URL: https://democracy.kent.gov.uk/ieDecisionDetails.aspx?ID=3006

Decision Maker: Cabinet Member for Environment

Outcome:

Is Key Decision?: Yes

Is Callable In?: Yes

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.  

Content: 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.   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    

Date of Decision: August 11, 2025