Ealing decides not to extend May Gurney contract

Instead, the council revealed this week (July 20) that it had decided to put the collections contract, which also covers street cleaning, out to tender in a bundle with its grounds maintenance services, in a bid to test whether procuring the contracts together would reduce costs while maintaining service standards.

This move was welcomed by Norwich-based May Gurney, despite a report considered by the council's cabinet last month (June 22) which detailed a number of issues with the current delivery of the contract which meant the council should instead “market test” the service by putting it out to tender again.

May Gurney took over the running of the collections contract when it bought the UK's largest community recycling group, ECT Recycling, in June 2008 (see letsrecycle.com story). ECT began running the seven-year contract, which now has an annual value of around £15 million, in February 2005.

At the time that the contract was awarded, in 2004, the decision to choose the community group ECT proved controversial in the sector, with some waste management companies questioning whether ECT should even have been invited to bid in the first place (see letsrecycle.com story).

In the latest report considered by Ealing council's cabinet, the borough's head of legal (contracts), Helen Bore, stressed that, while the deal could be extended to run for up to 21 years, “there is no obligation to extend and the contract is and always has been essentially a seven year contract”.

The “key” reasons detailed in the report for going out to tender include a claim that “changes in the service have reached a stage at which it will probably be cheaper to contract for a different contract”, as well that monitoring of the contract, which “should” be carried out by May Gurney is instead costing the council £280,000 a year.

The report also notes that the market testing is needed to test potential changes to collection methods, to test the “market appetite” for bundling the contract with other services and to fully integrate a performance management system into the contract to drive “year on year performance improvements”.

As a result, it concludes: “Overall performance under the contract is satisfactory, and has improved since the start of the contract, but there is potential for further improvement that can only be tapped by opening the contract up to competition.”

Value for money

The report reinforces this conclusion by stating that, while it carried out a ‘value for money' exercise with May Gurney in 2009/10, which did not produce “significant” savings, newer analysis had identified “significant potential” for operational savings.

It also said that, taking into account the increased size of the contract, the potential for some service specifications to be five years or older and the potential to make savings through bundling the service, the council was “well advised” to reassess its requirements.

And, as a result, it advised it to “take the option of going back to the market rather than extending the C&G contract”.

While May Gurney runs the collections operations, which are also known as the ‘Clean & Green' contract, the grounds maintenance contract is run by Veolia Environmental Services. This deal had been due to end in March 2011 but, under the council's new plans, it is being extended until spring 2012.

Ealing council's cabinet member for transport and environment, councillor Bassam Mahfouz, commented: “Our current contractors have achieved a standard of performance we are very pleased with.

“In the challenging financial climate we are keen to check whether by bringing these two contracts together and restructuring them we can achieve even better standards at lower costs,” he added.

Timetable

A timetable for implementation included in the cabinet report involves the council taking until September 2010 to prepare the details of the contract, before advertising it in the Official Journal of the European Union on September 24 2010.

This would involve contract close being reached in September 2011, with a transition beginning in October 2011 and resulting in the grounds maintenance contract beginning on January 30 2012 and the ‘Clean & Green' contract coming in on February 28 2012.

May Gurney

Following the council's announcement that it would be market-testing whether the contracts could be bundled together, May Gurney's managing director of environmental services, Nicola Peake, said the company was “glad” Ealing council was pleased with the service it provided.

She also welcomed the decision to begin the tender process well in advance of the contract end-date, which she said would enable the most companies to take part.

And, she added: “We applaud Ealing council's forward thinking initiative to test whether bundling a range of services (including refuse and recycling collections, street cleaning and parks and open spaces maintenance) into a single outsourced contract can maintain the current strong service standards at less cost.”

Ms Peake highlighted the bundled service contracts May Gurney holds elsewhere in the UK, such as in Torbay (see letsrecycle.com story), and said that the company's experience was that this approach would “deliver economies of scale and greater value for council tax payers”.