Issue details

Proposed decision

To award a contract to N+P via the CSKL Framework for the receipt and processing of dry mixed recyclables for an initial period of 24 months, with up to a further 36 months extension period

Reason for the decision

A key function of the Waste Disposal Authority operating under the Environmental Protection Act 1990, is to provide outlets for the processing of dry recyclables. The current three year (plus one year extension) is due to expire on 21 October 2024, with no further extension permitted

Background

Dry Mixed Recyclables (DMR) are a mix of recyclable items which typically arise from local authorities collecting co-mingled waste from households, such as paper and card, cans, plastics and glass.

These materials are collected together in the same kerbside container to be sorted at a material recycling facility (MRF).

At the MRF there are various mechanical and hand sorted processes to ensure the waste is correctly segregated.

Once the waste streams are separated, they are distributed to reprocessing plants where they are fed back to manufacturers to be processed into new products as demonstrated in Appendix 1.

The technology to sort the materials is extremely sophisticated and can sort over 95% of the materials that are processed at the facility for onwards recycling.

The sorting and processing of DMR falls under KCC’s statutory remit to make provision for the receipt and treatment of this material under the Environmental Protection Act 1990.

The current three year (plus one year extension) is due to expire on 21 October 2024, with no further extension permitted.

Options

o   Option 1:Do nothing and discontinue accepting the DMR waste from the collection authorities; this is not an option as when the contract ceases on the 21^st October 2024, KCC will be in breach of its statutory duty under the Environmental Protection Act 1990.

o   Option 2:Continue to accept the waste, but utilise alternative disposal methods by using landfill or incineration; this is not an option as there is a priority to move this material up the waste hierarchy to meet landfill diversion targets, improve recycling rates, achieve better value via a contractual arrangement with a contractor who specialises in managing DMR waste, and avoid incineration as it is costly in comparison.

Option 3 - To award a contract via the CSKL Framework to the incumbent contractor N+P for seven years via CSKL Framework -  for 7 years via the CSKL Framework –The new legislation poses unquantified outcomes which will impact the risk profile of the contract post 2026. These risks will be costed into the pricing mechanism to minimise risk for the contractor, making this a more expensive option.

Option 4:– To award a contract via the CSKL Framework to the incumbent contractor N+P for 24 months with a 36-month extension via the CSKL Framework. via the CSKL Framework – This shorter-term contract will allow for the outcomes of the reforms to be assessed without the risk being costed into the contract - Preferred Option

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The commission of this contract will meet KCC’s Strategy – Framing Kent’s Future 2022 – 2026 one of the four key priorities:

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

The commission of this contract will meet KCC’s Budget  Strategy – Securing Kent’s Future by seeking best value via the commissioning and procurement route consistent with  the prioritisation of the Council’s best value duty.

Financial Implications

o   The 2024/25 revenue budget is £1,831,400 p/a based on 69,882 budgeted tonnes.

o   The annual cost of the commission is £1,566,300 based on current market prices processing 75,000 tonnes.

o   The total cost of the commission for the 24-month initial period is projected to be £3,132,600 based on 75,000 tonnes pa,

o    Growth is based on an increase of tonnage anticipated through population growth and increased outputs due to increased performance.

o   The markets for recyclables can fluctuate as they are market driven, and as such predicting the extension value accurately is challenging.

o   KCC will be seeking a contractual arrangement which offers the benefit of a rebate on the sale of the commodities. These rebates are influenced by factors such as material quality, volume, and market values.

o   It should be noted that there would be significant haulage costs should there be a requirement to travel out of the County, as well as an environmental impact with regard to higher emission outputs. It is also necessary for the fleet to be available to service other contracts therefore, it is desirable to have disposal outlets that are as local to Kent as possible.

o    Haulage costs will be evaluated so that the full cost of the contract is considered.