Decision details

The Assistant Director Environmental Services and Climate Change, in consultation with the Executive Member for Managing our Environment, has decided to not exercise the option to extend the existing Services Contract for a further 5 year period.

The Assistant Director Environmental Services and Climate Change, in consultation with the Executive Member for Managing our Environment, has also decided to develop a new Services Contract that better reflects the responsibilities of the new unitary council and that a new Services Contract will be entered into from 18 September 2025, subject to approval of Gateway 3 by Procurement Assurance Board and in line with the Council’s financial governance process, and that further consideration and approval of the detail of the new Contract is delegated to the Assistant Director Environmental Services and Climate Change in consultation with the Corporate Director, Resources.

On 18 March 2014, the North Yorkshire County Council (“NYCC”) Executive agreed:
• The principle of awarding relevant contracts for future waste services to Yorwaste Limited (“Yorwaste”) without competitive procurement, where the conditions for the Teckal exemption are satisfied.
• To delegate authority to the Corporate Director (BES) to determine which future waste service contracts are to be awarded to Yorwaste.

On 18 September 2015, NYCC and Yorwaste entered into a contract (“the Services
Contract”) for the provision of waste management services utilising the Teckal exemption.
City of York Council and Yorwaste entered into separate services contracts at the same time. The individual services being provided are detailed in a series of schedules to the Services Contract (“Schedule”); each Schedule setting out the specification in relation to each service. The addition or removal of services is practically achieved by varying the agreement to add or remove Schedule(s).

When the Services Contract was written in 2015, NYCC was able to exercise the duties and powers of a Waste Disposal Authority (WDA), whilst the district and borough councils, as Waste Collection Authorities (WCA) had different powers. With the formation of The North Yorkshire Council (“NYC”) on 01 April 2023, the new North Yorkshire Council became a Unitary Authority encompassing the powers and duties of both a WDA and a WCA.

The Services Contract has an initial contract Term of 10 years which ends on 17 September 2025 with an option for a 5 year extension, but there is a requirement that “At least 12 months before 17 September 2025 the Council may require Yorwaste to continue to provide the Services for a further term of five years commencing on 18 September 2025, provided that the Charges shall not be increased as a result of the extension, other than as agreed by the Parties.”

The contract renewal timing provides an opportunity to reflect on the existing contract to ensure it meets the changed status of the new Council and its expanded range of powers and responsibilities.

A number of clauses within the Services Contract are no longer relevant to the new North Yorkshire Council’s Unitary status and so need to be revised. This could be done through a series of complex variations to the existing agreement if we extended it, or we could decide not to extend the existing Contract and enter into a new Services Contract with Yorwaste Ltd that is better suited to the needs of the new NYC. Legal advice is that a new contract is the best way to proceed given the extent of changes that would need to be made.

National waste policy and legislation in 2024 is also much different than was foreseen in 2015 and the current Services Contract allows a limited ability for the Council to change services specified within the Schedules to react to that already changed and impending legislation.

A new contract also allows us to introduce elements of flexibility into the contract and to tidy up areas where the contract and subsequent Schedules are no longer fit for purpose.

There are also other areas of the original drafting that have evolved over time as operational practices have changed, or it was realised that the original drafting did not achieve the original intent. There are also some services that Yorwaste provide that are not referenced in the contract at all. These are mostly in relation to the interface with the Allerton Waste Recovery Park contract with Thalia as that contract did not commence until 2018. A new Services Contract could address all of these inconsistencies and produce a more flexible, suitable and modern agreement.

The City of York Council (“CYC”) has a similar service contract albeit with a slightly different end date of 30 September 2025. CYC have always been a Unitary Authority and their contract was written to suit them, but they are also considering their position in relation to exercising the option to extend their contract and will make their own decisions on their approach. However, both CYC and NYC are in discussion with each other due to the impacts any decision taken by one party may have on the other.

There is a potential conflict of interest in relation to the fact that the Corporate Director of Environment is also a Director of Yorwaste. For this reason, any Council decisions made in relation to Yorwaste were delegated to the Assistant Director of Environmental Services and Climate Change on 6 December 2023.

Options to provide the services through third party contracts were considered and discounted due to the Council’s preference to continue to provide the Services through its own Teckal compliant company. A suitable Teckal compliant Services Contract also removes the cost and time attached to the complex procurement of multiple services, at a time when there is so much change within national waste policy and legislation, some of which is known but other details of some legislation is still unknown. Procuring services through open competition with so many elements of legislation unknown at this time adds a level of risk (and costs) to the Council.

An option to extend the existing agreement for 5 years was also considered, however so much has changed since the original drafting that it is no longer fit for purpose for the new North Yorkshire Council and so multiple complex variations will need to be carried out. From consultation with the Legal Services contract team the advice is that better value can be achieved by the drafting of a new Services Contract, instead of investing time in amending the existing contract to the level that is required.