Before developing a contract, you need to plan carefully to identify the objectives and desired outcomes of the services. Settling on the appropriate plan is also critical to enable elected members and company management to make informed decisions that will ensure contracts deliver the desired outcomes.
The following are key points for councils to consider when establishing their service objectives. Councils should ensure:
In the initial planning stage, council managers and elected members must reach agreement on the objectives of the services and the contractual approach. Developing the objectives serves to link the council’s waste minimisation targets with the performance criteria of the contractor. It is important that the waste minimisation targets are agreed by the council and the community and fit with national targets, before service objectives are developed. These performance criteria need to be realistic and achievable, and should be clearly stated in the contract. It also helps to align the council’s service objectives with national waste management objectives such as the Packaging Accord and the New Zealand Waste Strategy.
See: Case Study C: Manukau City Council (option assessment report)
Developing service objectives may involve commissioning an assessment report on options for service provision. This assessment report can include socioeconomic and legislative factors and the waste management strategic direction of the council, as well as key operational issues that have an impact on the services.
Life-cycle assessment can be used to assess the environmental performance of various systems. Examples of this methodology include the Sustainability Assessment Model (SAM),[Bebbington et al (2001), Moving from SD reporting to evaluation: the sustainability assessment model, New Zealand Business Council for Sustainable Development. http://www.nzbcsd.org.nz/_attachments/Sustainability_assessment_model.doc] Independent Economic Assessment of Kerbside Recycling in Australia[Nolan-ITU Pty Ltd and SKM Economics (2001), Independent Assessment of Kerbside Recycling in Australia – Revised Final Report – Volume 1, for The National Packaging Covenant Council.] and WISARD, a life-cycle analysis tool focused on waste management and adapted for New Zealand conditions.
The Sustainability Assessment Model follows a four-step, full-cost-accounting approach, as follows.
Another example of a planning tool is the Zerowaste Action Planning (ZAP) system, which consists of methods that councils can use to successfully influence and engage all sectors of the community in the process of waste minimisation. This includes providing the leadership, resources, incentives and information that will enable the community to participate fully and drive change (see: http://www.smf.govt.nz/results/4186_zap_report.pdf).
It is desirable to hold early discussions with prospective tenderers for the services, to enhance both their understanding of the objectives of the service and the related risks, and also the council’s understanding of the reality of implementing operational requirements. This process often reduces the need for a number of notices to the tenderer during the tender process.
Legal opinion varies on who owns the waste stream. Ownership can vary at different stages of the collection, sorting, processing and disposal processes. One opinion is that the waste is owned by the person placing it for collection until it is collected by the collector it is intended for, when ownership then passes to that person, and so on down the stream. The ownership of the waste stream is based on the rules of the service, and these rules are often outlined in council bylaws and/or the contract document.
There are a number of scenarios where the ownership of waste comes into consideration, including where waste is:
To ensure there is clarity of ownership of the waste stream, it should be clearly spelt out in the contract document where ownership lies and when.
It is essential that political (for councils) or management (for companies) mandate be obtained before procuring services. Elected members or company management must understand the benefits, disadvantages and possible outcomes of a service option if they are to make an informed decision. To obtain the best possible contract result, they must also have full understanding of the objectives, type of procurement method proposed, and the trade-offs that may be necessary.
Examples of trade-offs that require consideration include:
Note that the evaluation of trade-offs should take into account local knowledge and the specialist expertise of advisors.
It must be recognised that councils have to meet short-term statutory targets while also developing and delivering longer-term, sustainable waste management policies. It can be difficult for relatively short-term political administrations to make long-term and potentially unpopular decisions, such as changing traditional weekly collection methods to alternate weekly collection of recycling and residual waste.
There are a number of options for procurement processes. The appropriate process depends on the state of the market and on how certain the principal is about the particular service they want provided. Principles of sound procurement to consider include:
See: Case Study D: Fonterra: (best value; request for proposal)
See: Case Study E: Palmerston North City Council (community desire; request for proposal)
The expression of interest (EOI), request for proposal (RFP) and request for tender (RFT) are all forms of procurement process available. They all have different attributes that make them appropriate for certain situations. For instance, an EOI is used to shortlist prospective tenderers and is useful to allow the market to indicate to the principal the benefits and disadvantages of particular service options. However, the EOI process can be unproductive for both the principal and tenderers, because tenderers are often unwilling to compromise their commercial intellectual property by divulging it in an EOI.
Another form of procurement is the renewal of an existing contract for a further term, either with or without a variation to the scope of services being negotiated.
Early discussions held with prospective tenderers for services are desirable to help the tenderers understand the objectives of the service and the related risks. It also helps the council to understand the reality of implementing operational requirements. This often streamlines the tender process by reducing the need to amend tender documents.
Councils should always review any procurement of services in relation to their policy for delegating authority. This is because the particular value of the services can determine the appropriate tender process to be followed and who has the authority to undertake that process.
There are a number of documents available which outline best practice procurement processes for waste management and recycling and provide helpful advice with the planning and production of tender documents (see below).
Resource NSW, Model Waste and Recycling Collection Contract and User Guide (2005). The model contract is a comprehensive tendering package, developed in consultation with councils, collection contractors and industry to help streamline the tendering process: http://www.environment.nsw.gov.au/education/SPD_LGOV_WasteContract.htm
EcoRecycle Victoria, Guide to Model Contracts Kerbside Recycling, Collection and Acceptance Sorting Contracts, April 2001. Sustainability Victoria is reviewing its draft contract documents for its Recyclables Collection Service Contract: http://www.sustainability.vic.gov.au/resources/documents/061023_Combined_531765_8.DOC
and their Recyclables Acceptance and Sorting Contract: http://www.sustainability.vic.gov.au/resources/documents/061023_Accept_and_Sort_531762_7.DOC
EcoRecycle Victoria, Guide to Preferred Service Standards for Kerbside Recycling in Victoria, August 2004: http://www.sustainability.vic.gov.au/resources/documents/PSS_final_doc_sept.pdf
DEFRA (Department for Environment, Food and Rural Affairs), Waste PFI Procurement Pack (2000). This is a work in progress, providing a guide to the procurement of waste management services under a private finance initiative, a public private partnership or a conventionally funded project:
WRAP (Waste and Resources Action Programme) is a major United Kingdom government programme established to promote sustainable waste management by tackling barriers to waste minimisation and increased recycling: http://www.wrap.org.uk/
Note: Contract models are developed for both rural and urban situations as well as their country of origin. Take care to ensure the model chosen is applicable to the local situation.