Onyx quit its waste collection contract with Wycombe District Council two years early after its low tender meant it ended up making a loss on the deal, it has emerged. The news comes only days after Onyx secured the new contract created in the wake of its decision to end its former work for the council.
The company had to negotiate a financial settlement with Wycombe to end the 1 million per year contract in April this year instead of April 2003. But it has declined to say how much it had to pay the council for the termination, or how much it was losing on the contract.
“We got it wrong,” admitted Liz Pullen, Onyx's regional director for the Central region. She said the company realised it had underestimated the scale of the contract early on. “Things caused us problems. Wycombe has very hilly terrain and that added to the cost. And we assumed we could take a collection round out to get product efficiency but that didn't materialise.” But Ms Pullen said the quality of the service wasn't compromised.
As reported on letsrecycle this week (Onyx secures Wycombe Council work for hat trick of contracts) ,
Onyx has subsequently retained the contract for another nine years at 2 million per year following a new tendering process. The council's environment committee ruled that Onyx should not be excluded from the process.
Onyx's bid for the original contract in 1996 was “substantially lower” than even its nearest rival, according to Terry Hill, contracts manager for waste and cleansing at Wycombe District Council.
He said: “The council acknowledged that Onyx's bid was cheaper than the other bids and at that stage we accepted it because the company said they could deliver the service.”
When the council put the latest contract up for tender it released a video highlighting the challenges prospective waste management companies would face, including the hilly terrain of High Wycombe.