Sheffield votes to rip up 35-year Veolia contract

Council leaders in Sheffield have voted to rip up the city’s waste management contract with Veolia 19 years early and reprocure its services in an attempt to secure a ‘new and improved’ arrangement.

Resource reported last week that Sheffield City Council was considering the move after the council found that it had not been able to achieve the level of savings required to ensure the contract could operate within its reducing budget, with the service budgeted to costs £27 million in 2017/18.

The contract with Veolia was signed in 2001 and runs until 2036, with the firm providing waste collection and disposal as well as the council’s household waste recycling centres its incineration facility.

The council’s cabinet voted on Wednesday (18 January) in favour of the proposals to end the contract once a reprocurement process has been completed next April (2018), with Veolia continuing to manage the city’s waste until then. It has not been disclosed how much the early termination will cost the council, but it is believed to be several million pounds.

A report submitted to the cabinet explained that setting up waste services with seven-year contracts, with extensions of up to three years and a requirement for the bidders to set out how they would introduce greater efficiencies would provide a more flexible option.

The council is also seeking to receive a higher proportion of the income from the waste and electricity that is supplied by the incinerator operated by Veolia. Further changes would be insourcing communications and management systems and setting up disposal contracts according to the amount of waste material in each steam.

Contract ‘no longer compatible with tough financial landscape’

Councillor Bryan Lodge, Cabinet Member for the Environment at Sheffield City Council, said: “We needed to find a best-value solution that ensures a quality waste service for Sheffield taxpayers, and this led us to the decision that was made yesterday.

“It is no secret that we are operating in very tough financial times and we have to do things differently. Our contract with Veolia, which was signed 16 years ago, is no longer meeting our needs and is no longer compatible with the tough financial landscape in which the government is forcing us to operate.”

Veolia currently has 280 employees working in Sheffield, and Lodge said that any that would be affected by the change in contract will be consulted.

Veolia disappointed to end ‘successful partnership’

Commenting on the council’s decision, a Veolia spokesperson said: “We are obviously disappointed by Sheffield City Council’s decision to seek to re-tender for its waste services. We have had a successful partnership with the council – to date this relationship has lasted for sixteen years.

“During this time we have delivered state-of-the-art treatment infrastructure, operated the flagship district energy network and significantly increased recycling.

“From the start of our contract in 2001 we have been a major investor in Sheffield, outperforming our contractual objectives and achieving close to landmark ‘zero waste to landfill’, whilst generating direct financial benefits to the city and providing value for money to the council. Over £3 million has been donated to community projects in the Sheffield area via the Veolia Environmental Trust.

“We will work with the council to understand their timescales and ensure adherence to the full contractual implications of this decision. We’ll continue to keep our staff fully informed of developments as the situation becomes clearer.”

The council report explaining the decision can be viewed on the Sheffield City Council website.