9 August 2018

Reflections on the procurement toolkit webinar

SPECIAL REPORT: An overview of the recent webinar which looked at forthcoming public sector procurement best practice.

The recent letsrecycle.com webinar on Local Authority Waste Services and Contracts Procurement ‘a new toolkit’ attracted an enthusiastic audience from representatives of all sectors of the waste industry.

The interactive webinar aimed to address a few urban myths and unknowns about municipal service procurement as well as outline the contents of a new toolkit produced by Ricardo and commissioned by SUEZ to help assist local authorities in making early decisions about when to go to market, what services to package, and what processes and requirements might limit the competition for any such contract.

Brian Mayne, director resource efficiency & waste at Ricardo Energy & Environment

Will Date, introduced the expert panel of Brian Mayne (Ricardo Energy & Environment), Dr Adam Read (Suez) and Trevor Nicoll (Greater Cambridge Shared Waste Service) and explained that the webinar was organised to make a timely contribution to supporting the 60 plus local authorities who will be coming to the market for collection, cleansing and recyclate contracts in the next three years. Although much of the content of the toolkit is equally valid for in-sourced services who should be checking annually for best value in their provision.

Brian opened proceedings with an overview of who the toolkit is aimed at, namely local authorities who:

  • are procuring a range of public-realm services and infrastructure; or
  • have an in-house service or local authority trading company, but would like to test whether their services are delivering best value; or
  • have officers that are new to the procurement process or, experienced officers that would like to find out about the latest best practice.

He went on to outline that it provides all the necessary information needed to structure effective waste management and public-realm service and infrastructure contracts so that they are attractive to the market, commercially viable to the contractor and affordable to the local authority. He highlighted that the toolkit brings together a huge portfolio of current guidance documents, examples of good practice and a host of other publicly available resources to enable local authorities to learn from each other without having to re-invent the wheel.

Unsurprisingly, given they were the original target audience, there were a large number of the attendees procuring waste services in the next few years as the poll taken at the outset shows:

Following a summary of the toolkit the audience were encouraged to submit questions, with some having been sent in during registration so they could be captured in the webinar.

Audience participation

Naturally with so many delegates stating that they will be going to the market shortly the panel were asked whether they would recommend a ‘bidders day’ before the procurement phase so Local Authorities could determine what the contractors would prefer in the contract. The panel overwhelmingly supported the development of a market engagement strategy utilising a number of core activities, citing that they can be very useful in developing a procurement strategy and the associated documentation for the procurement process.

The panel went on to agree that such days can help provide direction on what may or may not be acceptable to the market, what elements of the contract the market consider to be riskier and how the market would like to see those risks mitigated. They also pointed out the types of activities that could be undertaken and have been successful in the past including pre-procurement questionnaires, soft market discussions and bidders days that have time set aside for one to one detailed discussions between interested parties and the client authority.

Risks and uncertainties

The panel had identified three main themes (or uncertainties) that were on the minds of bidders and authorities alike right now, namely:

  • Policy uncertainty – what will happen when, and how will it affect my contract? How do you design in flexibility without requesting a large number of options?
  • Markets uncertainty – how am I going to develop a contract for recyclates? What should I do about quality and contamination? What risk are you willing to take on quality and end market prices?
  • Bidder uncertainty – what will turn bidders off from submitting? what combination of services or risk apportionment would make getting bids harder and how to ensure bidder competition to drive down prices and improve innovation?

The audience were asked to rank their main risk (uncertainty) right now, and the standout concern was ‘Market Uncertainty, which is perhaps unsurprising given the attention in the national and trade media to China’s National Sword programme and the ripple effect being felt by markets globally.

If you are interested in this then check out a previous letsrecycle.com webinar on commodity risk (see letsrecycle.com webinar).

This theme was prevalent in the early discussions with a number of questions being raised by the audience around markets for recyclates and specifically about risk sharing for example in future MRF contracts. The panel identified that a key element of any risk is to ensure that the Local Authority identifies the risk and importantly assigns it appropriately. It was agreed that local authorities will not see ‘price certainty’ by passing back the majority of market risk to a contractor, where in reality it’s beyond control of either party, risk sharing is therefore essential.

The panel however felt that whilst commodity risk is real now, the others, policy and bidder uncertainty, are far bigger medium-term concerns (and opportunities). This, while not reflected in the poll, was highlighted in a range of questions from delegates concerning BREXIT, deposit return schemes and extended producer responsibility and their impact on local authority contracts now and in the future.

The general feeling of the panel was that given the UK had signed up to the EU Circular Economy Package, with its mandated food waste collections and full cost recovery for ‘obligated materials’ that Policy Uncertainty was the biggest uncertainty facing local authority decision-makers, and if the opportunity arose to extend existing contracts for a year or 2 it might be prudent to do so, enabling these ground-breaking step changes in policy, targets and metrics to be implemented before going to market. But if you had to go to market now, or in the very near future, then ensure your contract has clear procedures for dealing with wider sector changes, even if the specific detail of these changes remains unclear right now.

More questions please

The panel were also asked a diverse range of questions on such subjects not directly related to the core themes of the webinar, including topics like collection methodologies for dry recycling, food waste collections in high rise buildings and the opportunity and threat of insourcing. The panel took these questions away and have provided a short written response which is available to view, along with the webinar recording (see letsrecycle.com webinar).

Developing a new toolkit

Perhaps more surprising were the question about whether the panel considered it appropriate to have a new and more detailed Waste Procurement Toolkit for local authority contracts and how should this be developed and funded? To glean further information on this topic delegates were polled on what further support would they like to see following on from the Ricardo guide.

An overwhelming majority voted for a toolkit full of standard templates and guidance that could be followed and adapted (bespoke) to suit local conditions. The panel identified that potential funders could be the waste management companies themselves as one issue they continually raise is the need for more consistency in contract documents to help speed up bidding and reduce the costs of each bid. However, the contractors would only co-fund this toolkit (and associated template documents) if there was a clear message from local authorities that they would use it, which to date has not been evident.

Adam explained that Suez in particular, having funded the development of the toolkit, would welcome being part of the next step in developing standard documentation and template text that can be easily adapted and refined to suit local conditions. Perhaps the next step is to continue discussions with WRAP, the ESA and LARAC to gain support for some standard text, easy to adapt documents and more detailed guidance to build on the present toolkit. If you are in favour then please contact the authors and let us know!

One thing the panel most definitely agreed on was the need for ongoing webinars, articles and updates, to assist the industry in staying abreast of changing sector needs, policy developments and local authority issues.

In summarising the webinar Will outlined that there will be further opportunities to participate in the ongoing debate about the uncertainties the industry faced, including future webinars through letsrecycle.com, so please contact Will if you want to be part of these or have ideas about topics and cases studies.

There will be an opportunity for delegates to come and get involved in the next workshop or two focused on effective procurement and risks management at RWM, to be held at the NEC (Birmingham) on 12-13 September 2018.

If you have any feedback, ideas or comments then please email the authors on brian.mayne@ricardo.com and adam.read@suez.com.

Related links
Procuring Waste Management Services – A toolkit for local authority officers


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