Privatisation and Waste Management – Stacking the Odds and the Tendering Process

Blunders and Bodger carry out a thorough review of a proposed tender submission!

How Private Companies win Public Sector Contracts…

Cory Environmental was rather like working for the waste collection equivalent of the keystone cops.  I mentioned before that my opportunity to work for the Company was almost entirely due to their incompetence at preparing a realistic tender and they were certain to win the work in the first place because the always managed to under price the bid.

In the 1980s and 1990s because Margaret Thatcher thought that the private sector was, by definition, much more competent and efficient in these matters than the public sector, local authorities were required to offer certain services for open competition.

Margaret Thatcher was a horrible divisive politician who drove a wedge in British society, she destroyed the engineering heritage and the manufacturing economy that was based on hard work and sweat and replaced it with a service sector economy based on lies and greed.  By dismantling British society and privatising key services that should never be run for profit she established the Tory political dogma based on self interest and avarice that is still with us even today.

They called the privatisation of local government services  ‘Compulsory Competitive Tendering’.  Actually, it would have been more accurate to call it ‘Compulsory Competitive Thieving!’

Privatisation of Waste Management…

So that the waste management companies could cope with all the new work and profit from the Tory policy and local authorities couldn’t cheat, the Government set out a phased three year programme and one by one local authority services were thrown into a private sector pond full of hungry piranha ready to strip the flesh off of public services, cynically reduce service standards and hopefully get fat at the council tax payer’s expense.

As soon as the waste management companies spotted a contract they took a liking to they would express an interest, obtain the tender documents and specifications and go to work sharpening their pencils.

This was never a scientific process and the first thing the tendering manager did was to get up early one Monday morning and sit outside the council depot and count the dustcarts and the number of men in them as they left to go to work.  And that was about all there was to it and half an hour later over a bacon butty and a cup of tea he would write this all down on the back of a cigarette packet and by mid morning he would have a price in his head.  Nothing else in his head, just the price!  Sometimes, if he was being especially thorough, he would go back on Tuesday morning just to check his calculations but this would be quite unusual.

How the Private Sector prepares a tender bid for Public Sector service work…

The tendering manager at Cory Environmental was called Tony Palmer and for Tony arriving at the tender price was gloriously simple.  If the Council had ten refuse collection rounds, the company would do it with nine, and just in case the Council were thinking about doing it with nine as well then they would do it with eight so that would immediately undercut the Council price by 20%.  Just to make absolutely certain they would find out how much a refuse collector was paid each week and then they would reduce that by 20% as well.  If the Council had three mechanics to keep the fleet running they would do it with two and so on and so on. There was no way these boys could fail to win tenders!

There was nothing remotely businesslike about this approach but sometimes it got even worse.  Sita UK are a French company who set up early in the United Kingdom and immediately went about under pricing work to win contracts.

Erewash Borough Council Refuse Collection…

Today, their web site claims ‘We have 65 contracts with local authorities throughout the UK and we work hard to deliver excellent customer service’ and it reminds us that ‘we were awarded our first contract for refuse collection in Erewash, Derbyshire, in 1989’.  

I lived in Erewash at that time and I am not sure why they boast about it on the home page of the website because the contract was run like a West End farce and it lost thousands and thousands of pounds every year.  But, the real point of my story is this; in 1994 they were jolly relieved to come to the end of the contract, said no thank you to the generous offer of an extension at the existing suicidal price and the Council went back out to tender.

Now everyone in the industry knew that Sita lost a fortune at Erewash but a competitor, Serviceteam, managed to put in a bid that was even lower than Sita’s original 1989 price.

How dumb was that?  The whole of the industry pissed themselves laughing but at some point between award of contract and starting the work  somewhere at Serviceteam head office the penny dropped, someone came to their senses and at five o’clock on the Friday night before starting on the Monday morning they sent a fax message to Erewash saying sorry but they wouldn’t be coming after all.  Erewash had to quickly mobilise to do the work themselves and still do it to this day.

And for any hard line Thatcherite/Boris Johnson Tories reading this that’s how efficient the public sector can be by the way!

And it wasn’t just refuse collection they could cock up because they could make mistakes estimating for the street cleaning service as well.  At Southend, Blunders and Bodger bid to do all of the street cleaning with about twenty men who, when they were finished at about lunchtime, were then expected to walk and clean six miles of beach in the afternoon.

Unfortunately for them the Council wanted the job done properly, it was impossible, and after a couple of weeks of complete fiasco and countless arguments with the Council inspectors there were over one hundred men doing this work.  They were also supposed to clean out the drains at the sides of the road but all they managed to do was pour loads of money down them instead.

Another company, I’ve forgotten their name, went bust and out of business because the estimator didn’t realise that cleaning the streets meant both sides of the road and he won the Milton Keynes contract based on centre line rather than channel length.  I think other companies probably made the same mistake but Milton Keynes is a huge place and there are miles and miles of paths as well that they also forgot to include in the tender calculations.

Privatisation Nightmares…

All over the country Council bosses suddenly started to wake up to the fact that from a financial if not an operational perspective privatisation might not be such a bad thing after all and as finance managers struggled to balance budgets and keep council tax increases down cut price refuse collection services, thanks to the French and the Spanish, was actually quite beneficial.  At Southend, John Whiddon and his army of  inspectors knew full well that twenty men wouldn’t be enough to do all of the work in the specification but they awarded the contract all the same!

Trade Union Response to Privatisation…

So, these dimwits under priced the tenders and were awarded the contract and this gave them just about six weeks to prepare for and organise the work and this included, at some point, telling the men about the drastic cut in pay, the loss of their pension schemes and the expected (often unreasonable) increase in productivity.

This guaranteed that they certainly woudn’t have a loyal and committed work force.  To compensate however there was a smart new uniform but this didn’t really help very much and the one thing that was absolutely certain was that to start the new job the company would not have the benefit of the one thing they needed most –  motivated and dedicated crews.