Environmental Streetscene Services Contract - "Break Clause" Review
Decision status: Recommendations Approved
Is Key decision?: Yes
Is subject to call in?: Yes
A report by the Director of Technical Services indicated that the Environmental Streetscene Services Contract was the delivery mechanism for executing Wirral Council’s statutory obligations to collect household waste and maintain the cleanliness of the borough’s highways and associated open spaces.
The current contract with Biffa commenced in August 2006 and was worth approx £12.5M p.a. It was a 14-year contract currently running in its sixth year and had a ‘break clause’ at 7 years (August 2013).
The report outlined the opportunities available to the Council at this time around the execution of the ‘break clause’ to maximise the cost effectiveness of the delivery of these important services whilst retaining the flexibility to respond to the strategic requirements of the National Waste Framework Directive and the recently approved joint waste strategy for Merseyside. The recommendations within this report support the delivery of the Council’s Corporate Priority “To Create a Clean, Safe, Pleasant and Safe Environment” by securing a ‘break clause’ buy out offer from Biffa that did not impact on the current high standards of service delivery currently enjoyed by the residents of Wirral.
A number of documents appended to the report contained sensitive commercial information related to the management accounts of Biffa PLC. In order to protect the commercial competitiveness of Biffa’s position in the waste management market and to ensure the Council and Biffa are not disadvantaged in future procurement opportunities, this information had been classified as Exempt Information from public scrutiny, as set out the relevant paragraph/s of Schedule 12A of the Local Government Act 1972 (Minute No.41 refers)
The Deputy Director of Technical Services responded to Members questions in relation to reductions in the vehicle fleet; outsource risks; savings and the OJEU notice. It was reported that Option 3 as suggested within the report would allow officers to ascertain what the Waste Policy Framework in Merseyside would be to enable future planning.
In relation to the Biffa Group and reported buy out in the press, it was reported that this did not cause concern and that appropriate financial and viability checks would be carried out to ensure the Council’s protection.
(1) Option 3: To delay the ‘break clause’ decision until April 2016 and remove the age restriction of the fleet used to service the current Environmental Streetscene Services Contract, thereby continuing the contract with Biffa until at least March 2017 be approved;
(2) the Director of Technical Services be instructed to present a further report to Cabinet in July 2012 outlining the findings of the Price Waterhouse Cooper “open book” review and analysis of emerging risks around the financial solvency of Biffa and any potential impacts this could have on their ability to carry out an extended contract term;
(3) the £1.2m revenue savings that have been identified from implementing the preferred option (option 3) of £0.7m in 2013/14 and a further £0.5m in 2014/15 be noted;
(4) the Director of Technical Services be instructed to present a further report to this Cabinet no later than October 2015, outlining further recommendations for the future procurement and service ‘packaging’ options of waste collection and street cleansing services, to include appraising any opportunities of joint procurement with neighbouring authorities and/or in-sourcing some or all of these services and;
(5) provide an impact assessment (including an emerging equality impact assessment) of the proposed service changes arising from the rationalisation of Bring Site provision and Exclusion rounds as detailed in section 3.5 and Appendix 2, related to the additional savings package proposed by Biffa of £498k; and
(6) the Director of Technical Services be requested to submit a further report to include an explanation as to the use of RPI and CPI to the meeting of the Cabinet scheduled for 19 July 2012 .
Publication date: 09/07/2012
Date of decision: 21/06/2012
Decided at meeting: 21/06/2012 - Cabinet
Effective from: 07/07/2012