Issue - meetings
Streetscene Environmental Services - Contract Extension
Meeting: 09/12/2014 - Cabinet (Item 105)
- biffa, item 105 PDF 801 KB
- Appendix 2 Risk analysis contract extension proposal V5, item 105 PDF 65 KB
Councillor Bernie Mooney introduced a report by the Strategic Director – Regeneration and Environment which reminded the Cabinet that on 11 September 2014 it had reviewed a report (Minute No. 48 refers) that considered the benefits, opportunities and risks associated with extending the current Waste and Environmental Streetscene Services contract. The Cabinet had noted that the partnership between the current service provider and the Council had demonstrated a successful track record in delivering service improvements and efficiencies, in order to steadily improve Value for Money over the life of the contract. The Cabinet had agreed that the Strategic Director would enter into negotiations with Biffa, in order to ensure that the contractor improved the current “offer” in return for extending the contract to its full permissible term (2027).
The report detailed the “best and final offer” secured from Biffa Waste Services. The Cabinet noted that the negotiations had resulted in an improved financial offer, and agreement to a number of contractual terms and clarification that eliminated or reduced some of the risks highlighted during the review of the contractor’s original offer.
The Cabinet noted that the result of the negotiations was an improvement on the established Value for Money position to a discount equating to £7.27 per household per annum by April 2018. Due to the limitations of data sets around value for money and fluctuating procurement markets, the only way of knowing exactly how advantageous Biffa’s proposal would be to the Council would be to decline the offer and go back out to the market. The cabinet, therefore, had to balance the risks and lost opportunities of accepting the offer with the financial benefits and future opportunities gained by securing a long term deal.
The opportunities lost included:
· Ability to re-package services where synergies may result in enhanced neighbourhood working capacity (e.g. A Street Cleansing, highway maintenance and grounds maintenance bundle);
· The ability to go to the market in a re-tender exercise.
The opportunities gained included:
· Immediate revenue savings totalling a minimum of 9.22% over 4 years;
· Avoidance of procurement costs of up to £250K in 16/17;
· Stability of provider with proven track record in performance;
· Immediate identification of significant further savings for implementation by 2016/17.
Appendix 1 to the report detailed the value and terms of the revised and final offer from Biffa in return for the Council extending the contract to 2027. In total Biffa was offering a contract discount of £13,383K over an extended contract term to 2027. This was an increase of £3,758K from the original offer in January 2014; £450K increase on the current term and £3,308K increase in the extended term. In terms of the Council’s annual revenue budget savings from these proposals, there would be an initial stepped increase of the savings between 2014-17 before an ongoing annual revenue saving of £1,065K was achieved from 2017-18 onwards.
Appendix 2 to the report detailed key risks arising when considering Biffa’s offer. A risk register had been kept since the offer was first proposed ... view the full minutes text for item 105