Meeting documents

Appendix B

Summary of the Procurement Process for Phase 2 - Medium-term Residual Waste Treatment Capacity

1. Context

The Joint Waste Strategy identifies a need for all 4 authorities to secure treatment capacity or purchase allowances from 2010/11 until at least 2015 in order to avoid LATS fines. It also indicates that the contracting process should commence in 2008. A contract length of 5-10 years is envisaged.

The soft market test (SMT) interviews in 2007 revealed that a number of companies are actively pursuing the establishment of waste treatment facilities in the West of England area and have indicated they would be prepared to offer capacity to the Partnership on a gate fee payment basis.

It is anticipated that the type of treatment processes which are likely to be offered will be hybrid solutions involving bio-stabilisation (MBT or BMT) or autoclaving with or without thermal treatment; the products being a low grade compost or a refuse derived fuel for combustion together with small quantities of dry recyclables.

2. Issues

a) Procurement

i) Procurement of treatment capacity will have to be in line with the latest EU Regulations for public authority procurement. The quickest procurement process would be to follow a Restricted Tendering process, provided that the output specification can be relatively well-defined. Basically the specification will seek the treatment of residual waste in such a way that the Councils meet their LATS targets and is landfill tax neutral (ie; no landfill tax pass-through by the contractor).

ii) A further soft market testing exercise is being carried out with Jacobs' assistance to help guide the development of the contract specification and procurement method to ensure a deliverable, competitive package which is attractive to the waste market

iii) The arrangements for the shared use of any facility, and the risks and benefits will need to be developed and agreed. Work on cost sharing in general has commenced within the Finance Officer Group.

b) Governance/Resources

i) Before formal procurement can commence it will be necessary to secure the full approval and sign-off of each authority for an agreed Joint Working arrangement and associated indemnities will need to be put in place.

ii) Bristol City Council has offered the use of its Corporate Procurement Unit to manage the process, and it would seem appropriate therefore that Bristol be appointed the Lead Authority for this procurement. It will be undertaken by electronic communication (E-Procurement) with prospective contractors. Each will be required to register on-line.

iii) It is proposed that a project team be established to project manage the procurement process, supported by legal officers, procurement professionals and technical support from Jacobs.

iv) Bristol City Council's procurement team have provisionally set aside capacity to provide specialist procurement support and undertake the actual tendering process on behalf of the partnership from April 2008.

v) If Bristol is lead authority for this, Bristol's Contract Procedure Rules mean that its Cabinet will need to decide to proceed with the procurement before the procurement is advertised in the OJEU. This decision is being requested at the Cabinet meeting on 26^th June.

c) Sites

i) At this stage, and with some knowledge of what is being considered within the market, it is proposed not to offer a site(s) in the direct control of one or more of the partnering authorities but to invite proposals based upon the prospective contractor providing the land and facility. This will also have the benefit of not compromising the Phase 3 procurement process which is to follow.

d) LATS Trading Option

i) In parallel with the Phase 2 procurement, the partnership may also wish to seek formal LATS trading proposals and purchase prices from authorities with surplus landfill allowances as a contingency.

e) Timescale

i) The tonnage modelling by Jacobs showed that there will be a joint shortfall in landfill allowances commencing in 2010/11. Waste-flow modelling is in the process of being updated with 2007/08 actual tonnage data. Assuming a period of 2 years for companies to secure a site, obtain planning permission, and build the treatment plant, then a planning application will need to be submitted in Spring 2009 to meet the projected timetable. Officers are aware that some companies are already making speculative applications with technologies appropriate to meet our Phase 2 requirements, so this timescale may be reduced.

ii) An indicative timetable is given below:-

f) Risks

i) Delayed start to procurement because companies slow in developing facilities and capacity not available by 2010/11. Authorities "held to ransom" as treatment and capacity is short and market forces produce excessively high costs.

Mitigate - start procurement in 2008 with a view to awarding a contract by end of the year.

ii) Weak and ill-defined contract could result in unbudgeted additional costs, uncertainty around bio-waste diversion to meet LATS, facility not being available when needed.

Mitigate - Input of all necessary resources and specialist input to produce a sound, robust contract.

iii) Lack of suitably qualified and sufficient resources dedicated to procurement - delays and possible poor contract.

Mitigate - Establish a project team who can call on specialist support both internally and externally, working to a Project Plan and identified budget, supported by Procurement Professionals

3. Tasks in progress:

i) Bristol officers leading on preparing a specification, contract terms, evaluation criteria, payment mechanism and performance management system as appropriate.

ii) Necessary internal and external resources identified to support the process, including the preparation of a Project Initiation Document, Project Plan, Budget and Programme;

iii) Governance arrangements to be agreed with a proposal that Bristol becomes the lead authority for this procurement and contract award of Phase 2 until such time as the WEPO overarching structures are in place; Joint working agreement and associated indemnities are being drafted.

iv) Finance managers continue to consider issues around shared use of the facility and cost sharing in general;

v) The resource situation to be reviewed in July 2008, at a key stage in the process.