Agenda Item No.
HERTFORDSHIRE COUNTY COUNCIL 3
WASTE MANAGEMENT CABINET PANEL
THURSDAY 5 JULY 2012 AT 2.00 PM
HOUSEHOLD WASTE RECYCLING CENTRES – PROCUREMENT OF A NEW
SERVICE
Report of the Chief Executive & Director of Environment
[Author: Matt King, Head of Waste Management
(Tel: 01992 556207)]
Executive Member: Derrick Ashley (Transformation, Performance & Waste
Management)
1. Purpose of report
1.1 To provide the Panel with a proposed structure and timescale for the procurement of an outcome based contract, to replace the current Household
Waste Recycling Centre (HWRC) service, which achieves the Authority’s defined outcomes.
2. Summary
2.1 This report outlines proposals for the procurement of a service to replace the current HWRC service from October 2014.
2.2 The recommended procurement approach will allow bidders to present innovative solutions to meet the desired outcomes in service provision.
2.3 The proposed timetable allows the options presented by the bidders to be considered by key stakeholders and refined, to ensure the optimum levels of service provision are achieved and proposed changes to the network are acceptable and achievable.
3. Recommendations
3.1 The Panel is invited to:
(i) recommend that procurement of an outcome based contract for the
HWRC service is undertaken via the Competitive Dialogue procurement process;
(ii) approve the outline timetable for the procurement process.
(iii) recommend that Officers bring a further report to the Waste
Management Cabinet Panel in November 2012, following the softmarket testing day.
1

4. Background
4.1 As a part of the Council for the Future discussions in 2010, Cabinet agreed a recommendation of the Waste Management Cabinet Panel that officers bring a transformation plan to the July 2011 Cabinet Panel showing how reductions of 25% (in operating costs) can be achieved and incorporated in the procurement of a replacement contract by October 2014. The report presented to the July 2011 Cabinet Panel considered, in detail, the performance levels and quality within the current HWRC network.
4.2 The November 2011 Cabinet Panel report outlined a range of operational options and the potential benefits and financial savings to be achieved by each option. The Panel recommended that officers explore the nature and timetable of a procurement exercise, which would be required to obtain the desired service, including an outcome-based contract.
4.3 Subsequently the March 2012 Cabinet Panel was advised of potential service options which could be pursued and incorporated in the procurement of a contract for the provision of an HWRC service in 2014. The Panel concluded that officers proceed with the development of a range of key performance requirements to inform an outcome based procurement exercise in 2013/14 and report progress to the July 2012 Panel meeting. This report therefore provides an update on progress.
5. Procurement of an outcome-based contract
5.1 The move to outcome based contracting will place greater responsibility and freedom with the contractor for the day to day provision of the entire HWRC service. This type of contract differs from the current disaggregated approach which requires the County Council to provide contract management for a number of separate arrangements against detailed contract specifications.
5.2 Discussions with officers from the Strategic Procurement Group (SPG), regarding the procurement of an outcome-based contract, identified a range of options for structuring the process. The resulting recommendation is to undertake Competitive Dialogue as this provides an opportunity for discussion between Hertfordshire County Council and the market which will assist in shaping innovative solutions for meeting Hertfordshire County
Council
’s expectations. Competitive Dialogue is one of four procurement options available as outlined below:-
1. Open Procedure – this is a one stage procedure in which the market is invited to submit tenders, the tenders are evaluated and the successful bidder is selected;
2. Restricted Procedure
– this consists of two stages: the first involves a pre-qualification questionnaire (PQQ) which provides grounding for bidders to be short-listed; the second is an invitation to tender as per the Open Procedure above;
2

There can be no negotiation with bidders during the above two processes. An outcome-based contract ideally requires prior negotiation with bidders in order to understand and refine the options available for achieving the outcomes specified. These methods may be more appropriate where there is a pre-defined contract specification.
3. Competitive Dialogue Procedure
– Competitive Dialogue provides a platform for negotiation prior to the invitation to submit a final tender and can involve an initial PQQ which allows for bidders to be shortlisted within the first stage. This process provides an opportunity for innovative solutions to be put forward and refined before a final bid is submitted;
4. Negotiated Procedure
– the negotiated procedure can only be used in exceptional circumstances as set out within the procurement regulations. The process involves the contracting authority entering into negotiations with bidders having either selected the contractors directly or short-listed following a notice in the OJEU (Official Journal of the
European Union).
6. Outcome specification
6.1 The contract will be framed by a series of key outcomes, monitored by a set of Key Performance Indicators (KPIs). The outcomes will be based upon the following themes, designed, in part, to be consistent with the broader aims of the Hertfordshire Waste Partnership:-

Increased levels of recycling and composting

Expansion of reuse

Increased diversion from landfill

Increased customer satisfaction levels

Compliance with all relevant legislation and regulations

Improved public engagement and awareness

Added value and market flexibility (possibly including the provision of a service for the management of commercial waste)

Value for money
3

6.2 KPIs to support each outcome will be developed, and as part of the procurement process, prospective bidders will be expected to suggest relevant indicators which allow provision to be measured and set standards that the county council would accept. For example levels of recycling, customer satisfaction etc. require agreement and it is expected that the current levels (benchmarks) achieved by the current service would be the starting point.
7. Project structure
7.1
The procurement of the contract for managing Hertfordshire’s HWRC network will be undertaken by the Contract Development team within the
Waste Management Unit. The project will be overseen by the Head of Waste
Management and will be managed by an allocated project officer. An (officer) project board will be established and will consist of representatives from the
Legal, Financial, Risk and Procurement sections of the County Council as well as a representative from the Hertfordshire Waste Partnership (HWP).
7.2 The project is structured in line with HCC’s project management structure.
The implementation phase will incorporate the framework for undertaking the
Competitive Dialogue. Experience of procuring similar services within the
Waste Management Unit will be of value to the project and will provide guidance and input throughout the project to ensure that a thorough, effective and fair process is followed.
8. Procurement structure and outline timetable
8.1 The indicative timetable at Appendix 1 shows an outline of the key milestones involved in competitive dialogue together with dates. It is intended that the preferred bidder will be selected in early 2014 with subsequent time allowed for contract mobilisation before the contract commences in October 2014. The timetable for this project will be refined in conjunction with the Strategic Procurement Group over the next 2 to 3 months.
8.2 The market testing day will allow the project team to gain an insight of possible solutions for meeting contract outcomes and in refining the contract framework. It is intended that the results of the market testing day are brought to this Panel in November prior to any notice being placed in the
OJEU, currently scheduled for early 2013.
8.3
The timetable allows for key stakeholder engagement, including Members and the HWP, the competitive dialogue method providing an opportunity to reflect upon and shape the solutions presented by the market.
4

9. Research and lessons learned
9.1 This project will be informed by lessons learned both inside and outside of
Hertfordshire County Council. Further research and engagement with
Buckinghamshire, Staffordshire, Somerset, Cumbria and Suffolk may provide an opportunity to develop and refine suitable KPI’s to build upon the themes set out above.
9.2 Buckinghamshire County Council recently undertook a restricted procurement process to procure a contract for managing its HWRCs. Whilst the procurement process differs to the recommended process for
Hertfordshire County Council, some of the lessons learned may be of value to this project.
9.3 Staffordshire County Council is currently out to tender for the management of its HWRCs and will undertake Competitive Dialogue. It may be of value to both HCC and Staffordshire to share learning throughout the respective procurement processes.
9.4 Suffolk County Council undertook an enhanced competitive dialogue process in 2008/09 for the management and improvement of its HWRCs.
The process took into account a similar set of outcomes as proposed within this report: focusing upon collection opportunities, customer service, diversion of waste from landfill, maximising recycling levels, community engagement and reviewing the facilities offered, amongst other outcomes.
There may be scope to learn from the process undertaken and additionally from any problems or opportunities which have arisen post-award.
9.5 Both Somerset and Cumbria have been referred to in previous reports as authorities who have or are considering fundamental changes to their
HWRC services and on-going discussions with these authorities will also be used to inform the process.
10. Financial Implications
10.1 This report has no direct financial implications. The purpose of undertaking the outlined procurement process is to explore if a different contractual relationship can provide opportunities to secure a significant saving in the budget, using
£750m as the starting point.
5

Background Papers
Council For The Future – The Right Level Of Publicly Financed Services
(Household Waste Recycling Centres) - 1st March 2012
Council For The Future – The Right Level Of Publicly Financed Services
(Household Waste Recycling Centres) - 16th November 2011
Council For The Future
– The Right Level Of Publicly Financed Services
(Household Waste Recycling Centres) - 6th July 2011
Household Waste Recycling Centre Service - Part II - 9th May
2011
Council For The Future
– The Right Level Of Publicly Financed Services:
Waste
Management - 16th November 2010
Buckinghamshire County Council Report to Cabinet Member for
Environment –
20th September 2011
Buckinghamshire County Council Report to Overview and Scrutiny
Commissioning Committee - 9th June 2011
Suffolk County Council Environment Waste Management and Economic
Development Scrutiny Committee - 14th June 2010
Suffolk County Council Environment, Waste Management and Economic
Development Scrutiny Committee - 20th January 2009
Staffordshire County Council Tender Documentation - Operation of
Household Waste Recycling Centres
6

Key Milestones
Stage 1:
Pre-Procurement
Preparation
Stage 2:
Pre-Dialogue
Stage 3:
Dialogue
Procurement Preparation
Market Testing Day
OJEU Notice
Pre Qualification Questionnaire (PQQ) Returned
PQQ Evaluation and pre-qualified list of bidders agreed and approved
Open Competitive Dialogue:
Issue Invitation to Participate in Dialogue (ITPD) and Invitation to Submit Outline Solutions (ISOS)
Dialogue
Issue Invitation to Submit Detailed Solutions (ISDS)
Dialogue
Assess readiness to close
Potential further dialogue
Close Competitive Dialogue and Call for Final Tenders (CFT)
Bidders submit final tender
Preferred bidder selected
Stage 4:
Post-Dialogue
Final due diligence
Financial close
10 day stand-still period
Stage 5: Contract Mobilisation
Stage 6: Contract Commencement
Appendix 1
Indicative Timescale
May - August 2012
September 2012
January 2013
January 2013 -
March 2013
March 2013 -
November 2013
December 2013 -
March 2014
March 2014 - October 2014
October 2014
7