Somerset warned off commingled switch by Eunomia

The Somerset Waste Board was warned against adopting commingled recycling collections as a cost-saving measure by consultancy Eunomia due to concerns about the reliance on export markets, it has emerged.

The Bristol-based consultancy was charged by the joint-council Waste Board to benchmark the performance of its existing seven-year kerbside-sort collection deal with services firm May Gurney to ensure the Somerset Waste Partnership was achieving value-for-money.

In the Eunomia report, which was assessed by the Waste Partnerships Board last month (March 25), the consultancy states that commingled collections would signify a major change in the waste bodys service and that kerbside sort services tend to perform better in tender processes.

Furthermore, the Waste Board minutes state: Eunomia have highlighted the downsides and risks of switching to a co-mingled [sic] system which include continued reliance on high prices for mixed paper being obtained from Chinese and other Asian markets. However there is a significant risk of long-term price correction within this market.

The Eunomia report also, according to the report,warned against retendering the contract as it said the cost-savings achieved through a full retender process as opposed to an extension to the existing May Gurney deal would be minimal.

As of March 2010, the May Gurney contractwas costingthe Somerset Waste Partnership 12.5 million-a-year. May Gurney took over the collection contract in June 2008 when it purchased original contractor ECT Recycling CIC.

As a result of the benchmarking process, Somerset Waste Partnership opted to negotiate a seven-year extension to its contract, which will see May Gurney provide collections across the region until 2021.

Finding savings in Somersets waste budget has emerged as a prominent issue in the past few months, with secretary of state for communities Eric Pickles last week slamming the Waste Partnership for introducing charging schemes at four of its 18 household waste and recycling centres (see letsrecycle.com story).

Contract

Waste Board minutes also reveal the details of the contract negotiation process. Under the existing terms of the deal, the Somerset Waste Partnership would have been liable to pay May Gurney an additional 1.064 million for an uplift on the contract which would take into account inflationary rises.

But, the Partnership negotiated to have the increase related to the retail price index (RPIX) which measures inflation in terms of retail goods and services. The Partnership said this would be more favourable and mean that the total uplift cost would be 539,000 equating to a saving of 525,000.

Following lengthy negotiations, May Gurney agreed to forego the 1.064 million uplift and accept the 539,000 uplift in return for the seven-year contract extension.

In addition to the contract extension, May Gurney also sought three members of senior staff to be seconded to the service firm from the Somerset Waste Partnership, for which it will contribute 250,000-a-year to the Waste Partnerships 2011/12 budget.

Reservations

At a meeting of the Waste Board at the end of last year (December), some reservations were raised about the contract extension. Documents show concerns that, while a contract extension is credible, it would mean that there would be a prolonged wait to market test the contract.

Furthermore, at the same meeting, Board members also warned that agreeing to the extension could potentially limit the Partnerships ability to implement changes to its kerbside provision.

Commenting on the contract, Steve Read, managing director of the Somerset Waste Partnership, told letsrecycle.com that he welcomed the agreement brokered by the waste body and its contractor.

The situation would be that if we continued and we didnt come up with an alternative arrangement then we would be talking about 1 million or so under the terms of the arrangement, he said. One of the reasons we like working with May Gurney is they are very responsive.

Documents seen by letsrecycle.com also indicate that the Somerset Waste Board budget for 2011/12 is 35,641,502 with the biggest areas of expenditure being disposal via household waste and recycling centres at 7,971,778 (22.3%) and disposal to landfill, which includes clinical waste, which is 7,655,573 (21.47%).

In comparison, the cost of the Waste Partnerships kerbside collection scheme known as Sort It Plus is set to cost 7,225,540 (20.27%). However, some of these costs are mitigated by a contribution of 239,706 by retailer Marks and Spencer, which has directly invested in the kerbside service (see letsrecycle.com story).

The Somerset Waste Partnership is comprised of Somerset county council, Mendip, Sedgemoor, South Somerset and West Somerset district councils, Taunton Deane borough council.