has been to increase the funding ceiling for the project from the estimated £7.8 million per annum to a ‘maximum’ ceiling of £9.124 million per annum.  The table below explains the reasons for the increased funding:

Table 1.0 Increased WAG Funding Profile

 

WAG Funding Contribution	Increase	Rationale
£7.8 million p.a.		Approved OBC 2008 estimate
	+ £0.42 million	Increase in % of gate fee funded by WAG from 23.77% to 25%, in line with WAG funding conditions for all projects
	+ £0.49 million	9 month timetable slippage caused by WAG policy decision delays
	+ £0.41million	Increased bank funding costs due to the "credit crunch" and economic downturn
£9.124 million p.a.		April 2009 WAG funding award

 

18.        The JWA1 is attached as Appendix D of Appendix 1 and Table 2.0 below outlines each partner’s Revenue contribution over this phase of the procurement. 

Table 2.0 – Net Revenue Costs to Preferred Bidder stage

 

	2009-10 (part-year from OJEU)	2010-11	2011-12 (11 months)	Total (to Preferred Bidder stage)
Procurement Cost Schedule	371,538	772,351	775,816	*1,919,705
Other Project Costs	221,175	56,375	42,025	319,575
Project Total	592,713	828,726	817,841	2,239,280
Partner total (Equal share)	118,543	165,745	163,568	447,856

 

NB: Procurement costs are net of £415,086 grant approved by WAG from their Regional Capital Access Fund.

 

19.        In addition to meeting the revenue costs of the procurement, the Optional Site requirement to make available to the market a site within public control or ownership may incur additional costs to the partnership.  The cost of the three year option is £25,000 per annum, if the option is necessary to exercise then there are two choices: one of a Freehold Purchase, valued at today’s price of £1,500,000 plus overage or one of a Lease Rental at £25,000 per acre per annum.  If the asset is managed directly as a Freehold Purchase the costs would need to be divided on a tonnage basis and the Council would by liable for approximately 15% of that cost.

20.        An Affordability Analysis has been completed which focuses on assessing the gap between the Partnership's combined and individual Council's current budgets and the cost of the 'Reference Project with High Recycling' ("Reference Project") and ‘Landfill with High Recycling’ ("Landfill") options.  Both options assume delivery of 65% of each Council’s recycling and composting of their MSW outside of the scope of the Project.  The results are presented graphically for the partnership in Appendix F of Appendix 1 and for this Authority at Appendix 2.  The "Budget Gap" is the difference between the current (2009-10) budgets increased by RPI and the "Landfill with High Recycling” option.

21.        It should be noted that the “Landfill with High Recycling" option is not viewed as a ‘real’ option because of the need to meet landfill diversion targets and the limited amount of landfill capacity available locally over the medium term.  The option has been included as a ‘benchmark’ against which the cost of the Reference Project with High Recycling can be compared.

22.        The "Affordability Gap" is the gap between current budgets and the cost of the "Reference Project with High Recycling’.  Each partner has arrived at an "Affordability Envelope" which is the projected cost of the "Reference Project with High Recycling" plus a % based on sensitivity analysis undertaken as part of the modelling.  It is this affordability envelope (attached as Appendix G) that Members are being asked to commit to fund.  (Full details of the Affordability Modelling are included within Appendix 1.)

23.        Project costs have been evaluated over a period of just under 32 years representing the assumed time required to procure, obtain planning consent and deliver construction, plus the anticipated 25 year contract.  In order to aid comparison all cash-flows have also been discounted to produce a Net Present Value ("NPV") as at April 2008 prices.

Table 3.0 – Total Partnership and Council Results* NPV results are based on April 2008.

 

Partnership Results

Council Results

	Total Nominal Costs £ Million	Total NPV as at April 2008 £ Million	Total Nominal Costs £ Million	Total NPV as at April 2008 £ Million	2016/17 Nominal (1st full yr) of operation £ Million
Partnership Budget (indexed from 2008/09)	640	257	100	40	2.5
Landfill with High Recycling ("Do Minimum")	1,274	461	189	69	3.7
Reference Project with High Recycling (net of WAG Funding Support)	1,064	406	156	60	3.8
Comparison of Reference Project to Do Minimum	(210)	(55)	(33)	(9)	0.1
Budget Gap	634	204	89	29	1.2
Affordability Gap	424	149	56	20	1.3

 

*(Following completion of the OBC Health-Check 2009)

 

24.        For this Authority, the Reference Project with High Recycling option has the lowest expected cost both in nominal terms (£156 million, net of WAG funding) and in Net Present Value terms (£60 million).  This results in a saving of £33 million in nominal terms and £9 million in NPV terms when compared to the ‘Landfill with High Recycling’ option.  This Authority's Budget when compared against the ‘Landfill with High Recycling’ option results in a Budget Gap of some £89 million in nominal terms.  The resultant Affordability Gap (Reference Project with High Recycling compared to budget) is £56 million in nominal terms.  This report therefore asks Members to sign up to the cost of undertaking the reference project plus an agreed % which is detailed in Appendix G.

25.        While the Legal Implications of this report provides detailed advice on the Joint Working Agreement (JWA1), Appendix D of Appendix 1, which is seeking approval as part of this report.  The JWA1 does sets out the following financial issues:

·     Clause 7 sets the Financial Commitment of the Councils, including the making available to the project sufficient internal resources;

·     Clause 10 the potential liability arising on withdrawal from the project;

·     Schedule 5A the projected costs of the Procurement;

·     Schedule 5B Other Project related costs including cost of the site;

·     Schedule 6 the defined Accounting periods;

·     Schedule 7 the basis of the Liability Report.

 

26.        In essence, the JWA sets out the cost sharing arrangements, anticipated partner contributions and the liabilities that may arise should a partner wish to withdraw from the procurement at any point.  In particular, the document outlines the methodology for determining the level of compensation payable should a partner wish to withdraw from the procurement, whilst the estimated cost of the project remains within the agreed Affordability Envelope (as set-out in Appendix G).

27.        In addition to the affordability modelling undertaken for Prosiect Gwyrdd which covers 35% of the waste stream an estimate has been calculated of the costs of treating the remainder of the waste outside of the scope of Prosiect Gwyrdd.

28.        Two scenarios have been calculated, the first which calculates the cost of achieving 65% recycling and the second calculates the cost of achieving 58% recycling and sending the remaining 7% to landfill.

29.        The current rate of recycling for this Authority is approximately 40% therefore the challenge of reaching levels of recycling of 65% cannot be underestimated. It is projected that over the same 32 year time period that has been used for the Prosiect Gwyrdd modelling that there is a budget gap of £25million in NPV terms and £80m in nominal terms to reach levels of 65% recycling.

30.        To only reach levels of 58% recycling and sending the remaining 7% to landfill it is estimated that the budget gap would increase to £28million in NPV terms and £90m in nominal terms. The results are higher than those to reach 65% recycling due to the ever increasing cost of disposing waste at landfill.

31.        The table below combines the cost of Prosiect Gwyrdd with the cost of treating the remainder of the waste to arrive at an overall budget gap for 100% of this Authority's waste.  (Whole System Costing)

Table 4.0 Budget Shortfall Calculations For 100% of Waste Arisings

 

	58% Recycling & 42% Landfill (£ million)	58% Recycling, 7% landfill & 35% Reference Project (£ Million)	65% Recycling & 35% Landfill (£ million)	65% Recycling & 35% Reference project (£ million)
Prosiect Gwyrdd budget shortfall (35% of residual waste) - NPV terms	34	21	29	20
Budget shortfall - remaining waste - NPV terms	28	28	25	25
Total Shortfall - NPV terms	62	49	54	45
Prosiect Gwyrdd budget shortfall (35% of residual waste) - Nominal terms	108	59	89	56
Budget shortfall - remaining waste - Nominal terms	90	90	80	80
Total Shortfall - Nominal Terms	198	149	169	136

 

32.        It can be seen from the table above that the budget shortfalls are ranked from lowest to highest as below:

a)  The lowest budget gap is projected if the Authority achieves 65% recycling and proceeds with Prosiect Gwyrdd.  If achieved the Authority would be insulated almost entirely from the increase in landfill disposal cost and landfill tax.

b)  The next lowest result occurs if only 58% recycling is achieved and the Authority proceeds with Prosiect Gwyrdd.  The reason for this is that as only 7% of waste is going to landfill the Authority is being protected from ever increasing costs of disposing of waste at landfill.

c)  The budget gap for 65% recycling and 35% to landfill is the next lowest.  This is due to there being less insulation to the increasing costs of landfill and the cost of LAS fines of £200 per tonne are £1million higher in nominal terms than in the 2 options above 

d)  The budget gap for 58% recycling and 42% to landfill is the greatest.  Under this scenario LAS fines are £12million higher than in scenarios a & b above.  This scenario also offers the lowest barrier to increases in landfill disposal costs.

 

33.        The outcome of the table 4.0 above is also shown graphically as Appendix 3.

Legal Implications (to Include Human Rights Implications)

34.        Given the potential scope of the procurement, its potential value and complexity, it is proposed that the Competitive Dialogue procedure is 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 is costly to both the authorities and bidders.

35.        The proposed procurement is based on an overall output requirement to deal with 35% of the authorities’ residual waste, reflecting the expected requirements of the authorities presuming compliance with landfill diversion targets that are expected to be set.  However, changes in law/policy on a European or national level (re treatment and disposal of residual waste/limitation on energy from waste levels), and/or changes in the amounts and composition of residual waste produced, could have a significant impact on any proposed procurement, the viability of any solutions proffered and the costs involved.

36.        When two or more local authorities decide to work together to achieve an objective, such as procuring a residual waste treatment facility, it is necessary to put in place 'Governance Arrangements' that enable decisions to be made on behalf of the authorities to ensure the timely progression and management of the Project.  The Partnership proposes to structure its governance arrangements on the basis of a Joint Committee with a Lead Authority.  These arrangements are established pursuant to the powers in section 101 of the Local Government Act 1972.  They would be enshrined in an inter authority Joint Working Agreement (JWA1), which would define the parties’ responsibilities and obligations during the procurement process.

37.        Once resolved to commence the procurement and conclude the JWA 1 the authority is, to a significant degree, locked into the process.  Whilst the ultimate decision to award the contract will be reserved to each authority, the effect of concluding the JWA1 is that if the procurement process results in solution that put simply, is within the affordability envelope, meets the requirements and criteria set (and is shown to do so when the final business case is produced) then the expectation will be that a contract is awarded.  In such a scenario, should any partnering local authority determine not to award a contract (in other words withdraw) then that authority is likely to face significant financial consequences.  Similarly if any authority determines to withdraw from the procurement process, once commenced, then such authority is likely to face significant financial consequences.  It should be noted that damages will be assessed at the time of withdrawal/ decision not to proceed and that the agreement contains provision whereby the damages payable by any one local authority will be capped at £3,000,000.  Accordingly, the decision to approve the affordability envelope, conclude the JWA1 and commence the procurement is a significant decision for each authority and will impact on future budget commitments. For this reason the ultimate decision must be taken by full Council.  It is for this reason so much effort has gone into the preparation of the Approved OBC, pre procurement preparatory work, the OBC Health-check in considering affordability and the other issues raised.

Crime and Disorder Implications

38.        There are no crime and disorder implications.

Equal Opportunities Implications (to include Welsh Language issues)

39.        There are no Equal Opportunity implications.

Corporate/Service Objectives

40.        Enhancing the environment to ensure that people living, visiting and working in the Vale have access to a clean and high quality local environment.

Service targets:

 

·     Increase the percentage of total waste arising that is recycled from 25.54% in 2005 to 35% by 2009;

·     Reduce the percentage of total waste arising that is disposed of in landfill sites from 70.8% in 2005 to 65% by 2009;

·     Service Action;

·     E9 Facilitate a regional solution to waste disposal through the Connecting South East Wales initiative (2007).

Policy Framework and Budget

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

Consultation (including Ward Member Consultation)

42.        None.

Background Papers

·     Approved Outline Business Case for Prosiect Gwyrdd (redacted version) Autumn 2008

·     Initial Site Assessment Parsons Brinkerhoff September 2008

·     Council Corporate Plan (2006-10)

·     WAG “Future Directions” Policy Paper – April 2009

·     WAG Revised Waste Strategy for Wales Consultation Document April 2009.

Contact Officer

Clifford Parish, Operational Manager Waste Management and Cleansing Tel No:  029 20673220

Officers Consulted

Accountant, Building and Vehicle Services

Operational Manager Legal Services

Head of Planning and Transportation

Responsible Officer:

Rob Quick, Director of Environmental and Economic Regeneration

 

APPENDIX INDEX

 

The following Appendices are attached to this report:-

 

Appendix 1	Prosiect Gwyrdd Common Report 2
Appendix 1	Appendix 'A':	A Recommendation in Cabinet Report dated 17th December, 2009
*Appendix 1	Appendix 'B':	OBC Health Check 2009 Addendum - Redacted
*Appendix 1	Appendix 'C':	Site Evaluation Report - Redacted
*Appendix 1	Appendix 'D'	JWA1 - Redacted
Appendix 1	Appendix F	Partnership Affordability Model (graph)
Appendix 1	Appendix G	Affordability Envelope VOG - redacted
Appendix 2	VOG Affordability Model (graph)
Appendix 3	Whole System Costing VOG 100% waste (Graph)
Appendix 4	Prosiect Gwyrdd Funding Offer Letter - 15th May 2009	Tabled at meeting
*Redacted copies of these documents are available in the Members room.