A perfect score for a useless contractor

DOUG COLLIE wonders how bidder received 40 out of 40, then finance package 'disappeared'...

The waste management "specialists" handed a multi-million pound contract by Scottish Borders Council were awarded vastly superior scores compared to their rivals on both technical and financial merit even though their technology was subsequently unable to attract bank loans and funding was not in place when the deal was signed.

Details of the so-called tender evaluation summary for a proposed Mechanical Biological Treatment [MBT] waste treatment facility at Easter Langlee have been revealed for the first time in a confidential document released by the local authority under the Freedom of Information system.

New Earth Solutions, the successful bidder, outscored their only competitor Shanks Group on all three evaluation headings. The assessment is likely to have been carried out by 'expert' consultants commissioned by SBC at considerable cost. NES was awarded a total of 84 out of a possible 100 while Shanks managed only 70.3.

The maximum mark for technical aspects of the contract was 55, and NES clocked up 41.5  compared to Shanks on 38.4. When it came to finance New Earth received a perfect 40 out of a possible 40 with Shanks lagging behind on 30.9. And in the contractual section which carried a top mark of 5, NES were rated 2.5 while Shanks received a seemingly poor score of 1.

As the new information shows, New Earth Solutions indicated only a few months after winning the contract that the MBT on its own could no longer get bank funding. It meant councillors had to nod through a major change so that completely untried Advanced Thermal Treatment [ATT] technology could be included from day one.

According to a contracts specialist: "This radical Deed of Variation surely rendered the original tender evaluation completely irrelevant and worthless. Given it was less than a year after entering the contract with NES when they started to indicate they could not secure funding or deliver the project there must have been provision to reopen negotiations with Shanks as a reserve bid position".

The experienced consultant added that the council should have been undertaking contingency plans in parallel to NES discussions after New Earth confirmed they were struggling to deliver the project in 2012.

"I would suggest SBC's advisers may have been negligent in the advice they gave the Council, especially in light of how much it cost the Council and the fact the local authority has nothing to show for an outlay of at least £2.4 million".

But despite New Earth's considerable difficulties with funding, and notwithstanding the fact that the company's brand of ATT had not even achieved commercial status, SBC's elected members were advised - and agreed - to vary the contract. It was a decision which would ultimately result in the complete collapse of the authority's waste management strategy in 2015.

The crucial report, considered in private session in October 2012, says: "The key to this Deed of Variation is to allow New Earth Solutions to develop the project to a position where the banks or New Earth's sister investment company New Earth Recycling & Renewables [Infrastructure] plc (NERR) are confident enough to fund the construction phase.

"If NES are successful in obtaining all of the permissions required for the integrated facility, the funding is invested in the project and the construction contracts are signed, the council is then protected under the existing provision in the contract to allow the facility to be delivered even if the ATT technology fails".

Unfortunately for Borders council taxpayers the necessary operating certificate for the integrated plant was never secured, funding was never in place, and construction contracts remained unsigned. Apart from that the venture was no doubt considered to be a roaring success in-house after vast sums of public money were simply written off by SBC.

NES is in the hands of administrators with massive unpaid debts while NERR is the subject of an investigation by liquidators on the Isle of Man after investors in the fund lost everything. Some of those angry investors are calling for a criminal inquiry.

As one cynic told us: "It seems from the emerging evidence contained in the documents they wanted to hide that SBC was involved with some very strange bedfellows".