Essex looks to take HWRCs in-house

The county’s HWRCs are currently run by Veolia, with the French waste management giant having been awarded a contract in May 2013 (see letsrecycle.com story). This is due to end on 31 March 2022, though the council has the option to renew it for up to seven years.

However, the council’s director for environment and climate action Samantha Kennedy has recommended that the county’s HWRCs and waste transfer stations should be brought under direct control by the council following the expiry of the contract.

In a report that is to go before Essex’s cabinet tomorrow (24 November), Ms Kennedy writes: “The results of the financial modelling indicate that the in-house option delivers the best value for money in terms of mid-point delivery and net present value.”

Veolia currently operates 21 HWRCs across Essex.

In-house delivery

Under the proposals, staff who currently work for Veolia at the HWRCs and waste transfer stations would transfer to working directly for the council.

The report recommends Essex county council should still go to the market to procure contractors to provide waste haulage services, plant and equipment, material marketing services and any other ‘ancillary’ services to meet the operational needs of the HWRCs and waste transfer stations.

A final decision on the recommendation is due this week. If approved, Ms Kennedy is to bring a recommended approach for delivery before the cabinet in early 2021.

Contract

Essex county council began talks with Veolia in July 2019 to discuss contract extension options. Veolia submitted a proposal for a five-year extension at a 30% increase on the current contract price while also reducing staffing levels and transferring greater operational and commercial risk to the council, Ms Kennedy’s report says.

“The in-house option delivers the best value for money”

Samantha Kennedy, Essex county council

The report adds few other private companies would be willing to take a “risk” on a fully outsourced contract of the type it currently has in place with Veolia. Ms Kennedy writes: “There is evidence from the market engagement that the global materials market has shifted, which means that it is no longer viable for providers to take the risk on this. Appetite for entering contracts without enhanced indexation is low.”

With Essex county council having undertaken a market engagement exercise, the report says the feedback indicated an “increased reluctance to accept risk on aspects such as volume risk, waste material value and performance”.

Procuring a fully outsourced contract was likely to result in additional costs of £1.7 million, the report suggests.

Essex

With a population of more than 1.8 million, Essex had a recycling rate of 52% in 2018/19. This is higher than the national average of 45.1%.