1.1 Purpose and scope
The purpose of the Guidance Principles is to highlight key issues with contracts, the procurement process and ongoing contract management in the areas of waste management and recycling. They provide practical advice and tools to use when procuring waste management and recycling services. They are intended as a guide only, and contain information to help users to identify options and issues encountered during the procurement process.
The Guidance Principles cover developing, establishing and administering contracts for the waste management and recycling industry. They have been specifically developed as an overview that will assist in planning, preparing and managing waste and recycling service contracts.
Best practice contracts for the procurement of recycling and waste management services are a key aspect of waste management planning and a driver for waste minimisation. The Guidance Principles look at achieving best practice by providing:
- advice on incorporating waste minimisation objectives into contracts
- information on preparing the most suitable contract for your situation
- assistance in understanding the trade-offs that may have to be allowed for in a contract
- guidance for the development of the principal-contractor relationship
- tools for the effective management of contracts.
The document has been structured to follow the chronological order for developing a waste management or recycling contract.
We expect this guide will be used mainly by councils, although businesses may also find some aspects useful. The intended audience includes local government elected members and council officers, business managers, waste industry organisations, community waste groups and service providers. However, the emphasis is on local government contracts because of the major role of councils in waste management and recycling in New Zealand. The aim is for this guide to help organisations align and improve their practices within the New Zealand framework for waste management, as established by strategic planning documents and legislation.
The production of these Guidance Principles is a significant step towards best practice waste management planning and implementation. In August 2004 the Ministry for the Environment commissioned Montgomery Watson Harza (MWH) New Zealand Ltd to review the existing situation in New Zealand. This review looked at the issues and opportunities in the contracting of council waste management and recycling services. Subsequently, a number of workshops have been held with stakeholders to identify contracting issues and build a set of principles to foster improvement in waste management and recycling services procurement.
These Guidance Principles are intended to summarise the key issues already highlighted, as well as looking to international resources and identifying any other issues critical to achieving best practice. Note that the issues discussed here arose from workshops held by the Ministry for the Environment with invited members of industry, and from national and international research of procurement processes. Wider consultation has not yet been undertaken.
We recognise that a large number of issues arise in the preparation of contract documents for the waste management industry. Each procurement situation is unique, and there is no one solution for rural and urban or national and local scenarios. As a result, it has only been possible to cover key issues identified by stakeholders.
The Ministry for the Environment contracted Morrison Low & Associates to prepare these guidelines. They are based on generally accepted practices and standards at the time of their preparation. No other warranty, expressed or implied, is made as to the professional advice provided. The sources of information used by Morrison Low & Associates are outlined, but no independent verification of this information has been made. These guidelines were prepared between October 2005 and May 2006 and are based on information available at the time of preparation. An internal Ministry review was undertaken in April 2007, and a number of amendments were made in May 2007.
The Ministry for the Environment’s role is to advise the Government on New Zealand’s environmental laws, policies, standards and guidelines. It also monitors how laws and policies are working in practice and takes action where it is identified that improvement is needed. As part of these responsibilities, the Ministry provides guidance on waste management planning to local government, the waste management industry and major waste producers.
1.4 What is best practice?
Achieving best practice in recycling and waste management should be at the core of the procurement process. Sustainability Victoria [Formerly EcoRecycle Victoria. See www.sustainability.vic.gov.au] defines best practice as the current ‘state of the art’ process or service that aims to produce outcomes consistent with the community’s social, economic and environmental expectations. ‘State of the art’ services will not always be able to be provided in the New Zealand context, but contracts should always aim to produce outcomes that meet or exceed the expectations of the community.
Best practice is a product of the effective purchase of waste management services, so what is best practice will vary from council to council. Achieving best practice requires a certain level of understanding of what is being purchased and how likely it is to provide the desired outcomes. Continuous improvement is an inherent part of best practice.
‘Smart buyer’ is a term used to describe the set of skills and experience necessary to successfully purchase services. To be a smart buyer it is necessary to:
- identify and define the desired outcomes
- show transparency and accountability in spending public or company money
- ensure fair treatment of all parties
- give consideration to maintaining a competitive market
- ensure flexibility to allow for changes in waste minimisation.
1.5 National legislation, policy, strategy and direction
Strategic documents, policy and legislation combine to form the framework for waste management. Since the information this document was based on was collated, the Government has increased its focus on waste minimisation and management. The Ministry for the Environment is currently looking at all aspects of the management framework in New Zealand to ensure an integrated approach to waste management and minimisation. This work is likely to significantly alter the current approach, and these changes will need to be reflected in this document once the outcomes are known.
The Government has announced that it intends to secure funding for further solid waste minimisation initiatives. It is proposed that part of this funding will be used to improve national infrastructure, because the Government would like to see more reprocessing of materials occurring onshore. The Government also supports product stewardship schemes, especially for products that cause particular environmental harm or pose disposal problems. Established voluntary schemes have achieved good results, but there are concerns about ‘freeloading’ by business that do not contribute. The Government intends to provide greater support to these existing schemes and to work with industries on schemes that can improve product management.
To keep up to date with the latest waste work, please go to the Ministry’s website (http://www.mfe.govt.nz/issues/waste/).
Currently all of the following are relevant for both government and companies that are contracted to councils to provide recycling and waste management services.
- The New Zealand Waste Strategy - this presents a vision for minimising waste and optimising waste management. It sets out a practical programme of action, as well as specific targets for waste reduction and management.
- Waste policy - the Government is increasing its focus on reducing and managing waste. It sees the need for a legislative backstop to support product stewardship schemes and funding for waste minimisation initiatives to increase the scope and effectiveness of local and national waste minimisation initiatives. The Government will also develop, in partnership with local government, a recycling programme for public spaces.
- Product stewardship policy - product stewardship is a ‘cradle to grave’ tool that helps reduce the environmental impact of manufactured products. Under product stewardship schemes, producers, brand owners, importers, retailers, consumers and other parties accept responsibility for the environmental effects of their products – from the time they are produced until they are disposed of. There are currently a number of industry-led voluntary product stewardship schemes operating including:
- the Packaging Accord 2004, which is a voluntary product stewardship agreement bringing together key players from throughout the packaging life-cycle, including the packaged goods industry, recyclers, local government and central government
- the Used Oil Recovery Programme, which is a voluntary programme where the major oil companies operate nationwide collection networks and supply used oil to Holcim, New Zealand’s Westport cement kilns, where it is burnt at high temperatures
- Tyre Track, a voluntary tyre collection system that links tyre dealers, transporters and registered end points (generally recyclers and landfills).
- The Health Act 1956 - this provides councils with statutory obligations for the collection and disposal of refuse.
- The Local Government Acts 1974 and 2002 (LGA) - these require councils to assess the collection, reduction, reuse, recycling, recovery, treatment and disposal of waste in their district. Councils fulfil this requirement by completing a waste management plan and contracting for waste management services.
- Waste management plan (WMP) - under the LGA 1974, a WMP is any plan for the management of waste in the district. Every WMP must make provision for the collection, reduction, reuse, recycling, recovery, treatment and disposal of waste in the district and for the effective and efficient implementation of the plan.
- Long term council community plan - the LGA 2002 requires councils to have a long term council community plan (LTCCP). The purpose of the LTCCP is to describe the activities and community outcomes of the council, and to provide integrated decision-making and co-ordination of resources and a long term focus for decisions and activities.
- Bylaws - under the LGA 1974 a council may make bylaws for regulating waste management in its district. Bylaws provide the necessary regulatory support to achieve WMP targets and the broader objectives of the New Zealand Waste Strategy.
- Licensing - local authority bylaws may contain provisions for licensing waste collectors and the operators of waste management facilities. This enables councils to monitor and regulate waste collectors and operators.
1.6 Waste minimisation
Councils have an obligation under the waste management framework to promote waste minimisation strategies, which are outlined in their WMPs. The focus is firmly on diverting as much material from landfill as possible, with an emphasis on promoting greater individual and business responsibility for waste at all stages of its life-cycle. There are a number of ways in which waste reduction and recycling can be encouraged, including:
- user-pays refuse collection
- providing accessible, convenient recycling services
- providing smaller refuse receptacles
- bylaws that ban recyclable material, including green waste, being placed in landfill
- education and community-based social marketing programmes that promote recycling.
Increased recycling is important for successful waste minimisation. For recycling to succeed, however, socioeconomic factors such as economic growth, population growth, available infrastructure and the value, size and distance of recycling markets must be considered in a waste minimisation strategy. Another consideration is the quality of material demanded by recycling markets. It should also be noted that banning or restricting material from entering the residual waste stream may cause an increase in the level of illegal dumping unless alternative affordable recycling, recovery or reuse options are available.
In 2002 New Zealand became the first country in the world to adopt a vision of zero waste, Towards Zero Waste. The concept of zero waste is a key component of the vision of the New Zealand Waste Strategy. Since 2002, when the Waste Strategy was released, 70% of councils within New Zealand have adopted zero waste policies.
Criteria for councils adopting zero waste policies, developed by the Zero Waste New Zealand Trust, include:
- a council resolution confirming its commitment to a target of zero waste to landfill
- commitment to full and open community consultation and ownership of a zero waste strategy, involving community, council and business sector partnerships.
More information on the Zero Waste New Zealand Trust can be found at: http://www.zerowaste.co.nz/.
1.7 Relationship between purchaser and provider
Historically, contracts have followed the traditional approach whereby the purchaser (or principal) defines the scope and specifies the services, and the provider (or contractor) supplies those services. These types of contracts worked well for defined packages of work. Refuse collection contracts are an example, where the contractor collected bins from the street and the principal looked after aspects such as ratepayer communication and advertising.
More recently, the roles of principal and contractor have blurred. The contractor now often undertakes additional responsibilities beyond the core provision of the service, and the approach to contracts has moved towards partnering and alliances between the contracting parties.
See: Case Study A: Timaru District Council and Enviro Waste Services Ltd (partnering)
Partnering is about aligning all parties to common project objectives, and providing a relationship-based mechanism for problem solving. An alliance involves a contract agreement that embodies common objectives, shared risk and reward, and a structure based on mutual respect and working together. This involves a single service delivery team with representatives from all parties, sometimes working together in the same office. The most obvious benefit from this approach is the drive for high performance that is generated in an environment of co-operation and respect. Alliances can involve extra expense to establish and maintain, however, so they are more feasible for larger projects where the scope of services may be difficult to define precisely.
Contractors can be multinational companies, large and small local companies, or - as is often the case with recycling - community group-based initiatives. The type of contractor will bring different benefits and risks to the contract, so it is important to manage this from the outset with the most effective contractual arrangement for the particular situation. Factors to consider are:
- business and management expertise
- a reputation for quality service delivery
- value for money
- the ability to deal with the risks
- the ability of an organisation to engage with the community on waste reduction issues
- the level of community involvement and buy-in for waste reduction that is required.
For more information
Appendix 1: Case Study A: Timaru District Council and Enviro Waste Services Ltd
Appendix 1: Case Study B: Ashburton District Council and Wastebusters Trust Canterbury
Colquhoun C, Snow, 1995. Recyclanomics. This paper describes how in the Far North, experience with community group contracts shows that the operational aspects of recycling are competitive with the operational costs of waste disposal: http://www.zerowaste.co.nz/assets/Reports/Recyclanomics.pdf
1.8 Selected glossary
For the purposes of these Guidance Principles the following definitions and acronyms have been adopted.
- expression of interest
- Household organic waste
- this can include kitchen waste and green waste
- long term council community plan
- mobile garbage bin
- Mobilisation period
- the time between award of contract and commencement of services when the contractor is procuring plant and equipment and familiarising themselves with aspects of the service
- memorandum of understanding
- mobile recycling bin
- materials recovery facility
- the reprocessing of waste materials to produce new products
- request for information
- request for proposal
- request for tender
- refuse transfer station
- solid waste material that is unwanted and/or unvalued, and discarded or discharged by its owner
- Waste minimisation
- all activities aimed at preventing, reducing, reusing or recycling waste
- waste management plan or waste minimisation plan.