Environmental & Technical Services Portfolio Holder. To receive a report (C-047-2020-21) on a high-level review of the current Biffa contract.
Decision:
(1) The Cabinet noted that the Councils current street cleansing and waste and recycling collections contract with Biffa Municipal Limited which started in November 2014 was working very well delivering significant financial and operational benefits and that there was an option to extend the contract by another 10 years in November 2024 subject to both parties agreeing;
(2) The Cabinet noted the high-level desk top review of the current street cleansing and waste and recycling collections contract with Biffa by Ricardo Energy & Environment Limited;
(3) The Cabinet agreed that in light of the initial findings of the high-level review and to seek best outcomes for our residents the following strategy be adopted to enable a decision on next steps at the end of the first 10 years of the Biffa contract:
a) Carry out a more detailed performance assessment of the current Biffa contract and consider the suite of service delivery options available to the Council.
b) Identify and explore financial and operational risks in the current Biffa contract including contract price indexation, decreasing income from sale of recycling materials, risk share of recycling prices, material processing fees, lack of Council owned depot, procurement options including the ability to offer Biffa an extension.
c) Explore opportunities and alternative delivery models like bringing the service back in house or delivering through a subsidiary company as well as service improvement and innovation, assessment of waste and recycling depot as a strategic asset and opportunities it may offer for synergies with other operational services. And to
d) Commence negotiations with Biffa and assess their willingness for an extension
(3) The Cabinet agreed to engage Ricardo Energy & Environment Limited to carry out the next phase of detailed assessment and analysis work in accordance with section 2.7 (a) of the Procurement Rules; and
(4) The Cabinet agreed to allocate £25,000 from the Sustainable Travel Projects to enable this assessment work and to report back to Cabinet on the findings.
Minutes:
The Environment and Technical Services Portfolio Holder introduced the report on the strategic options for the Waste Management Contract.
It was noted that the Council had entered into a 20-year contract with Biffa Municipal Limited for street cleansing and waste and recycling services in November 2014. The contract had a 10-year break clause and the Council and Biffa need to agree if there was to be another 10-year extension from November 2024. Informal feedback from Biffa indicated that there were certain elements of the contract that they would like to review as part of the extension. Such a major decision required formal contractual negotiations between the Council and Biffa to enable both parties to assess financial and operational implications.
Ricardo Energy & Environment were commissioned to carry out a high-level review of the current Biffa contract and advise on service costs relative to market and options available to the Council. The review had identified a number of positives as well as risks.
Before the Council opens formal negotiations with Biffa more information was needed on the options available. These included the qualitative performance of the contract, market trends in relation to recycling challenges, procurement and alternative service delivery options. It was therefore recommended that Ricardo be engaged to expand on the work they had done and provide technical advice to the Council in negotiations with Biffa.
Decision:
(1) The Cabinet noted that the Councils current street cleansing and waste and recycling collections contract with Biffa Municipal Limited which started in November 2014 was working very well delivering significant financial and operational benefits and that there was an option to extend the contract by another 10 years in November 2024 subject to both parties agreeing;
(2) The Cabinet noted the high-level desk top review of the current street cleansing and waste and recycling collections contract with Biffa by Ricardo Energy & Environment Limited;
(3) The Cabinet agreed that in light of the initial findings of the high-level review and to seek best outcomes for our residents the following strategy be adopted to enable a decision on next steps at the end of the first 10 years of the Biffa contract:
a) Carry out a more detailed performance assessment of the current Biffa contract and consider the suite of service delivery options available to the Council.
b) Identify and explore financial and operational risks in the current Biffa contract including contract price indexation, decreasing income from sale of recycling materials, risk share of recycling prices, material processing fees, lack of Council owned depot, procurement options including the ability to offer Biffa an extension.
c) Explore opportunities and alternative delivery models like bringing the service back in house or delivering through a subsidiary company as well as service improvement and innovation, assessment of waste and recycling depot as a strategic asset and opportunities it may offer for synergies with other operational services. And to
d) Commence negotiations with Biffa and assess their willingness for an extension
(3) The Cabinet agreed to engage Ricardo Energy & Environment Limited to carry out the next phase of detailed assessment and analysis work in accordance with section 2.7 (a) of the Procurement Rules; and
(4) The Cabinet agreed to allocate £25,000 from the Sustainable Travel Projects to enable this assessment work and to report back to Cabinet on the findings.
Reasons for Proposed Decision:
To enable a decision on the next 10-year extension of the street cleansing and waste and recycling services contract with Biffa from November 2024. The early start was to have adequate time for a procurement exercise if an agreement on extension cannot be reached.
Other Options for Action:
It was possible to commence negotiations with Biffa for the further 10-year extension of the contract without knowing the full knowledge of market factors however this could result in agreeing an extension which may not be in the best interest of the Council.
The scope of Ricardo’s work could be limited to Biffa contract extension only and no consideration given to other options available to the Council.
As part of the next phase feasibility of collocating the depot with a neighbouring local authority will be assessed.
Supporting documents: