Issue details

Proposed decision

(i) REPROCURE contracts for the operation of 17 HWRCs and co-located WTS;

And subsequently,

(ii)       DELEGATE authority to the Director for Environment and Circular Economy, to take relevant actions to facilitate the required procurement activity; and

(iii)      DELEGATE authority to the Director for Environment and Circular Economy in consultation with the Cabinet Member for Environment, to take relevant actions, including but not limited to, awarding, finalising the terms of and entering into the relevant contracts or other legal agreements, as necessary, to implement the decision.

Reason for the decision

The option to reprocure the service is recommended by the Cabinet Member for Environment as this option will enable KCC to drive savings through economies of scale and be assured that it is paying the current market price for the service.

Background

As the Waste Disposal Authority, KCC has a statutory responsibility to arrange for the disposal of the controlled waste collected in its area by the waste collection authorities, and to provide places at which persons resident in its area may deposit their household waste and for the disposal of waste so deposited.

Contracts with FCC Environment Ltd and Commercial Services Kent for the operation, management and haulage services Household Waste Recycling Centres and co-located Waste Transfer Stations are due to expire on 31 October 2025.

Other Options considered but discarded

Option 1 - Do nothing. Discounted due to failure to meet statutory duties.

Option 2 – Extend with FCC and CSKL for 5 years, as per the current contractual terms. Discounted as this option is unable to demonstrate best value and does not test the market for potential economies of scale.

Option 3 – Extend with FCC and CSKL for 7 years. Discounted due to legal and procurement risk.

Option 4 - CSKL to operate all sites.  Discounted due to technical and operational risk and unable to demonstrate best value.

Option 5 - FCC to operate all sites. Discounted due to legal risk.

The commission of this contract will meet KCC’s Framing Kent’s Future 2022-2026:

Priority 3 – Environmental Step Change -Continue to work with our commissioning partners to create the infrastructure and jobs that enable us to reprocess waste materials and produce energy within the county, in order to maintain a closed loop local economy.

Securing Kent’s Future - Budget Recovery Strategy regarding the following outcomes:

Objective 2: Delivering savings from identified opportunity areas to set a sustainable 2024/25 budget and MTFP: Contract Review

Financial Implications

The current budget for 2024/25 is £13,344,800 which covers operational 17 sites.

Payable Exit fees and costs associated with procurement (£250k), demobilisation and remobilisation (£450k) are unbudgeted pressures.This will bring several sites up to an ongoing serviceable standard which may be required before they are handed over to a new provider to maintain.

These costs can be treated in several ways, KCC can either pay it at the close of the contract, it can be included in the procurement as a set up cost or amortised over a period of time but will remain a budget pressure

There is a risk to the delivery of MTFP savings during the procurement process, which will need to be managed with the incumbent contractors. Going forward these improvements may be included in the new contract specification and therefore can be priced and secured in open competition. 

A procurement process will enable KCC to be satisfied that it is paying the current market rate for these services and economies of scale may help to drive efficiencies in the service. However, there is no guarantee that the tendered price will be more attractive than the current price.