Agenda item

To approve the use of £222,500 of earmarked reserves to cover the increased cost for 2016/17

That the use of £222,500 of earmarked reserves to cover the increased cost of the Materials Recovery Facilities Contract for 2016/17 be APPROVED.  

63.1           The report of the Environmental and Housing Services Group Manager, circulated at Pages No. 117-122, provided the Committee with information about a possible contract variation for its Materials Recovery Facility (MRF) and asked for approval of the use of £222,500 of earmarked reserves to cover the increased cost for 2016/17.

63.2           Members were advised that, in April 2014, the Council had entered into a three year contract for the processing, sorting and selling of its comingled dry recycled materials. Since January 2015 there had been problems with contamination in the recyclate stream and, over that period, there had been more than 30 incidents of needles being found within the material; this had resulted in increased risks to staff and had an impact upon the sorting process. The contractor was responsible for the health and safety of its operatives and, despite attempts to manage the situation, material had been rejected from specific waste rounds. As a result, nine full loads and part loads of material had been diverted to landfill. Officers from Tewkesbury Borough Council and the Joint Waste Team had continued to work with various organisations to try to educate residents and resolve the issue on safe disposal of needles.

63.3           The consequences of contaminated loads of recyclate reaching the MRF were that the plant would be stopped, emptied and the contaminated material sent to landfill for disposal.  This generated a cost in downtime due to the stoppage and disposal of material as well as a loss in revenue which could have been gained if the material was processed and sold for recovery. Grundon had indicated that it would continue to accept the Council’s recyclate materials but that it had to slow down the process to allow more time for the contamination to be removed and dealt with safely. In addition, there would be a two stage exercise introduced to split the material; the first run would drop bottles, cans, glass etc., and anything under 120mm in size, this would reduce the density of material going into the picking line and allow the pickers a better opportunity to identify any needles. The material that was dropped out in the first phase would then be run again with anything up to 50mm in size which would allow a better level of material through the plant and another opportunity to identify needles. The process identified would involve additional costs.

63.4           The current contract was due to expire in April 2017, therefore a tendering and procurement exercise would look to address the issues and the future costs. Members were advised that the current contract had been agreed at an advantageous price for the Council. Since that time there had been significant fluctuations in the commodity markets, and the global economy, which had impacted on the price of recycled materials; this meant that, whilst the contamination issue sat outside of the bigger picture, it was clear that, in any revisiting of the market place for MRF facilities, the Council would need to consider potential increased costs for the future.

63.5           A Member questioned whether the contamination issue was a problem in specific areas or whether it was Borough-wide. In response, she was advised that it had initially been in specific areas but now it appeared to be more widespread. The Deputy Chief Executive explained that the Council was extremely fortunate with the low level price that it had on the current contract which had met the Council’s budgetary requirements at the time. However, this came with compromises which meant the equipment was possibly not as sophisticated as some. The contractor had been extremely proactive in working with the Council to resolve the issues faced which had been very helpful. The recycling environment was complex and volatile with the value of recycling materials also being volatile; the price of the MRF contract was dependent upon what the recyclate could be sold for. A Member questioned whether Tewkesbury Borough was the only authority with the problem. In response, the Deputy Chief Executive advised that Tewkesbury was the only authority in the County that operated a comingled service; it was that which caused the issue as there was less chance of contamination when items were sorted at the kerbside.

63.6           One Member expressed great concern about the additional cost which had been suggested and she questioned whether it really was a fair price; whether negotiations had taken place; and what the current cost of the contract was. In response, it was explained that the negotiation process had been very detailed and had been carried out by Officers from legal and finance, as well as receiving independent advice, and a compromise solution had been reached with an acceptable price for both parties. It was a fact that the contractor could refuse to accept loads where there was a significant health and safety risk and the cost of that over and above the contract, as well as the loss of recycling credits, was significant.

63.7           Having considered the information provided, it was