Source: Australian Competition and Consumer Commission
The ACCC has granted authorisation to four Adelaide councils to jointly procure certain waste management services.
The four councils, Adelaide, Charles Sturt, Marion and Port Adelaide Enfield, and a council-owned procurement body called Council Solutions, have been authorised to appoint common providers:
- to supply waste processing and disposal services for recyclables, organics and residual waste, and
- to supply collection services for bulk bins, hard waste and street litter.
“The ACCC considers a joint tender process by the four councils is more likely to encourage competition from suppliers than separate tenders,” ACCC Commissioner Sarah Court said.
“The joint tender process is also likely to create efficiencies, such as reduced transaction costs and more efficient service delivery, which should be passed on to local residents through lower costs or improved services.”
“The ACCC considers it is unlikely that the joint tenders will reduce competition in the Adelaide waste service industry in the long run. The Councils expect to attract a number of competitors and the ACCC considers that unsuccessful tenderers will be able to compete for other waste management services in South Australia,” Ms Court said.
Joint tendering by local councils is common and the ACCC has previously authorised many similar proposals across Australia over the years.
The councils’ aim in running a joint tender process is to provide value for money, improve waste management and reduce waste, and to achieve environmental and economic benefits for their communities.
“The ACCC considers that the councils are well informed and well placed to decide whether running a single tender process for a larger volume of work or four smaller, separate tenders, is likely to deliver the best outcomes for their respective communities.”
Further information about the applications for authorisation, including copies of the ACCC’s determinations and public submissions, are available at Council Solutions and others (ancillary) and Council Solutions and others (processing).
In the context of procuring these services, councils may be considered to be each other’s competitors. Therefore, by conducting their procurement jointly rather than individually they risk breaching competition laws unless they have ACCC authorisation, which provides immunity from court action.
Broadly, the ACCC can grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment.
The ACCC granted interim authorisation on 14 September 2018 to jointly procure certain waste management services. Interim authorisation allowed the councils to commence the tender processes. The tender closes on 12 December 2018.
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 to date, concluding they were likely to result in a net public benefit.
Council Solutions and the participating councils lodged three separate applications for authorisation with the ACCC, covering joint procurement of:
- kerbside waste collection services
- receival and processing of recyclables and organics and receival and processing or disposal of residual waste, and
- collection of bulk bins (used in high density residential, hospitality, and retail facilities), hard waste (such as bulky household items) and street litter from bins located on streets, footpaths, parks and other public places.
On 12 October 2018, the ACCC released a determination granting authorisation to the kerbside waste collection procurement arrangements.
The determinations released today relate to receival and processing application and bulk bin, hard waste and street litter collections application.
This proposal differs from the one lodged by Council Solutions in 2016, and which the ACCC denied. Council Solutions has sought to address the concerns of the ACCC in 2016 by simplifying the joint procurement processes and providing greater certainty about how the processes will operate.