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EXCLUSIVE: Letter To Auditor General & Audio Of ICC Extraordinary Meeting (21/9/19)

Aug 29, 2019
2739 Views

EXCLUSIVE: What’s On Invers have obtained a copy of the letter sent to the Auditor General requesting an investigation into the Wastenet tender. The letter from Southland disAbility Enterprises Limited lawyer, is very detailed with a good timeline explaining things.

Invercargill City Council and Gore District Council, Southland District Council (see below) have ‘never authorised’ the RFP Tender document to be put out for tender.

It looks like Wastenet has gone ‘rogue’.  and put it out to tender.

We have republished the full letter below.

Quick points:

  • Gore & Invercargill Councils never authorised
  • Southland District Council are hiding behind Official Information Act, responding to a LGOIMA request, SDC declined a request for the minutes of their meeting.

The Letter

Auditor General
Office of the Auditor General PO Box 3928
WELLINGTON 6140

ATTENTION: Jonathon Keate

BY EMAIL: (redated) @oag.govt.nz

lnvercargill City Council/Gore District Council/Southland District Council – WasteNet Southland -Request for Proposals for Recyclables Acceptance Services Contract Number 850

1. We refer to our telephone discussion with Mr Keate on Friday 16 August last.

2. We act for Southland disAbility Enterprises Limited (“SdE” ). We have been instructed by our client to ask you to initiate an inquiry under section 18 of the Public Audit Act 2001 in respect to WasteNet Southland’s Request for Proposal (“RFP’ ) for the provision of the Recyclables Acceptance Services (“Contract 850” ) issued by WasteNet Southland on behalf of the WasteNet Councils on 14 December 2018.

Background

3. lnvercargill City Council, Gore District Council and Southland District Council, together referred to as the WasteNet Councils have constituted a joint service for achieving their Waste Management and Waste Minimisation Objectives on a Southland regional basis known as WasteNet Southland.

4. The WasteNet Councils have agreed that WasteNet Southland should operate as a shared business unit providing shared waste management and minimisation services to each of the WasteNet Councils.

5. WasteNet is managed and governed under the provIsIons of the WasteNet Joint Waste Management Agreement dated 13 October 2011. Under that agreement a joint committee of the WasteNet Councils was constituted, known as the Waste Advisory Group (WAG). The functions, responsibilities and powers of the WAG are set out in clause 4.12 of the agreement. The WAG does not have delegated authority to award contracts for Waste Management Services.

6. WasteNet entered into a Recyclables Acceptance Contract with Southland disAbility Enterprises Incorporated for the provision of Recyclables Acceptance Services for an initial 8 year term commencing 1 July 2011. The Contract (referred to as Contract 650) provided for a right to an extension for a further 8 year term subject to agreement between the parties on the renewed terms. In 2018 the parties commenced negotiations for a renewed term of 8 years from 1 July 2019. During the course of those discussions, SdE requested a variation to the contract for an increased payment for the balance of the term ending 30 June 2019.

7. At a meeting of the Waste Advisory Group on Monday 27 August 2018 a report was received from the WasteNet Southland representative, Mr Cameron McIntosh of the lnvercargill City Council. The report made recommendations that the Waste Advisory Group in turn recommend that the WasteNet Councils approve the variation requested by SdE by way of an advance of $380,000.00 plus GST for the 12 month period from 1 July 2018 to 30 June 2019. The report went on to make the following recommendations:

“2.5 Authorise the Waste Advisory Group to enter into Contract 650 renewal proceedings with Southland disAbility Enterprises and that the contract renewal term is a maximum 8 year term;

2.6 Authorise the Waste Advisory Group to authorise the Waste Management Group to prepare tender documentation for a Recyclables Acceptance Service Delivery Contract (should negotiations with Southland disAbility Enterprises be unsuccessful};

2.7 Request the Waste Advisory Group to report back to the WasteNet Councils at the scheduled November 2018 meetings with the outcomes on resolutions 2.1 to 2.5.”

8. At the Waste Advisory Group Committee Meeting held on Monday 27 August 2018 the Waste Advisory Group resolved that the WasteNet Report would be received and the Waste Advisory Group recommended that the WasteNet Councils adopt the resolutions referred to in paragraph 7 above.

9. At the lnvercargill City Council meeting on 28 August, the Council received a report from Cameron McIntosh, Director of Works and Services and titled “Waste Advisory Group Committee Update” which recommended that the Council accept the Waste Advisory Group’s recommendations which mirrored the resolutions of the Waste Advisory Group and were as follows:

“1.5 Authorise the Waste Advisory Group to enter into Contract 650 renewal proceedings with Southland disAbility Enterprises and that the contract renewal term is a maximum 8 year term;

1.6 Authorise the Waste Advisory Group to authorise the Waste Management Group to prepare tender documentation for a Recyclables Acceptance Service Delivery Contract (should negotiations with Southland disAbility Enterprises be unsuccessful)

1.7 Request the Waste Advisory Group to report back to the WasteNet Councils at the scheduled November 2018 meetings with outcomes on the resolutions 1.1 to 1.5.”

10. At its meeting on 28 August 2018 the lnvercargill City Council resolved that Council accept the Waste Advisory Group recommendations and resolutions in the form referred to in paragraph 9 were passed.

11. On 14 December 2018 the WasteNet Councils through WasteNet Southland issued a Request for Proposal for Recyclables Acceptance Services Contract number 850.

12. The issue of this RFP was not authorised by the lnvercargill City Council, nor was it authorised by the Gore District Council. We have made a Lgoima request for a copy of the minutes of the Southland District Council authorising the issue of the RFP but this request has been refused. It is suspected, but as yet unconfirmed, that the Southland District Council did not authorise the issue of the RFP either.

13. The resolutions passed by the lnvercargill City Council on 28 August (and Gore District Council on the same date) authorised the Waste Advisory Group to “enter into contractrenewal proceedings”

with SdE. The Waste Advisory Group was authorised to authorise Waste Management Group to “prepare tender documentation should the negotiations with SdE be unsuccessfuf’. The Waste Advisory Group was to “report back to the WasteNet Councils at the scheduled November 2018 meetings with the outcome of the contract renewal negotiations”.

14. What was anticipated by these resolutions was that in the event that the contract renewal negotiations were unsuccessful, then the WasteNet Councils would consider the tender documentation that had been prepared, and if approved the tender (RFP) would be authorised for release.

15. This step did not occur. There was no meeting in November to consider the RFP and it was not authorised by the WasteNet Councils before it was issued on 14 December 2018.

16. We have spoken to some councillors about this and they have confirmed that they did not authorise the issue of the RFP and they expected that they would approve the RFP before it was issued.

17. The failure by the lnvercargill City Council and Gore District Council to authorise the release of the RFP is significant. Section 76 of the Local Government Act provides that every decision made by a local authority must be in accordance with such of the provisions of section 77, 78, 80, 81 and 82 as are applicable.

18. Section 76 (4) provides that “for the avoidance of doubt, it is declared that, subject to subsection 2, subsection 1 applies to every decision made by or on behalf of a local authority, including a decision not to take any action”.

19. Under section 77 the local authority must “seek to identify all reasonably practical options” and
“assess the options in terms of the advantages and disadvantages”.

20. Under section 78 of the local authority is required in the course of its decision making process to give consideration to community views.

21. In making a decision about how it will achieve compliance with section 77 and 78, the local authority has to have regard to section 79 (Compliance with procedures in relation to decision).

22. There is no evidence that the lnvercargill City Council complied with its Significance and Engagement Policy.

Why is an inquiry necessary?

23. The RFP process has been completed and WasteNet has recommended to the WasteNet Councils that its preferred tenderer, Smart Environmental Limited be awarded Contract 850 for a term of up to 15 years. On 4 June 2019 the Southland District Council and Gore District Council resolved to accept the WasteNet recommendation. On 5 June the lnvercargill City Council voted not to accept the WasteNet recommendation.

24. Subsequently, Gore District Council gave a Notice of Dispute to the lnvercargill City Council invoking a disputes resolution procedure under the WasteNet Joint Management Agreement.

25. The lnvercargill City Council is proposing to participate in that dispute resolution process, which involves mediation and arbitration. The lnvercargill City Council is proposing to empower the dispute resolution process to award Contract 850 to Smart Environmental.

26. The lnvercargill City Council is not bound by the dispute resolution process because Contract 850 is not covered by the WasteNet Joint Waste Management Agreement and in any event there cannot be a dispute about an RFP that the three Councils did not authorise.

27. A further issue which is equally important is that the WasteNet recommendation to the three Councils recommending that the contract be awarded to Smart Environmental Limited was based on a Proposal Evaluation Report which has been found to be seriously inaccurate.

28. We have written to the Council about all of these issues and we will forward copies of this correspondence to you separately by email. No substantive response has been received in respect to any of this correspondenc.e

29. In the meantime, quite apart from the fact that this is a significant contract (15 year term and contract value in excess of $20M) the award of this tender has been the subject of intense public interest. SdE is not for profit organisation which employs approximately 80 disabled under the Recycling Services Contract. There is very wide spread community support for SdE and its continued involvement in the Recycling Services Contract. When it was announced that the Contract was going to go out to open tender in December 2018 an online petition was set up which attracted 25,716 signatures supporting SdE.

30. The Chamber of Commerce Southland ran an online campaign canvasing members as to their support for local businesses and supporting the vulnerable or disabled in the Southland community. The survey canvased members as to whether or not they were supportive of SdE retaining the contract even if this was at an increased cost. The overwhelming majority of those that responded indicated that they would support an increased cost to retain SdE as the provider.

31. We enclose copies of the relevant meeting minutes that we received from the lnvercargill City Council and Gore District Council in response to our LGOIMA request. Southland District Council declined our request for the minutes of their meeting. Please let us know if there is any further information that you require in order to consider this request.

Yours faithfully
CRUICKSHANK PRYDE

Rex Chapman
Partner

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