Previously held by Amey, the 15-year contract signed in 2007 covering waste collections, street scene and grounds maintenance services is due to come to an end on 31 March 2022.
This was handed over to Urbaser when the company acquired six contracts from Amey in January 2021 (see letsrecycle.com story).
However, in November, the council said its preferred option was to progress with a bid submitted by Ubico, which is owned by Cheltenham borough and Cotswold district councils but operates at arm’s length.
A decision was deferred until 2021 to allow the opportunity for an offer to be finalised.
KMPG
As part of the “final stage in the selection process”, the council then asked KMPG to undertake an independent financial appraisal of the Amey/Urbaser and Ubico proposals. The value and length of the contracts were restricted.
The report, which will go before councillor’s on Thursday (11 March), says the Ubico bid provides better value, with both bids acceptable from a technical standpoint.
The report added the Ubico proposal is based on utilising a new vehicle fleet, whereas Urbaser in the main propose to continue to use the current fleet.
The deal with Ubico would also “enable the council to benefit from the Teckal exemption and award directly to the company without a procurement exercise”.
Financial
Despite the Ubico proposal scoring a ‘medium risk’ for ongoing price certainty, it scored better in governance and flexibility, assessing cost certainty and cost transparency and control.
“The council places on record its thanks to Amey and its staff”
KPMG’s conclusion is that the net present costs for Ubico is lower than that of Urbaser. The Ubico proposal therefore ranks first from a financial appraisal perspective, the council says.
The council however placed on record its thanks for Urbaser’s co-operation and the submission of a comprehensive offer to the council.
It also thanked Amey and its staff for the way “they have sustained essential public services during the pandemic and the positive and constructive way that the company has engaged with the city council in recent years”.
Legal model
On approval of the recommendations in this report, the council will need to work with the preferred partner to negotiate and agree the legal model, including governance arrangements, and develop a detailed mobilisation plan.
This will include the safe and successful transition of services, investment in fleet, and the design and implementation of agreed service and technology enhancements.
Costs
While the exact value of the offers was not disclosed, the Ubico offer would require a £5 million capital investment at the start of the contract with an additional £5 million during the contract for the purchase of vehicles. There would also be around £480,000 of mobilisation costs.
Under the Ubico contract, the council would be responsible for the sale of recyclates, and “it is reasonable to assume this would require additional staff capacity to manage this service”.
Subscribe for free