Otto J B Kobus Otto & Associates Waste Management Consultants Hansen M K RAMBØLL A/S

1. Gauteng Health Care Risk Waste Management Tender DANIDA Kobus Otto & Associates Waste Management Consultants DEVELOPMENT OF TENDER DOCUMENTATION FOR THE OUTSOURCING OF HEALTH CARE RISK WASTE MANAGEMENT SERVICES TO PROVINCIAL HOSPITALS AND CLINICS IN THE GAUTENG PROVINCE • Otto J B Kobus Otto & Associates Waste Management Consultants • Hansen M K RAMBØLL A/S

2. Gauteng Health Care Risk Waste Management Tender DANIDA Kobus Otto & Associates Waste Management Consultants Overview • Introduction; • Current HCRW management service delivery in Gauteng; • Needs analysis; • Billing system options; • HCRW categories and estimated generation rates; • Possible influences on the tender format • Services included in HCRW tender; • Format and structure options for the tender document; • Agreed tender format and structure; • Conclusions.

3. Gauteng Health Care Risk Waste Management Tender DANIDA Kobus Otto & Associates Waste Management Consultants INTRODUCTION • HCRW treatment and disposal services historically part of hospital services; • Large hospitals in the past all equipped with incinerators of varying sizes and with varying levels of efficiency; • Outsourcing of specialized non-health services like HCRW treatment became more popular over the last decade; • Various shortcomings identified in the previous HCRW management tender process had to be addressed; • Department of Health responsible for 28 hospitals and 140 clinics, generating approx. 50% of all HCRW in Gauteng; • Development of Tender Specifications formed part of the Sustainable HCW Management in Gauteng Project.

4. Kobus Otto & Associates Waste Management Consultants CURRENT HCRW MANAGEMENT SERVICE DELIVERY IN GAUTENG DANIDA

5. Gauteng Health Care Risk Waste Management Tender DANIDA Kobus Otto & Associates Waste Management Consultants NEEDS ANALYSIS Consultation and communication needs • Experienced HCF staff not consulted for input during tender development; • Proposed changes to tender specifications by HCF’s were to be motivated in writingand submitted to GDoH head office for approval; • No formal complaints system with ineffective addressing of complaints raised by HCF’s, e.g. delays before problems are solved; • General lack of communication on HCW management matters between GDoH head office, regional offices and HCF’s; • HCF’s uncertain as to the roles and responsibilities of regional offices and head office regarding HCW management issues, as well as to theroles and responsibilities of individuals at HCF’s.

6. Gauteng Health Care Risk Waste Management Tender DANIDA Kobus Otto & Associates Waste Management Consultants NEEDS ANALYSIS (Cont.) Procurement needs • Not all types of disposable containers required by HCF’s were allowed for in the tenders; • Some HCF’s opted to enter into separate service contracts outside of larger HCRW tender to address particular needs; • No penalty or arbitration process, leaving contract cancellation as the only option in the event of poor contract performance; • Even though HCF’s wanted to haveindividual needs collectively incorporated in the tender specification, individual HCF’s could not have specifications developed for its own particular needs.

7. Gauteng Health Care Risk Waste Management Tender DANIDA Kobus Otto & Associates Waste Management Consultants NEEDS ANALYSIS (Cont.) Technical needs • HCF’s not consulted to make individual or a collective input towards development of technical specifications, in particular related to: • Types and sizes of HCRW containers supplied which did not meet the hospital or clinic needs, resulting in ad hoc arrangements with contractors; • No sharps container brackets provided, resulting in sharps containers being placed on the floor, affixed with plaster, hangedfrom strings, etc; • Lids for the sharps’ containers and specican containers very difficult to close, leading to spillage. Rubber hammers used to seal containers; • Quality assurance on container supplyand HCWM service delivery was ineffective; • GDoH head office complaints systemwas ineffective.

8. Gauteng Health Care Risk Waste Management Tender DANIDA Kobus Otto & Associates Waste Management Consultants NEEDS ANALYSIS (Cont.) Operational needs • No training on new HCRW containers introduced as it was not allowed for in tender; • No allowance made for collection, transport and treatment of full HCRW containers remaining from previous contract; • Pathological waste not removed daily from all sources due to modest amounts generated, resulting in odour problems at certain clinics; • HCF’s expressed need for HCRW tracking system to enable generators to verify responsible treatment / disposal of HCRW; in particular for pathological and pharmaceutical HCRW; • The manifest system used to confirm HCRW collection from HCF’s, wasalso used to verify the contractor’s monthly accounts; • Confusion existed as a result of HCGW services being provided by both local authorities and private contractors.

9. Gauteng Health Care Risk Waste Management Tender DANIDA Kobus Otto & Associates Waste Management Consultants NEEDS ANALYSIS (Cont.) Performance monitoring needs • HCF’s not clear on responsibility for performance monitoring or procedures to be followed for lodging of complaints; • HCF’s agreed for performance monitoring to be done at HCF level, with reporting to head office and copied to respective regional offices; • HCF’s indicated need for performance monitoring guidelines during inspections; • Formal evaluation and reporting on contractor’s performance,based on complaints lodged,to be considered beforeaward of future tenders; • HCF’s informed of responsibility i.t.o. duty-of-care for HCRW management, i.e. HCF to ensure environmentally sound HCRW management; • Duties and responsibilities by HCF’s also to be fulfilled, with line of communication for contractors tolodge complaints in the event of non-conformance by HCF’s; • The need for training and awareness emphasized.

10. Gauteng Health Care Risk Waste Management Tender DANIDA Kobus Otto & Associates Waste Management Consultants BILLING SYSTEM OPTIONS Volume Billing Option: Advantages: • Easy to verify waste collected by counting number of containers in each category; • Allows for use of simplified prepaid system; • Ensures cost effective transport for contractor, as loading bay volume is paid for by HCF’s, irrespective of whether effective payload is achieved. Disadvantages: • Benefits contractors who get paid per volume irrespective of waste mass in containers; • Creates incentive for HCF’s to increase amount of HCRW in containers, resulting in injuries or infection when HCRW is forced into containers; • Does not create incentive for contractors to improve on effective payloads; • Does not provide accurate data on HCRW generation at any particular HCF.

11. Gauteng Health Care Risk Waste Management Tender DANIDA Kobus Otto & Associates Waste Management Consultants BILLING SYSTEM OPTIONS (Cont.) Mass Billing Option: Advantages: • HCF’s have better control over actual HCRW generation rates to monitor trends or effects of training and awareness programmes; • HCF’s only pay for transport, treatment and disposal of actual mass of HCRW generated; • Provide control mechanism on HCRW collected from HCF’s, which can serve as a tracking system when compared to HCRW mass delivered to treatment plant (HCWIS). Disadvantages: • More difficult to verify, as it requires HCRW to be weighed at HCF where it is to be verified by HCF staff; • Cannot accommodate prepaid system, as it is unknown at time of container delivery what the mass of containers would be when collected; • May result in staff from HCF’s not filling containers effectively, thusresulting in semi-full containers with inefficient payloads being transported.

12. Gauteng Health Care Risk Waste Management Tender DANIDA Kobus Otto & Associates Waste Management Consultants BILLING SYSTEM OPTIONS (Cont.) Combination of volume billing (rate per container) and mass billing (extra-over rate per kg of HCRW): Advantages: • This could provide a payment system that is fair to both generators and service providers since it creates and incentive for both the HCF as well as the contractor to make optimum use of the storage space inside HCRW containers, without the incentive being so strong that it will justify unsafe practices during filling of containers. Disadvantages: • This would not overcome the need for scales to be provided to HCF’s, where mass recording is to be done with HCF staff required to verify the mass.

13. Gauteng Health Care Risk Waste Management Tender DANIDA Kobus Otto & Associates Waste Management Consultants BILLING SYSTEM OPTIONS (Cont.) General Billing Considerations: • The prepaid system is not considered to be viable as it inter alia contravenesthe procurement regulations by which no payment is to be made for undelivered services; • Recording of container masses at HCF’s considered to be problematic not only because of staff shortages, but also because of unavailability of scales or theft of scales; • Implementing billing system for individual clinics considered to be difficult, as their HCRW management services are administered by regional offices; • Opinion expressed that SA should take on new challenges that could improve existing systems, rather than to continuously retreat as “it will not work in SA”; • Mass recording of HCRW would highlight HCRW management problems, and Pilot Study HCF’s were to be equipped with scales to test the feasibility of mass recording at source; • Proposed that a fixed rate per institution be requested from tenderers for management of HCRW and HCGW, but practical problems related to this were identified; • Combination of HCGW and HCRW service contracts may result in HCGW part of the contract being affected by local bylaws, thus also impacting on HCRW management.

14. Gauteng Health Care Risk Waste Management Tender DANIDA Kobus Otto & Associates Waste Management Consultants HCRW CATEGORIES AND ESTIMATED GENERATION RATES

15. Gauteng Health Care Risk Waste Management Tender DANIDA Kobus Otto & Associates Waste Management Consultants POSSIBLE INFLUENCES ON THE TENDER FORMAT The most important external influences likely to impact on the format of HCRW management service Tenders were the following: • Revised Metropolitan Council bylaws:The legal standing of bylaws could prevent outsourcing of HCW management services to private contractors in any particular local authority’s area of jurisdiction; • Transfer of clinics to local authorities: The current size of the service contracts as well as contractual implications due to future reductions in contract sizes; • Extended contract periods: Effectiveness of extended contract periods (say 5 years or longer) and its impact on HCRW management costs when considering tax legislation; • Breakdown in Tenders: The optimum tender split that will ensure the highest possible service standard at an affordable price, whilst allowing formanagement of a number of interfacing contracts.

16. Gauteng Health Care Risk Waste Management Tender DANIDA Kobus Otto & Associates Waste Management Consultants SERVICES INCLUDED IN HCRW TENDER The following services were to be allowed for in the HCW management tenders: • Supply and maintenance of reusable HCRW containers; • Supply of disposable HCRW containers; • Optional supply of certain HCGW liners; • Supply and installation of durables in the form of brackets, baskets and freestanding racks; • Collection and transport of HCRW; • Treatment of HCRW; • Disposal of residues; • Training and Consultancy Support.

17. Gauteng Health Care Risk Waste Management Tender DANIDA Kobus Otto & Associates Waste Management Consultants SERVICES INCLUDED IN HCRW TENDER (Cont.)

18. Gauteng Health Care Risk Waste Management Tender DANIDA Kobus Otto & Associates Waste Management Consultants FORMAT AND STRUCTURE OPTIONS FOR THE TENDER DOCUMENT Geographical Split Options: • One contract to service all of Gauteng; • Separate contracts to service individual parts or regions of Gauteng (e.g. 3 Regions); • Individual contracts for each of the respective HCF’s. Process SplitOptions: • One contract to render the full spectrum of services from “Cradle-to-Grave”; • Separate contracts for: • Supply of all consumables; • Collection and transport of HCRW (including supply and maintenance of reusable containers); and • Treatment and disposal of HCRW.

19. Gauteng Health Care Risk Waste Management Tender DANIDA Kobus Otto & Associates Waste Management Consultants FORMAT AND STRUCTURE OPTIONS FOR THE TENDER DOCUMENT(Cont.) Waste FractionOptions: • HCRW management services in separate contract; • All HCRW and HCGW management services in one contract; • All HCRW and HCGW management services, together with silver recovery in one contract. Contract PeriodOptions: • Less than approximately 5 years; • Approximately 5 years; • More than approximately 5 years.

20. Gauteng Health Care Risk Waste Management Tender DANIDA Kobus Otto & Associates Waste Management Consultants AGREED TENDER FORMAT AND STRUCTURE Geographical Split • Three separate tenders for 3 Regions in Gauteng. Since technical specifications are the same for the 3 Regions, a single document with 3 separate Schedules of Rates & Quantities for the respective Regions is used; • Tenderers allowed to tender for more than one Region, but no contractor to be awarded more than 2 out of 3 Regions, provided that the award of more than one Region to any one contractor result in justifiable financial benefitto GDoH. Waste Fractions • Only HCRW handled under this contract, with exclusion of radioactive waste; • Supply of black plastic liners is the only part of HCGW management included under the HCRW tender.

21. Gauteng Health Care Risk Waste Management Tender DANIDA Kobus Otto & Associates Waste Management Consultants AGREED TENDER FORMAT AND STRUCTURE (Cont.) Process Split • Due to vast number of contracts with associated interfaces resulting from detailed process split, all services required for an integrated HCRW management system are included in one tender; • Tenderers encouraged to make use of subcontractors or to form joint ventures or consortiums if not in a position to provide the complete service; • Contractors to tender for supply and delivery of both reusable as well as disposable containers (with the associated durable items), collection, transport and treatment of HCRW, disposal of residues as well as provision of training and consultancy services. Contract Period • Based on investigations undertaken, it was decided to allow for a 3-year and 5-year optional contract period, with 5 years only being considered if it provides sufficient financial benefits to the GDoH to compensate for any increased risks to both GDoH and contractors.

22. Gauteng Health Care Risk Waste Management Tender DANIDA Kobus Otto & Associates Waste Management Consultants CONCLUSIONS • Increasing drive towards outsourcing of services in South Africa in accordance with the National Government’s policy; • Service providers often not meeting the client’s expectations, which not only results in financial losses to the client, but also result in the principle of outsourcing being considered to be unsuccessful; • Level of success of outsourcing depends on thoroughness of agreement, which if overlooked, leads to disputes regarding the extent of service to be rendered as well as remuneration for which the service provider is illegible; • Cancellation of a contract should be last resort and since this option is most likely to have financial and operational implications for both the client and the service provider, there need to be interim measures in the form of penalties that can be taken long before cancellation of the contract is considered;

23. Gauteng Health Care Risk Waste Management Tender DANIDA Kobus Otto & Associates Waste Management Consultants CONCLUSIONS(Cont.) • The time and costs associated with development of appropriate and comprehensive tender documents are quite often the reason why outdated documents are used or alternatively why documents developed for other similar applications are used without having the necessary adjustments made; • The “saving” achieved by using inappropriate tender material quite often results in rendering of an incomplete or poor service that cannot be addressed with a contract binding on both parties for several years, thus requiring the client to spend significantly more money in rectifying short-comings than what was saved at the time of tender; • The use of comprehensive and well-structured tender documents is not only in the interest of the client as a tool to compare proposals and service levels on an equal basis, but also in the interest of dedicated service providers who want to render an appreciated and professional service; • A well-defined Scope of Work and technical specifications combined with detailed commercial and legal terms will ensure uniform standards at the time of tender, that will eliminate opportunities for substandard service providers to render a poor service by identifying possible shortcomings in the tender specifications, thereby improving the overall HCW management standard in SA.