Purpose

Proposed decision:
 
(a) 
APPROVE the continuation of the current Household Waste Recycling
Centre and Waste Transfer Station operation, management, and
haulage contracts in Mid, East, and West Kent (SC18031 and
SC18031/WK), by extending the existing arrangements from 18 months
to a total of five years, as permitted under the contract terms.
The revised contract period will now expire on 31st October
2030;

 
(b) 
DELEGATE authority to the Director of Environment and Circular
Economy in consultation with the Cabinet Member for Environment to
award extensions of the contract in accordance with the relevant
clauses within the contract.
 

Reason for the decision
Following a previously approved 18-month extension, the risk
profile of re-procurement has significantly increased due to
inflation, geopolitical instability, fiscal changes, and
uncertainty around Local Government Reform. Extending the current
contracts provides cost certainty, avoids mobilisation costs, and
supports continuity during legislative reforms.
 
Background

·     
As the Waste Disposal Authority, KCC has a statutory
responsibility to arrange for the disposal of the household
municipal waste collected in its area by the waste collection
authorities, and to provide places at which persons resident in its
area may deposit their household waste and for the disposal of
waste so deposited.

·     
KCC currently contracts with FCC Environmental Ltd,
for the management, operation and haulage services of 12 sites in
Mid and East Kent, and with Commercial Services Kent Ltd. for 5
sites in West Kent, which commenced in 2020, and 2021
respectively.

·     
Both contracts included a five-year extension
clause.

·     
The extension avoids mobilisation and exit costs and
secures continued income from commercial royalties and
commodities.

·     
Legal advice confirms the extension is compliant
under PCR 2015 and internal governance.

 
 
Options

-     
Option 1 - Do nothing – Proceed
with procurement - this is not recommended due to the high
risk and cost uncertainty related to market volatility and
uncertainty following impending Local Government Reform and
legislative changes, as well as significant exit costs.

-     
Option 2 - Continue procurement with
break and novation clauses - This is not
an option as this would be a complex process related to how the
contract might be subdivided, as well as retaining the high risk
and cost uncertainty as per Option 1.Tenders
may price the risk of the uncertainty and vehicle depreciation may
not be covered during the term of the contract.

-     
Option 3 – Extend current
contracts to 2030 – (recommended option)
– This is the preferred option and provides
stability, cost control, and legal compliance. It allows sufficient
time to understand the impacts of local government reorganisation,
contract costs are known and budget for and exit costs are negated
or deferred.

-     
Option 4 – Withdraw and Re-tender
with revised lotting structure - This is
discounted due to timing and value concerns. The contract would not
be awarded in time to mobilise the contract in a cost-effective way
and would not be of a sufficient length to account for vehicle
depreciation.

Preferred Option

-     
Option 3 is the preferred
option. The authority is seeking to
extend the contracts with both incumbents for a further 3.5 years,
to expire 31st October 2030. This will benefit and
achieve the best outcomes for the authority and Kent households and
fulfil the Statutory duty of KCC operating under the Environmental
Protection Act 1990.

 
How the proposed decision supports the

Framing Kent's Future
- Our Council Strategy 2022-2026

·        
Priority 3: Environmental step
change: Continue to work with our
commissioning partners to create the infrastructure and jobs that
enable us to reprocess waste materials and produce energy within
the county, in order to maintain a closed loop local
economy.
How the
proposed decision supports Securing Kent’s Future 2022
-2026:
Securing Kents Future
- Budget Recovery Strategy.pdf

·        
Objective 2: Delivering savings from identified opportunity areas to set a
sustainable 2026/27 budget and MTFP: Contract Review and delivery
of best value.

Financial Implications

-     
The extension of the contracts will be met by
existing revenue budgets.

-     
Annual cost currently £14.6m
(25/26).

-     
Inflationary increases are built into the MTFP each
year, based on forecasts of inflation indices for the month of
uplift and have been included within the figures above.

-     
Both Commercial Services and FCC generate royalties
for KCC and growth in returns through their work at the Transfer
Stations with regard to accepting commercial waste.

-     
Estimated Income generation from commodities and
commercial royalties is expected to be in region of
£4,373,600.00 per annum

-     
A continuation of the contract negates
£750,000 in mobilisation/demobilisation costs and defers
capital costs related to additional site preparedness work in
readiness for new contractor.
 

Decision

As Cabinet Member for Environment I agree
to:
 
 
(i) APPROVE the
continuation of the current Household Waste Recycling Centre and
Waste Transfer Station operation, management, and haulage contracts
in Mid, East, and West Kent (SC18031 and SC18031/WK), by extending
the existing arrangements from 18 months to a total of five years,
as permitted under the contract terms. The revised contract period
will now expire on 31st October 2030;
 
(ii) DELEGATE authority to the Director of
Environment and Circular Economy in consultation with the Cabinet
Member for (the Kent) Environment to award extensions of the
contract in accordance with the relevant clauses within the
contract