A much-vaunted project to save councils £85m on waste contracts by pooling their collective buying power will not achieve its aims, critics claimed this week, as leading suppliers geared up to submit their bids.
Not-for-profit council support organisation Improvement & Efficiency South East (IESE), set up the framework the first of its kind for 141 council members. It expects to make £85m savings over four years.
However, infrastructure consultancy WYG attacked the £1.7bn framework, saying it would prove costly for local authorities and contractors.
WYG project manager Len Attrill said: “Sadly, it would appear that the chances of this particular framework [cutting the costs of procurement] are very low.”
Attrill said councils would be charged a fee of 0.5% of the value of contracts let, which would equate to a charge “much higher than the current market rate”.
Contractors faced “significant costs” to get onto the framework and would pay a £10,000 annual fee, he added, although some discounts were available.
Adam Read, global practice director at consultants AEA, said councils must “not get carried away with this one-size-fits-all approach to procurement”.
However, consultants would be one of the likely losers.
IESE director of market leverage Alison Templeton said the framework would lead to savings, despite the costs.
“Currently many councils go to market individually, which leads to a fragmented approach to the market, unnecessarily large consultancy costs and a large number of full tenders for suppliers to handle,” she said.
“[This system] will not only exercise councils’ collective buying power, with most of the procurement work only having to be done once, but it will also start to leverage savings for suppliers as well.” Templeton added that suppliers’ charges would be “capped, fair and sustainable”.
Neither the Chartered Institution of Wastes Management nor the Local Government Association have so far given firm backing to the framework, but former LGA environment lead Paul Bettison is IESE chairman.
CIWM chief executive Steve Lee said: “Having not been party to the development of the IESE framework, CIWM cannot comment on its value for money. However, CIWM has recently agreed in principle to explore how it can support local authorities who choose to use the framework.”
The LGA said it was in favour of the principle of framework contracts because they could drive economies of scale, but had yet to take a position on IESE’s offer.
The framework seeks to address long-standing problems with council procurement practices highlighted by the National Audit Office in 2010 and the government-commissioned Roots Review, published in 2009.
The IESE Waste Management Framework
- Will run for four years from spring 2012.
- Core scope will be domestic and commercial waste collection and street cleansing services, with possible additional non-core items if required.
- Will be open to 141 councils across London and the greater South East of England.
- Some 24 suppliers are to submit tenders to IESE on 7 February, with an unspecified number selected for the framework