HomeMy WebLinkAbout7.1 Solid Waste & Disposal
CITY CLERK
File # D~[Q]raJ-[3J[f5]
AGENDA STATEMENT
CITY COUNCIL MEETING DATE: December 6, 2004
SUBJECT:
Execution of Solid Waste Collection and Disposal Agreements
Report Prepared By: Richard Ambrose, City Manager
Joni Pattillo, Assistant City Manager
Jason Behrmann, Senior Analyst
Ric Hutchinson, R3 Consulting Group
ATTACHMENTS:
1) Staff Report of November 2,2004
2) Amador Valley Industries "Best & Final" Proposal
3) Waste Management Inc. "Best & Final" Proposal
4) Republic Services "Best & Final" Proposal
5) Year 1 Cost Comparison of Agreement Scenarios
6) Rate Comparison of Agreement Scenarios
7) Amador Valley Industries Rate Comparison to Tri- Valley
Cities
8) Waste Management Inc. Rate Comparison to Tri-Valley
Cities
9) Collection Service Information
10) Resolution Authorizing the City Manager to Execute the
Collection Services Agreement
11) Resolution Authorizing the City Manager to Execute the
Disposal Services Agreement
~
1) Adopt attached resolution authorizing the City Manager to
execute the Collection Services Agreement with Amador
Valley Industries.
2) Adopt attached resolution authorizing the City Manager to
execute the Disposal Services Agreement with Waste
Management of Alameda County
RECOMMENDATION:
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COPIES TO: Ric Hutchinson, R3 Consulting Group
ITEM NO. U--
HI cc-forms/agdastrnt.doc
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FINANCIAL STATEMENT
Awarding the Collection Services Agreement to Amador Valley Industries and the Disposal Services
Agreement to Waste Management would result in a first year compensation amount of $6,040,077. It is
anticipated that solid waste rates would need to be increased by approximately 20.11 % in order to
generate the required compensation.
BACKGROUND
The original Request for Proposals for Residential and Commercial Solid Waste Collection, Disposal and
Recycling Services ("RFP") was released on July 26, 2004, and proposals were due on September 13,
2004. The City received three proposals for Collection Services, including Amador Valley Industries
("A VI"), Republic Services Inc., ("Republic") and Waste Management, Inc., ("WMI"). The City received
two proposals for Disposal Services, including Republic and WMI. City Staff and the City's consultant,
R3 Consulting Group ("R3"), performed a thorough review of the proposals received, including financial
analysis, staff interviews, site visits, reference checks, etc.
On November 2,2004, Staff presented the results of the initial evaluation to Council. For the Collection
Services Agreement, Republic received the highest weighted score (81.91), followed by A VI (72.64) and
WMI (69.55). For the Disposal Services Agreement, WMI received the highest weighted score (86.63),
followed by Republic (83.46). A VI did not propose on the Disposal Services Agreement. The November
2,2004 Agenda Statement has been included as Attachment 1 to this report.
At the conclusion of the Staff presentation on November 2, the Council directed Staff to proceed with a
"Best and Final" process, whereby each proposer was asked to submit revised proposals including new
cost proposals and additional operational information. The "Best and Final" proposals were due on
November 16, 2004. The following provides a brief summary of several significant discussion points
from the November 2nd meeting:
· Labor Issues: The Council heard testimony from the Teamsters Local 70 representative, as well as
an employee of Waste Management, regarding the requirement that the selected collection
contractor execute a labor contract with Local 70. The Council affirmed the requirement of a
Local 70 contract, and directed the proposers to include the associated costs in their "Best and
Final" proposals.
· Alternate Fuel Vehicles: The original RFP contained cost proposal forms for both conventional
and alternate fuel vehicles. Based upon the costs received in the original proposals and the
significant benefit to using alternative fuel vehicles, the Council affirmed the AFV requirement in
the new Collection Service Agreement, and directed the proposers to include the use of AFV in the
"Best and Final" proposals. Please note that Staff has researched grant funds for alternate fuel
vehicles, and the Bay Area Air Quality Management District recently made available
approximately $3.5M in grant funds for local governments. The Council will be asked to approve
a resolution authorizing Staff to submit an application to receive grant funds from BAAQMD for
alternate fuel vehicles. If the City is awarded grant funds, they will be used to reduce the cost of
the Solid Waste Collection Service Agreement compensation in order to lower the residential and
commercial rates.
· Collection Service Information: In an effort to allow Staff to adequately compare the proposals,
proposers were asked to include information regarding the number of collection vehicles,
employees, collection routes, etc. in the "Best and Final" proposals.
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· Countv Open-Space Fee: Proposers providing a "Best and Final" proposal for Disposal Services
were requested to include the County Open-Space Fee as part of the government fees whether or
not the fee was currently being assessed at their disposal facility.
The "Best and Final" proposals were due on Tuesday, November 16t\ and the City received the following
proposals:
· A VI submitted a "Best and Final" proposal for Collection Services (Attachment 2) that met the
conditions requested by Council. The proposal included revised Collection Compensation forms
resulting in a significant reduction in the overall compensation. The revised cost proposal for
Collection Services allows for the delivery of solid waste to either the Altamont Landfill (WMI) or
the Vasco Road Landfill (Republic) for disposal.
· WMI submitted a "Best and Final" proposal for Collection and Disposal Services (Attachment 3)
that met the conditions requested by Council. Under the terms of the "Best and Final" proposal
WMI has removed all of the exceptions to the Agreement language contained in the original
proposal. Additionally, WMI included a discount for the award of both Collection and Disposal
Services and agreed to include all diversion and public education programs offered by the other
proposers that are not part of the current service package. This includes the implementation of the
Go Green program. Finally, the proposal included revised Collection Compensation and Disposal
Rate forms, which included reduced Collection Compensation and Disposal Rates from those
proposed in the original proposal.
· Republic submitted a "Best and Final" proposal for Disposal Services (Attachment 4) that met the
conditions requested by Council, but did not submit a "Best and Final" proposal for Collection
Services. Republic staff indicated that the City Council requirement of a Local 70 contract for the
collection employees would have required that they site and maintain a corporation yard within
Alameda County, and it was not possible to secure a site and prepare a revised Collection Service
proposal within the time requirements of the "Best and Final" process. Republic indicated that if
the Council was not satisfied with either of the two proposals, and the Council elected to go back
out to bid, that it would be interested in re-submitting a proposal for collection services. The
proposal submitted includes revised Disposal Rate forms, which provided reduced Disposal Rates
from those proposed in the original proposal.
COLLECTION COMPENSATION COMPARISON FOR AGREEMENT YEAR 1
The following table provides a comparison of the proposed collection and container compensation
amounts in each of the two proposals received, as well as a comparison to the original proposals. A more
detailed comparison, including the franchise and administrative fee element and the disposal element is
included in Attachment 5.
Collection Compensation
Container Compensation
Total
Change from Original Proposal
Percentage Change From Original
Proposal
Table 1
"Best and Final" Year 1 Collection &
Container Compensation Comparison
AVI
$4,176,900
$177,000
$4,353,900
($1,521,501)
(25.9%)
Waste Management
$5,263,782
$190,000
$5,453,782
($508,860)
(8.5%)
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In addition, the compensation form required the proposers to submit a tonnage amount that they
anticipated for Year 1. The tonnage amount affects the overall compensation as the tonnage is multiplied
by the disposal tip fee to produce the disposal compensation amount shown on Attachment 5. The tonnage
submitted by the two companies is shown in Table 2.
Proposal
Table 2
Proposed Year 1 Disposal Tonnage
"Best and Final" Disposal Tonnaee
A VI 27,039
WMI 26,575
DISPOSAL TIPPING FEE COMPARISON FOR AGREEMENT YEAR 1
The following table includes a comparison of the disposal rates presented in the proposals:
Table 3
Total Cost Per Ton Comparison
Component Republic (Vasco Road Waste Management (AItamont
Landfill) Landfill)
Tip Fee $16.00 $12.76
Government Fees -Misc $13.41 $13.41
Open Space Fee $1.25 $1.25
County Planning Fee 0 $.075
Total $30.66 $27.50
As shown in the above table, there is a modest tipping fee differential between the two proposals.
However, WMI has proposed that the Disposal Rate stay the same for the first two years and then increase
annually over the remaining 8 years of the Disposal Agreement. This will result in a per ton rate of
$30.44 for the tenth year of the Disposal Agreement. Republic has proposed that the Disposal Rate
increase annually over the ten year term of the Disposal Agreement resulting in a per ton rate of $33.78 for
the tenth year of the Disposal Agreement. Assuming that tonnage and government fees remain constant,
utilizing the Vasco Road Landfill (Republic) would result in approximately $930,000 of additional
Disposal Costs over the ten-year term of the Disposal Agreement.
COLLECTION AND DISPOSAL SERVICE OPTIONS
There are two options for the provision of solid waste collection and disposal services that are presented
below. The following sections provide a detailed comparison of the pros and cons of selecting among the
two collection service providers. Staff has included the recommended disposal site for each collection
service option. A complete comparison of the total compensation for Year 1 for each of the service
alternatives is included in Attachment 5. The proposal options are presented with the recommended option
fi rst.
AMADOR VALLEY INDUSTRIES WITH AL T AMONT LANDFILL DISPOSAL
A VI has proposed full Collection Services including disposal at either the Altamont or Vasco Road
landfills. The total first year cost of selecting A VI as the collection service provider, including awarding
the Disposal Agreement to Waste Management for the Altamont Landfill is $6,040,077 as shown in
Option I of Attachment 5.
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If A VI is selected by the City Council to provide Collection Services, Staff recommends the Disposal
Agreement be awarded to Waste Management for the Altamont Landfill.
Rate Impact
Selecting A VI as the collection service provider and the Altamont Landfill as the disposal site will result
in the smallest rate increase. As shown on Attachment 6, the overall rate increase would be approximately
20.1 %. A comparison of these rates to those of other cities in the Tri-Valley is included in Attachment 7.
It should be noted that for comparison purposes, Staff assumed an equal percentage distribution of the rate
increase across all service levels. It is likely that the actual recommended rates will reflect a larger
percentage increase for the commercial rates and a smaller increase for the residential rates. Staffbe1ieves
a higher commercial rate increase is more equitable given the substantial costs associated with the new
bundled commercial recycling program. A higher commercial rate increase will also bring the distribution
of residential and commercial rates more in-line with other Tri- Valley jurisdictions. It is anticipated that
the recommended rates for Fiscal Year 2005-2006 will be presented to the City Council for approval in
March 2005.
Labor Impact
A VI currently has no labor contracts with any union organization. However, A VI has indicated on page 2
of the "Best and Final" proposal, included as Attachment 2 to this report, that it will honor the Local 70
contract currently in place in the City of Dublin and that Waste Management employees who choose to
take employment with A VI will retain the full seniority, pay and benefits that they currently have.
WASTE MANAGEMENT WITH ALTAMONT LANDFILL DISPOSAL
Waste Management submitted a proposal to provide Collection Services including disposal at either
landfill. The total cost for selecting WMI as the Collection Service provider, including awarding the
Disposal Service Agreement to WMI for the Altamont Landfill, is $7,127,199 as shown on Option 2 of
Attachment 5. Staff reviewed the option of selecting WMI for Collection Services and Republic (Vasco
Road Landfill) for Disposal Services, however this combination was the most costly of all the
combinations and thus was removed from consideration.
Rate Impact
The option to select WMI as the Collection Service provider and the Altamont Landfill as the disposal site
will require a significant rate increase for Dublin ratepayers. As shown on Attachment 6, the overall rate
increase would be approximately 41.7%. A comparison of these rates to those of other cities in the Tri-
Valley is included in Attachment 8.
Labor Impact
WMI currently stages the collection vehicles operating in the City of Dublin out of its facility in the City
of Livermore. WMI operates its Livermore facility under a labor contract with the Teamsters Local 70. If
the City elects to enter into an agreement with WMI, the current WMI employees would continue
operating within the City at their current salary, seniority and benefit level.
COLLECTION SERVICE COMPARISON
To assist in the evaluation of the proposals, each proposer was requested to provide details of the number
of vehicles, routes and drivers that would be utilized to provide Collection Services. The information
provided by both ofthe responding companies was very comparable and is presented in Attachment 9.
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PROPOSED ALTERNATIVE
Waste Management presented an additional program alternative that is described in the following section
of this report.
Waste Manaeement
Waste Management's proposed program alternative is to utilize its existing vehicles and carts instead of
providing new Alternate Fuel Vehicles and new carts. This option would provide for the use of Alternate
Fuel technology for the six vehicles providing Residential Collection Services, but not for the seven
vehicles providing multi-family, commercial and other services. Under this option, vehicles and carts
would continue to be replaced or repaired as required.
Collection Compensation
Container Compensation
Total
Table 4
Year 1 Collection & Container Compensation for Base and Alternative Proposals
A VI WMI WMI Alternative
Base Proposal Base Proposal Proposal
$4,176,900 $5,263,782 $4,805,563
$177,000 $190,000 $190,000
$4,353,900 $5,453,782 $4,995,563
While this alternative proposal does provide a Collection and Cart compensation reduction of$458,219,
or 8.4%, it is still $641,663 higher than the base proposal of A VI. The required rate increase and a sample
of the resulting rates are set forth in the following table.
Table 5
Comparison of Base and Alternative Proposal Rates
AVI WM
Base Proposal Base Proposal
Required Rate Increase (%)
Service Level
32 Gallon Residential Cart
1 Cubic Yard Container Once per Week
20.11 %
41.73%
WM
Alternative
Proposal
32.62%
$12.19
$52.20
$14.39
$61.60
$13 .46
$57.64
RECOMMENDATION
After a thorough review of the original and "Best and Final" proposals submitted by Amador Valley
Industries, Waste Management Inc. and Republic Services, Staff recommends that the City Council adopt
the attached resolution authorizing the City Manager to execute the Collection Services Agreement with
Amador Valley Industries and adopt the attached resolution authorizing the City Manager to execute the
Disposal Services Agreement with Waste Management in substantially the form attached as exhibits to the
resolutions.
Any additional Agreement language changes will be limited to clarification and will not affect the content
or intent of the Agreement approved by City Council. Any significant changes prior to execution will be
brought back to the Council for approval.
The Staff evaluation of the Collection Service proposals found that the proposal submitted by A VI
represents a very complete program at a competitive cost. A VI proposed a program that meets all of the
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requirements of the City, while taking no exceptions to those requirements. The key personnel are very
experienced and received high recommendations and praise rrom the cities they currently service.
The rate comparison survey included in Attachment 7 demonstrates that the cost proposed by A VI would
result in residential and commercial rates that are very competitive in the Tri-Valley region. It should
also be noted that the Collection Service Agreement contains many new programs and services, including
many that are not offered by other Tri- Valley jurisdictions, such as: commercial organics collection; rree
multi-family bulky waste collection; free compost giveback; free curbside collection of items such as
electronic waste, household batteries, tires, white and brown goods; the ability to add an additional
organics and/or recycling cart at no additional charge and the only 100% alternative fuel vehicle collection
fleet.
The Staff evaluation of the Disposal Service proposals found that Waste Management submitted a very
competitive proposal. As the current Disposal Service provider, WMI has shown that it is capable of
providing Disposal Services that meet the needs and requirements of the City. It is interesting to note that
the disposal cost portion of the rate proposed by Waste Management is lower than the governmental fee
portion. In addition, WMI proposed to hold the rate constant for the first two years of the Agreement.
ALTERNATIVES
If the Council does not believe that the proposals submitted by A VI and WMI for collection and disposal
services respectively, represent the best solid waste service combination for the City, the Council should
consider the following alternatives:
1) Award both the Collection and Disposal Services Agreement to Waste Management. This
option would result in a rate increase of approximately 41.73 %
2) Select the alternative proposal submitted by Waste Management and award both the
Collection and Disposal Service Agreement to Waste Management. This would result in a
rate increase of approximately 32.62%. This option would require the use of existing vehicles
and carts including seven non-alternative fuel vehicles.
3) Extend the current agreement with Waste Management by one year and restart the
procurement process. There were a number of external factors that affected the final number
of Collection Service proposals received, including other RFPs released at the same time.
While it is possible that additional companies may elect to submit a proposal if it were re-
released, Staff believes that it is unlikely that the City would receive any proposals lower than
that currently offered by A VI. There is also a risk that the re-submittals would all be higher
than the current A VI proposal.
It should be noted that although the original proposal submitted by Republic Services was 2%
lower than the current A VI proposal, Republic's proposal was based on the assumption that it
would operate out of its existing Richmond operating facility using Teamsters Local 315 labor.
The additional labor costs associated with the payment of Alameda County prevailing wages
and the costs to site a facility in Alameda County would likely push the costs of any future
proposal well above the proposal currently offered by A VI.
If the Council elects to extend the current agreement, the rates would be adjusted on July 1,
2005, according to the current annual rate adjustment methodology, which allows a maximum
rate increase of 5%.
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