Five-council, 17-year procurement tie-up rubbished by ACCC

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A plan by five Adelaide councils to bundle up their many waste management contracts for the next 17 years in a collaborative procurement process has been scuppered by the Australian Competition and Consumer Commission.

Adelaide City, Charles Sturt, Marion, Tea Tree Gully, and Port Adelaide Enfield had sought authorisation from the competition regulator to bundle their contracts for the collection of garbage, organic waste and recyclables together, but its decision went against the bold strategy.

“Overall, the ACCC is not satisfied that a joint procurement process would produce a public benefit that would outweigh the effects of a lessening of competition,” ACCC member Sarah Court said in a statement.

One of the watchdog’s biggest concerns was that the collaborative procurement process the councils wanted to introduce would be significantly more complex than in the past, and could effectively exclude some potential suppliers. The commissioner added that the “size and scope” of the application was also a concern.

One wonders what industry-leading waste management will look like in the year 2033, when the exemption from legal action under the competition provisions of the Competition and Consumer Act would have finally expired.

It is not clear why the five councils chose to apply for the exemption, via the joint regional authority Council Solutions, for such a long and oddly specific period of time.

The ACCC received a lot of public submissions on the application and reports a “large majority” strongly opposed the idea. Interestingly, some of those came from no higher place than federal Cabinet.

Deputy Prime Minister Barnaby Joyce and Resources Minister Matt Canavan both sent in submissions against the proposal, as did Defence Industry Minister and concerned Adelaide resident Christopher Pyne.

In one letter, Joyce says he was told that if approved, Council Solutions would bundle up what are now 20 separate contracts into a single Request for Proposals from the market. Joyce continues:

“The new super contract would be valued at around $500 million, run for 10 years and be 200 times larger than the current median contract size and would service 37 per cent of the Adelaide waste management market.”

The Nationals leader writes he has been advised that 14 out of 15 past applications to the ACCC by councils to do the same kind of joint procurement have resulted in a single prime contractor taking on all the work rather than “a selection of contractors with different areas of expertise”.

“The ACCC received an extensive amount of public and confidential information from both the applicants and interested parties,” said Court.

“This has allowed the ACCC to assess the potential benefits and detriments of the proposed conduct against the current situation where the participating councils individually procure their waste services.”