The company will stop work for Arun district council in West Sussex on June 27, more than eight years earlier than the date committed to under its contract terms.
Onyx has revealed little about its reasons for what it describes as its decision “to exit the contract” but it has written to Arun district council giving the reason as “continued losses”.
A spokesman for Arun said: “Arun continues to seek and act on legal advice in relation to Onyx's decision to unilaterally withdraw from it's 15 year contract with Arun on 27th June 2003.”
Competition
Onyx won the contract, worth about 2.1 million a year, in 1996 against stiff competition from other major waste management companies. About 10 companies are thought to have wanted the work originally.
When the contract was first proposed back in 1995 the decision to amalgamate five services into one contract was seen as forward-thinking. Among the services put into one tender for a combined cleansing service contract were refuse collection, recycling, street cleansing, clinical waste, public conveniences, and dog bins. The authority said at the time that it had high aspirations for the contract, especially because all the services and the specifications were put together after listening to views from all the firms interested in the work.
At the time this approach was also designed to allow for an added value element to the contract and included performance and income reinvestment incentives. By putting all the contracts together a contractor would be able to come in with new ideas and modern service methods to enhance service delivery.
On the council's side there was also a rigorous assessment of the sufficiency of the bids to ensure that the contractor bidding was offering realistic and deliverable resource levels and performance. The Onyx bid was thought to be the most comprehensive, realistic and innovative at the time.
Kevin Basford, the council's head of environmental amenities service group, told letsrecycle.com this week that: “the style and orientation of the contract were based on the views we had from the industry which wanted to show us what they could do.”
Fixed price
The contract was offered on a fixed price basis and it is understood that none of the tenderers flagged up any problems regarding this at that time. In 1996-97 there was also a recognition among industry that the Arun approach was intended to be cutting edge with a new style of contract. It was designed with maximum flexibility to last the15 year term and to enable the contractor to deliver an all-round service without the need to be constantly mindful of offering the lowest price.
Arun council documents reveal there have been variations to the Onyx contract since 1997 and Mr Basford confirmed this was the case.
He explained: “We have some legitimate claims from Onyx and there have been variations to the contract at our request. The base value is now more than originally tendered for but other than these variations we are not asking for anything more than provided for in the original specifications and bid.”
Variation
One example of a variation, shown in the council documents, is that waste arisings in Arun were rising by 5% rather than the UK norm of about 3%. Accordingly Arun varied the contract to allow for what was in effect an extra refuse collection round.
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