Sunday, 29 March 2015

Waste plant decisions "extremely questionable" says council's expert

The procurement expert who negotiated the original £65 million contract on behalf of Scottish Borders Council for the development of a waste treatment facility at Easter Langlee says the local authority made some "extremely questionable" decisions relating to the project, and he would welcome an investigation following the cancellation of the scheme.

Barry Phelps, who was asked to head up the council's procurement team in 2008, and sealed the deal in 2011 has told Not Just Sheep and Rugby he cannot understand why councillors amended the contract with developers New Earth Solutions (NES) in 2012 to include an Advanced Thermal Treatment Plant (ATT) from the outset at a time when the technology for that element of the facility was unproven.

Mr Phelps was recruited by senior SBC officers while they were on a visit to inspect a waste management centre in Essex where he (Mr Phelps) had procured a similar arrangement for the county council.

He agreed to start work in the Borders almost immediately on a daily rate of £550 plus expenses together with a percentage of any savings he achieved for the council. His normal fee was £1,000 per day, but the radically reduced rate took account of the 20% Gain Share he would receive if he was successful in saving the council significant sums of money.

As is well documented, after the original contract with NES was tied up Mr Phelps was told by SBC officers that the council owed him nothing so he raised a Court of Session action in 2013 in a bid to recover millions of pounds of unpaid Gain Share he believed were due to him.

But after SBC terminated their 24-year contract with New Earth in February of this year and decided to write off over £2 million of public money they'd spent on the project Mr Phelps abandoned his claim.

"Setting aside the issues relating to my case, SBC has made some extremely questionable decisions relating to the waste treatment facility at Galashiels", said Mr Phelps. He explained that the initial contract was to provide a Mechanical Biological Treatment (MBT) facility with NES requiring to use their best endeavours to bring on board ATT technology within eight years of the MBT being built.

In 2012 SBC took the decision to amend the contract with NES, he said. This made the development of the ATT mandatory at the start of services commencement (i.e. when the treatment facility was built).

"This technology was not fully developed, hence the original eight year agreement", said Mr Phelps. "I do not understand why they had to make such an amendment. Not only did SBC/NES amend the contract to include the ATT at the start, they also adjusted the terms of the contract that shifted risk away from NES to SBC without any financial adjustment, The council is now in a position whereby if they retender and the cost is higher they will not be able to recover those additional costs."

Almost all of the council debates about the waste treatment facility have been held in private, and details of decisions made amount to no more than a line or two at the end of council minutes. None of the detailed technical reports on which it is assumed decisions were based have been made public.

It would appear the original contract was changed in October 2012, five months after a new political grouping took control of SBC in the wake of the local government elections in May of that year.The relevant minute of a full council meeting on October 25th simply reads: SUMMARY OF PRIVATE BUSINESS. Item 3 Waste Treatment Project.. Members approved a report by the Director of Environment & Infrastructure.

According to Mr Phelps: "In the previous unamended contract, if NES did not meet deadlines for construction (amongst other obligations), the council was protected against any additional cost, including if they terminated the contract and had to retender or bring in an alternative contractor to take over the services.

"I do not understand why anyone would set aside this protection. If you compare the gate fees [the actual cost of waste disposal] within the NES contract and the guaranteed minimum of 80% diversion of waste from landfill, this is substantially less than any other contract in Scotland. Therefore if SBC retender it is likely they will have to pay substantially more for the same services. The Scottish Government released expected prices a few years ago and these indicated gate fees of around £126 per tonne, some 50% more than the NES contract."

He went on to predict that if SBC decide to transport waste out of the region, this will cost more in terms of gate fees and transportation costs. Mr Phelps said this was estimated to be well in excess of £1 million per year when the project team undertook this analysis in 2009/10.


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