What You Say is What You Get

An Informed Approach to Bid and Contract Design

SWMD/Ohio EPA WorkshopHighbanks Metro ParkAugust 4, 2011

Today’s Discussions

Navigating the Procurement Process

Identifying Applicable Laws

Understanding a Bidder’s Perspective

Establishing a Framework of Specifications

Exploring National Trends

Controlling Price

What we won’t discuss

Specific bid or contractual language

Legal interpretations

Issues with specific contractors

Detailed laws & regulatory requirements

Actual prices

Traditional Franchise

Established by ordinance

Service areas/fees set by franchisor

Issued by service type

Franchisees petition for

service areas

Area size determines exclusivity

Often controls flow to public

facilities

Billing done by franchisee/franchisor

Franchise fee assessed for

privilege

Regulatory Enforcement rather than

contract

Procurement Styles

Request for Proposals

• Conceptual• Inconclusive• Alterable• Negotiable

Invitation to Bid

• Specific • Definite• Predetermined• Binding

State and Local Laws Determine Procurement Capabilities

Ohio Revised Code

CountiesSection 307.86Item M exceptions

TownshipsSection 505.27

Municipal Corporations

Section 731.14

Procurement of Private Sector Waste and Recycling Collection Services

Competitive Bidding Required Public Notification Timeframes Establishes Contents of Bids Bonding Issues Injunctive Relief for Bidders

Competitive Bidding . . .Then and Now

From Subscription to Single Hauler Contract The Hauler’s Perspective

Rapid Growth or Loss of

Customer BasePredictable Revenue

Interference with Cash

Flow

Lower Profit Margins

Delinquency Risk

Higher Service Expectations

Greater Accountability

Less Routing Flexibility

Stricter Equipment Standards

Immediate Capital Outlay

Administrative Responsibilities

Is a Contract Price Always Lower?

Through the eyes of the bidder

Is the start date feasible?

Is the contract term worth the

investment?

Will I get paid? By whom?

When?

How will this impact my

current operation?

Are the specifications

realistic?

Do I have enough

information?

Will I have the support of the municipality?

Are there unwritten

expectations?

Are there hidden costs? Operational constraints?

Are More Better?

It’s All in the Details . . .

WhoService Units

FrequencyVolume LimitsWhat MaterialsSpecial ServicesTime ConstraintsDay ConstraintsDesignated Facilities

ParticipationExceptionsDiscounts

BillingRate StructureDelinquency

Franchise FeesPenalty Deposits

Rebates

Understanding Safety Issues

Prevent

Injuries Save

Lives

•Advantages of Automation•School Buses and Commuters•One Pass Collection Dangers•Cell Phone Usage•Bulky Waste•Ice/Snow

Contractual Flow Control

Pros• Pay direct for

processing/disposal• May negotiate rebate from

MRF• Levels the playing field• May control environmental

liability

Cons• Put or pay provisions for

guaranteed rate • Risk of disposal costs

exceeding revenue• (unlimited waste collection

or recycling residuals)• Risk of higher overall price• Hauler has no vested

interest in quality

Operational Trends

Equipment Customer ServiceAutomationCartsAge RestraintsDedicated VehiclesRequired Equipment SparesWhite GoodsPrivate Drive VehiclesGPS SystemCell Phones/RadiosOn-Board ScalesBar Code/RFID readers

Toll Free NumberLocal Office Extended Office HoursRatio of Reps to Customers24 hour voice mailEmailWeb sitesContract Dedicated StaffResponse TimesException Reports

Price Busters

Performance Bonds

Minority Vendors/Partnerships

Franchise Fees

RebatesLiquidated Damages

Liability Insurance

Discounts/Exceptions

Fixed Term Rates

Dedicated Equipment

Time Constraints

Pay As You Throw Anxiety

Bag/Tag Revenue Shortfalls

Inventory Control and Accountability

Billing Complexiti

esVariable

Rate Hybrids

Enforcement

Service Complaints

Retail Sales Outlets

Thank YouQuestions/DiscussionBid Development Checklist Available Upon Request