This Is Guernsey

By Joel de Woolfson

PUBLIC SERVICES failed in its attempt to get the builder of Guernsey’s proposed incinerator to take on full liability if the plant broke down during the 25-year contract, it has emerged.

One of the criteria PSD wanted to fulfil during the tendering process was to have the ‘construction and operating risks carried fully by the contractor over the full life of the plant’.

However, each of the three tenderers baulked at the idea. And, technically, the fact that each company failed to meet this criterion should have led to them being automatically discarded as possibilities.

‘On initial evaluation, it emerged that none of the tenderers had submitted a fully compliant bid in respect of criterion iii, legal compliance, which meant that, strictly speaking, all should have been marked as a “fail” and not been taken to stage two of the evaluation process,’ Public Services minister Bernard Flouquet said in the Billet report released by the department yesterday.

‘However, this was not considered a sensible approach as it would have resulted in there being no tenders.’

After negotiations with eventual preferred tenderer Suez Environnement, it was agreed that the contractor would be liable for anything that went wrong with the incinerator during the first two years of operation.

‘There was some expectation of achieving a contract where the entire operating risk was borne by the contractor, which means that in the unlikely event of a serious and prolonged plant breakdown the financial consequences of such would have to be met by the contractor rather than employer [i.e. the States],’ Deputy Flouquet said.

‘It is noted that the aborted 2004 waste project was a design and build contract and the offer from Suez is more advantageous than a pure design and build contract offer.

‘However, the risks of this altered expectation need to be considered, addressed and managed, which is achievable and in hand.

‘Whilst it is perhaps disappointing that original expectations cannot be met, the market has been thoroughly tested and it is not unreasonable to draw the conclusion that the ideal situation sought – i.e., that the contractor takes on 100% of the operating risk – will not be delivered.’

Deputy Flouquet said PSD was putting together a package of measures to manage the greater degree of risk taken on by the States.

‘Consequently it [the department] does not consider this aspect should be allowed to prevent the progress of the project.’

Deputy Flouquet added yesterday that the risk of the proposed facility breaking down for long periods was very small.

‘The critical period would be after commissioning, and if no major technical problems arose in the first six years they would be very unlikely thereafter,’ he said.

Article posted on 27th June, 2009 - 2.29pm