Hampshire County Council Executive Member Policy and Resources Item 3 (xix) 11 November 2004 Contracting Matters - Corporate Contracts for Waste Collection and Energy Report by the Director of Property, Business and Regulatory Services (Summary of CONFIDENTIAL decision)

Contact: Neil Jones Ext: 6180 email: [email protected]

1	Summary
1.1	The following decisions are sought:
	That approval be given to:
1		the Director of Property, Business and Regulatory Services being authorised to conclude contract arrangements in line with the options set out in this report for the provision of waste collection and recycling services for an initial period of four years commencing in April 2004;
2		the contracts for waste collection being mandatory on corporate departments unless there are exceptional, operational or financial circumstances to prevent this;
3		awarding the contract for the provision of security services at the Headquarters complex to Shield Security Services Limited at an approximate annual cost of £88,000;
4		a short-term contract be awarded to the lowest bidder for supplying electricity to large County Council sites on the most advantageous terms and conditions that can be negotiated.
2	Reason(s)
2.1	To provide a county-wide, cost-effective waste collection service, and enable an increase in the volume of material recycled by introducing pre-collection segregation.
2.1	This decision supports Aims 2, 3 and 5 of the Corporate Strategy by improving arrangements for the collection of recycled waste in schools and the corporate estate; through a positive impact on the management of resources; and through the effective procurement of goods and services.

3	Other options considered and rejected
3.1	None
4	Conflicts of interest declared by the decision-maker or other Executive Member consulted
4.1	Not applicable
5	Dispensation granted by the Standards Committee
5.1	Not applicable
6	Reason(s) for the matter being dealt with if urgent
6.1	Not applicable

Approved by:	..........................	Date of decision:	.........................
	Councillor T K Thornber

BLPP1004B

Hampshire County Council Executive Member for Policy and Resources Item 11 November 2004 Contracting Matters - Corporate Contracts for Waste Collection and Energy Report by the Director of Property, Business and Regulatory Services (Confidential) Not for publication by virtue of Paragraph 9 of Part I of Schedule 12A of the Local Government Act 1972

Contact: Neil Jones Ext: 6180 email: [email protected]

How this report fits with the Corporate Strategy This report will impact on the delivery of the following Corporate Aims: Aim 2 - stewardship of the environment Aim 3 - achieving economic prosperity Aim 5 - improving services

1		Summary
1.1		The purpose of this report is to provide members with information relating to the key contracting activities of County Supplies.
1.2		The outcome of a tender exercise for the provision of a collection service for recyclable materials and residual waste to County Council establishments (including schools) is reported in some detail. The contracts to be awarded in this area are expected to produce a significant advance both in terms of uptake by customers and in their contribution to the achievement of corporate aims. Some risk is linked to the implementation of the new arrangements, but the proposals have gained the support of both the Corporate Procurement Network and the Corporate Sustainable Development Steering Group.
1.3		At the meeting of the Buildings, Land and Procurement Panel on 16th July 2004, the Panel recommended that the Director of Property, Business and Regulatory Services be authorised to award contracts for the supply of electricity to monthly invoiced sites and for the supply of heating oil and motor fuel. This report provides the Panel with details of the arrangements
		that have been concluded for these contracts and also reports on the extension of the contract for the supply of electricity to large sites. Price trends in energy markets were reported to the Panel in July and an updated summary of pricing movements is shown in Appendix 1.
	2 2.1		Contracts for Collection of Residual Waste and Recyclable Materials Background Information The existing contracts for the collection of refuse from Council sites are due to expire on 31st March 2005. A summary of the current contracts, which do not cover the whole of the County, is shown below: Area No. of Participating Sites Contractor Approximate Annual Value Basingstoke & Deane 44 Grundon £35,000 Fareham 10 Onyx £45,000 Gosport 26 Onyx East Hampshire 50 Onyx £35,000 Havant 30 SITA £20,000 Test Valley 49 SITA £15,000 Rushmoor 24 Biffa £15,000 TOTAL 233 £165,000
	2.2		Responsibility for the collection of household refuse rests with the district councils and unitary authorities, which also arrange a service for commercial sites if required. In 1996, a number of the district councils outsourced this work to the private sector and while domestic refuse remained their concern, schools and other County Council sites were designated as commercial properties.
	2.3		County Council site managers and headteachers then entered into contracts with private companies on a direct basis in order to ensure the continuation of the service. The result in many cases was contracts with unfavourable conditions, poor service and escalating costs and this led to a demand for some corporate provision in the areas most affected. This patchwork of arrangements was further complicated by differences in charging practices between district authorities. Some free services are still currently available to schools in areas served by the New Forest District Council and by Basingstoke and Deane Borough Council.
	2.4		County Supplies, working with the Education Department, initially set up contracts in three areas to test the market and establish a degree of control. The contracts were extended to other areas of the County and brought to a coterminous date of 1 April 2005 so that new contracts for the whole county could be tendered.
	2.5		Since awarding the existing contracts, significant developments have taken place that will have an ongoing impact on the management of waste collection and disposal. Legislation is placing stringent controls on disposal methods and increases in Land Fill Tax are expected to take the charge from £15 to more than £30 per tonne by 2010. Landfill sites are becoming scarce and only one site in Ringwood is expected to be available within Hampshire by 2007. The overall trend in costs is upwards and this background together with performance targets and greater awareness of the benefits of recycling provides the environment for change.
2.6		The original intention to provide a cost effective waste collection service is now linked to a desire to include a service for recyclable material that will make a significant contribution to the corporate sustainability agenda. The current contracts are for a single collection of waste, although recyclable materials are sorted out from residual waste by the contractor in most areas. There has been a concern that this system has resulted in a low yield of recycled material due to contamination and that it does not demonstrate an overt commitment to recycling and reducing the volume of residual waste. The County Council has a commitment to delivering sustainable development and the new contracts provide an opportunity to demonstrate this. The challenge has been to attract bids that incorporate proposals which guarantee to increase the volume of recycled material at costs that will not act as a deterrent to the participation of sites.
2.7		Success can be measured by the strength of the competition attracted and by a substantial increase in the level of participation in the contracts, which should in turn lead to a value-for-money service and a significant increase in recycled material. The contractors appointed will expect the Council to deliver a substantial increase in the number of sites using the contracts in order to make the proposed dual collection service economically viable. Schools will retain their right to make alternative arrangements, but work with the Education and Environment Departments, and the responses to a pre-tender questionnaire circulated by County Supplies, shows that there is likely to be strong support from schools as long as a financially viable option is available. With the corporate estate, the opportunity to make the participation of sites compulsory is recommended.
		Aims of the Contracts
2.8		The new contracts aim to achieve the following: · The provision of a county-wide, cost effective waste collection service · An increase in the number of sites using of the contracts · An increase the volume of material recycled by introducing pre-collection segregation · Improve management information · Raised awareness of the benefits of recycling by engaging contractors in education activity, especially in schools · Recycling of material within the Hampshire boundary where possible
2.9		The Tendering Process Tender invitations were sent to five private sector companies and to the in-house services of three district councils - New Forest, Eastleigh and Fareham (?). Tenderers were invited to submit separate prices for the collection of good quality paper, mixed recyclables and residual waste in any or all of the eleven districts of Hampshire.
2.10		Six organisations submitted bids for the following districts:

DISTRICT	TENDERER
	Cleanaway	Grundon	Onyx	SITA	Eastleigh BC	New Forest DC
Basingstoke	_	_	_	_	-	-
Eastleigh	_	-	_	_	_	-
East Hampshire	_	-	_	_	-	-
Fareham	_	-	_	_	-	-
Gosport	_	-	_	_	-	-
Hart	_	_	*	_	-	-
Havant	_	-	_	_	-	-
New Forest	_	-	*	_	-	_
Rushmoor	_	_	_	_	-	-
Test Valley	_	-	*	_	-	-
Winchester	_	-	*	_	-	-

Notes:

1. * Onyx offered a mixed recyclables collection service only in these areas (no residual waste collection service)

2. Cleanaway, Grundon and Eastleigh BC were the only tenderers to offer a collection service for `good quality paper'

3. _ = bids made to provide both mixed recyclables & residual waste collection services.

2.11		Tender Assessment The six tenderers submitted a range of costs for collection services using a variety of options ranging from from sacks to skips. Included in the tender submissions are standard collection charges per bin, discounts for preferred areas and proposals for rental charges and annual fees.
2.12		Because of the range of pricing proposals, it has been difficult to assess the financial elements of the bids on a precise like-for-like basis. This has been aggravated by uncertainty over the number of sites that will use the contract. However, an attempt has been made to arrive at an annual cost for each tenderer in each of the districts using assumptions about levels of participation, the volume of waste and implementation of the prices.
2.13		The evaluation has also included a range of non-financial issues in order to form a properly rounded opinion of the bids. Consideration was given to confidence in the tenderers' ability to deliver their proposals as the services sought by the Council are not being operated by any of the companies involved anywhere else in the UK, to the quality of the recycling offer, to management information and health and safety.
2.14		Post-tender meetings were held in order to provide each organisation with an opportunity to expand on their proposals and to discuss implementation issues. The tender assessment team were keen to ensure that the recommendation to award contracts was based on the right balance between price (50%) and operational issues (50%). A brief summary of each of the bids and post tender interviews is given in Appendix 2 for the information of the Panel.
2.15		Following the interviews, six officers scored the offers in line with the criteria described above:
			Quality Score	Price Score	Total Score
	New Forest District Council *		44.5	50	94.5
	Grundon Waste Management		42.7	49	91.7
	Onyx UK		38.3	50	88.3
	SITA UK		40.8	45	86.2
	Eastleigh Borough Council		45.2	41	86.1
	Cleanaway		30.0	44	74.4

2.16	* pricing for recyclables needs further clarification The offer from Cleanaway Limited was the lowest financial offer in one area (Winchester), but there was generally a lack of confidence in their proposals.
2.17	The offer from Eastleigh Borough Council scored highly in terms of their commitment and ability to deliver, but this was the most expensive offer by around £10,000 pa.
2.18	The offer from New Forest District Council scored the highest overall rating and this organisation currently provides the service for most of the sites in their area.
2.19	The offer from Grundon Waste Management Limited scored well in both qualitative measures and price. Their offer was the lowest for Hart and second lowest in Rushmoor where the lowest cost was just £1,000 less.
2.20	SITA UK Limited offered the lowest prices for the Test Valley and were second lowest in Winchester only behind Cleanaway.
2.21	Onyx UK Limited provided the lowest priced offer in all the remaining areas. However, their scores reflect a number of concerns about the recycling services and the company's ability to implement their proposals. However, as the County's Project Integra partner it is reasonable to expect that these difficulties could be resolved.
2.22	The County Council is committed to improving the volume of recycling carried out by its premises and schools, but there do not appear to be any other schemes for similar organisations elsewhere in the country and at this stage the results are uncertain. Managing operational risks will be important; awarding contracts to several contractors will provide a county-wide service and should reduce concerns about service delivery. Two options are favoured and these have been discussed at recent meetings of the Corporate Procurement Network and Corporate Sustainable Development Steering Group. Both options have been greeted with positive responses and the final selection will be made after consultation with representative schools over the next few weeks.
2.23	Options for Service Delivery Option One : Award contracts to four organisations with each contractor being responsible for the collection and handling of both recyclable materials and residual waste in their areas of operation. The recommended allocation of areas would be:

	Area	Collection Contractor	Indicative Value p.a.
	Hart	Grundon	£36,000
	Rushmoor		£48,000
	Basingstoke & Deane	Onyx UK	£82,000
	East Hampshire		£55,000
	Havant		£56,000
	Gosport		£32,000
	Fareham		£48,000
	Eastleigh		£55,000
	Winchester	SITA	£65,000
	Test Valley		£73,000
	New Forest *	New Forest DC	£78,000
	Estimated Annual Value :		£628,000

* pricing for recyclables needs further clarification

2.24		Option Two: Award contracts to the same four organisations, but in a different pattern. The same arrangements will be made for the provision of services in five areas and in the remaining districts there would be a `horizontal' split between SITA and Onyx. SITA would have responsibility for residual waste and Onyx would provide the service in respect of recyclable materials (see table overleaf).
2.25		This option would result in slightly lower costs as SITA offer a lower charge for the collection of residual waste than Onyx. Onyx would provide a service for recyclable material over a wider area (8 districts) and there would be more consistency in the pricing across the county. Onyx has expressed an intention to collaborate with the services arranged by the other local authorities in Hampshire and it is worth noting in this context that the company operates domestic collections in Basingstoke and Deane and Portsmouth. The benefits of Option 2 are somewhat offset by the fact that customers in six areas will be faced with two different companies having responsibility for waste collection on their sites. There would also be no place for SITA's recycling partner, RecycledWaste.Com.
			Area Collection Contractor Indicative Value p.a. Hart Grundon £36,000 Rushmoor £48,000 Basingstoke & Deane Onyx UK £82,000 East Hampshire £55,000 New Forest * New Forest DC £78,000 Havant SITA for residual waste and Onyx for recyclables £55,000 Gosport £31,000 Fareham £47,000 Eastleigh £54,000 Winchester £65,000 Test Valley £73,000 Estimated Annual Value : £624,000 * pricing for recyclables needs further clarification Key Issues
	2.24		As these contracts are intended to replace a wide range of existing arrangements, it is difficult to draw any firm any firm or universal conclusions about the likely impact on budgets. As mentioned previously, there are some considerable cost drivers in the industry and it is difficult to isolate the effect of these factors - land fill tax will increase by 20% next April, enhanced requirements in respect of the collection and treatment of waste are being implemented, diesel prices are relatively high and there is a shortage of landfill sites. Taking these into account, the results are considered to be very encouraging and in line with expectations.
	2.25		An analysis of prices suggests that the unit cost for the collection of residual waste will increase in most areas, but the increases range between 2% up to 19%. Taking East Hampshire as an example, the current charge from Onyx UK to empty a standard 1,100 litre bin is £5.40 and under the new prices this would rise to £5.79; an increase of 7%. Depending on the option taken, new charges in other areas will range from £5.50 to £6.25.
	2.26 The overall position is clouded by uncertainty over the impact of the pricing structure tendered by Onyx for recyclable material. This is based on rentals and a cost per site visit rather than the more usual cost per bin emptied. This will tend to favour larger sites, but it will disadvantage smaller locations. Discussions will continue with Onyx on this point and it may be possible to mitigate the effects of this through flexibility over the frequency of collection or by rebalancing the charges to individual sites.
	2.27		The widest participation possible will be needed for these contracts to function effectively. Arrangements have been made to promote the contracts to schools at the same time that the Education Service Level Agreements are circulated. The curriculum work carried out by County and District officers with schools will support the arrangement and County Supplies will also be active in this area. However, it is recognised that in some circumstances it will be necessary to facilitate the participation of some schools. Particular cases may arise where the pricing structures may discourage smaller schools from actively engaging in recycling. In these circumstances, it must be remembered that the sums involved will be relatively small, but the Environment Department has earmarked some funds within existing budgets to provide short-term assistance to help sites make the transition where these issues are seen as a significant barrier.
	2.28 The principle of making the contracts mandatory (except in exceptional circumstances) for corporate departments has been discussed with departmental representatives and a broad consensus has been agreed. Members are invited to endorse this proposal.
	Conclusion
	2.29 These practical issues need to be explored with key stakeholders in order to reach a final conclusion, but the Panel is asked to consider the work undertaken to date and recommend to the Executive Member for Policy and Resources that the Director of Property, Business and Regulatory Services be authorised to conclude contractual arrangements with Onyx UK Limited, Grundon Waste Management Limited, SITA UK Limited and New Forest District Council for the provision of waste collection services to County Council departments and schools
3		Contract for the Supply of Electricity to Monthly Invoiced Small Sites
3.1		The existing two year contact for the supply of electricity to these sites is due to expire on 31st October 2004. The current position is set out below:

	Premises	Supplier	Annual Value	Comments
	92 HCC Sites	Scottish & Southern	£570,000	Sites include schools, SSD, libraries and country parks
	38 Non-HCC Sites	Scottish & Southern	£250,000	Predominantly Hampshire Constabulary and Fire & Rescue
3.2	Twelve companies were invited to submit fixed price bids for one or two year periods, with the option to extend the contract period up to a maximum of four years. Bids were invited against the following options: · supply of brown electricity (electricity with no environmental benefits) · supply of electricity from highly efficient generators with lower CO² emissions that will achieve Climate Change Levy exemption (CCLX) · supply of electricity generated from a renewable source (green electricity)
3.3	Five suppliers submitted a total of 13 different offers. The six best tenders were submitted by two companies - E.ON UK plc (the owner of Powergen) and Scottish & Southern - and these offers are summarised below:

Tenderer	Type of Offer	Annual Value £s HCC only	% Change from Current	Annual Value £s Non- HCC	% Change from Current	Annual Value £s All Sites	% Change from Current
E.ON UK	1 yr CCL X	685,000	+ 20.0	308,000	+ 22.1	993,000	+ 20.7
E.ON UK	1 yr Brown	687,000	+ 20.4	310,000	+ 22.6	997,000	+ 21.1
E.ON UK	2 yr CCL X	688,000	+ 20.5	310,000	+ 22.6	998,000	+ 21.2
E.ON UK	2 yr Brown	690,000	+ 21.0	311,000	+ 23.3	1,001,000	+ 21.7
S&S	1 yr Brown, CCLX or Green	703,000	+ 23.1	319,000	+ 26.2	1,022,000	+ 24.1
S&S	2 yr Brown, CCLX or Green	705,000	+ 23.5	320,000	+ 26.8	1,025,000	+ 24.5

3.4		There is very little difference in value between any of the bids from E.ON and no financial incentive to award a contact for the supply of brown electricity. Most commentators expect that prices will continue to remain high and changing supplier will always involve a cost in resources to set up new accounts and deal with the inevitable queries resulting from the reconciliation of closing and opening meter reads. Taking these factors into account, there appeared to be no material benefit from a one year contract.
3.5		Therefore, the Director of Property, Business & Regulatory accepted the recommendation to award a fixed price contract to E.ON UK Plc for the supply of Climate Change Levy Exempt electricity for a period of two years commencing from 1st November 2004. On a like-for-like basis, this equates to an annual increase in cost to the County Council of around £120,000 and an increase of £60,000 to external customers.
4.		Supply of Electricity to Large Sites
4.1		Contracts for the supply of electricity to large sites are currently held by Scottish & Southern and London Electricity. These contracts began on 1st November 2003. Prices were fixed for the first year and are subject to negotiation in line with market changes thereafter. Negotiations have recently taken place with both suppliers for the second year of the contract and the results are shown below:
	Premises		Current Annual Value £s	London Electricity £s	Scottish & Southern £s	% Increase
	Corporate Sites (14)		432,000	134,000	395,000	22.5
	Schools (47)		874,000	735,000	346,000	23.7
	Externals (35)		1,177,000	584,000	896,000	25.7
	Total (96)		2,483,000	1,453,000	1,637,000	24.4

4.2	The total increase in cost for County Council sites will be in the region of 23% over current prices and the impact on external customers will be slightly higher. These results reflect trends in the market and are consistent with data obtained from energy specialists, John Hall Associates. Average savings of 7.7% over previous prices were achieved when the current contract began and prices previously fell by around 20% in 2000 and by some 3% in 1998. The energy to be supplied by London Electricity over the next twelve months will be fully "green" in contrast to current supplies. This will mean that only the Council's small (quarterly billed) sites will be contracted to take "brown" electricity.
5.	Contracts for the supply of Heating Oil and Motor Spirit
5.1	Contracts for the supply of heating oil and motor spirit are due to expire on 31st October 2004. The current position is:

Supplier	Product	Approx. Annual Volume	Approx Annual Value
Esso	Heating Oils	2.0m litres	£0.42m
	Derv	3.7m litres	£2.41m
Texaco	Heating Oils	3.6m litres	£0.76m
Shell	Heating Oils	2.3m litres	£0.48m
	TOTAL	11.6m litres	£4.07m

5.2	Tender invitations were sent to five companies inviting bids for the supply of heating oils (Gas Oil and Kerosene) and motor fuels (Ultra Low Sulphur Diesel and Bio-diesel). Around 70% of the total volume is supplied to County Council establishments with 30% being purchased by external customers.
5.3	Oil products are priced on a lagged basis; the daily price of each product is used to calculate an average price over the previous two weeks. The supplier's fixed operating margin and any duty is added to this average price, which then becomes the price charged to the Council for the following two weeks. Therefore, the competitive element of the tender exercise only relates to the suppliers' operating margins because all other elements of the price charged are equal (being determined by reference to an agreed independent product index, government duty and the dollar/pound exchange rate).
5.4	The tenders received are summarised below (all prices are pence per litre):

P Product	ESSO			Shell			Texaco			Minster			Wessex
	Margin	SLS	Total	Margin	SLS	Total	Margin	SLS	Total	Margin	SLS	Total	Margin	SLS	Total
Gas Oil	1.45	0.41	1.86	1.39	0.41	1.80	1.90	0.55	2.45	2.40	0.31	2.71	1.10	0.28	*1.38
Kerosene	2.08	0.65	2.73	2.10	0.70	2.80	2.04	0.83	2.87	2.40	0.51	2.91	2.26	0.39	*2.65
Derv	1.55	0.27	*1.82	2.15	0.24	2.39	2.29	0.33	2.62	2.40	0.17	2.57	2.55	0.17	2.72

Notes:

1. Margin: Average Weighted Margin for supply to all tendered areas.

2. SLS: Average Small Load Surcharge applied to most deliveries other than full loads.

3. * = Best offer for each product.

4. Wessex's margins for Gas Oil and Kerosene are fixed for the first 2 years; all other margins are for one year only.

5.5	The tendered prices will yield an annual reduction in the service charges incurred by the County Council of around £25,000. New four year contracts have been awarded to the lowest tenderers and will commence on 1st November 2004 as follows: · Gas Oil and Kerosene - Wessex Petroleum · Diesel - Esso
6	Other Contract Matters
	Tender for the Provision of a Security Service - Winchester Headquarters
6.1	For the last eight years, this service has been provided by Shield Security Services Limited and the company has performed well within a closely supervised regime. The company: · undertakes internal and external patrols · monitors a CCTV control room · manages a range of alarm systems · controls access for staff, contractors and suppliers
6.2	Tenders have recently been invited from eight companies against a revised specification. Shield Security provided the second lowest tender at an annual cost of around £88,000. The lowest bid offered a reduction of less than £2,000 per annum.
6.3	The transfer of the service to another contractor will inevitably involve some implementation costs and uncertainty and the financial reward from making such a change will be small. Therefore, it is recommended that a contract be awarded to the existing provider, Shield Security Services Limited for a period of five years with effect from 1 December 2004.
	New Contract - Provision of First Aid Training
6.4	A contract is being developed with the Hampshire Learning Centre for the provision of First Aid Training. The contract is expected to commence on 1 December 2004 and the estimated annual value is £30,000. The initial period will be three years with an option to extend by a further two years. This contract was not included in the forthcoming Contracts report that was presented to the Panel at its meeting in March 2004.

Recommendation(s)
That the Panel recommend to the Executive Member for Policy & Resources that:
1	The Director of Property, Business and Regulatory Services by authorised to conclude contract arrangements in line with the options set out in this report for the provision of waste collection and recycling services for an initial period of four years commencing in April 2004.
2	The contracts for waste collection should be mandatory on corporate departments unless there are exceptional operational or financial circumstances to prevent this.
3	The contract for the provision of security services at the Headquarters complex be awarded to Shield Security Services Limited at an approximate annual cost of £88,000.

Section 100 D - Local Government Act 1972 - background papers

The following documents disclose facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of this report.

NB the list excludes:

1 Published works

2 Documents which disclose exempt or confidential information as defined in the Act

........................

........................

 ***

EMP&R1104B

APPENDIX 1 - TO FOLLOW

Appendix 2

Waste Collection Contracts - Summary of Tenders and Interviews

New Forest District Council · Collection costs for residual waste are relatively high, but the collection of recyclables is virtually at nil cost. Lowest overall cost for this district on the basis of tendered prices. The outstanding issues around the very low cost of dealing with recyclables need to be addressed and it is probable that charges will have to be introduced) · NFDC currently provide the service for many HCC sites and, therefore, offer a no change option. Very good track record and are regarded as a good partner with a minimum risk of operational problems · All recyclable material would be processed in Hampshire · Will use various types/sizes of vehicles to suit the physical constraints of each site · Able to provide volume of both residual and recycled material collected from each site

Eastleigh Borough Council · Well established with a good track record. · Very good knowledge of the issues involved in recycling. · All recyclable material processed in Hampshire. · Able to provide the management information required. · Very strong on educating children and adults in schools and community groups on waste minimisation and recycling. · Will use a range of vehicles to suit constraints at each site. · Prices not the most competitive. · Overall bid and interview were well regarded, but with some concern at costs.

Cleanaway Limited · Tendered for all services in all areas · Costs for collection of recyclables are lower than for residual waste and this should encourage recycling. · Prices reasonably competitive, but not the lowest. · Service relies on pre-segregation of recyclables into specific separate waste streams ie cans, plastic, paper etc. Must be collected and stored separately, to be collected by a number of appointed specialist sub-contractors for recycling. This is not the dry mixed recyclable collection service specified and will require all sites to operate a system utilising several collection points for each type of waste product. · Cleanaway will collect residual waste and good quality paper. · The post-tender meeting was very sales driven and answers to questions tended to lack focus. · Overall some concerns at the approach with increased potential for problems arising out of the need to deal with several collecting agents.

SITA UK Limited · Current contractor with a good track record. · SITA's tender includes 4 options as follows: 1. Prices for any individual areas - highest offer 2. Prices for the 2 existing contract areas - 2nd best offer 3. Prices for 5 preferred areas - lowest offer 4. Prices for all areas - 3rd lowest offer · Propose a partnership with RecycledWaste.com, which is a specialist recycling group. · RecycledWaste.com will collect pre-segregated waste through a separate collection service. Waste will ideally be segregated into individual waste streams through a range of colour coded bins which could create problems. However, they expect some recyclable material to be mixed and claim to be able to cope with this. · RecycledWaste.com were extremely enthusiastic about the strategic objective to `reduce and recycle' and proposed to make resources available to raise awareness and encourage sites to recycle. They offered a very flexible system of collection frequency. · All sites would be given access to the RecycledWaste.com website for information on recyclable material and feedback on volumes collected, ideas etc. · SITA offered post collection segregation of recyclables from waste where units do not make this commitment.

Grundon Waste Management Limited · Current contractor with a good track record; operational base in the Thames valley. · Will initially collect bagged recyclables with residual waste. · When sufficient up-take is reached, a dedicated vehicle will be used for the recyclables. · Recyclables will be taken to Berkshire (Beenham) for processing. · Residual waste to landfill in Oxfordshire until 2008 when their own waste-to-energy plant opens. Thereafter, nothing to landfill. · Offered to undertake post-collection segregation of waste for sites where there is no commitment to the separation of recyclables. · Prices are broadly comparable with current costs, allowing for landfill tax and inflationary increases.

Onyx UK Limited · Part of Onyx Group, the County Council's Project Integra partner. · Current contractor with a good track record. · Offered no bid for the collection of residual waste in four districts (no infrastructure available) · Offered a collection service for recyclables across all districts · Submitted the lowest overall offer in seven areas, but their pricing structure is unusual (charges for mixed recyclables are based on a weekly rental per bin with a standard charge per collection irrespective of the number of bins or the volume of waste · The recyclables would either be collected by a dedicated vehicle or by utilising the services of the appropriate District Council (a longer term vision). · Recyclables would be taken to the Alton/Portsmouth facilities. · The recycling pricing was skewed towards larger waste producers, disadvantaging the sites with only one or two bins. · Onyx does not offer post-collection segregation of unsorted or residual waste. · Generally regarded as a cautious bid with some potential for development over the course of the contract period.

DRAFT APPENDIX 1 (v.July 2004)

CUMULATIVE FINANCIAL POSITION SINCE DEREGULATION ELECTRICITY/GAS SUPPLIES

Contract	Period	Approximate Annual Contract Value (£)		Reductions/(Increases) over Previous Contract Year (£)		Cumulative Position Electricity/Gas (£)		Comments
		HCC	Non-HCC	HCC	Non-HCC	HCC	Non-HCC
Electricity Large Sites (Over 100kWh)	1.11.98 to 30.10.00	1,300,000	1,200,000	50,000 (x 2 years)	40,000 (x 2 years)	100,000	80,000	Early start deals/tenders prior to this date produced no significant savings
	1.11.00 to 31.10.02			250,000 (x 2 years)	230,000 (x 2 years)	600,000	540,000
	1.11.02 to 31.10.03			63,000 (x 1 year)	127,000 (x 1 year)	663,000	667,000	Current contract which includes the option to extend. Negotiations are underway for a new price and conversion to green.
Electricity Small Sites Quarterly Billed	1.04.99 to 31.03.03	1,200,000	300,000	200,000 (x 4 years)	50,000 (x 4 years)	1,463,000	867,000	Early start deal ie negotiated contract with British Gas, prior to market deregulation, for supply to quarterly invoiced sites.
	1.04.03 to 31.03.06			236,000 (x 3 years)	35,000 (x 3 years)	2,171,000	972,000
Electricity Small Sites Monthly Billed	1.04.99 to 30.09.02	550,000	300,000	125,000 (total saving)	50,000 (total saving)	2,296,000	1,022,000	Early start deal with Southern Electric for supply to monthly invoiced sites. Initially for 18 months, extended by 2 years.
	1.10.02 to 30.09.04			100,000 (x 2 years)	20,000 (x 2 years)	2,496,000	1,062,000
Gas (CBC Contract)	1.11.97 to 31.10.99	1,750,000	750,000	-	-	-	-	Prior to 1999 sub 2,500 therm sites were not contracted. Over 2,500 therm sites were contracted using a different banding structure to the current arrangement. During this period it is difficult to calculate the savings against tariff.
	1.11.99 to 31.10.01			165,000 (x 2 years)	85,000 (x 2 years)	2,826,000	1,232,000	The price of gas increased rapidly after the award of this contract. The CBC contract was for a fixed price and therefore, HCC customers were protected for almost 2 years against what amounted to a 40-50% increase. However, the effects of this increase were felt from 1.11.01.
	1.11.01 to 31.10.03	2,600,000	1,100,000	(800,000) (x 2 years)	(350,000) (x 2 years)	1,226,000	532,000
	1.11.03 to 31.10.04			(330,000) (x 1 year)	(145,000) (x 1 year)	896,000	387,000	Further increases of around 13.5% were applied from 1.11.03. Negotiations to extend this contract are underway but the signs are that further increases will be incurred.