As part of the deal, the remaining time on the contract, valued at £112 million, will be ‘novated’ to Syracuse. In the UK, novation is a mechanism where one party transfers all its obligations and rights under a contract to a third party, with the consent of their original contractor.
Somerset awarded Viridor an initial 16-year core waste management services contract in 2006 (see letsrecycle.com story). The pair then agreed an £80 million extension to the deal in 2019 (see letsrecycle.com story).
This includes the operation of services such as the network of household waste recycling centres, compost sites and landfill, which has now closed but managed under the contract.
Following the £4.2 billion sale of Viridor to KKR in 2020, the company has moved away from many aspects of the waste sector, focusing instead on polymer recycling and energy from waste (EfW) (see letsrecycle.com story).
The company announced last May that it had agreed to sell its collections business and “certain recycling assets” to Biffa for £126 million (see letsrecycle.com story).
Viridor transferred the resources, assets and staff associated with its Somerset contract into a newly created, wholly owned subsidiary, Syracuse, official documents show in June 2021. A month later, Biffa acquired the entire share capital of Syracuse.
A spokesperson for the Somerset Waste Partnership (SWP) told letsrecycle.com: “We expect and are planning no alterations to the way Somerset’s waste is managed: no facilities will close and no hours of operation will change.”
Biffa declined to comment when contacted by letsrecycle.com as the transfer is not yet complete. The SWP said the contract would formally pass to Syracuse, “following the VEAT publication and 10-day standstill period.”
We expect and are planning no alterations to the way Somerset’s waste is managed
- SWP spokesperson
Official tender documents published by Somerset on 29 July state that “the council considers that it is permissible to enter into a novation agreement with Syracuse” because the falls within scope of Regulation 72(1)(d)(ii) of the Public Contracts Regulations 2015, meaning Somerset believes re-procurement was unnecessary.
The SWP manages household waste services on behalf of Mendip, Sedgemoor, Somerset West and Taunton councils, South Somerset district council and Somerset county council.
Representing an estimated population of more than 560,000, the Taunton-based SWP had a household waste recycling rate of 52.4% in the 2020/21 financial year.
Waste management company Suez officially took over a £210 million collections contract for the SWP in March 2020 and now carries out more than 400,000 kerbside collections every week (see letsrecycle.com story).
Despite Syracuse taking over the core services contract, Viridor’s Avonmouth EfW plant will continue to process Somerset’s residual waste, the SWP spokesperson told letsrecycle.com.