Shellharbour and Wollongong City Councils

Key points

• Lead council: Sharing the load, Shellharbour City Council (SCC) is leading the current joint procurement effort. Wollongong City Council (WCC) led the previous joint procurement.
• Building procurement team expertise: Collaboration was key to building experience and knowledge as the waste teams for both councils were new.
• Focus on joint tendering stage: Joint procurement focused solely on the tendering stage. Post-tendering activities and service delivery, including communication and education, to be managed independently by each council.
• Australian Competition and Consumer Commission (ACCC) interaction: Engagement with the ACCC was complex and time-consuming. The process was unfamiliar and lacked clarity with little guidance available.

Project overview

The current process of jointly procuring a domestic waste collections contract for WCC and SCC involves:

• garbage collection services (residential and commercial properties) 
• recyclables collection services (residential and commercial properties)
• food organics and garden organics (FOGO) collection services (residential and commercial properties)
• bulky waste collection services 
• public place waste and litter bins services (Shellharbour City Council only) 
• supply, repair and removal of mobile bins 
• waste education and customer service, including call centre for managing service requests.

This joint procurement follows a similar successful process for the previous 10-year contract that was led by WCC. This time, SCC has taken the lead to share the load.

The geographical differences between Wollongong and Shellharbour present logistical challenges for services and pricing. Collection frequencies also differed with Wollongong collecting red bins weekly, while Shellharbour collect theirs fortnightly. The councils also have distinct demographics and infrastructure, leading to separate marketing strategies and waste campaigns, and each council operates its own landfill.

Key drivers that encouraged WCC and SCC to collaborate again include:

• Increased buying power: Combining resources enables greater negotiating leverage with potential service providers.
• Improved community outcomes: Cost savings from joint procurement can be redirected to other community services and projects.
• Administrative cost savings: Shared administrative tasks reduce overall operational costs.
• Access to specialised experts: Collaboration provides access to resources such as legal advice and probity.

Project timeline

Joint Procurement Agreement 

In late 2022, the joint procurement process began with establishing a formal Joint Procurement Agreement, similar to a Memorandum of Understanding (MOU). The agreement was drafted by legal experts and adapted by both councils to suit the needs of the joint procurement. The agreement was signed by the CEOs/General Managers of both councils. The agreement covered specific aspects such as:

• relationships between the parties
• effect of agreement
• the consultants and their respective work
• establishment and role of the steering committee
• establishment and role of the tender assessment panel
• probity measures.

The joint procurement agreement detailed the roles and responsibilities of each party. A learning from developing MOUs is to specify the lead council’s role to help with decision making. This was not clarified in the WCC and SCC agreement and could have helped to improve efficiency by reducing the time spent seeking collective agreement on matters that the lead council could have managed on behalf of both councils.

Steering committee

The steering committee, established in late 2022, included two directors, two waste managers, and two contract managers from each council. The steering committee met monthly and arranged ad-hoc meetings if there were large decisions to be made. Additional members consisted of the tender evaluation committee, and the consultants who provided essential technical advice, handled background information and completed administrative work. An external probity advisor consultant was engaged, and external legal counsel was consulted as needed.

Contract documents: opportunities and challenges

• The new contract was based off the previous contract and required only minor adjustments, including better management of multi-unit dwellings (MUD) and street bins. In this regard, the tender will be designed to be flexible enough to accommodate expected growth and increased density across both cities.
• Significant changes were made to the tender documents to reflect updated legislation. A new initiative to explore alternative fuel vehicles was considered. However, as alternate fuel technologies are still new and expensive, implementing these technologies would require a very long contract term to ensure the capital recovery and demonstrate value for money for the community. Ultimately, SCC and WCC recognised that it would be unaffordable at this stage and decided to exclude it from the tender. However, it is an action that will be further pursued by the councils.
• Originally, the tender documents were planned to be released in February 2024, but this was delayed due to amendments made in December 2023 to the waste tendering requirements under the Local Government (General) Regulations 2021. This delay resulted in a change to the procurement plan with the councils agreeing to activate the extension options in the existing contract by one year.

Australian Competition and Consumer Commission (ACCC)

Seeking ACCC authorisation had its challenges, including negotiations on contract length. It took almost 6 months to finalise. SCC and WCC initially aimed for a 14-year authorisation from the ACCC, to capture innovation such as alternative-fuel vehicles, proposing a 7-year term with a 7-year extension option. The councils had received ACCC authorisation for the previous contract, set to expire on 30 June 2029. However, although the new proposed contract was similar, the ACCC suggested a shorter contract duration of 5-7 years. The councils subsequently suggested a 7+3 year contract (10 years total) which was accepted by the ACCC. This process added to the time needed to finalise arrangements to go out to the market.

On 14 May 2024, the ACCC issued a draft determination proposing to grant authorisation for 11 years and granted an interim authorisation to commence joint procurement conduct without entering into contracts. On 27 May 2024, councils amended the authorisation period to extend until July 2037, maintaining the maximum contract period of 7 years with an optional 3-year extension.

Procurement outcomes

Tenders hope to be out by late 2024, with contracts commencing in 2027.

Challenges, solutions and tips