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The ACCC is proposing to grant authorisation to Council Solutions and a group of four Adelaide councils to jointly procure kerbside waste collection services.
The four councils - Adelaide, Charles Sturt, Marion and Port Adelaide Enfield - are seeking authorisation to appoint a single provider to supply kerbside waste collection services to residents in their municipalities.
“The ACCC considers that the four councils running a joint tender process is likely to result in transaction cost savings and other efficiencies that could be passed on to residents in lower costs or improved services,” ACCC Commissioner Sarah Court said.
“The ACCC also considers that the councils offering a single contract for a larger block of work is likely to encourage more competition from suppliers than if each council contracted separately.”
Ms Court said that the ACCC was satisfied that the joint tender was unlikely to reduce competition to supply waste collection services in Adelaide in the longer term.
"While the proposed contract will cover around 180,000 rateable properties, unsuccessful tenderers will have sufficient opportunities to provide waste services in other parts of Adelaide and around Australia,” Ms Court said.
The ACCC has issued a draft determination and expects to make a final determination in September.
The ACCC has also granted interim authorisation to allow the councils to commence the tender process with the aim of having a contract in place by May 2019. Interim authorisation does not extend to entering into any waste collection contracts. Contracts cannot be entered into unless the ACCC makes a final decision granting authorisation.
Further information about the application for authorisation, including a copy of the ACCC’s draft determination and public submissions, is available at Council Solutions & Ors (collection).
Background
ACCC authorisation provides immunity from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010. Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment.
Interim authorisation allows parties to engage in conduct while the ACCC is considering the substantive application for authorisation.
Council Solutions is a regional subsidiary established in December 2012 in accordance with the Local Government Act 1999 (SA) that undertakes collaborative procurement, contract negotiation and management on behalf of its constituent Councils. Its constituent councils are Adelaide City Council and the Cities of Charles Sturt, Marion, Onkaparinga, Salisbury and Tea Tree Gully.
It is common practice throughout Australia for local councils to jointly tender for waste services to reduce transaction costs, pool resources and expertise and achieve economies of scale. The ACCC has authorised 30 such arrangements, concluding they were likely to result in a net public benefit. The joint procurement process the councils are proposing is similar to a number that the ACCC has authorised.
In 2016 the ACCC denied authorisation for Council Solutions and five Adelaide councils (the four councils participating in the current process plus Tea Tree Gully) to jointly procure kerbside waste collection services, receival and processing services and waste disposal services via a single request for proposal (RFP) process. Under the RFP each council would have individually decided which supplier to appoint for each service stream, meaning there was the potential for a large number of possible service stream and supplier combinations.
The ACCC was concerned that the size and scope of the 2016 proposed joint procurement, covering multiple waste service streams, and the uncertainty about the possible outcomes arising from the request for proposal process, would reduce or eliminate transaction cost savings and may mean that some businesses were unable to participate.
In this 2018 application, Council Solutions has sought to address the issues associated with the 2016 application in the following ways:
running a separate tender process for each service stream; kerbside waste collection services, processing services and ancillary services. The ACCC expects to release draft decisions about the processing and ancillary service stream applications in August 2018.
issuing a more tightly prescribed request for tender for each service stream, instead of a RFP.
appointing a single kerbside collections supplier for all four councils.
The ACCC considers that these changes have addressed the concerns identified in 2016 as they relate to joint procurement of kerbside waste collection services by simplifying the process and providing greater certainty. This is likely to provide greater opportunities for the realisation of cost savings and encourage competitive bids from potential suppliers. ##
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