Sunday, 11 June 2017

Contract change 'potentially unfair to competitors'

DOUG COLLIE with more revelations from council's top secret files...

The decision by councillors in the Scottish Borders to sanction radical changes in a multi-million pound waste management contract only months after the deal was signed weakened the local authority's position and the move could have been challenged by a rival bidder, it has been claimed.

As we reported recently, a collection of highly confidential reports covering the disastrous £180 million 24-year contract between Scottish Borders Council and New Earth Solutions (NES) have just been released after a lengthy journey through the Freedom of Information system.

Not Just Sheep & Rugby will bring to public attention aspects of the failed venture involving attempts by council and contractor over a four year period to deliver a £21 million waste treatment facility to handle 40,000 tonnes of household refuse a year at Easter Langlee, Galashiels.

The project ended in complete chaos in February 2015 when both sides walked away and the contract was shredded in the face of insurmountable technological and financial issues. But not before £2.4 million of public money disappeared into thin air with millions more belonging to shareholders in NES and its offshore "funder" suffering a similar fate.

SBC's elected members were somehow persuaded in October 2012 to sign up for a variety of Advanced Thermal Treatment (ATT) technology which had not even completed research and development trials, and remains commercially untried to this day.

A 34-page report presented to councillors in a private meeting, and which has never been seen publicly till now, argues the so-called Deed of Variation to the contract to include ATT alongside the conventional Mechanical Biological Treatment plant which formed the original deal with NES still represents 'best value' for the council.

New Earth told SBC the MBT on its own could not attract bank funding, and the ATT conversion of waste to electricity would be a much more attractive proposition for funders.

"The new integrated facility will actually deliver added benefits and reduced risk to the Council", according to the document. "The delay to the delivery [from October 2012 to March 2015] actually benefits the Council as there is no increase to operational costs and the delivery coincides closer to the point at which it becomes cheaper to treat waste than land filling it (2017/18).

"Once funding is in place and the construction contracts have been signed the main contract does provide the Council with better protection from future changes in the financial viability of the project for New Earth Solutions".

We showed the report to an independent expert in procurement who literally "rubbished" those statements.

We were told: "It seems clear the Deed of Variation severely weakened the position of the council in respect of providing a situation whereby if NES did not deliver they would not be held financially accountable for SBC's losses, a safeguard which would have been built in to the original agreement. NES could have just delivered the MBT and would have been forced to deliver according to the contract".

Our expert explained that bringing the MBT and the energy facility together into a single phase had "completely changed the dynamics of the deal". It constituted a material change to the bid which could have been challenged by Shanks Group, the company which lost out to NES in the bidding process, added the consultant.

The procurement specialist went on: "The revised contract provided funders including New Earth Recycling & Renewables [Infrastructure] or NERR to redraft terms according to risk. The energy aspect of the project always carried the higher risk, and this was a fundamental.reason why they could not secure funding at a reasonable rate. An experienced commercial negotiator would have recognised this".


No comments:

Post a Comment