Tuesday, March 5, 2013

In-Depth: Brevard's Garbage Collection Contract Award

The BCAO responses to other controversial issues surrounding the Waste Management contract award follow.
 

BCAO Response: Waste Management Community Support


On or about September 13, 2012, Waste Management Inc. of Florida (“Waste Management”) submitted a proposal to the County in response to the RFP.  In its proposal, Waste Management stated as follows:


Though not included in the required elements of the response, Waste Management has documented its tangible contributions to improving the economic vitality and quality of life in Brevard County. We live here, too, and the success of our community is our success. These contributions of volunteer time, in‐kind service and financial support are multi‐decade commitments Waste Management has made as a trustworthy and responsible corporate citizen and community partner. Our support of the County’s economic development and military retention efforts is deep, as is our support of key community organizations and events. Since 1988, Waste Management has committed more than $3 million and thousands of volunteer hours in supporting these community events and organizations.


As part of this proposal, Waste Management is prepared to grow those contributions to efforts that are of keen interest to all County residents. We offer a new partnership with the Brevard Zoo, which Waste Management has supported since inception with in‐kind service donations, by helping the zoo retain and compost its waste for new beneficial uses. We also offer to support key initiatives, including the United Way of Brevard’s Annual Campaign and the development of the Brevard County Field of Dreams sports complex designed for those with special needs.


We also offer what we believe to be a unique partnership with Brevard County. As the County continues to aggressively pursue new businesses to establish themselves in Brevard, and encourage existing businesses to stay and grow, Waste Management proposes to help defray the County’s cost to provide economic development incentives, particularly in this challenging fiscal environment.


In all, these contributions – in addition to those made by Waste Management historically – total an additional $1 million investment in our community. We are proud to offer them and excited to share in the future success of each of these efforts. Waste Management Proposal, at pp. 5‐6.


Waste Management specifically enumerated its planned contributions to community and charitable organizations:

Brevard Zoo ($50,000) – to develop an in‐house composting facility for organic material.

Brevard County Board of County Commissioners ($50,000 annually) – to specifically provide support for the County’s economic development incentive programs to attract and retain high quality jobs in Brevard County.

Brevard Field of Dreams ($20,000 annually) – to support the development of this specially‐designed sports complex for those with special needs.

Economic Development Commission ($15,000 annually) – to support economic growth.

United Way of Brevard ($20,000 annually) – to support the Annual Campaign.



BCAO Response: Waste Pro Community Support


Much has been made of Waste Management’s community contributions. Detractors have overlooked the fact that the competing Waste Pro proposal also included a community support component. Waste Pro stated: “Over $500,000 in donations to local charities & community organizations, 2012.” 


In its presentation to the Selection Committee on December 14, 2012, Waste Pro submitted the following:


Waste Pro in Partnership with Brevard County
An Active Supporter of Community Events and Organizations

Space Coast League of Cities Scholarship
Boy Scouts of Brevard
Relay for Life
Local Holiday parades
Municipal charity events
Local business community involvement
Boys and Girls Club of Brevard
United Way
Keep Brevard Beautiful





BCAO Response: Direction By County Commissioners

 
After a public process, on January 9, 2013, the Board of County Commissioners directed staff as follows:


1. Negotiate a solid waste and recycling collection services contract within the next 30 days with Waste Management, and if it cannot be accomplished, move to the next vendor;
 
2. Waste Management to commit to building a materials recovery facility and the timeline for completion;

3. Clarify yard waste as part of the contract;

4. Carts and commercial prices to be tightened up;

5. Look at carts versus no carts options; and

6. Waste Management to commit to being a good community partner.



BCAO Response:  What happened during the negotiations?

The staff negotiation committee consisted of County Manager Howard Tipton, Solid Waste Management Department Director Euripides Rodriguez, and Assistant County Attorney Morris Richardson. Assistant County Attorney Christine Lepore provided legal counsel to the negotiation committee. The negotiation committee’s first priority was price. The negotiation team was well aware that Waste Management had not submitted the lowest price proposal initially. The team focused on closing the pricing gap between the competing vendors, with the goal of obtaining the level of service selected by the County Commission at the lowest price possible.


Proposal (Annual, Year 1)                       Automated Collection         Manual Collection
Waste Management                                   $14,474,370                       $12,025,371
Waste Pro                                                  $11,966,934                       $11,913,449
Difference                                                    $2,507,435                             $111,922


Waste Management attempted to justify its higher price by pointing out its commitment to service, particularly with regard to yard waste collection (17 dedicated rear loaders and 1,900 man hours weekly vs. 8 rear loaders and 1,250 man hours weekly).


Analysis of the competing proposals suggested that the yard waste collection commitment was likely responsible for some of the cost difference, particularly in the automated collection proposal. Waste Management also discussed its $12 million capital commitment to constructing a materials recycling facility in Brevard County. However, the negotiating team was adamant that the cost of that facility would not be borne on the back of the waste collection services contract. 

Through negotiations, the committee obtained the following price reductions from Waste Management:


                                          Automated Collection                  Manual Collection
Proposal                                $14,474,370                                 $12,025,371
Negotiated Price                    $11,966,934                                 $12,001,572
Reduction (Annual, Year 1)      $2,507,435                                       $23,799



Based on the lower price, statements by the Board at the County Commission workshop and selection meetings, and the benefits of vendor provided, County owned automated carts, the negotiating committee recommended the automated collection option. The initial annual contract price negotiated is identical to Waste Pro’s price proposal for the same service.


The only remaining cost difference between the vendors is that Waste Pro’s proposal included an annual CPI‐based increase with a maximum of 3% per year and a cumulative cap of 11.55% over the initial 7‐year term, while Waste Management agreed to the 3% annual cap but bargained for no cumulative cap (a potential 18% CPI‐based increase over the initial 7‐year term).


Assuming the worst case scenario (CPI increases equal to or greater than 3% annually), the difference between the negotiated Waste Management automated service deal and the Waste Pro automated service proposal is $1,480,390 over the 7‐year initial term – an average of $211,484 per year ($0.22/mo./residence). 


The negotiating team believed that potential difference was rational given Waste Management’s additional commitment to yard waste service and other benefits related to the material recycling facility (increased recycling revenues, tax base, extended landfill life, etc.) which were unique to the Waste Management proposal.


On February 1, 2013, staff concluded negotiations with the vendor. The negotiating committee voted unanimously to recommend that the County Commission contract with the vendor for the automated service option at the negotiated price. Staff also presented the negotiated manual option to the County Commission.


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