Contractual Matters

Editors’ Note: The following is an edited transcript of a presentation delivered by Robin D. Ennis, chief of solid waste collections, Montgomery County, Md., as part of the Sustainable Materials Management Web Academy hosted by the U.S. Environmental Protection Agency.

Essentially, there are four steps to getting an effective hauling contract for a municipality. The first step is the planning phase, where you decide all of the things you want in your contract. Step two is the design phase, where you pull all of the stakeholders together to determine the type of service that you want and then sit down to write the contract. The next step is the implementation phase, which involves the procurement process and execution of the contract. The fourth stage is administration, which involves managing and operating the contract for its duration.

Planning
Planning is the first critical part of this whole process. Your best resources are going to be all of the networking that you’ve done and the colleagues whom you have in other communities. You really need to understand what kind of options are out there and what your community needs in terms of services—recycling, refuse, yard trim? What kind of collection system do you want—automated collection, single stream?

When we go through the RFP (request for proposals) process, I’ll explain to you why it is not necessarily a good idea to rely on the contractor to tell you what types of services they will provide. Often times it is hard to compare proposals if different bidders are offering different services. You should do your homework and really understand what your community needs are. For instance, if you live in an urban area or if you live in a rural area, not all collection systems are going to be viable. If you have a lot of street parking, for instance, automated collection systems may not be the best for your community. However, semi-automated collection might work well.

The next step is to identify all of the stakeholders. If you are implementing this program for the very first time, who is it going to affect? Stakeholders often can include:

• Internal staff (Public Works, Finance, Legal departments, etc.);
• Haulers, collectors and contractors;
• MRF operators and disposal sites;
• Neighboring municipalities;
• General public/customers; and
• Elected officials.

Set and communicate your goals with stakeholders. Is your goal to increase recycling and do you think that implementing automated collection or single-stream will help you do so? It could be that you must do it to comply with a certain ban or that you want to lower your costs. A major goal for many of us also should be reducing our carbon footprints.

Do a lot of research on other systems; compile case studies. Talk to some of your counterparts in other communities who have done this kind of thing before. Why reinvent the wheel when the wheel has already been reinvented three or four times.

Conduct a waste composition study to identify waste quantities by type and to determine the recycling potential. You will want to determine pounds per household per week, as this will greatly affect the cost of the contract.

You also should identify who your waste generators are. Are you offering the service to the residential community, to the commercial community or both? The haulers have to know who the customer base is going to be.

Next, you must identify local resources that can handle the collected materials. You really can’t have a recycling program if there is no one to take the material. You need to look into local material recovery facilities (MRFs) and recycling markets. You want to make sure that you have a home for all of the material.

Last is the financing—How are you going to pay for the collection and the processing and disposal?

Design
In determining your customer base, you must consider:

• The number of service areas;
• The number of homes per service area;
• Whether the homes are single-family, multifamily or town homes; and
• The number of collectors servicing the program.

You have to design your system knowing full well what you want to provide in the way of services. Will you be collecting refuse, recycling, bulk waste, yard trim, electronics, household hazardous waste, scrap metal or food waste?

You also will need to determine the frequency of that service. Some common options are:

• Refuse – weekly or two times per week (Most communities are getting away from twice weekly service.);
• Recycling – one time per week or every other week (This is a way to cut costs.);
• Bulk trash – one time per week, monthly or on call; and
• Yard waste – one time per week with no service in winter.

You also need to consider whether all services will be be provided on the same day of the week.

How are your customers going to pay for the services? Services can be funded through property tax assessments, which have the highest rate of on-time payments and are generally the preferred way to do it, or residents can be billed by the hauler or on their utility bill, which have the lowest rate of on-time payments.

Develop a timeline. Make sure you allow sufficient time for the whole process—system planning and design, the contract and RFP development, procurement and startup. From the time you start the contract development and issue the RFP, it generally takes about a year. Allow plenty of time for your contractor to purchase equipment. The procurement process generally takes from 60 to 90 days. Then, of course, there is startup. You want to allow plenty of time between these four components.

Procurement
Determine the type of solicitation that you are going to do. In general, what you need to know about this is that a request for qualification (RFQ) simply tells you whether a company qualifies to bid on your project. The bidder gets to tell you who they are and the financial resources they have.

A request for proposal (RFP), however, is typically done when you are asking the contractor to give you ideas about how they will fulfill your specifications. (Again, it is better to have all of the options that you want mapped out because it is truly difficult to compare one proposal to another if you let the bidders determine that.) The more detailed your RFP, the better.

A request or invitation for bid (RFB or IFB) is when you tell the contractors specifically what it is you want to do and they give you a price. The important thing here is to make sure the scope of the services you want are extremely clear. You want to attach a copy of the contract that you are going to be asking them to sign so there is absolutely no question about what you are asking for. You don’t want to be negotiating whether the truck is supposed to be 32 cubic yards or 28 cubic yards or whether collection of yard trim will be every other week or once per month at this point.

The next thing you do is schedule a preproposal meeting, where you bring all the bidders in to answer any questions they have about the RFP. This is typically done about two weeks after the RFP has gone out and ensures that everyone is clear about what you want. Send answers to all these questions to all of the attendees of the meeting. Proposals are generally due from 30 to 45 days from the issue of RFP/IFB.

Once the proposals come in, you have to evaluate them based on the lowest bid, the most responsive bidder, the qualifications of the company and the financial strength of the company. After you narrow it down, you will interview the three finalists. If it is an RFP, you can negotiate a lower price and some terms. If it is an IFB, the only thing you can negotiate is the price. You really don’t want to get into negotiating the finer points, which is why you went to the trouble to design your program and write your contract very specifically.

Then you make the award, post it on your website and give the losing bidders 30 days to protest it.

Details
What’s the key to a successful collection contract? Detail, detail, detail. The more information that you can give the bidders, the better off you are and the better off they are. They know exactly what you are asking for and they know exactly what they are bidding on.

The author is chief of solid waste collections, Montgomery County, Md.