Partnering Agreement for Environmental and Street Scene Services

The Council is not awarding a contract under the Procurement Act 2023. Rather, this notice is being used only to provide transparency in relation to a non-material extension to a PCR 2015 governed contract alongside a VEAT notice and a Transparency Notice. The Council is facing a number of challenges centred around new waste legislation (in particular Simpler Re-cycling and EPR) and the need for a new depot site used for the provision of service. The above, coupled with long run-in times for ordering refuse trucks/equipment, means that a variation to extend the term of the existing Contract is the most viable option to prevent disruption to the services and to maintain continuity of a key public service. The Council is part of the Hampshire County Council wide Project Integration but the parties to that integration are yet to finalise their needs. The existing Contract with Urbaser Ltd (now FCC Waste Management Ltd (FCC)) commenced on 1 April 2011 and was due to expire in March 2026. The Contract has been provisionally extended by informal agreement between the parties and the parties now intend to formalise the extension by two years effective from April 2026 to April 2028, with an estimated value of £8.75M over the period. This extension was not originally provided for in the Contract. The following modifications to the Contract will be made as part of the extension to capture the financial agreement reached between the Council and FCC: FCC's garden waste income (minus expenditure) has been included for reporting purposes into the main contract sum before margin/profit calculated to reflect income received. Collection of garden waste income from residents remains an FCC risk; FCC's payment to the Council to reflect "guaranteed garden waste income" has been removed as an expenditure prior to any profit being shared by the parties. Concept of profit share between the parties remains but figure changed as below. Exceptional profit share amended with the Council taking a greater percentage of any overspend but receiving an equivalent higher percentage of any savings to reflect extension. The Council's variable profit annual payment to FCC has been removed which has an estimated value of £25,000 per annum; Adding weed spraying into the Specification as a service to be provided rather than one which the Council could request if required. This has an estimated value of £60,000 per annum within the main contract sum instead of being pad as part of Ad Hoc Works to reflect reality this is always required. Reducing liability for both the Council and FCC in respect of Interior Maintenance and Repair of Public Toilet Buildings which represents a reduced spend of £45,000 per annum; Incorporating the guarantor as a party to the deed of variation to recognise that these changes are already captured by the existing guarantee; As a consequential change to the deed of variation, the existing lease between the Council and the Contractor for part of the Willmott Lane expired on 31 March 2026. The Council anticipates putting in place a new lease for a term of two years (to align with the extended term of the Contract) in substantially the same form as the original lease but with an updated plant to reflect the practical boundary/use of the site. In the Council's reasonable financial opinion, these changes are not considered to be material but rather reflect the practical operation of the Contract and, in places, reduce certain costs to the Council. The total actual spend under the original Contract over the 15 year term was £41M. The increase as against the original estimated value arose due to unexpected increases in waste volumes over the term, growth in households served, market inflation, and changes to operational requirements, which were not foreseen when the initial award was made. The estimated cost of the proposed two year extension taken together with the other modifications described above is £8.75M. The proposed two-year extension is intended to provide sufficient time to allow the Council to finalise its requirements for a long-term solution and to plan and undertake a competitive tendering exercise for the successor, long-term arrangement in accordance with the Procurement Act 2023. The Council considers that the proposed modifications are permitted in accordance with Regulation 72(1)(e) of the Public Contracts Regulations 2015 (PCR) for the reasons set out below. With reference to Regulation 72(8)(a), the proposed modifications will not render the Contract materially different in character as there will be no material change to the services to be provided for the extension period (either in terms of the nature of the services or the quantity). The modifications are an extension of term only and minor clarifications to the service/payment made to reflect actual operation as set out in this notice. With reference to Regulation 72(8)(b), the Council does not consider that the modifications introduce conditions which would have (i) allowed for the admission of other candidates, (ii) allowed for the acceptance of a tender other than that originally accepted, or (iii) attracted additional participants in the procedure. The key effect of the modifications are to extend the term of the Contract by 2 years and in the context of a 15 year contract the Council does not consider there would have been any change to the outcome of the original procurement by this change. With reference to Regulation 72(8)(c), the modifications will not materially change any of the core commercial terms of the Contract, and there will be no change to the economic balance of the contract in favour of FCC. The Council does not consider that the modification will extend the scope of the Contract considerably within the meaning of Regulation 72(8)(d). No material change is proposed to the nature or quantity of the works and services and no material new services or works will be included in the scope. Regulation 72(8)(e) of the PCR is not engaged as there is no change to the contractor.