Sheffield City Council has decided to re-tender its 35-year deal with Veolia, which was due to expire in 2036.
The authority’s cabinet has voted to end the current contract and re-procure the services the firm currently provides.
Veolia disputed the assertion that its relationship with the council had ended, but said it was dissapointed the authority had decided to re-tender its waste services.
The current deal includes operation of the city’s energy-from-waste (EfW) facility on Bernard Road (pictured) and an associated district energy scheme.
It also covers collection and disposal of waste, running household waste recycling centres, bulky item collections and the removal and disposal of abandoned vehicles.
The contract with Veolia, signed in 2001, will continue until a new service provider is in place, with its services remaining unchanged for the meantime.
Bryan Lodge, council cabinet member for the environment, said: “We needed to find a best-value solution that ensures a quality waste service for Sheffield taxpayers. It is no secret that we are operating in very tough financial times and we have to do things differently.
“Our contract with Veolia, which was signed 16 years ago, is no longer meeting our needs and is no longer compatible with the tough financial landscape in which the Government is forcing us to operate.”
The authority said in a statement it was committed to consulting the 180 people employed under the contract.
A Veolia spokesperson said: “We are obviously disappointed by Sheffield City Council’s decision to seek to re-tender for its waste services. We have had a successful partnership with the council, to date this relationship has lasted for sixteen years.
“During this time we have delivered state of the art treatment infrastructure, operated the flagship district energy network and significantly increased recycling.
“From the start of our contract in 2001 we have been a major investor in Sheffield, outperforming our contractual objectives and achieving close to landmark zero waste to landfill, whilst generating direct financial benefits to the city and providing value for money to the council.
“We will work with the council to understand their timescales and ensure adherence to the full contractual implications of this decision. We’ll continue to keep our staff fully informed of developments as the situation becomes clearer.”
Earlier this month, the council announced it was set to review its contract and suggested that refinancing its waste services could allow the authority to benefit from an increased share of income from the 225,000-tonne capacity EfW plant and make efficiency savings in the collection service.
In place of the current deal, the proposals suggested the council tenders separately for a seven-year collection contract, a five-year EfW plant operation deal and a two-year district energy network contract.
However, speaking to MRW now, a council spokesperson said it had not yet decided whether or not to split up its current waste services when they are put out to tender.
They said Veolia could apply to be the council’s new waste provider, as could other waste firms, or services might be taken in-house.
MRW understands the council will incur a cost to leave the current contract prematurely although the authority could not comment on this.
This is not the first time the £26m contract has been subject to scrutiny over costs.
In 2012, MRW reported that Defra officials had been helping Sheffield find savings in the contract, with the negotiations to be used as a pilot study for the department’s guide on how councils can make cutbacks in their waste contracts.