Over the last fifteen years, the competition in the market place for waste management and environmental services contracts has reduced. Some fifteen or so years ago we would have expected around five companies tendering for waste management and environmental services contracts. Now we might expect a maximum of three, but seek to ensure a minimum of two to demonstrate competition.
It is the experience of our staff that this is true for most types of waste management and environmental contracts.
The main players for household waste collection services contracts are Biffa, FCC, Serco, SUEZ, and Veolia, although there are a good number for waste collection services contractors who focus on more local and commercial work e.g. Countrystyle, Gaskells, Business Waste. A few years ago, we would have included other companies e.g. Amey, Enterprise, Kier, May Gurney and Viridor in the list of companies who would have considered tendering for waste collection contracts. Amey bought Enterprise and also had its fingers burnt on a number of waste services contracts and consequently are no longer bidding for waste management contracts. Kier and May Gurney sought to enter the waste services market place to expand their core construction businesses but made losses and withdrew. Viridor sold its waste collection business to Biffa in 2021. In addition, Urbaser has sought over in recent years to enter the UK waste management services market place but despite some successes, anecdotally through very competitive pricing, they are not now bidding municipal waste services contracts in the UK as they once were.
The recycling of co-mingled waste collected in England used to be included in waste collection and treatment services contracts by the likes of Biffa, FCC, Serco, SUEZ, and Veolia who operate material recovery facilities (MRFs). However, with the volatility in material prices these contractors have sought to minimise their contractual risks and local authorities have sought direct agreements with regional MRFs (e.g. Casepak, Hills Waste Solutions Ltd, Grundon Waste Management Ltd), or to develop their own MRF (e.g. Sherbourne Recycling Ltd, Coventry Council plus seven other local authorities). Competition for MRFs has increased over the last fifteen years with increasing demand and the development of the MRF market place.
The number of types of facilities and players and therefore the competition for waste treatment has declined over the last fifteen years. Whilst some gasification and pyrolysis facilities (e.g. Glasgow RREC (Viridor), AmeyCespa Milton Keynes and the Isle of Wight) have been constructed, they are not as tolerant to heterogeneous municipal solid waste (MSW) as Energy from Waste (EfW incinerators). Some f the waste management companies have ceased tendering for gasification, and a number of the providers have had financial difficulties, e.g. Energos, New Earth Solutions.
Some fifteen years ago we were in the PFI era and mechanical biological treatment (MBT) contracts were being let to try to deliver waste management services higher up the waste hierarchy e.g. Barnsley, Doncaster and Rotherham, East London Waste Authority and Dumfries and Galloway (Renewi), Essex County Council (Urbaser), Donarbon - Cambridgeshire County Council (AmeyCespa). The preferred option for MSW treatment in England is now EfW but the number of plant suppliers and therefore the competition has diminished in recent years with mergers and acquisitions and selective tendering e.g. HZI (Hitachi Zosen Inova) has recently taken over Steinmüeller Babcock; the CNIM Group has sought financial restructuring. Consequently, there currently appears less competition for EfW facilities than a few years ago. There is still a requirement for final disposal to landfill, and the number of landfills is declining.
One area of waste services where competition has not declined is HWRC services management. Waste collection and treatment contractors remain interested in HWRC services management, there are dedicated HWRC contractors (e.g. HW Martin Waste Ltd; W&S Recycling), whilst there are options for local authority and charity managed services for HWRCs. Likewise, competition for street cleansing services has not changed significantly in recent years and these services can be provided by large contractors, dedicated contractors, and in-house service providers.
Overall, there has been a reduction in competition for waste management service contracts in recent years, and we would expect the trend to continue with mergers and acquisitions. Consequently, it is more important to undertake soft market testing to decide on a procurement strategy and preparing tender documentation. This allows local authorities to consider elements that make the procurement and contracts more attractive to the private sector. Local authorities should also be considering increasing competition by making the contract attractive to suitable smaller companies, and not inadvertently ruling these out through overly high pre-qualification thresholds.
In preparing procurement and contract strategy, local authorities should also consider insourcing options including Local Authority Trading Companies (LATCo).
For advice on waste management services procurement, see www.frithrm.com or contact cherie@frithrm.com