Growth

Turning municipal waste into raw materials with the help of smart public procurement

Turning municipal waste into raw materials with the help of smart public procurement

Each European generates 475kg of municipal waste per year, ranging from 759kg per capita in Denmark to 272kg in Poland and Romania. In the past years, the total amount of this waste that goes to landfills has fallen, but it is still high at 131kg per person. This means that a significant amount of potential secondary raw materials such as metals, wood, glass, paper and plastics end up in landfills. More efficient procurement of waste management services can help to maximise recycling, which accounts for only 136kg of municipal waste today. The collection and treatment of waste generated by households, shops, restaurants, etc. (so-called municipal solid waste) is also an important economic sector providing employment for 850 000 people in Europe. About 42 000 enterprises are active in waste management, out of which over 60% are SMEs. The rest are mainly semi-public entities (including Public Private Partnerships), as well as a small number of large multinational companies.

Public authorities manage municipal solid waste through the award of contracts 

The collection and treatment of municipal solid waste (MSW) is managed by local authorities (mainly municipalities), either in-house or through procurement, which is handled differently across EU countries. Out of the yearly 3000 contracts awarded through TED (€4.7 billion p.a. for tenders published at EU level) by municipalities, their associations or regions, about 80% concern services (collection, treatment), 15% works (infrastructure such as incinerators) and 5% supplies (vehicles, containers). The average contract length is about three years and the average contract value is almost €2 million. 88% of contracts are awarded under fair and transparent tenders open to all interested companies. However, there is very little cross-border procurement and only three EU countries (United Kingdom, Italy and France) represent around 70% of all published tenders on waste collection and treatment.

Waste-specific challenges in public procurement

Municipalities face some waste-specific challenges which make it difficult for them to obtain the best value for public money:

  • if the supplier owns the required infrastructure, it can be difficult to change companies once a contract runs out making the municipality bound to continue the contract with the supplier.
  • for in-house contracts, at least 80% of the company turnover must come from the owning municipality. Anecdotal evidence seems to indicate that the admittedly rather complex rules are not always correctly implemented.
  • Discriminatory award criteria excludes bidders located at further distances which can reduce competition.
  • Some EU countries use the lowest price only criteria for awards on waste collection/treatment despite environmental consequences possibly causing additional costs at a later stage. This criteria may also favour predatory pricing to the detriment of competitors. The MEAT criteria on the other hand (Most Economically Advantageous Tender - best quality-price ratio) can take lifecycle costs into account.
  • There is also a high usage of the 'negotiated procedure without prior publication' in several countries, which is normally intended for exceptional cases only.
  • Due to a lack of professionalisation of its waste procurers contracting authorities often cannot properly assess the in-house/outsource options and the use of more sophisticated award criteria (such as MEAT).

Economic challenges

Some countries/regions have moved to outsource waste management tasks, while in others the reverse trend can be observed with the 'remunicipalisation' of MSW. Market concentration in the waste sector is growing with this trend towards vertical and horizontal integration of collection and treatment facilities.

With illegal shipment, treatment and disposal with links to instances of corruption, there is still a significant risk of crime in the waste management sector.

Best practice identified to overcome problems in waste procurement

A good example of supporting professionalisation in waste procurement is the Scottish "Sustainable Procurement – Waste Management" e-training to facilitate sustainable procurement of waste management services.

The Good practice template ITT and Service Specification for Resource Efficient Waste Management operations by Zero Waste Scotland helps to reducing administrative burden for buyers.

RECO Baltic 21 Tech is a flagship project in the EU Baltic Strategy to improve waste management in the Baltic Sea Region finished in 2013. The main results were a Baltic Waste Investment Concept and a Joint Strategy including 18 pilot projects. The Guidelines for Public Procurement in Municipal Waste Management include a proposal to implement MEAT evaluation models for waste procurement.

Background

Since 18 April 2016, new opportunities for more effective procurement have been opened up by new EU public procurement legislation, such as the option to purchase innovative solutions, to centralise purchasing, and to do joint cross-border and joint EU-wide procurement.

New EU public procurement rules: Less bureaucracy, higher efficiency

Simplifying the rules for contracting authorities to ensure better quality and value for money

Innovation partnerships keep public services up to date

Date: 
14/10/2016