NHS BLOOD AND TRANSPLANT 28 NOVEMBER Contract for the Collection and Disposal of Clinical Waste: Award Recommendation.

28 NOVEMBER 2013

Title Contract for the Collection and Disposal of Clinical

Waste: Award Recommendation

Executive Summary Collection and Disposal of Clinical Waste across the NHSBT estate is currently contracted-out on a national basis with the contract due to expire in June 2014. Tenders have been invited by NHSBT for the provision of the service. The bids were analysed and assessed against pre-set award criteria by a cross-directorate panel. As a result, it is recommended that a single national contract to SITA should be awarded with a total value of £1.024m per annum (excluding VAT).

Action requested from Board

The Board is asked to approve the award of the contract to SITA for an initial 3 year fixed term commencing 1 June 2014.

Strategic Priority, Regulatory

Requirement or

Corporate Risk that this item relates to

The contract award will enable the continuation of a key service, ensuring compliance with MHRA, CQC and other regulatory body requirements, all of which are subject to routine audit. Failure to deliver this service could affect delivery of NHSBT s core purpose as well as breaching legal requirements under Environmental Duty of Care legislation.

Organisational forums where the paper (or equivalent paper) has been considered

Executive Team

Consultation and Review

Cross-directorate tender review panel Estates Senior Managers

Executive Team

Equality and Diversity

Impact Assessment Full assessment not required

NHS BLOOD AND TRANSPLANT

Sustainability Impact

Assessment Full assessment not required

Author Neil Powell, Environmental Manager

Responsible Director Rob Bradburn, Finance Director

NED Reviewers Roy Griffins

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NHS BLOOD AND TRANSPLANT

28 NOVEMBER 2013

CONTRACT FOR THE COLLECTION AND DISPOSAL OF CLINICAL WASTE AWARD RECOMMENDATION REPORT

EXECUTIVE SUMMARY

The Collection and Disposal of Clinical Waste across the NHSBT estate is currently contracted-out on a national basis with the contract due to expire in June 2014. Tenders have been invited by NHSBT for the provision of the service across the national estate. The bids were analysed and assessed against pre-set award criteria by a cross-directorate panel. A compliant tender was received for each of the three NHSBT regions and, as a result, it is recommended that a single national contract to SITA should be awarded with a total value of £1.024m per annum (excluding VAT) resulting in like for like savings of £0.276m pa. Contract commencement is scheduled for 1 June 2014 with a fixed three year term followed by a further four, one year optional extension periods.

RECOMMENDATIONS

The Board is asked to approve the award of the contract to SITA for an initial 3 year fixed term commencing 1 June 2014 (with a value of £3.072m over the period).

INTRODUCTION AND BACKGROUND

The contract primarily provides for the removal and disposal of clinical waste from thirty-four NHSBT properties; 13 main blood centres and 21 blood collection team bases. The waste that will be subject to this contract can be broadly split into the following types:

General clinical (including liquid clinical mainly plasma) Hazardous waste, clinical

Sharps

Ad hoc radioactive Chemical

Small quantities of GM waste

Tissue waste (disposed of in accordance with Human Tissue Authority requirements).

Offensive waste

The contract fulfils one of the key regulatory functions in respect to the safe removal of clinical waste from NHSBT sites and is routinely subject to MHRA, CQC and other regulatory audit.

The contract duration of up to seven years allows for the development of a partnering approach which will enhance the understanding and potential for innovation by the service provider, leading to an enhanced and cost effective delivery of contract. This long term partnering approach has allowed NHSBT to make significant cost savings over the current contract through the redirection of waste away from incineration and towards alternative technology disposal (AT). AT involves the use of high pressure heat treatment instead of incineration. Two years ago >90% of waste was incinerated this has now reduced to <10%. Within the new contract NHSBT will be looking to work with SITA to identify further savings for the future, whilst maintaining regulatory and legal compliance and environmental best practice.

The contractor s performance will be monitored against the following KPIs, all of which have been accepted by SITA during the tender process:

KPI Expected Level Minimum Acceptable Level Liquidated Damages Threshold

All waste collected from site, as per schedule.

100% 98% 97% All waste containers

delivered to site, as per order.

100% 98% 97%

FINANCE

The collection and disposal of clinical waste cost £1.643m in the 12 months to the end of September 2013. This masks, however, savings made part way through the year by introducing both AT and the routine use of bags in place of disposable bins. Over a full year, these changes are expected to reduce the underlying annual cost to approximately £1.3m.

Based on the scenario used for tender evaluation purposes, using historic waste volumes, the potential saving per annum with the recommended contractor is therefore circa £0.276m pa. This has been achieved against a background of rising energy, transport, environmental and landfill costs, without either compromising the specification (Appendix 1) or reducing service levels.

Additionally, the tenders received all maintain their price fixed over the first three year term and will not be subject to increases for any reason other than changes in

taxation and legislation relating specifically to the disposal of clinical waste.

TENDER AND EVALUATION PROCESS

The tender was undertaken using the Official Journal of the European Union Restricted Procedure and the procurement process was conducted via the NHSBT ePortal (Bravo). This procedure is fully compliant with public procurement regulations and was judged to be the optimum procurement route given the specialist nature of the contract. It ensures transparency, maximises competition and minimises the potential for fraud while also enabling a shortlisting exercise to be undertaken prior to inviting full tenders.

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The NHSBT electronic tendering portal further ensures that the process is fully transparent and auditable. Users have individual accounts and passwords which enable any actions to be traced back to the relevant individual. All actions taken by NHSBT and potential suppliers are time and user stamped. It also has a closed messaging system so any communication between NHSBT and suppliers, or an individual supplier, are securely held in one place.

The Procurement Group comprised:

Department Responsibility Representative/s Procurement Process lead Shirley Phillips Estates & Facilities Lead Customer Neil Powell Estates & Facilities Customer Representative Maureen Cooper Blood Supply Customer Representative Randle Derbyshire Logistics Directorate Customer Representative Neville Robinson Quality Customer compliance Jonathan Strohm Finance Cost compliance Neil Colbourne Health & Safety H&S compliance Lee Bayliss

Expressions of interest were sought from suppliers to offer on either a regional or national basis, to ensure that smaller regional contractors had an opportunity to compete and to draw out the potential economies of scale from letting a single large contract.

14 suppliers expressed an interest. Nine completed and returned a Pre Qualification Questionnaire (PQQ). PQQ responses were evaluated and nine suppliers were invited to tender. Six responses were submitted. The tender panel assessed all bids against a detailed set of award criteria (Appendix 2). Scores for the six tenders were as follows:

Award Criteria Scoring

(maximum available score in brackets) Ranking Tenderer Technical

(250) Quality (260) Delivery Performance (65) General (125) Cost (300) Total Score (1000) 1 SITA 222.5 255 65 112.25 300 954.75 2 SRCL 242.5 260 65 117.25 225 909.75 3 Healthcare Environmental Group 182.5 235 46.25 111.5 150 725.25 4 MITIE Waste 202.5 180 58.75 99 150 690.25 5 Personnel Hygiene Services 210 235 46.25 113.25 75 679.5 6 Sharpsmart 122.5 240 56.25 98 75 591.75

On evaluation of the bids, further clarification was sought in relation to any potential efficiencies if a supplier was awarded more than one region.

The most favourable cost and bid compliance was offered by SITA, for a single national contract (Appendix 3). SITA s tender included a 2.4% discount from tonnage and transportation costs if awarded across all three regions. SITA also submitted the lowest overall bid, followed by SRCL. Supplier presentations were undertaken to assess their understanding of NHSBT s requirements. Given the substantial difference in scoring between the top two tenders and the remaining field, only SITA and SRCL were shortlisted for the final stage of the tender process.

The initial fixed term contract period of three years is the minimum term recommended by NHSBT Procurement for service contracts of this nature. The additional four, one year extension periods, will permit NHSBT the option to apply incremental contract extensions should this be deemed to be financially advantageous, dependant on market conditions at the time of each annual review. The annual review and recommendation to extend will be based on performance monitoring, a financial viability check and marketplace benchmarking to verify the service provider s stability and continuing value for money.

ADVANTAGES OF THE PREFERRED BID

The submissions from SITA demonstrated a good understanding and response to the contract specification. SITA s tender response was generally on par with that of SRCL, the incumbent supplier. SRCL s tendered price represented a significant saving versus the current contract but the bid from SITA offered a further reduction of £96k (figures based Appendix 3 Offer Schedule).

Further to this, the SITA bid improves NHSBT s ability to monitor environmental performance. This will be achieved through a detailed reporting process, which includes quantification of all CO2 produced as a result of our waste activity.

RISK

SITA has been financially vetted and shown to be a secure. They are a major player in the European waste market. Within the UK, they own and operate their own waste incineration and AT plants, with significant capacity available to absorb NHSBT s waste. In terms of quality and environmental management, SITA have passed site inspections by NHSBT s Environmental and Quality Assurance managers.

As with any change between an incumbent and new supplier there are risks involved. These will be mitigated, however, by having an extended period before the contract start date of 1 June 2014, to allow for the development of a good quality implementation plan, prior to mobilisation.

There is also a small risk with appointing one contractor for all three regions. However, this situation has existed for the past two contract periods, without detriment to NHSBT, and there is a significant financial incentive to award on this basis (2.4% discount against tonnage and collection cost). Furthermore, appointing the contractor on a national basis ensures that NHSBT continues to have single clear national processes that are understood by all NHSBT staff in all locations.

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Questions and Scoring Methodology

Appendix 3 - Offer Schedule