Competitive tendering of waste disposal gives lower prices, but not better quality.

Competitive tendering of waste disposal gives lower prices, but not better quality.
Competitive tendering of waste disposal gives lower prices, but not better quality.


Indications by the European Commission suggests that the cost for waste disposal services are lower when performed as a competitive tender, while the quality is higher when the handling is done by the municipalities themselves. This is demonstrated in a recent study published by the European Commission.


The European Commission conducted a study of the weaknesses of the seven member countries and the possibilities of improvement regarding the use of public procurement in waste management. This concerns Germany, Sweden, Italy, Spain, Poland, Romania and the United Kingdom. The study includes waste from households, restaurants, shops and businesses.

In all of the seven member countries, municipal countries are often responsible for the handling, either by self-regulation or by competition. In Poland, Romania, Spain, Sweden and UK, the rules for public procurement in a competition is most common for collection and transportation of waste. Competitive tendering of waste management is most common in Poland, Spain, Romania, and the UK.


Lower price with competitive tendering

Indications from Germany and Sweden indicate that the costs for waste services are lower when it takes place through competitive tendering, while the quality of the handling is higher where the municipalities themselves handles the waste. It is shown in the study that there is no clear connection between the degree of the competitive tender and the completion of the service by the municipalities themselves.

Most used is an open tender competition. Limited tenders and negotiations without prior competition are used in 3 % and 2 % of the competitions respectively.


Weaknesses found in the practice

The European Commission points out in the study that there are some weaknesses associated with the use of public procurement related to waste management in Europe: Only 0,74 % of awarded contracts after cross–border competitions. In some of the competitions it was required that supplier should belong to a particular geographical area and it prevented suppliers from other areas to participate in that competition. Sometimes it was asked to fulfill extensive administrative requirements to participate, and small to medium suppliers often felt excluded because large contracts were not divided.

The European Commission also points at cases with illegal misuse of dominant marked position. Some of the cases entail cross-subsidization where companies were operating both in private sector and at the same time on a retainer for a municipality after a direct acquisition. Contracts have been directly awarded private equity companies with too much of private ownership. There have been identified cases of corruption and other criminal behavior, close to an unlimited duration of individual contracts, illegal changes along existing contracts and cases of oddly low prices. 


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This article first appeared at Anbud365, Norway’s leading online newspaper for public procurement. Published by Lennart Hovland on February 6th, 2017. The full article can be read in Norwegian here.


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>> Study: Municipal waste procurement in EU countries can be more efficient

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