Proposed contract modification (under Regulation 72(1)(c) of the Public Contracts Regulations 2015) to the Councils Servicing, Treatment and Disposal of separate materials collected from the City's three Household Waste Recycling Centres contract, between the Council of the City of Newcastle upon Tyne ("the Council") and Biffa Waste Services Ltd ("the Contractor").

The Council's current contract for the provision servicing, treatment and disposal of separate materials collected from the City's three Household Waste Recycling Centres is due to expire on 7th July 2023. The Council has a statutory duty to provide this service and therefore needs to make arrangements for the provision of the services beyond this date. The Covid pandemic, war in Ukraine and unprecedented increases in fuel prices have resulted in global volatility in the waste industry and recyclate markets at the present time. These factors could not have been foreseen by the Council when the contract was awarded in 2019. Together with revisions to the timetable to deliver the National Resources and Waste Strategy, the above factors mean that a competitive procurement at this time is unlikely to deliver better value than that already achieved by the current contract. As such, in light of the unforeseeable circumstances above, the Council proposes to extend the Contract by a further twenty three months and twenty four days. Additional information: The Council's total spend over the period from 8th July 2019 to 31st December 2022 has been £3,650,616.26 (excluding VAT). The Council estimates that the spend over the remaining 6 months of the contract from 1st January 2023 to 7th July 2023 will be £522,133.02 (excluding VAT). Combined, these two figures give a projected spend for the full contract term (8th July 2019 to 7th July 2023) of £4,172,749.28 (excluding VAT). The remaining contract projected spend of £522,133.02 (excluding VAT) was calculated as follows: • Over the three and a half years of the contract to date, the only annual Consumer Prices Index (CPI) uplift requested, and authorized, was applied in July 2022 and operates from 1st July 2022 to 30th June 2023. The impact of this uplift on monthly charges is known for the period July 2022 to December 2022. To project the spend for the remaining period of this contract (1st January 2023 to 7th July 2023), the charge for each month in the previous year (January 2022 to June 2022) was adjusted by a factor of 1.05071 and each adjusted monthly charge was summed to provide the projected charge for January 2023 to June 2023 of £522,133.02 (excluding VAT). The factor of 1.05071 was derived by dividing the total charges for the period July 2022 to December 2022 by the total charges for the same period in the previous year (July 2021 to December 2021). The average uplift in monthly charges from July 2022 to December 2022 of 5.071%, compared to the same months in the previous year, is considered to accurately represent the impact of the July 2022 CPI uplift as the throughput tonnages for these six months in both years, 2021 and 2022, were almost identical, at 7974 tonnes and 7970 tonnes respectively. The Council estimates that the contract spend for the extension period being sought (7th July 2023 to 30th June 2025) will be £2,041,771.73 (excluding VAT). Therefore, the overall total contract value, to account for the modification proposed in this notice, is estimated to be £6,214,521.01 (excluding VAT). The projected spend for the extension period (8th July 2023 to 30th June 2025) of £2,041,771.73 (excluding VAT) was calculated as follows: • The known charges for the period July 2022 to December 2022 (£498,752.84 excluding VAT) and the predicted charges for the period January 2023 to June 2023 (£522,133.02 excluding VAT) were used as a baseline to which no annual uplift was applied and the same charges for each of these twelve months were replicated in each corresponding month over the 24-month extension period being sought. This gives a sum for the 12 months July 2023 to June 2024 of £1,020,885.86 (excluding VAT) and for the 12 months July 2024 to June 2025 of £1,020,885.86 (excluding VAT). Combining the two years' predicted charges, gives the total of £2,041,771.73 (excluding VAT). These projections assume: • The annual tonnage of waste and recyclable materials collected at Newcastle HWRCs has stabilised at 34% less than in pre-covid years. This is a result of the introduction of strict residency and household-waste-only checks on incoming vehicles introduced during the covid period. These checks are now permanent features which will continue in the future. The projected impact is that HWRCs will continue to operate at two thirds of their pre-covid capacity over the term of the extension being sought (July 2023 to June 2025). • Although there is the possibility of a potentially recessionary economic environment in 2023 and 2024, these projections assume this will have minimal impact on HWRC tonnages and associated charges over these years.