COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Department of Public Works

DATE:

August 24, 2007

BOARD MEETING DATE:

September 11, 2007

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

TO:

Honorable Board of Supervisors

FROM:

James C. Porter, Director of Public Works

SUBJECT:

Approval of the South Bayside Waste Management Authority’s Collection and Operations Request For Proposals and Agreements

Recommendation

Adopt a resolution:

1.

Approving the solid waste, recyclable materials, and organic materials collection programs outlined in the South Bayside Waste Management Authority (SBWMA) August 2, 2007 draft Request for Proposals (RFP) for Collection Services;

2.

Approving the contract terms detailed in the SBWMA’s August 2, 2007 draft Uniform Franchise Agreement for Solid Waste, Recyclable Materials, and Organic Materials Collection Services;

3.

Approving the scope of services in the SBWMA’s August 2, 2007 draft RFP for the Operation of the Shoreway Recycling and Disposal Center (SRDC); and

4.

Approving the contract terms in the SBWMA’s August 2, 2007 draft Agreement for the Operation of the Shoreway Recycling and Disposal Center (SRDC).

Vision Alignment

Commitment: Responsive, effective and collaborative government.

Goal 22: County and local governments effectively communicate, collaborate and develop strategic approaches to issues affecting the entire County.

The proposed RFPs and associate agreements are the result of a collaborative effort between all member agencies in the SBWMA. The adoption of a uniform franchise agreement by each agency that franchises garbage collection in the SBWMA service area provides the most cost effective service to the rate payers while maximizing the amount of material that is diverted from landfills through recycling and other programs.

Background

Previous Board Action

Became a member of the South Bayside Transfer Station Authority (SBTSA) in 1982, which was formed under a joint power agreement (JPA) comprised of
12 jurisdictions: Atherton, Belmont, Burlingame, East Palo Alto, Foster City, Hillsborough, Menlo Park, Redwood City, San Carlos, the City of San Mateo, the County of San Mateo, and the West Bay Sanitary District.

Amended the JPA in 1999 and SBTSA became the SBWMA.

Entered into a franchise agreement with subsequent amendments with Browning Ferris Industries (BFI), now Allied Waste (Allied), for Collection Services in the North Fair Oaks Area (County Service Area No. 8 [CSA8]).

On January 9, 2007,

1.

Approved the criteria for providing garbage service pursuant to uniform garbage franchises that are proposed to be negotiated between member agencies of the SBWMA and private collector(s) beginning in January 2011; and

2.

Directed the Director of Public Works to contact and advise known homeowner associations or advisory agencies in the unincorporated areas within the SBWMA service area that currently do not receive franchise garbage collection services of the criteria that will be used to define the garbage collection services that will be provided in their area, and to explain the difference between franchised and non-franchised garbage collection.

History

The SBWMA owns and contracts for the operation of the Shoreway Recycling and Disposal Center (SRDC) in San Carlos, and also manages the debt service related to the facilities. Each member agency has its own franchise agreement with Allied for garbage collection services within their jurisdictions; and the SBWMA provides coordinated waste management related staff services to the member agencies including rate review and recycling program services.

The SBWMA, in February 2006, initiated a five and one half (5-1/2) year contractor selection process on behalf of its member agencies that can result in new franchises for garbage collection services in each member agency’s area effective January 1, 2011. They are also developing a new contract for the operation of the SRDC that would commence on January 1, 2011.

Garbage service in CSA8 is provided via a franchise agreement between the County and Allied; and garbage service in the unincorporated areas of West Menlo Park, Menlo Oaks, and Ladera is provided via a franchise agreement between Allied and the West Bay Sanitary District. It is envisioned that the County and West Bay will negotiate new franchise agreements for these respective areas.

However, there are currently unincorporated areas in the SBWMA service area that receive Collection Services by Allied, but are not covered by a franchise agreement. They include Burlingame Hills, San Mateo Highlands and Baywood Park (Crystal Springs area), Harbor Industrial, Devonshire Canyon, Palomar Park, Oak Knoll, Kensington Square, Emerald Lake Hills, and the Sequoia Tract. These areas will be included in the upcoming franchise agreement.

Pursuant to your Board’s direction, staff has contacted and advised known homeowner associations or advisory agencies in the unincorporated areas within the SBWMA service area that currently do not receive franchise garbage collection services of the criteria that will be used to define the garbage collection services for their area, and to explain the difference between franchised and non-franchised garbage collection.

Discussion

All SBWMA Member Agencies voted affirmatively to participate in the RFP process. Several of the Member Agencies agreed to participate in the RFP process contingent on special service needs (i.e., Atherton and Hillsborough) being addressed, retaining the right to initiate their own RFP process (i.e., Belmont) and stating concerns regarding the intent of some portions of the contract terms (i.e., West Bay Sanitary District).

Following the SBWMA Member Agency approvals, SBWMA staff has prepared numerous drafts of the RFP documents. The draft documents have evolved over the past several months based on substantial input from a technical review committee of consultants, potential providers, SBWMA Board members, Member Agency staff, and outside legal counsel for SBWMA. SBWMA staff also toured some of the largest material recovery facilities (MRF) in California and nationally to gather further information. The net effect of this input is that SBWMA staff has made some changes to reduce the complexity of the RFPs (both collection and operations) while maintaining the same set of proposed programs and services previously approved. The changes are described later in this report.

With regard to the RFP process, the SBWMA Board on April 26, 2007 approved a preferred master plan for the SRDC so SBWMA staff could move forward with permitting and design work on significant site improvements required for the new solid waste and recycling collection services to be rolled out in late 2010/early 2011. They include transfer station building retrofits, new MRF building construction, traffic circulation improvements, new recycling sorting equipment, etc. The approved master plan was incorporated as a Site Plan into the draft SRDC Operations RFP. The recommended facility improvements must be permitted, designed, and constructed in time for the rollout of the new services.

On June 28, 2007 the SBWMA Board approved the draft Collection RFP and Agreement and the draft SRDC Operations RFP and Agreement. The next step in the RFP process is for Member Agencies to reaffirm their approval of the programmatic details and contract terms, including approval of the changes recommended by SBWMA staff as explained towards the end of this report.

After receiving Member Agency approvals and any recommended changes to the draft RFPs and Agreements, the documents will be brought to the October 25, 2007 SBWMA Board meeting for final approval. A Board vote at that meeting requires that all Member Agency approvals are completed by September 28, 2007. SBWMA staff will finalize the documents based on Member Agency approvals and input received by September 28^th. Shortly after SBWMA Board approval, the approved documents will be released to proposers. Ultimately each Member Agency could make a separate selection of providers, negotiate any parts of the template agreement, and sign separate agreement. However, the County unincorporated areas are much smaller than the adjacent cities and we intend to recommend the same service provider as the neighboring cities to facilitate operations. The County will still have the option to negotiate any part of the template agreement for the range of services that will ultimately be provided.

Schedule

The next steps in RFP process are outlined in the following schedule:

July – September 28, 2007

Member Agency approval of draft Collection RFP and Agreement and draft SRDC Operations RFP and Agreement (“RFP documents”). All Member Agency approvals and comments to be completed by September 28, 2007.

October 18, 2007

SBWMA staff sends out Board packet with final “RFP documents.”

October 25, 2007

SBWMA Board meeting to consider staff recommendation to approve release of the final “RFP documents.”

November 1, 2007

SBWMA release of the final “RFP documents.”

December 2007

Conduct mandatory pre-proposal conferences.

February / March 2008

Proposals due.

March – July 2008

Review of Proposals, Proposer Interviews, and Selection.

August – September 2008

SBWMA Selection of Contractor(s).

October – December 2008

Member Agency Selection of Contractor(s).

January – March 2009

SBWMA and Member Agencies complete negotiations with contractor(s).

April - June 2009

Member Agencies approve negotiated Agreements*.

January 1, 2011**

Contractor(s) commences rollout of services.

*

The SRDC Operations Agreement is subject to approval of two-thirds of the Member Agencies whereas the Collection Agreements are unique to each Member Agency and subject to approval by each Member Agency.

**

Services may be rolled out sooner if an alternative rollout schedule is negotiated.

The SBWMA Board approved draft Collection RFP and Agreement and draft SRDC Operations RFP and Agreement reflect some changes to the original core services and contract term recommendations initially proposed by the SBWMA Board and Member Agencies. These changes were notably driven by extensive input received from potential proposers. The changes primarily relate to making the RFP documents simpler (as summarized in the following section) in an effort to ensure that they are more reasonable and manageable for proposers to respond to and eventually provide the services requested. While simpler, the draft Collection RFP still remains highly complex given the large size of the SBWMA service area and magnitude of the rollout of new services, customization of services for Member Agencies, and potential for some Member Agencies to opt out of the process.

Summary of Changes to the Collection RFP

The key changes to the original SBWMA recommendations for Collection Services relate to the following areas:

1.

Expanding the residential core recycling services to include used oil collection, battery and cell phone collection and food scraps (to be commingled with plant materials); these programs were originally listed as optional programs.

2.

Expanding the commercial core recycling services to include multi-family and commercial technical assistance; these programs were originally listed as optional programs.

3.

Developing separate and distinct scope of services to meet unique Member Agency needs. For example, the Town of Hillsborough has a unique scope that all potential proposers will be required to address.

4.

Removing ancillary services (listed under Optional residential and/or commercial collection programs) such as on-call household hazardous waste, universal waste and Sharps from the Collection RFP so they can be addressed through a separate SBWMA procurement. Member Agencies can still decide whether or not to add these services to their franchise Agreement.

5.

Addressing significant SBWMA staff and proposer concerns regarding the improbability of a successful rollout of new programs and services in one-day, on January 1, 2011, at the expiration of the existing contract. Staff has included direction in the Collection RFP to solicit proposals for a phased rollout starting July 1, 2010 (“alternative start date”) or a phased rollout after
January 1, 2011.

6.

Simplifying the contractor compensation methodology from a hybrid cost-plus/fixed-price compensation methodology to pursue a more typical industry standard fixed-price model with annual “cost of living” adjustments. Very few communities currently use a cost-plus compensation methodology for solid waste collection and recycling services. The proposed compensation process eliminates detailed annual rate reviews so that contractor’s compensation will not be “trued up” to contractor’s actual costs (with the exception of an annual cost reconciliation related to actual tonnage collected and actual disposal and processing costs). Elimination of the detailed annual rate review will dramatically reduce consultant expenses for this activity beginning in 2011. Also, this fixed price model should result in far greater rate stability and predictability compared to the current cost plus approach.

7.

Requiring all proposers to use the same operational assumptions for key items such as residential cart sizes, use of new collection vehicles for core services and use of new commercial collection containers when preparing their proposals. These assumptions are for the purposes of obtaining comparable cost proposals from proposers. Member Agencies still retain the right to establish cart sizes for residents, use of used equipment, etc, as part of the final negotiated scope of services and costs with their selected contractor.

8.

The term of Collection Agreement was recommended as a seven-year term but has now been changed to a 10-year agreement term. This modification has been made to reflect a more standard amortization schedule for the primary equipment used to provide collection services. In addition, based on the fixed-price compensation methodology and no need for an annual rate review, a longer contract term provides Member Agencies with a longer time frame for rate stability and extends the time that the next procurement or negotiation cycle will occur.

9.

Adjusted the “Acceptable Materials” list for the curbside recycling collection program to exclude some small scrap metal types that pose a problem to sorting equipment (i.e., small appliances, hand tools, automotive parts, chain, wire, and banding).

Summary of Changes to the SRDC Operations RFP

1.

Similar changes as in the Collection RFP to simplify the compensation methodology.

2.

Similar change as in the Collection RFP to change the term from seven years to ten years.

3.

Contractor will oversee MRF processing equipment installation and startup prior to the expiration of the existing Operating Agreement.

4.

All proposers are required to bid new equipment for rolling stock and transfer vehicles for the purposes of preparing cost proposals. SBWMA may later negotiate with the selected contractor for the use of some used equipment.

The final Collection RFP and Agreement will evolve through the procurement process as proposers raise questions and the SBWMA issues RFP addenda, as contract negotiations take place with selected contractor(s), and the final Agreements are approved. Ultimately, each Member Agency will approve its final Collection Agreement with the selected contractor(s).

The SRDC Operations RFP and Agreement similarly will undergo change throughout the competitive procurement process. The final SRDC Operating Agreement will be subject to approval by two-thirds of the SBWMA Member Agencies.

This item has been reviewed by the Environmental Quality Committee, and the Committee concurs with the recommendation.

A resolution has been approved as to form by County Counsel.

Fiscal Impact

Solid waste and recyclables collection services and the operation of the Shoreway Recycling and Disposal Center are funded through the rates paid by customers. No change in the franchise fee is recommended as part of the RFP process. There is no impact to the General Fund.

Enclosures:

1.

Draft RFP for Collection Services;

2.

Draft Uniform Franchise Agreement for Solid Waste, Recyclable Materials, and Organic Materials Collection Services;

3.

Draft RFP for the Operation of the SRDC; and

4.

Draft Agreement for the Operation of the SRDC.