The east London council originally awarded the contract to SITA UK under a tender process. But, the waste management company blamed the subsequent downturn in the recyclate market and oil prices since its initial bid in autumn 2014 for its subsequent decision to decline the award during the standstill Alcatel stage of the tender process.
The contract was then offered to second-placed Viridor, which held the previous Tower Hamlets MRF contract, but the firm had already filled up the spare capacity at its Crayford MRF vacated by the borough’s recycling and therefore declined the work.
Viridor took on the previous Tower Hamlets deal in 2012 for three years, sorting and marketing around 13,000 tonnes of material each year from the council at the firm’s Crayford MRF in Kent.
The third preferred bidder, Bywaters, therefore secured the deal, under which it will sort around 12,000 per year of commingled dry recycling collected from Tower Hamlets households, businesses and household waste and recycling centres (HWRCs) at its Lea Riverside MRF in East London.
At the time the initial tender was published last year, the contract – which began on March 1 2015 and will run until March 31 2017 – was estimated by the council to be worth around £542,000.
Strong bids
A council spokesman said: “The council received three very strong bids in response to the tender. When offered the contract, the first bidder said it could no longer sustain its quoted price and the second said it no longer had the necessary space available. The third bidder was still in a position to commit to its terms and was therefore awarded the contract.
“The winning bidder is a highly-respected and experienced provider and we look forward to working closely with them to further improve the council’s strong record on recycling.”
The Tower Hamlets deal is good news for Bywaters, with the company having recently lost out to both Viridor in Lewisham (see letsrecycle.com story) and Luton-based waste firm Cawleys for a deal with the Canary Wharf estate last month (see letsrecycle.com story).
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A spokeswoman for Bywaters said: “We are working together with Tower Hamlets to ensure success.”
SITA UK
SITA’s decision to decline the Tower Hamlet deal reflects recent volatility in the recycling commodities market, particularly in the plastics sector where the depressed price of oil has affected demand for recycled polymers.
The situation has sounded alarm bells for many in the industry, with the likes of Biffa, Veolia, Viridor and SITA all emphasising the changing market for commodities.
A spokesman for SITA UK said: “Since submitting our original bid for the Tower Hamlets contract in Autumn last year, there has been significant volatility in the market for recyclate, strongly linked to the rapid decline in the price of oil.
“SITA UK entered into dialogue with the borough to explain the impact of this market uncertainty, and how it had influenced our decision to decline the contract offer.”
Viridor
However, explaining Viridor’s reasons for turning down the Tower Hamlets deal, the firm’s senior communications manager Victor Perez-Mares suggested the current volatile commodities market was not a factor in the decision.
Mr Perez-Mares said: “Viridor has been working with Tower Hamlets council for many years. We participated in the bidding process to retain the contract and continue providing the council with a high quality recycling service. Viridor received notification that it had been unsuccessful.
“Further to the ‘standstill period’, Viridor was then advised that the ‘preferred bidder’ had declined the proceed with the contract and we were offered the opportunity to continue to provide services to the council. Unfortunately we had filled the throughput capacity left by material from Tower Hamlets at our MRF in Crayford, through which we had serviced our previous contract with the council. Otherwise we would have been pleased to continue with the longstanding relationship.”
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