If Contract Waste falls below the GMT the Authority is obliged to pay the Contractor as if the GMT tonnage had been delivered. In other words the Authority pays for capacity that is not being used to process its waste. As detailed in Section 4.2.4 the Authority is allowed to source Top Up Waste in this scenario. The WIDP Contract (Clause 25) also puts an obligation on the Contractor in the scenario to source Substitute Waste where the Authority is not able or willing to source Top Up Waste. If this is done then the Authority only has to pay for the capacity not used for its waste to the extent that the income the Contractor realises for the Substitute Waste is less than that which would have been paid by the Authority. If the Contractor realises more income from the Substitute Waste than it would have received from the Authority the excess should be shared with the Authority. The sharing percentage should be highlighted in the Contract Management Manual.
If the Contractor does not use reasonable endeavours to secure Substitute Waste then the GMT is reduced by the amount of waste that the Contractor would have secured if it had used reasonable endeavours.
In order to maximise the potential for Substitute Waste being sourced by the Contractor, when needed, the Contract Manager should ensure that the Contractor meets its obligation to have a Substitute Waste Plan (Schedule 30). This plan should be submitted to the Authority a specified number of days before Service Commencement and then updated annually. The Authority's procedures for ensuring that the plans and updates are received should be set out in the Contract Management Manual.
The Contractor is only obliged to implement the Substitute Waste Plan once a formal notice has been issued by the Authority advising that in its reasonable opinion there will be a shortfall of Contract Waste relative to the GMT for the year. As the sourcing of Substitute Waste can lead directly to cash savings for the Authority the Contract Management Team should be aware of the importance of the relevant Contractual provisions through the Contract Management Manual. Notifying the Contractor early is critical if the Contractor is to source Substitute Waste quickly32.
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32 Implementing the Substitute Waste provisions requires an agreed process for deciding which deliveries of waste are Third Party Waste and which are Substitute Waste. As the key parameters are defined on an annual basis this may have to be deferred to the end of the Contract year when the annual wasteflows will be known. The Substitute Waste notice should simply warn the Contractor that the Contract Waste tonnage for the year is likely to be below the Guaranteed Minimum Tonnage.