8.2 TENDER 2000 SOUTH MELBOURNE MARKET CLEANING AND WASTE MANAGEMENT

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1 8.2 TENDER 2000 SOUTH MELBOURNE MARKET CLEANING AND WASTE MANAGEMENT LOCATION/ADDRESS: GENERAL MANAGER: PREPARED BY: TRIM FILE NO: 14/01/2000 ATTACHMENTS: SOUTH MELBOURNE MARKET FIONA BLAIR, INFRASTRUCTURE & AMENITY ROSS WILLIAMSON, MANAGER SOUTH MELBOURNE MARKET ALAN GIACHIN, ACTING MANAGER SAFETY AND AMENITY KATE CORNWALL, CONTRACTS ADVISOR Nil PROPOSAL To present the report on the tender evaluation process and recommend the awarding of the contract to OCS Services Pty Ltd. 1. RECOMMENDATION That Council: 1.1 Awards OCS Services Pty Ltd Contract No 2000 for South Melbourne Market Cleaning and Waste Management Services for a three year period commencing on 1 July 2016, with an option to extend the term for a further term of two years (at Council s discretion). 1.2 Notes that the contract sum for the initial three year period will be approximately $2,896,802 (excluding GST), which includes a fixed lump sum component of $2,806,802 and a schedule of rates provisional cleaning sum of $90,000. The total contract value including extensions is $4,828,004 (excluding GST). 1.3 Affixes the Common Seal of the Port Phillip City Council to Contract No 2000 between Council and OCS Services Pty Ltd. 1.4 Authorises the Chief Executive Officer to execute the further option of two years (as and when required) subject to satisfactory contract performance by OCS Services Pty Ltd for approximately $1,931,202 ex GST, (subject to CPI fluctuations at the time of the extension option being considered). 1.5 Notes a decision has been taken in accordance with Best value principles in making this recommendation. 21

2 2. BACKGROUND AND CONTEXT 2.1 Background This contract is to provide cleaning and waste management services to the South Melbourne Market (SMM). Council s contract arrangement for the provision of these services expired on 31 October To allow for the running of a competitive tender process and to avoid a potential transition over the holiday period, the contract with the incumbent service provider was first extended through to 29 February 2016 and for a second period from 1 March 2016 to June The tender was advertised in The Age on Saturday 6 February 2016 and closed on Friday 26 February The proposed contract term is three years from 1 July 2016 with an option for a further two year extension at Council s discretion. In addition to routine cleaning, the contract also includes forklift operations, heavy cleaning, waste management; waste removal, waste recycling and assistance with Market event bump ins and bump outs. The contract specifications were last updated in early The updated specifications have been modified to more outcomes based, and incorporates the existing variations into periodical cleans. The SMM engaged a consultant with extensive public sector cleaning and contract experience to advise and assist with the new outcome based specifications. Variations that were made to the previous contract as a result of improved contract management were incorporated into the Tender specification and included in the lump sum pricing are as follows: The introduction of a close loop recycling system (Gaia) that will convert fish and chicken offal, food waste, coffee grounds into a certified fertilizer; The introduction of Enzyme Wizard which is Green Cleaning Technology, and is environmentally friendly and out performs chemical cleaners. The product is biodegradable, non-corrosive, non-flammable, non-caustic, PH neutral and phosphate free; The SMM has reduced its water use through the installation of outlets throughout the market which are connected to the rain water tanks. This water is used for wash down of the aisles, and is also used in all the toilets throughout the Market. These outlets are monitored by data loggers which provide real time data on usage; The Cecil Street precinct consisting of food service stalls had an awning installed during the current contract, which has now been incorporated into the periodical cleaning schedule; Installation of a glass crusher to the Cecil St restaurants (x2 240L bins of bottles, reduced to x1 50L bin.) This significantly reduces volume by 80% 2 x 240L bins of bottles are replaced by 1 x 50L bin, Transportation costs are therefore reduced. The main benefits of using the technology include:, environmental and cost benefits, elimination of bottle noise, space saving OH&S improvement and risk reduction; 22

3 The introduction of the annual Mussel Festival (in its 3rd year) plus the annual Night Market which is now running for 10 weeks (January to March) have been incorporated into the periodical cleans. The proposed contract includes charges for offsite waste removal of various waste streams. Market staff are constantly working with stall holders and staff to improve the current waste streaming and reduce landfill costs. The closed loop and vermicomposting project will assist greatly in the reduction of waste going to landfill. The composition of the TEP is set out in Table 1 below. TABLE 1 COMPOSITION OF TEP Name Title Scott Thompson Adam Mehegan Alan Giachin Chairperson Member Member All TEP members signed the standard form indicating they had no conflict of interest to declare and that they would keep the tender information confidential. Pitcher Partners was appointed on 28 January 2016 as probity advisor for the project to ensure the process complies with probity requirements. The nominated Probity Advisor is Nathan Hudson, Senior Consultant. The evaluation criteria and weightings are detailed in Table 2 below. TABLE 2 TENDER EVALUATION CRITERIA Criteria Percentage Weighting Price 40 Capacity to meet the requirements of the specification. Relevant experience and track record Environmental Management 10 OH&S System 5 23

4 Social Procurement 5 Tenders received and Evaluation Details of the tenders received are shown in Table 3 below. TABLE 3 TENDERS RECEIVED No. Tenderer s Name $ Price (Excluding GST) 5 years 1. Tenderer A $9,371, Tenderer B $5,024, Tenderer C $5,886, Tenderer D $5, Tenderer E $9,133, Tenderer F $6,181, Tenderer G $8,408, OCS Services Pty Ltd $4,954, Tenderer I $5,236, Tenderer J $6,616, Tenderer K $5,249, Tenderer L $7,076,793 Note: Calculation basis Tenderer s submitted lump sum contract price for Years 1-3 with a CPI adjustment of 2.5% applied for Years 4 and 5. All tenders were prepared in conformance with the specifications and contract conditions and have been referred to the TEP for their review and evaluation. As part of the Tender Evaluation Plan and in consultation with the Probity Advisor, the TEP decided to interview the top six organisations based on the scoring against the evaluation criteria. The pre interview scores (against weighted criteria) are shown in Table 4. TABLE 4 Tender Scoring - Pre Interview No. Tenderer s Name Score (Out of 1,000) 1. OCS Services Pty Ltd Tenderer I

5 3. Tenderer B Tenderer D Tenderer F Tenderer J The TEP then interviewed a short list of six tenderers. The post interview score (against weighted criteria) are shown in Table 5. Table 5: Tender Scoring Post Interview Score No. Tenderer s Name (Out 1,000) of 1 Tenderer F OCS Tenderer I Tenderer D Tenderer B Tenderer J A Best and Final Offer (BAFO) process was conducted Wednesday 6 April The TEP agreed to invite the top five scoring respondents. The results of the BAFO are detailed in Table 6 below: Table 6: Tender Scoring Final No. Tenderer s Name Pricing pre (inc. GST) Pricing post (inc. GST) Score (Out 1,000) of 1 Tenderer F $6,181,265 $6,072,

6 2 OCS Services Pty Ltd $4,677,894 $4,678, Tenderer I $5,236,175 $5,105, Tenderer D $5,887,088 $5,887, Tenderer B $5,024,292 $4,867, Upon completion of the Best and Final Offer process, reference checks were conducted on all five tenderers. After careful consideration of all referees responses and the close score of the top two tenderers, site visits were taken to referee locations for Tenderer F and OCS Pty Ltd. The TEP were satisfied with the Site Visit and after careful review the TEP confirmed no change to score after BAFO was necessary. The final weighted score in Table 6 takes into account all of the evaluation criteria. The following factors have been taken into account in scoring tenders against agreed criteria. Price Tenderers have been assigned a score for price which has been derived from the ratio of lowest priced bid compared to each Tenderer. Qualitative Evaluation Criteria Tenderers were assigned a score for qualitative criteria. Comparing the top two Tenderers, it is noted Tenderer F scored the highest score for combined qualitative criteria below. a) Capacity Both OCS Services Pty Ltd and Tenderer F demonstrated in their written submission, interview and site visits that they have the ability to deliver the services required by the tender specification. Both organisations displayed a capacity to resource the contract with experienced management and staff and plant and equipment. 26

7 b) Relevant Experience OCS Services Pty Ltd provided two local references who indicated they were contracted with IPS Services Pty Ltd, which is a wholly owned subsidiary of OCS Services Pty Ltd. Both referees confirmed their contracts with IPS did not include Waste removal and provision of associated plant and equipment. Upon further inquiry from the TEP, OCS Services Pty Ltd confirmed their use of subcontracts for Waste Removal. Tenderer F provided referees confirming they have current and ongoing contracts of similar price and scope as SMM, in particular, two ongoing contracts with high profile Melbourne metropolitan Markets (Events). c) Environmental OCS Services Pty Ltd wholly owned subsidiary, IPS Pty Ltd is fully accredited to ISO 14001:2004 Environmental Management Systems. Tenderer F are fully accredited ISO 14001:2004 Environmental Management Systems. d) Occupational Health and Safety OCS Services Pty Ltd displayed an excellent understanding of the daily tasks required to perform duties within a robust OHS framework. Tenderer F displayed an excellent understanding of the OHS requirement specific to SMM, and offers a client portal for Quality Assurance. e) Social Procurement OCS have a Local is Better motto. This approach has a direct influence on the engagement of local resources. The organisation displayed a clear understanding of Equal Employment Opportunity and associated practices. Tenderer F showed a good understanding of Social Procurement practices with regards to product and Services with an emphasis on sustainable practice through local procurement. Financial Evaluation The financial viability of OCS Services Pty Ltd was checked by Council s Financial Compliance Accountant. A standard VEDA report confirmed that the company has a 2% chance of adverse (including late payment) in the next 12 months and a 0.66% chance of failure in the next 12 months. Council s Financial Compliance Accountant advised this entity passed and could be awarded the contract as they have traded over a decade, have no legal events recorded and have low chance of adverse event or failure in the next 12 months. 27

8 3. KEY INFORMATION Both OCS Services Pty Ltd and Tenderer F demonstrated they are capable of performing the services as required by the specification. Both organisations provided a detailed written submission outlining their capability and experience, and subsequently confirmed this at interview. Thorough site inspections were carried out at the premises of both OCS and Tenderer F. Whilst the score on the qualitative criteria was marginally higher for Tenderer F than OCS, OCS submitted a price that was substantially lower. Although the TEP was confident both OCS Pty Ltd and Tenderer F had the capacity to meet the requirements of the specification, in assessing the value for money of this contract and based on the core Best Value Principles, it is recommended to award Contract 2000 to OCS Services Pty Ltd as overall they present best value to council to perform the services. The contract price of awarding the contract to OCS Services Pty Ltd, will result in efficiency savings of $94,821 in the first year of the contract. 4. CONSULTATION AND STAKEHOLDERS Council has undertaken an initial consultation with the key stakeholders including South Melbourne Market Management and Sustainability. The consultation process has assisted with the development of the specification and ensures the project will meet the community expectations. The contract manager and project sponsor shall ensure the key stakeholders will be updated throughout the term of the Contract. 5. DISCUSSION 5.1 OPTIONS The preferred option is to award the contract to OCS Services Pty Ltd for three years with a two year option to extend the contract. 5.2 ALIGNMENT TO COUNCIL PLAN Cleaning and Waste Management Services at the South Melbourne Market supports and enables Council to deliver the following strategies in the Council Plan: Engaged, a well governed city achieve a reputation for organisational and service excellence, Healthy, a healthy creative and inclusive city ensure our City is a welcoming and safe place for all, and Vibrant, a liveable and connected city- improve and manage local amenity and assets for now and the future. 28

9 5.3 POLICY IMPLICATIONS The tender process has been conducted in accordance with Section 186 of the Local Government Act FINANCE / RESOURCE IMPLICATIONS The estimated total contract sum of $4,828,004 excluding GST falls within the projected budget allocation for this service, and will result in savings of $94,821 in the first year of the contract The tender from OCS Services Pty Ltd provides the best value for Council. 5.5 LEGAL & RISK IMPLICATIONS An effective and efficient cleaning and waste management service at the South Melbourne Market is required to enable Council to meet its statutory obligations. The preferred tenderer OCS Services Pty Ltd is well resourced with experienced personnel, and this should ensure that Council avoids risk that may lead to financial loss or have a negative impact on the Council s reputation The preferred tenderer complies with insurance requirements of $20M public liability and $5M professional indemnity (professional indemnity will be provided within 48 hours upon awarding of contract) equal to that specified in the contract terms and conditions A $50,000 bank guarantee requirement applies to this contract 5.6 BEST VALUE The tender has been assessed in accordance with the Best Value Principles; a) the need to review services against the best on offer in both the public and private sectors; and b) an assessment of value for money in service delivery; and c) community expectations and values; and d) opportunities for local employment growth or retention; and e) potential environmental advantages for the Council's municipal district. 6. IMPLEMENTATION STRATEGY 6.1 TIMELINE It is recommended that the Council awards the proposed contract as soon as possible to the recommended tenderer. 6.2 COMMUNICATION Contract documentation shall be prepared and forwarded to the contractor for execution. 29

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