OPINION: Dr Adam Read, external affairs director at Suez, discusses the difficulties local authorities face in procuring in uncertain times, following on from a webinar held on the matter last month.
For any local authority waste collection, recycling and treatment contracts are some of the most expensive and high profile they will ever let (or manage), and they deliver services and in many cases infrastructure that touch the lives of all households, in a way that even schools and the health service cannot.
But for many years procuring effective service providers and long term partners has been fraught with difficulty, given the much publicised problems of some major outsourcing companies in recent years, the consolidation of the market in terms of waste management companies offering these services in the UK, and the increasing risk associated with global recycling markets which has strained even the best of contracts or relationships.
But even against this backdrop 50% of all waste collection contracts are outsourced, which is why in 2018 SUEZ sponsored the development of a new toolkit to help identify best practice in waste & resource management contracts, and to get a bidder’s perspective on what makes for an attractive and engaging procurement process, including early market engagement, well designed specifications, a proper two-way dialogue, and an appropriate risk sharing mechanism.
Roll-on 18 months and if anything the situation has become even more daunting for a local authority looking to re-tender, or outsource their service for the first time. Global markets for plastic and paper haven’t improved, consumer awareness has been heightened with increasing expectations for service delivery and performance, yet the UK policy landscape although progressive has many uncertainties that are critical for the future evolution of these services. Following the launch of DEFRA’s Resource & Waste Strategy in December 2018, we have seen a great deal of policy development and consultation in England in particular, with a first look at the Government’s intentions around Extended Producer Responsibility, Deposit Return Schemes, Plastic content taxation, and consistent recycling collections.
The expected timeframe for these revolutionary policies was always going to take a couple of years to get into law, but with the BREXIT and the forthcoming General Election the planned second phase of consultations on these issues will probably be delayed until post Easter 2020, creating even more uncertainty for authorities who are in the process of trying to procure waste and recycling based solutions. So what should authorities do?
So what can you do?
Delaying any decision, or extended your existing contract for another year or two would be wise, so that policy certainty is guaranteed, and you can plan your collection and processing services & infrastructure to meet newer and higher recycling targets, deliver the preferred consistent collection system, meet the quality standards of end markets to ensure materials are put back into the economy and that packaging producers obligations are satisfied (given they will be funding more of the collection system) etc.
But if this isn’t an option or you feel compelled to go to market now, then you need to ensure that you recognise ALL of these uncertainties before going into any procurement, choosing the best approach to engaging the market, timing your procurement to avoid unnecessary clashes with other major contracts (where possible), ensuring you are ready and willing to manage the risks you are best positioned to handle, and building in flexibility to the process to enable insights to be shared as the policy landscape changes, and flexibility within the contract to ensure that a long term partnership can flourish that adapts to changing circumstances etc.
And these were the themes of a recent webinar, co-hosted by SUEZ and letsRecycle.com a few weeks ago, where the procurement process of the Somerset Waste Partnership were shared, on the back of developing a useful reflective guide from all parties involved in their recent recycling and waste collection contract. The webinar involved Mickey Green, Managing Director of the Somerset Waste Partnership, Andy Grant, Technical Director at Eunomia Research & Consulting Ltd who were the lead technical advisors, and Peta Johnson who led SUEZ’s successful bid. The webinar is available to watch here and you can download the guide here , and by watching after the event you can see what questions were raised by the live audience and how the panel dealt with them.
We asked the audience if the current level of uncertainty was forcing their hand in terms of procurement options, and the resulting poll was not surprising at all:
- 36% are actively considering insourcing the service
- 28% are committed to outsourcing; and
- 36% are looking to delay their procurement until we have greater certainty.
The other headlines from the webinar can be summarised as:
- Recognising that the policy landscape will change is key – building in flexibility to the process, and having review periods in the contract to enable both parties to reflect on changing circumstances is critical to making the contract look attractive for the market and for ensuring we don’t price for all the uncertainty upfront.
- Using the right procurement process will save money – Somerset utilised the dialogue meetings to focus on the things that could be changed, to drill down into the technical solutions and to find ways of sharing the risks appropriately, which in turn ensured the prices were sharp and competitive.
- Having a good team (including advisors) was essential in enabling progress and dealing with uncertainty – having the core team at the dialogue meetings helped all parties to refine solutions, whilst good documentation ahead of all meetings allowed bidders to work through options and scenarios and bring back questions and ideas.
- Knowing what you want in terms of service will save time and effort – bidders don’t like costing up endless options and variations if they are unlikely to be delivered, so focus on what you want / need and test it early on in terms of the affordability window with the bidders.
- Understanding the market is vital if you want competition – testing out contract lengths, procurement routes, timetables and key objectives with the market early on will avoid you launching a tender exercise with little interest.
The intention of producing the guide was to provide confidence to the 70 authorities or so that we are due to come to market in the period 2020-2023, whilst policy remains uncertain, and judging by the audience feedback (73% felt more confident about procuring in uncertain times at the end of the session than they had at the beginning) the insights provided by the guide should do just that.
So if you are thinking about the market, and are worried about your service and the tendering process then please spare an hour to listen to the experts on the webinar, and to follow up and read the short guide with top tips and lessons, it will help demystify uncertainty and confirm the flexibility of procuring a partner.