Hampshire waste deal could be extended to 2036 as financial details stay secret

Hampshire councils look set to extend their long-running waste disposal deal rather than going to the market for a new contract from 2031.

Southampton City Council officers say extending the current arrangement to March 2036 would provide continuity through local government reorganisation.

They argue this approach would reduce the risk of having to procure a replacement shortly after new unitary authorities are expected to take over all council services in April 2028.

However, the detailed financial comparison with a fresh tender has been kept confidential.

The public report says only that the proposed extension is broadly comparable with a procurement alternative once risk and uncertainty are considered.

Veolia’s waste disposal service contract, shared by Portsmouth City Council, Hampshire County Council and Southampton City Council, began in 1997.

The three-authority contract, which covers disposing of all household waste collected across the county, was extended in 2015 to a common end date of December 31, 2030.

Officers say ending the arrangement in March, rather than December 2035, would avoid starting future arrangements during the busy post-Christmas period for waste services.

The councils need to reach a consensus on a course of action under the terms of their tripartite agreement, which is one of the authorities’ major contracts in terms of scale and importance.

Negotiations with Veolia over an extension have progressed behind the scenes with a number of offers and counteroffers.

Meanwhile, the councils commissioned PricewaterhouseCoopers (PwC) to consider the alternative option of going out to market and procuring new arrangements.

A briefing paper to the overview and scrutiny management committee says the proposed five-year-and-three-month extension is longer than the approximately four years and four months of remaining extension capacity in the original procurement.

Officers say the risk of a legal challenge is low, but acknowledged that the extension must be considered alongside previous changes to the deal.

The briefing paper by director for environment Rob Harbour says: “The proposed extension provides greater certainty in the near term compared with a future procurement scenario, where outcomes are subject to market conditions, asset condition and performance, and wider sector volatility.

“This is a key consideration in the tripartite authorities’ view of best value.”

The report added: “The alternative option was rejected on the basis that the proposed extension offer provides continuity and certainty during a period of local government reorganisation, reduces delivery and mobilisation risk compared to a future procurement, and enables the authorities to secure additional non-financial improvements within the existing contractual framework.”

The proposed extension would not change front-line waste collection or disposal arrangements for residents.

A confidential annex contains financial details relating to the contract extension proposal, including the detailed comparison, modelling assumptions and sensitivity analysis. The council says publishing the document could prejudice its position in completing the contract and tender process and in negotiating best value.

The overview and scrutiny committee will debate the briefing paper at a Southampton City Council meeting on Thursday, August 20.

A report on the future options for the waste disposal contract is due to go to cabinet next month.