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Contractual tangles warning for weekly collection fund bidders

Councils will have to clear a number of costly hurdles with their waste management contractors if they successfully bid for a slice of the government’s £250m weekly collection fund, waste experts warned this week.

Local authorities have just two weeks to submit expressions of interest for the Weekly Collection Support Scheme, which communities secretary Eric Pickles launched to much fanfare as part of his fight against alternate week collections.

But industry advisers said the process could mean retendering contracts, renegotiating targets, and huge spikes in costs.

AEA global practice director for waste management Adam Read said waste providers were “certainly not being proactive in going out and encouraging councils to apply for the fund”.  

“The first thing waste companies are going to want to do is renegotiate their recycling targets,” he said. “The evidence is that AWC drives up recycling so if you move to a weekly collection, you need a new target.”

He added: “If a council with an AWC wants to return to a weekly collection, that could have massive ramifications in terms of fleet and labour costs.”

Such a switch could also require a contract re-tending under EU procurement law, procurement experts warned.

Read said: “The penalty clause for breaking a contract could be a year’s worth of the contract – that’s a massive disincentive.”  

One senior legal adviser told MRW that companies did not see the pot as a “ringing cash till”.

“Some clients are warning councils that moving from an AWC to a weekly collection would damage their recycling rates,” he added.        

Councils could also find themselves grappling with potentially prohibitive administrative costs and challenging time constraints if they are to extract cash from the fund.

Local Partnerships, which provides commercial advice to councils, said the timescale was challenging.

“Authorities which want to bid are going to need to mobilise a project team pretty quickly and not underestimate the amount of work putting together a robust offer will take,” said Mike Pugsley, who leads the Local Partnerships waste programme.

The fund’s prospectus, published by communities secretary Eric Pickles last month, said final bids need to be in by 17 August, a timetable that government officials have publically admitted is “tight”.

The Local Government Association this week warned councils considering a bid for the fund that “some key decisions in the courts recently send a note of caution to any local authority seeking to make a contract variation.

“Variaitons may be so material that they create a new contract, triggering the need for a re-tender”.

The Local Authority Recycling Advisory Committee last month said the quickfire bidding process was just one factor that may put councils off bidding for a slice of the fund.

In a statement, the body said: “It is unknown how many councils will feel able to commit to maintaining the service after the fund has been spent.”  

The Scheme is worth up to £250m, with £50m available in 2012-13, £100m in 2013-14, and £100m in 2014-15.

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