2016-12-12 General Committee Agenda

GENERAL COMMITTEE MEETING AGENDA                                              12 DECEMBER 2016


 Financial incentives are available to the contractor if they negotiate improvements in the
   marketing of recovered material. (This is intended to facilitate the movement of surplus
   stockpiles of recycled material at the resource recovery facility).
 Agreement has been negotiated for the contractor to work with Council to develop two new
   retail products, blended soil and Australian Standard compost, for sale to the public. The
   revenue returned from sales will be used to offset the costs of production with surplus
   revenue shared between Council and contractor.

Previous Council Consideration

Nil.

Finance & Risk

The waste management contract has historically been let for a 7 year period together with
optional extensions, often taking the contract period to 10 years. It is the largest contract entered
into by the Council, and as such presents a number of significant risks to Council, which are
summarised below:

Portion A Collections
 Ensuring the implementation of the 3 bin service does not result in anticompetitive behaviour.
 Failure to pay the Security Bond.
 Financial failure of the contractor resulting in serious disruption to an essential waste
   collection service in the community.
 If a non performing contractor is engaged the impact on Council can be significant with
   respect to damage to both reputation and also established relationships with the community.

Portion B Landfill
 An underperforming contractor on the landfill and resource recovery facility can expose
   Council to significant penalties under environmental legislation.
 As holder of the Environmental Authority (Licence) with EPA, Council is exposed to significant
   financial risks for breach of conditions and harm to its environmental credentials.
 Poor operational performance on the landfill (under compaction of waste) also results in
   consumption of valuable landfill air space, reducing the life of the landfill.

Portion C
 The objectives of Council’s Waste Reduction and Waste Minimisation Plan 2016-2024”
   cannot be achieved.
 The range of materials recycled is not able to be sold as markets are not available.

Performance Bond Held to Reduce Risk

The contract provides for Council to hold a substantial performance bond on each of the
separable portions.
 For Separable Portion A - $1,000,000;
 For Separable Portion B - $750,000; and
 For Separable Portion C - $200,000.
This bond is available to Council if the contractor defaults on the provision of services. If all or
any portion of the bond is used during the term the Contractor is required to immediately replace
the amount used to maintain the available bond as detailed above.
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