The Office of Government Commerce (OGC) Kelly programme arose in
response to Sir Christopher Kelly’s Report into Increasing
Competition and Long Term Capacity Planning in the government
market place. Its aim was to improve public sector procurement in a
way that best uses available capacity within markets and enables
industry to respond effectively, innovatively and at an affordable
price. Mott MacDonald worked with the OGC on both the decision to
choose municipal waste for the Second Kelly Market and also on
local authority data collection and analysis.
Our role
In April 2005 Mott MacDonald provided technical consultancy advice
on the decision to make municipal waste management the Second Kelly
Market. The decision was largely due to the need for the UK to meet
its obligations under the European Union’s Landfill
Directive.
A solid understanding of the public sectors demand for waste
management services and the current supply capacity within the
industry was fundamental to successful project delivery. We worked
closely with OGC to develop proposals to reform Government
procurement in the municipal waste management sector, seeking to
propose and implement changes that would deliver:
- increased competition
- a more responsive market
- greater security of supply, and
- reduced dependency on a limited group of suppliers
The following highlights our key roles and outputs in the delivery
of the Second Kelly Market.
Outputs
Mott MacDonald developed an understanding of future demand and
procurement activity in the waste market. Public sector demand was
established from a comprehensive survey which saw 71% of all waste
authorities providing data on the future shape of their waste
arisings and procurement needs, highlighting that the municipal
waste market had a very predictable growth pattern and in England
is worth approximately £2.4 billion per year.
We developed a demand profile for the supply side accompanied with
projected demand plans. With landfill declining and the limited
availability of alternative disposal methods, a steady increase in
demand for disposal was creating considerable practical and
commercial challenges.
We outlined that there was insufficient competition with only a few
major players in the market. Further obstacles were created with
demand plans not being visible to the market and also the flow of
information to supply-side being very restricted.
We also highlighted that the funding channels for waste management
were very complex with PFI and prudential borrowing being favoured.
Recommendations
Mott MacDonald helped to construct recommendations for a better
management of the municipal waste sector. Our recommendations
included:
- Better advice to be made available for authorities on disposal
methods
- A review should be undertaken of the suitability of PFI and the
operation of direct service organisations (DSO) / in-house
organisations within the waste collection authorities
- The encouragement of collaborative arrangements between waste
authorities
- All waste management policy drivers to become the
responsibility of a single government department and that a
framework for the procurement of waste services should be
developed
Finally Mott MacDonald recommended that the implementation of these
recommendations should be taken forward by Defra, as the key
stakeholder in the waste market and as part of the Waste
Infrastructure Development Programme.
