Uncertainty over legality of £613m waste contract

INDEPENDENT auditors will not say whether the issuing of a £613m waste contract for the Javelin Park incinerator in Gloucestershire was lawful or not.

Community benefit society CR4C raised concerns in 2017 over the waste contract Gloucestershire County Council entered into with Urbaser Balfour Beatty ( UBB) to build and operate the waste site that towers over the M5 near Quedgeley.

They objected to the council’s accounts for 2016/17 and their concerns related to potential breaches of procurement law relating to changes in the value of the contract.

In 2013, the value of the incinerator contract was assessed by the council to be around £450m over 25 years.

However, the value of the resigned contract in 2016 was estimated to have increased to around £613m over the same period.

The objectors requested that spending relating to the council’s contract with UBB relating to the disposal of waste be declared unlawful and that a public interest report be issued on the topic.

However, external auditors Grant Thornton have now completed their work and have not come to a definitive view on the lawfulness of the modifications to the 2016 re-signed contract in terms of procurement law.

Cllr Paul Hodgkinson (Lib Dem, Bourton-on-the-Water and Northleach) asked, during Tuesday’s audit and governance committee meeting, why the report did not confirm one way or the other whether the contract was illegal or not.

External auditor John Gregory said the whole reason for producing the report in the way they had was to be absolutely clear they had not reached a conclusion on whether it was lawful.

“The payments under the contract could only be lawful if there was compliance with the public procurement regulation,” he said.

“We have not reached a conclusion as to whether or not there was compliance with those regulations because the whole thing turns on the question of whether or not the economic balance of the contract changed during the revised project plan process in 2015.

“Because, clearly, at that point in time, they were not subjected to the normal competitive pressures you would get during an open tendering process which clearly existed earlier in the process when UBB were appointed as the contractor.

“We have not reached a conclusion and we’ve set out the reason why we have not reached a conclusion.

“I understand why that might be disquieting to people but you have to bear in mind that the council did a lot of things right in dealing with this contract.

“The overall original tendering process was compliant with expectations, it used standard form of contract recommended by the Treasury.

“We understand why the council did what it did in entering into the revised project plan.

“We don’t know what would have happened if the council had at that stage withdrawn from the tendering process.

“It would have had to pay significant costs for doing so.

“The council was concerned about the impact any withdrawal would have on any future attempts to go to the market given it was already the second time the council had gone to market for the provision of a waste contract.

“It’s also important that everyone bears in mind that the lawfulness of the compliance with procurement regulations is one aspect of everything we’ve looked at.

“In everything else we have not found the council wanting.”

Cllr Hodgkinson said he was still concerned as it was five years on and councillors were still speculating whether it was lawful or not.

Mr Gregory also decided not to issue a report in the public interest because it is his view the council has made satisfactory arrangements for securing value for money.

He said in the report that while there are risks in entering into a long-term private finance initiative contract, the council was aware of these risks and used a standard form of contract to achieve a reasonable share of the risks between itself and the contractor.

And while they understand why the objectors do not consider the contract provides value for money over its lifetime, it’s a matter on which reasonable differences of view are possible.