Domestic Waste Processing and Disposal Contracts

We are partnering with our three neighbouring councils (Camden, Campbelltown & Wingecarribee) to make sure we get the best outcome and the best price on behalf of our communities. Waste costs are increasing considerably each year, due to the significant pressures on the waste processing sector and factors such as the supply chain and Covid impacts, so it’s important that we lock in the best contract possible when the current agreement expires in May 2024.

These contracts can vary in length from 2 years to 20 years, depending on a range of circumstances. If a council is expecting the contractor to build, own and operate a new facility to process its waste, the contractor will need a lengthy contract period and a guarantee of large tonnages to cover the cost of building the facility. If a contract is likely to be for processing at an existing facility or disposing waste into and existing landfill, the contract period can be shorter as construction of the facility has already been funded by the contractor’s past business. Either way, market forces in the waste industry show that the longer the contract and the more tonnes we’re able to offer, the cheaper the contract fees will be. On the downside, signing up to a very long contract can lock us into a waste processing technology that may be superseded by more environmentally sound technologies before the contract expires.

Councils may award separate contracts for processing of the different waste streams (red-lid waste, yellow-lid waste, green-lid waste and kerbside clean-up waste), or they may award a single contract for processing and disposal of all four waste streams. Tenders are evaluated against a range of criteria including price, environmental performance of their proposed processing/disposal methodologies, the tenderer’s experience and stability, and financial, social and environmental risk exposure to Council’s residents.

Project 24

Due to the success of the current contract and the collaboration between the four councils, a decision was made in 2017 to repeat the joint tender process for the next contract. As the contract would commence in 2024, the project was named ‘Project 24’. The four councils have worked on the project over the past 5 years. This project has involved many steps, including:

• Obtaining the Australian Competition and Consumer Commission’s approval to tender jointly
• Engaging with senior officials from the Department of Environment and Planning, EPA and Treasury
• Meeting with the NSW Minister for the Environment
• Due to the very high value of the contract, engagement of an independent probity advisor to observe the entire tender and tender evaluation process
• Two rounds of consultation with the waste industry
• Conducting a community survey on the provision of waste management services in the future
• Drafting the Request for Tender document and inviting tenders
• Conducting a rigorous evaluation of the tenders in accordance with a formal Tender Evaluation Plan

The Request for Tender (RFT) was structured in a way that gave the councils options to award all four waste streams to one tenderer, or each stream to a separate tenderer. The RFT also offered contract terms for 5 or 20 years, depending on the waste stream and the proposed method of processing/disposal. This was an important feature of the RFT, as it would empower the councils to choose the most attractive offer for each stream. The pricing schedule in the RFT was structured in such a way as to enable tenderers to offer discounted prices in the event that they were awarded all four streams.

Council received tenders from four companies well known in the industry:  BINGO Waste Services, Cleanaway Pty Limited, SOILCO Pty Limited and SUEZ Recycling & Recovery Pty Limited (currently in the process of re-branding under its new owner’s name, Veolia Environmental Services (Australia) Pty Limited).

The Local Government Act requires a council to (by formal resolution) either accept or reject a tender in its tendered form. The council is not permitted to negotiate variations to a tender’s terms and conditions during the tender evaluation period. If the council resolves to reject the tender, it may also resolve to negotiate with various parties with a view towards entering a contract.

Evaluation of the tenders concluded that it would not be in the partner councils’ or their residents’ interest to accept any of the tenders in their tendered form, but that there was potential for negotiation with a number of organisations to ultimately agree to a contract with terms and conditions acceptable to all parties. On Tuesday 11 October 2022 the four partner councils held formal Council Meetings to consider the Tender Evaluation Panel’s recommendations. The matter was dealt with in a closed, confidential session of the meeting as permitted by the Local Government Act, as it was determined that holding the meeting in a public forum would disclose information that would confer a commercial advantage on the parties with whom we intend to negotiate, placing Council in a weaker position to negotiate the terms and conditions of the contract.

The four councils resolved to reject all tenders and to enter into negotiations with certain parties with a view to entering into a contract or contracts. We hope to successfully negotiate terms and conditions and return to Council in the near future with a recommendation to award a contract or contracts.

Contract Timeline