City of Kwinana Minutes – SMRC RRRC WCF Odour Issue – 11 November 2009
16. REPORTS – PUBLIC HEALTH:
16.1 Recycling Acceptance and Processing Services
SUMMARY:
A Tender, (Cockburn RFT 42/2009) Recycling Acceptance and Processing Services, was advertised on Saturday 10 October 2009 in “The West Australian” newspaper and it was also displayed on the City of Cockburn’s website.
The Tenders closed at 2:00pm (AWDT) on Tuesday 27 October 2009 and tender submissions were received from:
- Transpacific Cleanaway P/L
- Perth Engineering and Maintenance
- Perthwaste
Tenders were evaluated by a panel comprising of officers from the Participant Councils on 28 October 2009.
All compliant tenders are considered to have the capacity to meet the Town’s requirements as detailed in the Specifications as well as comply with the General and Special Conditions of Contract as stated in the tender document.
Cleanaway and Perthwaste provided the best assessment against the non cost selection criteria. Referees were assessed and again Cleanaway and Perthwaste have proven extensive experience and reputation in processing recyclable product.
Perth Engineering however, provided the best overall assessment score and also offered the best tonnage rate, commodity price benefits and convenience. Consequently the evaluation panel has recommended that participating Councils award the contract to Perth Engineering.
OFFICER RECOMMENDATION:
That the Town of Kwinana participate in the regional contract (Cockburn RFT42/2009) ‘Recycling Acceptance and Processing Services’ and on the concurrence of the Cities of Cockburn, Fremantle and Melville and the Town of East Fremantle, accept the tender submitted by Perth Engineering for the provision of Recyclable Processing Services, in accordance with the Schedule of Rates provided in its submission for an initial two year period concluding 30 November 2011.
Background
The Town of Kwinana is a member of the SMRC. As such, the Town was required to dispose of all domestic recyclable material at the SMRC’s Material Recovery Facility (MRF) at Canning Vale. On 1 June 2009 the Materials Recovery Facility at the SMRC was destroyed by fire and could no longer receive the Town’s recyclable material. In the intervening period an Interim Regional Recycling Agreement was established with Perth Engineering at its Hamilton Hill facility. The regional Councils which are party to this agreement include the Cities of Cockburn, Fremantle, Melville and the Towns of East Fremantle and Kwinana (The Participants).
Due to the tender provisions of the Local Government Act, the Interim Agreement could only have a limited life, thus a contract document was prepared to formalise the service. The contract was written as a regional contract and all of the Participants have expressed their intention to remain part of the regional contract. The scope seeks the services of suitable contractors to receive and process recyclable material from the participants for an initial two year period. This should provide the SMRC with sufficient time to resolve a future way forward.
A Tender (Cockburn RFT 42/2009) Recycling Acceptance and Processing Services was advertised on Saturday 10 October 2009 in “The West Australian” newspaper and it was also displayed on the City of Cockburn’s website.
The Tender closed at 2:00pm (AWDT) on Tuesday 27 October 2009 and tender submissions were received from:
- Transpacific Cleanaway P/L
- Perth Engineering and Maintenance
- Perthwaste
Tenders were evaluated by a panel comprising of officers from the Participant Councils on 28 October 2009 (Tender Evaluation Sheet and Tendered Prices provided under separate Confidential Cover).
DISCUSSION:
Scope
The Cities of Cockburn, Fremantle, Melville and the Towns of East Fremantle and Kwinana (The Participants), provide a fortnightly 240 litre MGB Recycling collection service for residential and commercial properties throughout their respective districts. Collectively the Participants will generate approximately 29,000 tonnes of recyclables annually and are seeking the services of suitable contractors to receive and process this material. Recyclables will be delivered to the designated recyclables sorting centre as specified by the Contract.
The contractor will be required to receive and process all recyclable material delivered by the Participants and more specifically:
- receive recyclable material delivered by, or on behalf of, the Participants;
- process the recyclables and separate them into individual recyclable commodities, suitable for sale to the market;
- market and sell the sorted recyclable commodities;
- dispose of residual waste at a suitably licensed disposal facility;
- provide comprehensive reports detailing recyclable materials received, residual waste and recyclates sold.
Compliant Tenderers
Alternative Submissions
The contract permitted the submission of alternative tenders. Both Transpacific Cleanaway and Perthwaste submitted alternative tenders which provided differential prices to participating Councils as separate entities. The contract document however, was written as a regional tender and does not facilitate individual participating Councils awarding a contract in its own right, other than to the contractor deemed to represent the most advantageous tender to the collective Councils (i.e. it is all or nothing).
All participating Councils agreed to take a regional approach to the service provision and this intent was stipulated in the interim agreement signed by all parties. If a participating Council wished to consider any of the alternatives submitted, all tenders would need to be rejected and participating Councils would need to call tenders for their service individually.
The alternative submissions were not further scrutinised by the evaluation panel for the reasons provided above. Fortunately however, the recommended tenderer represented the best value for all participating Councils.
Contract Term
The Contract was advertised for an initial period of two years commencing on 30 November 2009 (or as close as possible to that date). During initial discussions on the need to tender the service, officers from the participating councils believed that fixing a two year term represented a suitable timeframe to enable the SMRC to complete its due diligence and rebuild the facility (if that was its decision) and to enable the participating councils to secure an economical recycling rate in the interim period.
There will be options to extend the Contract period by an additional six months and for up to six months after that to a maximum period of three years if an alternative facility has not been established.
Impact on the SMRC
The SMRC insurance policy provides for Consequential Loss cover for a maximum indemnity period of 24 months. The Consequential Loss claim is required to cover the costs of interest and principal repayments on the loans associated with the MRF of approximately $1.5 million per annum and fixed overheads previously allocated to the MRF business totalling approximately $1 million per annum.
If cash generation from the MRF business, by whatever method, has not commenced by 1 June 2011 (the cessation of the indemnity period) then the SMRC will need to fund these annual costs from other sources at a rate in excess of $200,000 per month. This cost will fall on the Participant members and as the Town of Kwinana is not a financial member of the Resource Recovery and Recycling Centre (RRRC) Project this monthly burden will not be imposed on Kwinana.
Evaluation Criteria
Qualitative (non-cost) and Quantitative (cost) criteria were established to assess each submission. Cost and non-cost criteria were equally weighted (i.e. 50% each).
Tenderers were asked to address the following non-cost criteria:
- Outline details of previous and/or current experience in providing the same or similar services to the local government or private sector,
- Provide details of tonnages processed, the timeframe of operation and recovery rates achieved;
- Demonstrate capacity to sell commodities into secondary markets through existing commodity contracts.
- Provide details of your organisation including:
- Background information including time in business, annual turnover, number of current contracts, number of past contracts
- Demonstrate competency and proven track record of achieving the same or similar outcomes as are required by this contract.
- Detail of plant and machinery (and the adequacy of same) that will be used to service the contract
- Organisation structure
- Employee Qualifications and past experience
- details of issues that arose through the course of providing the service and how these were managed
5. Provide detail of strategies, techniques, processes and procedures to be used in delivering the specified services;
6. Provide details of referees including work provided for those referees.
Evaluation Panel
The evaluation panel was convened on the 28 October 2009 by Michael Littleton, Director Engineering & Works at the City of Cockburn and the Superintendent of this contract.
The tender submissions were evaluated by:
Scoring Table – Combined Totals
The outcome of the evaluation is summarised in the table below.
Evaluation Criteria Assessment
Non-cost Criteria
Demonstrated Experience
Each tenderer demonstrated capacity to meet the Participating Councils requirements as detailed in the Specification. All three submissioners were considered to have a high level of relevant experience in processing and selling recyclable product.
Key Personnel Skills and Experience
All tenderers demonstrated that they had sufficient key personnel with skills and experience to complete the works.
Tenderer’s Resources
The evaluation panel believed that all tenderers had sufficient resources to provide the service.
Cost Criteria
Each tenderer provided a rate per tonne to accept and process recyclable material from all five Participating Councils. The gate fee will be subjected to a ‘Rise and Fall’ at various intervals throughout the contract term as stipulated in the contract document. The genesis of the rise and fall clause arose from a desire to link the $/tonne to commodity prices so that participating councils could benefit if commodity prices recovered as projected. Any benefits, however, may be offset if there is a collapse in the commodity prices. The potential risk is mitigated (in part) by the number of reviews and the short contract timeframe.
The proposed rate is also dependant on the movement in landfill fees. The increase in landfill levy and the potential for further increases to landfill fees would create a degree of uncertainty for the contractor and that would be reflected in the price to us, however, a facility to review price based on the movement in landfill fees was included which should have enabled contractors to price with a greater degree of certainty, thus reducing the rate to participating Councils.
Contractors were asked to proportion their contract rate across three cost factors (fixed costs, variable costs and commodity prices) and were also asked to outline current commodity prices received and landfill fees paid. During evaluation of the cost structure provided by each tenderer, officers were able to model the likely gate rate in a declining and recovering commodity market. This gave the panel greater confidence in the selection of the preferred tenderer and the subsequent recommendation.
LEGAL/POLICY IMPLICATIONS:
Section 3.57 of the Local Government Act 1995 and Part 4 of the Local Government (Functions and General) Regulations 1996 refers to the requirement for works valued above $100.000 to be awarded under the tender process.
FINANCIAL/BUDGET IMPLICATIONS:
The cost of processing recyclable product is accommodated in the Town’s Annual Budget. The recommended tendered rate represents a 10% saving on the current cost paid for receival and processing of recyclable products. The estimated annual cost of the tender across all five Participant Local Governments is $2,598,447 GST inclusive ($2,362,225 GST exclusive).
These figures do not include the ‘Rise and Fall’ clause variables that underpin the pricing schedule. Variable costs (i.e. the cost of landfill) and commodity sales will be reviewed twice yearly and proportional increases or decreases will be applied throughout the contract. A CPI component will be applied to the fixed costs on an annual basis.
ENVIRONMENTAL IMPLICATIONS:
Given the emerging carbon economy, it is now more crucial that the successful contractor prove and guarantee an ability to not only process but to ‘on sell’ the recyclable product.
Transportation distances and fuel consumption were also considered in selecting the successful contractor.
STRATEGIC/SOCIAL IMPLICATIONS:
• To deliver our services and to manage resources in a way that is cost effective without compromising quality.
• To manage the Town’s waste stream to achieve sustainable resource management, in an environmentally acceptable manner.
There was no requirement for Community Consultation.
RISK IMPLICATIONS:
It is a requirement for the Town to provide an efficient domestic waste collection service. This Tender provides for this requirement as well as provides for a cost effective option by reducing the waste to landfill and thus reducing the costs associated with disposing at landfill sites.
COUNCIL DECISION
024
MOVED CR LEE SECONDED CR S WOOD
That the Town of Kwinana participate in the regional contract (Cockburn RFT42/2009) ‘Recycling Acceptance and Processing Services’ and on the concurrence of the Cities of Cockburn, Fremantle and Melville and the Town of East Fremantle, accept the tender submitted by Perth Engineering for the provision of Recyclable Processing Services, in accordance with the Schedule of Rates provided in its submission for an initial two year period concluding 30 November 2011.
