Waste industry experts discuss how to get the best value for a procurement process.
This story is contributed by SarahJane Widdowson, a procurement and waste operations business manager at Ricardo with more than 15 years’ experience in the environmental sector, and Tiffany Correggia, a senior consultant at Ricardo who works in the waste operations and circular economy sector.
It’s often said that the relationship between a service provider and a buyer (council and contractor) is like a marriage. You go through a courtship process where you’re both putting forward a common vision and testing whether you can get on together. You find out that you like each other, and by contracting together you enter into a legal and financial partnership. Hopefully you’re then together for a number of years and, during this time, you’ll continue to identify the best way of working together to maintain and evolve your relationship. Hopefully.
So how do you make sure that your relationship gets off to the best start?
Last year, Ricardo created a free-to -download procurement toolkit which included feedback, tips, checklists and case studies from council and contractors. The toolkit splits the procurement process into five broad stages: preparation, planning, procurement, practicalities and performance. Its aim was to provide a useful roadmap for anyone going through the procurement process so that they could achieve the appropriate outcome, whether for a small collections contract or major infrastructure procurement. Going through a procurement process takes time and money for both council and contractor and it’s important to get it right the first time. Recently, there have been a number of failed procurement processes or examples where a lack of interest hasn’t driven best value for council and it’s important to learn from these to identify how they can be avoided in the future.
Start early. Gather performance data, evaluate your current service/infrastructure, research what’s available in the market that might suit your council and begin discussions on your priorities for the future. Consult internally and externally and remember to speak and listen to potential service providers.
Think about what you’re currently delivering and whether there are other people in your team who can pick up tasks/projects from you. At certain periods, such as the push for final document preparation or the evaluation period, you may be working five days per week just on procurement activities.
When drafting your timetable, start with your contract end-date, or the date when you need infrastructure up and running, and work backwards, taking into consideration the length of your chosen procurement route, timings for approvals, holiday periods and elections. For a service contract, you should be considering 18-24 months from preparation to contract award. For development of infrastructure, you’ll need to factor in time for planning, design and the facility being built.
A detailed response takes time and a contractor will often need board-level sign-off (similar to committee sign-off) prior to submission. An ideal time for a service contract response would be six weeks. Remember, if you’re coming to the market at the same time as another council in the same region, think about staggering your timings slightly so that you both receive the best possible response.
Use a business-case framework. The scale and complexity of your procurement will govern how detailed your business case needs to be, but following a standard business case structure – strategic, economic, commercial, financial and management sections – will provide a good framework. Thinking in these terms will also push you to have early conversations with internal colleagues about what will be affordable in the future.
Design your future service. You need to understand what you’re going to market for and how you want your service to run in the future. For collection services, this might include options for FOGO or even moving to an extended frequency residual waste collection. Talk to the market. Market engagement can be very useful in developing and designing a procurement strategy and tender documentation. It helps provide direction on what may or may not be acceptable to the market, what elements of the contract bidders consider to be high-risk and how they would like to see those risks mitigated and apportioned.
Factor in contingency within the process. Do not underestimate the time and resources required to draft the procurement documentation, particularly the rounds of review and amendments. Ensure contingency time for this activity is incorporated into the overall timetable.
Consider what examples are available from other councils. When starting the drafting process, it can be beneficial to review examples from other procurements as a basis (if available and appropriate). Remember to get feedback on what worked and what didn’t, and take care if cutting text from a previous document and pasting it into a new one – services, regulations and policy don’t stand still.
Think carefully about capital assets. Recent examples have shown short-term collection contracts (three years) with the requirement of new vehicles. Ideally, contract length should be aligned with new vehicle alignment.
Consider how you can limit risk. Some recent (short-term) tenders have requested fixed price over the life of the contract instead of CPI – meaning risk is costed in by the contractor, which in turn will increase the overall price. Using a schedule or rates rather than a lump sum approach can also help to reduce risk.
Consider publishing the evaluation criteria. If you’re price sensitive, then let the market know that this is your priority. If you’d like to see innovative treatment technologies, then highlight this.
Once you’ve evaluated your tenders, take the time to provide both the winners and losers with detailed feedback. Bidding for a contract is a very expensive and resource intensive process, and if you can provide feedback on what was done well and what didn’t suit your needs, it will be beneficial. You may also be working together at a later point in the future, so it’s always important to maintain professional relationships.
Once the contract has been awarded, place orders promptly to ensure sufficient time is allocated for the contractor to mobilise the contract, based on the scale and complexity of the services. Orders for new vehicles/equipment may take many months to fulfil, so they need to be placed as soon as the contract has been awarded.
A well-structured contract management plan should be prepared, and its content and protocols should be proportionate to the value, risk and complexity of
For a contract relationship to work effectively, there should be mutual trust and understanding, an open and constructive environment, shared contribution in managing the contract delivery, and swift resolution of issues to prevent escalation. All the important factors that make a good marriage!