Provision of Household Waste Collection, Street Cleaning and ancillary Services

Concepts

• refuse collection
• abingdon
• street cleaning
• waste management service provision
• new waste vehicles
• ancillary services
• usual service provision
• waste collection
• waste
• a viable new service specification

Location

Oxfordshire

Description

On 3 June 2009, South Oxfordshire District Council (“SODC”) and Vale of White Horse District Council (“VWHDC”) (together “the Authorities”) entered into an agreement with Verdant Group PLC (now Biffa Municipal Limited) (“Biffa”) for the provision of household waste collection, street cleansing and ancillary services (the “Contract”). This was advertised on the OJEU on 21 January 2008. The initial term of the Contract expired on 6 June 2017 but contained an option to extend for up to seven (7) years. The Authorities extended the Contract in accordance with its terms up to the maximum length, with a new expiry date of 6 June 2024. This VEAT notice relates to a proposed extension of the Contract for a two (2) year ‘bridging period’ with a longstop date of 28 June 2026 to allow time for the Authorities to prepare for and implement a long-term replacement service to the Contract. The Authorities intend to enter into a deed of variation (the “DOV”) to modify certain terms of its current

Total Quantity or Scope

On 3 June 2009, the Authorities entered into an agreement with Verdant Group PLC (now Biffa Municipal Limited) (“Biffa”) for the provision of household waste collection, street cleansing and ancillary services (the “Contract”). The initial term of the Contract expired on 6 June 2017 but was extended in accordance with its terms up to the maximum length, with a new expiry date of 6 June 2024. The Agreement has been subject to minor amendments by the Authorities and Biffa pursuant to separate deeds of variations entered into between the parties on 19 December 2011; 11 April 2014; 9 May 2016; and 18 June 2021 respectively. These variations implemented minor policy changes, including minor performance measure changes, creation of a special cleansing team, new operating times, updating authorised officer names, data protection systems and adverse weather requirements. This VEAT notice relates to a proposed extension of the Contract for a two (2) year ‘bridging period’ with a longstop date of 28 June 2026 to allow time for the Authorities to prepare for and implement a long-term replacement service for the Contract, including, if applicable, to conduct a viable re-procurement exercise for the long-term successor to the Contract which takes account of expected developments in environmental legislation in the near future. Expected environmental legislation is likely to have a significant impact both commercially and operationally on waste and recycling in England, and without clarity on the future requirements for waste collection, it will be extremely difficult to draw up a viable new service specification for a contractor and conduct a meaningful procurement process. The procurement decision has therefore been taken to continue with the existing contractor (Biffa) for a limited period to allow more time for future environmental changes relevant to waste collection to take shape / come into force. Delaying the procurement for a successor provider will allow the changes to be factored into the future procurement requirements and strategy. The proposed extension will therefore provide the Authorities with a sufficient period of time, if necessary, to run a comprehensive market-engagement, commissioning and re-procurement exercise, and to factor in the current high degree of risk and uncertainty in the waste management sector, with the new service to commence no later than 28 June 2026. The extension will provide continuity of service for the Authorities while they conduct this exercise, and allow the orderly wind-down and exit of the Contract with Biffa and mobilisation of any new contract. As part of the proposed DOV, the Authorities will make certain additional modifications to the Contract which take account of the changing economic climate for waste management service provision (particularly the increased costs faced by contractors) and to replace certain vehicles which are nearing the end of their service life. The additional changes to be implemented are: (i) Change of payment mechanism from fixed charging to target operating model to account for increases in delivery costs (particularly fuel and driver hire: this brings the charging basis into alignment with current market conditions for fuel and recycling pricing, among other things); and (ii) The supply by the Authorities of new waste vehicles, for Biffa to operate on a commercial lease during the extension period. The Authorities shall retain ownership of the vehicles, with Biffa operating and maintaining the vehicles in the same manner that it operates and retains its existing waste fleet. The changes are necessary to allow business as usual service provision only.

Award Detail

CPV Codes

• 90511000 - Refuse collection services
• 90514000 - Refuse recycling services
• 90611000 - Street-cleaning services

Indicators

• Award on a basis other than price and quality.

Legal Justification

The Authorities intend to extend the Contract for a two (2) year ‘bridging period’ to allow time for the Authorities to prepare for and implement a long-term replacement service to the Contract, including, if applicable, to conduct a comprehensive re-procurement exercise for the appointment of a long-term successor to the Contract, and to allow the Authorities to factor in anticipated future environmental legislation into this process. In addition, the proposed DOV will amend the payment mechanism so that remuneration will be made on the basis of a target operating model and open book accounting, and provide for the supply by the Authorities of new waste vehicles for Biffa to operate for the purpose of delivering the services. The changes referred to above are collectively referred to as the “Modifications”. The Authorities’ position is that the Modifications are permitted under Regulation 72(1)(e) of the Public Contract Regulations 2015 (as amended) (“PCR”) (non-substantial modifications) and that none of the conditions set out in Regulation 72(8) apply. With reference to Regulation 72(8)(a), the proposed Modifications will not render the Contract materially different in character from the one initially concluded as there will be no change to the services to be provided during the extension period (either in terms of the nature of the services or the quantity). Beyond the extension of term, the effect of the other Modifications simply allow for the continuation of services on a business as usual basis and brings the charging basis into alignment with current market conditions for fuel and recycling pricing. With reference to Regulation 72(8)(b), the Authorities do not consider that the Modifications introduce conditions which, had they been part of the initial procurement procedure, would have— (i) allowed for the admission of other candidates than those initially selected, (ii) allowed for the acceptance of a tender other than that originally accepted, or (iii) attracted additional participants in the procurement procedure. The principal effects of the Modifications are to extend the term of the Contract, to update charging arrangements in light of significantly changed market conditions, and to replace operational vehicles that are reaching the end of their service life to support business as usual service provision. With reference to Regulation 72(8)(c), whilst the Authorities have agreed an amendment to the existing payment mechanism, this do not affect the economic balance of the contract as the changes are being introduced to account for the significant increase in costs associated with the provision of the services (in particular fuel and driver wages). Charging arrangements will be carried out on an open book basis. The Authorities do not consider that the Modifications will extend the scope of the Contract considerably within the meaning of Regulation 72(8)(d) in the context of the Contract as a whole. No change is proposed to the nature or quantity of services to be provided on an ongoing basis and no new services or works will be included in the scope. Regulation 72(8)(e) of the PCR 2015 is not engaged.

Other Information

Continued from II.1.4 The Authorities intend to enter into a deed of variation (the “DOV”) to modify certain terms of its current contract with Biffa (detailed below) and to extend the duration of the Contract until 28 June 2026. The estimated value in II.1.7 and V.2.4 refers to the projected value of the two (2) year extension period. The total value of the Contract from 2009 to 2024 is expected to be £120 000 000. Continued from IV.1.1: The purpose of the Modifications is to provide a ‘bridging period’ in order, if necessary, to conduct a comprehensive re-procurement exercise for the long-term successor to the Contract. The Modifications will therefore allow continuity of service for the Authorities while they conduct this exercise, the scope of which may include market testing, assessment of risks and uncertainty within the waste services sector, corresponding development and design of procurement strategy to factor in changes in environmental legislation, managing the orderly wind-down and exit of the Contract with Biffa and mobilisation of the new contract.