TENDER EVALUATION REPORT: WESTERN REGIONAL WASTE MANAGEMENT GROUP INTEGRATED WASTE MANAGEMENT SERVICE CONTRACT

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1 FINANCE, CORPORATE SERVICES AND GOVERNANCE COMMITTEE REPORT COVER SHEET TENDER EVALUATION REPORT: WESTERN REGIONAL WASTE MANAGEMENT GROUP INTEGRATED WASTE MANAGEMENT SERVICE CONTRACT Agenda Item October 2004 Division Assets & Services Presenter Michael Norton, Principal Engineer Services Purpose To advise Council of the outcome of the tender evaluation process for the Western Regional Waste Management Group ( WRWMG ) Integrated Waste Management Services ( IWMS ) contract for the provision of the municipal waste & recyclable materials kerbside collection services. Caretaker Policy The report recommends that Committee and Council note the outcome of the tender evaluation report for the Western Region Regional Waste Management Group Integrated Waste Management Services contract and this recommendation would not result in the Committee of Council making either a major policy decision or a significant decision pursuant to the provisions of the Caretaker Policy. Finance The financial implications are described in the report. The expenditure is within the approved budget of Council. Legal When the Council intends to enter into a contract for the purchase of goods or services or the carrying out of works valued at $100,000 or more, section 186 of the Local Government Act 1989 ( the Act ) imposes a duty on the Council by public notice either to invite tenders or to invite expressions of interest. Sustainability Connected and Accessible City There is no significant sustainability impact. Inclusive and Engaging City There is no significant sustainability impact.

2 Innovative and Vital Business City The intention to pursue the integrated waste management services was based on using innovative ideas and demonstrating Council s focus on being part of different business initiatives. Environmentally Responsible City The concept of a Regional municipal waste and recyclable materials collection service supports the Council s environmental sustainability requirements through the service making a significant impact on achieving increased diversion of waste to landfill targets and a service more adaptable to changing environmental requirements. Recommendation That the Finance, Corporate Services and Governance Committee recommend that Council: note the outcome of the Western Regional Waste Management Group Integrated Waste Management Services contract tender evaluation process; and advise the Western Regional Waste Management Group of Council s decision. 2

3 FINANCE, CORPORATE SERVICES AND GOVERNANCE COMMITTEE REPORT TENDER EVALUATION REPORT: WESTERN REGIONAL WASTE MANAGEMENT GROUP INTEGRATED WASTE MANAGEMENT SERVICE CONTRACT Agenda Item October 2004 Division Assets & Services Presenter Michael Norton, Principal Engineer Services Purpose 1. To advise Council of the outcome of the tender evaluation process for the Western Regional Waste Management Group ( WRWMG ) Integrated Waste Management Services ( IWMS ) contract for the provision of municipal waste & recyclable materials kerbside collection services. Background 2. The WRWMG Board in August 2003 recommended that an IWMS be developed for the Region to be managed on behalf of the member Councils. The system was to include the collection of domestic waste and recyclable materials and receipt and processing of waste and recyclables to maximise diversion rates from landfill. In November 2003 at a Councillor forum, the WRWMG chairman and executive officer presented the IWMS to Council. It was anticipated that the waste and recycling collection component of the IWMS would provide considerable savings to Councils. 3. The waste management initiative being pursued by the WRWMG was discussed at the December 2003 meeting of the FCSG Committee. Council, at its meeting on 18 December 2003, approved the following: That Council, having received a presentation on the possible environmental and financial advantages of collecting waste in an integrated manner with other Councils in its vicinity, being all or some of the Member Councils of the Western Region Waste Management Group, ( WRWMG )( the Member Councils ) co-ordinating the Member Councils and their waste management collections, resolve to: acknowledge that the notion of an integrated contract for the waste collection of the Member Councils of 15 years duration may have environmental and financial benefits for the Council and its community; acknowledge that the concept of integrated waste management needs to be tested in the market place; by instrument of delegation sealed by Council pursuant to section 98(1) of the Local Government Act 1989, ( the Act ), the Council delegate its powers under the Act to the Chief Executive Officer, or the person from time to time acting in that position to: appoint the WRWMG as its agent for the purposes of WRWMG inviting tenders or expressions of interest for waste collection services for the Member Councils, ( the Tender Process ), subject to the Tender Process being conducted on the basis that Council is not bound to enter into any contract following the Tender Process, and subject to the proviso that the Tender Process documentation contains: 3

4 an acknowledgement that Council is not bound to enter into any contract following the Tender Process, and the tenderers sign an acknowledgment to that effect; and a clause to the effect that the tenderers release and indemnify Council against any loss the tenderer may suffer by reason of Council declining to enter into a waste management contract following the Tender Process; negotiate and agree with WRWMG the terms on which it will act as Council s agent for the purposes of the Tender Process, and the terms of the tender and/or expressions of interest put out under the Tender Process, subject to the terms and conditions outlined above; do all things incidental and ancillary to the above; and under section 98(3) of the Act the Council authorise the instrument of delegation to the Chief Executive Officer, or the person from time to time acting in that position, to empower him or her to delegate any power duty or function of Council delegated to him or her under the three sub points of the third dot point to a member of Council staff; and require further Council approval before the Council enters into any contract for waste collection services following the Tender Process. Expected Outcomes 4. The WRWMG on behalf of its members called tenders for the provision of collection services for municipal waste and recyclable materials to leverage off the buying power of a combined or regional approach to waste collection services. It was expected that this would lead to lower collection rates and link the Region with a service provider who could readily adapt to changing legislative, community and environmental issues over the term of the contract. Another perceived benefit was that for the first time, it would align all member waste collection services across the Region with a common end /start date. In the past this had been regarded as a contractual difficulty that was an obstacle to purchasing services on a Regional basis. Tender Evaluation Process Invitation to Tender 5. The WRWMG advertised tenders for the collection of municipal waste (including domestic waste, green waste, illegally dumped rubbish and litter bins) & recyclable materials on 23 April Hard rubbish collection service was excluded from the tender. 6. The tender involved eight of the nine member Councils of the WRWMG. Brimbank City Council elected to be excluded from the tender as it currently provides these services with in-house teams. Tenderers were able to make submissions on a regional wide service or on an individual Council basis. Tenderers could bid for the waste and/or recyclable materials collection services. 7. The term of the contract(s) was ten years with a five year extension option. Tenders closed on 18 June Evaluation Criteria and Weighting System 8. The evaluation criteria and weightings were agreed by the evaluation panel as follows: Evaluation Criteria Weighting Financial 40% Non Financial 60% 4

5 Tender Evaluation Panel 9. The tender evaluation panel consisted of the following members: The Executive Officer WRWMG, Council representatives from the Cities of Melbourne, Yarra (appointed chairperson), Maribyrnong, Hobsons Bay, Moonee Valley and Port Phillip. The panel was also assisted with the appointment of independent financial & technical advisors and a probity auditor. Summary of Tender Evaluation 10. Tender submissions were received for the following municipalities and service options: WHOLE OF REGION (8 municipalities) Collection of Municipal Waste & Recyclable Materials Tender 1. Thiess Services 2. Collex 3. Four Seasons Comment 1. Most aspects referred to. 2. Most aspects referred to. 3. Tender price and service plan excluded those services required for the Cities of Melbourne and Yarra. CITY of MELBOURNE RESPONSE ONLY Collection of Municipal Waste & Recyclable Materials Tenderer 1. Collex 2. CityWide Service Solutions 3. Thiess Services Comments 1. All aspects documented. 2. All aspects documented. 3. Tender price and service plan excluded manual handling of CBD bundled cardboard & illegally dumped rubbish and residential green waste service. 11. The tender evaluation panel determined that the tenders received for whole of Region options were unable to be evaluated. This was due to the unsatisfactory responses from the tenderers. In some instances the submissions were inadequately scoped and reflected high risk to Councils. Most importantly, the submissions had additional requirements outside of the service specification, this being the consequence of the staged start dates of the various services and the impact of current contracts in place and under the control of several member Councils. The panel was able to assess submissions received for individual Councils. 12. For the City of Melbourne submissions, the panel assessed both financial and non-financial criteria and determined that the best option was based on the provision of services for the combined municipal waste and recyclable materials collection service. The scoring of these submissions were: 6

6 Financial Scores Year 1 prices submitted by the tenderers were assessed and scored accordingly: Tenderer Combined Year 1 Price Financial Score Collex Commercial in Confidence 25.6 (relative) Thiess Services $0 0 CityWide Service Solutions $4,283, (max) 13. CityWide Service Solutions ( CityWide ) price is the lowest cost and scored the highest financial score. The price from Thiess Services was unable to be assessed as they did not originally submit (and were unwilling to subsequently submit) prices for significant parts of the specified service including collection of CBD bundled cardboard and illegally dumped rubbish and residential green waste service. Non Financial Scores - Tenderers were assessed and scored accordingly: Tenderer Score Collex 40.8 Thiess Services 42.8 CityWide Service Solutions CityWide received the highest non-financial score based on fully scoping all parts of the services including the provision of more than adequate resources, excellent capability and past performance based on being the current service provider and superior OH&S, Risk Management and Quality Assurance management plans. Both Thiess & Collex scored lower due to level of resourcing for the specified services, demonstrated a limited understanding of the scope of services and presented a higher risk to Council. Summary of Final Scores Final financial & non-financial scores are: Tenderer Financial Score Non Financial Score Total Score Collex Thiess Services CityWide Service Solutions CityWide has achieved the highest aggregate score. 7

7 Financial Assessment 15. Although CityWide achieved the best financial and overall score, the tendered annual price for Year 1 is higher than the current cost paid by Council to CityWide for an equivalent service under its current contract. Council s 2004/05 budget for the equivalent regional service is $3,956,062. The tendered price of $4,283,736 is 8.3% higher than the current budget. The higher prices are explained by CityWide pricing the risk associated the 1% rise and fall cap provision, replacing collection vehicles after seven years and the uncertainty of a 15 year contract term. On this basis, it is recommended that Council should not agree to terminate the current contract and enter into the new Regional IWMS contract. Pecuniary Interest and Probity Statement 16. No member of the evaluation panel has a pecuniary or personal interest in the tenders or contract. The Tender Evaluation Report prepared by the WRWMG and the records of the proceedings of the evaluation have been audited by the independent probity auditor appointed by the WRWMG. Contractual Position 17. The concept of an IWMS through a regional tender did not produce the intended outcomes. It seems the service as specified with several variables created many uncertainties which culminated in no substantial industry response for the whole of region commitment. 18. The recommendation of the evaluation panel is that the regional IWMS arrangement be discontinued at this time. The proposition of an IWMS should be reconsidered by the WRWMG some time in the future when circumstances are more likely to achieve the desired outcome. The evaluation report identifies several matters that need to be considered by the WRWMG member Councils should an integrated approval for collection be considered in the future. 19. Council s Waste Management Services contract 59/2/3200 expires in April The contract has a two year extension option. A decision to offer a contract extension will be assessed by the Council s contract manager, under the existing terms of the contract, closer to the expiry date. Relation to Council Policy 20. Council aims to deliver quality services that are responsive to business and community expectations, demonstrably cost-effective and subject to public accountability. Council is committed to delivering its services equitably and in a way that meets customer needs, minimises costs and recognises Council accountability. Recommendation 21. That the Finance, Corporate Services and Governance Committee recommend that Council: note the outcome of the Western Regional Waste Management Group Integrated Waste Management Services contract tender evaluation process; and advise the Western Regional Waste Management Group of Council s decision. 8

8 Agenda Item 5.3 Finance, Corporate Services and Governance Committee 12 October 2004 FINANCE ATTACHMENT TENDER EVALUATION REPORT: WESTERN REGIONAL WASTE MANAGEMENT GROUP INTEGRATED WASTE MANAGEMENT SERVICE CONTRACT The tendered annual price for year 1 is 8.3% higher than the current cost paid by Council to CityWide for the equivalent service under its current contract. Joe Groher Manager Finance Services

9 Agenda Item 5.3 Finance, Corporate Services and Governance Committee 12 October 2004 LEGAL ATTACHMENT TENDER EVALUATION REPORT: WESTERN REGIONAL WASTE MANAGEMENT GROUP INTEGRATED WASTE MANAGEMENT SERVICE CONTRACT The Western Regional Waste Management Group ( WRWMG ) is a body corporate set up under the Environment Protection Act 1970, ( the Act ). Sections 50E- 50RE of the Act govern the operations of WRWMG. In particular, section 50H sets out the functions and powers of the WRWMG. The functions of the WRWMG are: (a) to plan for the management of municipal waste in its region, working in partnership with the councils in its region; and (b) to co-ordinate the activities of its members in its region to give effect in its region to State policies, strategies and programs relating to waste; and (c) to facilitate and foster best practices in waste management. The role undertaken by WRWMG in seeking tenders for an integrated waste management service is therefore consistent with WRWMG s functions as set out in the Act. Alison Lyon Manager Legal & Governances