Omaha, Nebraska, to rebid recycling contract

The city of Omaha, Nebraska, has rejected a bid by Firstar Fiber Corp., dba Firststar Recycling, an Omaha-based recycling company, to process recyclables for the city. The city says it will rebid the contract with different terms.

According to the city, Firstar’s $4 million bid equaled $200 per ton, double the amount the city expected to pay and greater than Firstar’s retail rate for its other customers of $110 per ton.

In a letter that he sent to Firstar Fiber CEO Dale Gubbels, the city of Omaha’s Public Works Director Bob Stubbe writes, “The bid exceeds the city’s budgeted estimate for the work to be performed and is, therefore, being rejected.”

In September, the city advertised a Request for Bids to award a new five-year contract for processing that would respond to uncertainties in the recycling market, and still be affordable and fair to taxpayers. The contract would have replaced the current agreement with Firstar Fiber, which ends Dec. 31, 2020. The new contract could have been implemented as early as Jan. 1, 2020, if the city had received favorable bids. Firstar Fiber submitted the only bid.

Firstar Fiber has been under contract with the city since 2006. The initial contract (2006-2015) required Firstar to pay the city based on the volume of recyclables. The second contract (2016-2020) required Firstar to continue those payments. Because of plummeting recycling markets, Omaha and Firstar amended the contract, requiring the city to pay Firstar $25.92 per ton to process recyclables at its material recovery facility (MRF), the same fee it pays to dispose of solid waste at the landfill. Monthly payments to Firstar started in September.

In explaining the city's decision to reject the bid, Omaha Mayor Jean Stothert says, “We recognize the changes in the recycling business require us to pay for processing, but this bid is excessively high and would require significant cuts in our 2020 budget.”

The processing contract is separate from the solid waste and recycling collection contract, which recently was awarded to FCC Environmental.  That contract includes $5.3 million for curbside recycling collection and takes effect Jan. 1, 2021.

“We are committed to recycling, but we must have a fair price,” Stothert says.

Omaha currently collects about 17,000 tons of recyclables per year for delivery to Firstar's MRF for processing. That volume is expected to increase to 20,000 tons or more with the switch to the new collection contract and covered carts.

The city will develop a new Request for Bids with new terms and will include input from industry experts, including a longer contract term.