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HomeMy WebLinkAbout15-ATTACHMENT 1 (SUMMARY OF PROPOSAL EVALUATION)ATTACHMENT SUMMARY OF PROPOSAL EVALUATION SUMMARY OF PROPOSAL EVALUATION The following is a detailed description of the results of the proposal evaluation by the Ad Hoc Committee. It is divided into the nine sections of Evaluation Criteria contained in the RFP and contains information on the sub -categories under each category of the criteria. The proposal forms where the information was presented in the proposals is noted under each of the Evaluation Criteria. 1. Organization (Proposal Forms 2, 3, 4, 5, 6 and 20) a. Team member assignments: i. CR&R has existing operations and management team for Tustin that is doing a good job. ii. WM submitted personnel that appear to be their operations team currently serving the City of Santa Ana. b. Linkage between local management and corporate structure: i. As a local, private corporation, CR&R's structure is clear; senior management decision -makers are local. ii. Waste Management of Orange County is a local subsidiary of a very large structure of companies. The proposal described their standard operating process of local, Area and Regional Management reporting to Corporate headquarters in Houston, TX. Proposal identified local team responsible for contract operations plus Area and Regional senior management. c. Experience of key personnel: i. Much of CR&R's proposed team has Tustin -specific experience (Christina Ochoa, Maria Lazaruk Norma Zarate, Filiberto Hernandez). Assigned personnel have extensive experience implementing recycling programs at businesses. ii. WM listed personnel have all the demonstrated skills required. WM has less in-house experience with on-site implementation of recycling and food scrap programs at businesses. WM usually uses 3rd party consultants hired by cities to implement programs and has successfully implemented programs using this approach. Expressed willingness to hire 2 in-house Recycling Coordinators as required by contract for Tustin. d. Client references: CR&R — Proposer described as responsive. Few resident/business complaints received by the cities contacted. Some complaints are a result of factors outside proposers control such as space constraints and vehicles blocking containers resulting in missed pickups. Collection vehicles are generally well maintained. Monthly/quarterly/annual reporting is easy to read and extract data from. Successful implementation Summary of Proposal Evaluation Page 1 of 23 of recycling and food waste programs highly dependent on contract requirements. No City faulted proposer for not attaining 100% compliance when not required by contract. ii. WM — Proposer described as responsive to City needs, but also limited by corporate decision makers in Houston. Few resident/business complaints received by the cities contacted. Some complaints regarding call center staff not having correct information about programs available in individual cities. Collection vehicles are generally well maintained. Monthly/quarterly/annual reporting is easy to read and extract data from. Successful implementation of recycling and food waste programs highly dependent on contract requirements. No City faulted proposer for not attaining 100% compliance when not required by contract. e. Pending Litigation: i. CR&R has 10 pending matters, all insurance claims including 8 auto accidents, one labor matter and one property damage claim. Fairly typical of most companies in the industry. ii. WM stated it has no pending litigation within the parameters described in the RFP or follow up question sets. 2. Contract Exceptions (Proposal Form 21) a. CR&R — No exceptions. b. WM — 18 exceptions (plus one correction of typos) summarized as follows: i. Section 4.01. Broad Re -Openers For Changes in Waste Stream. WM proposed eliminating language stating City makes no warranties about quality or quantity of waste stream. Shifts risk of changes in stream to City. ii. Section 6.12. Diversion of Yard Trimmings. Eliminates City's prohibition on use of any materials collected in Tustin for Alternative Daily Cover. Would allow use if considered "diversion" by CalRecycle. Concern that yard trimmings might be made into low quality compost and applied as ADC at landfills; or similar use of CalRecycle exceptions might frustrate City's goal of diverting these materials completely from landfills. iii. Section 12.03. Rate Adjustments for Proposition 218 Challenges. Would require City and its ratepayers to "make WM whole" in event of a successful Proposition 218 challenge to rates either by reducing services to ratepayers or by payments from the City. Summary of Proposal Evaluation Page 2 of 23 iv. Section 12.06. Adjustments to Rates Based on City -Directed Changes to Scope of Work. Requires City/ratepayers to pay WM for any projected lost revenues from processing materials themselves if City directs a change to use of a lower cost processing facility. Would defeat the purpose of the City's right to change facilities to reduce ratepayer costs. v. Proposed New Section 12.05. Extraordinary Adjustments. Creates a broad re -opener where WM could apply for rate increases over and above the annual increases set forth in the contract for many items, including most cost categories and lost revenues from sale of recyclables in case of market downturn. Makes "apples to apples" comparison of proposed costs (between proposers) impossible, given unlimited number and amount of adjustments WM could request from City Council. Contractor is in best position to offset any unforeseen cost increases by cutting costs in other areas. Absent an incentive to do so, the contractor would have little reason to economize to offset cost increases. vi. Section 14.1. Force Majeure. Broadly expands the list of force majeure events (usually "Acts of God" such as fire, flood, earthquake) to include "Acts of a Government" including China's Green Sword, trade tariffs imposed by the U.S., China or any other country, etc. Such actions by a government could excuse failure to perform contract requirements. City placed risk of global markets for recyclables on the contractor because it has experience and contacts in global markets. Contractor also has the ability to proactively reduce contamination in the City's recyclables through public education and training of commercial customers. Contractor has the ability to find new foreign and domestic markets for commodities, to counteract China's tightening of standards. vii. Attachment A. Definition of "Recyclable Materials". Would change the definition to exclude materials "for which there is no market". This would undermine the contract, which is predicated on diverting materials, regardless of the strength or weakness of markets for them. The City's obligations to meet state requirements are not contingent on the availability of markets. viii. Section 4.10A. Close the Cart Lids After Collection. Would delete this requirement. This affects aesthetics. Might also create storm water issue if rainwater in carts contacts trash residue and is then dumped into storm drains by residents. ix. Section 13.09. Liquidated Damages. Proposed to delete language that makes WM responsible for payment of liquidated damages if they fail to achieve performance standards in the Summary of Proposal Evaluation Page 3 of 23 contract. Changes this to payment only if they "materially breach" the agreement. Also proposes to significantly reduce the amount of liquidated damages that would have to be paid. Undermines a key tool placed in the contract to incentivize achievement of contract requirements. x. Attachment A. Definition of "Clean MRF" Contract requirement that contamination (remaining non -recyclable residue after the sorting process at the Materials Recovery Facility) is limited to 10%. This provision was included by City to help ensure compliance with new state regulations that limit contamination levels that must be achieved in recyclables and food scraps. A. Attachment 8, Section 5.5. Contamination. Proposed having the ability to charge customers a "contamination fee" to recover its costs to handle contamination. This runs counter to City's current approach to encourage recycling and food scrap program participation through ease of use, free training, and financial incentives. When fines for contamination are mandated by the State beginning in 2022, this could result in customers paying twice (State -required fine and WM's fee) if their contamination exceeds State requirements. xii. Attachment 8, Section 1.3. Customer Requests to Change Collection Dates. Proposed to eliminate a provision allowing commercial and multi -family customers to change pick-up days. Creates a customer service issue. xiii. Section 11.02A.3. Insurance — Pollution Liability. Eliminates obligation to provide pollution insurance for Non -owned disposal sites for materials placed in bins by residents. Shifts that risk from an insurance company to City/ratepayers. xiv. Section 11.02.A.4. Insurance — Physical Damage. Allows self- insured retentions in an amount above $100,000 with City's consent. Could slightly increase risk to City, but given WM's size is not an unreasonable request. No change was requested by the other proposer. xv. Section 11.02.C. Insurance — Required Endorsements. Eliminates requirement that insurers notify City in event of non- renewal or reductions in coverage. WM states it would give City this notice. This is a standard requirement in all City contracts and City has not been willing to change it for others. xvi. Section 11.02.D. Insurance — Delivery of Proof of Insurance. Eliminates requirement that WM provide copy of its insurance policies to City upon request and would eliminate the requirement to obtain City's consent before changing coverage. WM states policies are specially negotiated and proprietary. City could request to view policies with reasonable notice. Summary of Proposal Evaluation Page 4 of 23 xvii. Section 11.05. Indemnification — Revision to Exclude Certain Landfills. Indemnification would not apply to "Landfills or other facilities operated by Orange County Landfill System or any other disposal or processing facility that the City directs to be utilized by Contractor that is not owned by Contractor or an affiliate." WM's rationale was that Orange County already indemnifies the City regarding its landfills. However, multiple layers of protection against liability reduce City/ratepayer risk and this would remove one layer. xviii. Attachment Z. Guaranty, Section 3 — Proposed Change in Parent Company Guarantee. WM's guarantor is unwilling to waive rights established in the future to "terminate, cancel, quit or surrender" the Guaranty. This weakens the value of the Guaranty compared to that of the other proposer who did not take an exception. 3. Technical Capability (Proposal Forms 7 and 12) a. Demonstrated experience with similar projects, implementing diversion programs and diversion requirements: i. CR&R has met the requirements of the City of Lake Forest's contract, a contract with similar diversion program implementation requirements. ii. WM has demonstrated the ability to operate conventional recycling programs but has a comparatively less aggressive expansion of AB 341 and 1826 implementation levels in some Orange County cities. iii. Both proposers have experience using materials recovery facilities, composting facilities, construction and demolition processing facilities. iv. Both proposers have experience maintaining accurate records and providing data to customers and cities. b. Demonstrated experience with providing high quality customer service for 8-10 year contracts: i. Both proposers have experience with long-term agreements in similarly -sized Orange County cities and other cities of 75,000+ population: 1. WM — Mission Viejo, Santa Ana, Irvine plus 31 other jurisdictions of 75,000+ population. 2. CR&R — Orange, Lake Forest, Tustin plus 8 other jurisdictions of 75,000+ population. c. Demonstrated experience with public education and outreach: i. Both firms have public education and outreach experience. Each provided examples of outreach materials. Summary of Proposal Evaluation Page 5 of 23 ii. WM utilizes corporate database of outreach materials, social media, data -driven targeted public outreach. Focus is on customer buy -in. However, proposed use of a "contamination fee" (see contract exceptions) seemed to run counter to the City's approach to use public education, free training of businesses and multi -family complexes and financial incentives to obtain customer participation in programs. iii. CR&R outreach is matched to a customer's particular needs or challenges. d. Demonstrated ability to hire qualified Recycling Coordinators with proven track records of program implementation: i. CR&R has demonstrated capacity to hire qualified, competent Recycling Coordinator staff in Lake Forest and in Tustin. The company has a total of 14 Recycling Coordinators currently on staff serving several Orange County cities and proposed to hire 2 additional Coordinators for Tustin. Current Tustin Recycling Coordinator would be promoted to City Liaison. ii. WM traditionally relies on 3rd party consultants and multi - jurisdictional staff; limited track record of committing to expansion of in-house dedicated Recycling Coordinator staff. WM proposed paying $50,000 per year for the City to augment the work of the 2 WM Recycling Coordinators with outside consultant assistance. During the interview, company representatives expressed enthusiasm and willingness to hire Recycling Coordinators and City Liaison for Tustin. e. Adequacy of, and comparison of FTE proposed for Tustin contract: i. The employee headcount submitted by each proposer is adequate to perform the work required by the contract. As shown in the table below, the total FTE of the headcounts is similar. Residential Drivers Commercial/multi-family Drivers Roll -off Drivers Total Misc. and Support Total Proposed Headcount CR&R Waste Management 8 7.13 11 10.72 2.5 1.58 4.5 5.01 26 24.44 Summary of Proposal Evaluation Page 6 of 23 4. Proposed Approach (Proposal Forms 8, 9,10, 11, 13, 15, 16, 17, 18, and 19) a. Thoroughness of Proposed Approach: i. CR&R submitted a concise, thorough, detailed and well thought out proposal. ii. WM submitted a proposal that is complete with respect to content and form. It is lengthy and more `high level', with more generic descriptions of programs; emblematic of the more standardized approach of a large nationwide and world-wide company. b. Incorporation of Technology: i. CR&R proposed implementing a 3-phase Smart Bin program at public parks, City facilities and bus stops beginning in late 2019 and running through late 2020. Smart Bin sensors on bins and carts alert dispatch when the bin/cart is full and needs to be emptied, saving time, cost and energy. Proposes specific measures of cost effectiveness for expansion of program and covering percentage of expansion costs, CR&R proposed to use the results to propose expansion to commercial customers. ii. CR&R proposed installing on-board scales on all front loader vehicles and using the results to propose a "pay-as-you-throw" rate system by early 2021. iii. CR&R proposed use of 4 lightweight recycling vehicles all to be phased in by 2021; trucks are 5,000 pounds lighter than conventional trucks with a comprehensive redesign of the vehicle CR&R currently has in use in Lake Forest. Redesign includes reduction in axels down to a 2-axel vehicle. Savings of for each the four vehicles is $38,880 per light-weight vehicle for total of $155,520 savings incorporated into proposed rates. iv. WM proposed use of 6 light-weight commercial recycling trucks and 3 light-weight residential recycling trucks weighing 1,700 pounds less than conventional vehicles. This was accomplished by changing from 4 axles to 3. No mention of amount saved or application of savings to rates. v. WM is currently conducting a pilot using hybrid trucks in other areas, results expected in 2020/21. WM is willing to discuss hybrid vehicles as "potential future opportunity to bring expertise to Tustin" but none proposed and not included in proposed rates. vi. WM has experience in Mission Viejo pilot testing Smart Bins, but no specific plans proposed to implement in Tustin c. Adequacy and reliability of Collection Equipment: Summary of Proposal Evaluation Page 7 of 23 i. Both firms have a history of reliable and adequate deployment of collection equipment. As shown in the chart below, the number of proposed vehicles is similar for both companies. CURRENT CR&R WASTE MANAGEMENT Residential Vehicles 6 8 9 Commercial Vehicles 8 11 10 Roll -off Vehicles 2.5 2.5 2 Special Vehicles 3 4 5 Total Proposed Vehicle Count 19.5 25.5 26 d. Proposed Processing Facilities: i. Clean MRF 1. CR&R proposed 2 Orange County facilities with adequate capacity for Tustin: a. CR&R Intermediate Processing Center (Western Avenue Clean MRF) in Stanton b. South Orange County MRF and Transfer Station in San Juan Capistrano 2. WM proposed 2 Orange County facilities with adequate capacity for Tustin: a. Waste Management Orange MRF b. Sunset Environmental MRF/Transfer Station in Irvine ii. Composting Facility 1. CR&R proposed to provide composting services at three sites owned and operated by the company: a. Lakeview Composting Facility located in San Jacinto - permitted for composting of yard trimmings. b. South Orange County — permitted for composting of yard trimmings. c. Yuma, AZ — permitted for composting of yard trimmings and food scraps. d. CR&R offered Sage Ranch in Riverside County as a backup. Site is currently in permitting process. 2. WM proposed two 3rd party composting facilities with adequate capacity for Tustin: a. Agromin located in Chino, permitted for composting food scraps and yard trimmings. WM has a long-standing relationship with Agromin and the facility creates high quality compost products Summary of Proposal Evaluation Page 8 of 23 and other soil products. WM currently supplies over 90% of the feedstock to Agromin's Chino facility. b. Tierra Verde Industries EcoCenter in Irvine for composting yard trimmings. iii. Bio -Engineered Feedstock Facility: 1. WM proposed to use its own CORe facility located in Orange, CA which has adequate capacity for Tustin. WM pioneered development of this facility in California and worked with LA County Sanitation Districts for several years to refine use of the Bio -Engineered Feedstock created at the CORe Facility. (City of Tustin's food scraps collected by CR&R under the current contract are processed at this facility.) 2. CR&R proposed to use the Puente Hills (LA County Sanitation Districts) facility with commitment for adequate capacity for Tustin food scraps. Building on its relationship with WM's CORe facility, LA County Sanitation Districts developed its own Bio -Engineered Feedstock facility (using the Doda technology) so it now can accept food scraps directly. iv. Anaerobic Digestion Facility 1. CR&R proposed use of the AD facility it owns in Perris, CA which has adequate capacity for the City of Tustin. The facility creates Renewable Natural Gas which is fed into Southern California Gas pipeline. RNG will be used to fuel CR&R fleets. 2. WM's proposed approach did not include an AD facility. The City indicated in its pre -submittal Q&A Addendum #4 that an AD facility was desired but lack of one would not be considered non-responsive. WM did include a composting facility and a bioengineered feedstock facility for processing food scraps as noted above. WM is currently exploring the feasibility of an AD facility at a site in Adelanto (San Bernardino County). e. Public Education Strategy: i. Both WM and CR&R submitted adequate public education plans. As noted above, both submitted samples of public education materials. ii. CR&R's plan is more simple and straightforward, and evidences experience of having Recycling Coordinators on site working with residents and businesses, distributing some training and information materials, etc. Summary of Proposal Evaluation Page 9 of 23 iii. WM's plan is more general and high level. It noted ability to use customer data to target messaging to select groups of customers. It listed use of social media to get messages out but not specifics of how this would be done in Tustin. During the interview Waste Management elaborated on its Tustin community events and how they would be leveraged into supporting public education in Tustin. iv. WM's proposed contract exception to charge a "contamination fee" runs somewhat counter to the City's planned approach in the contract to obtain customer participation in diversion programs by providing public education, free planning of programs and free training at businesses, and cost incentives. The proposed fee could result in a double penalty to customers in 2024 when the State mandates that non-compliant customers with too much contamination in recyclables must be fined by the City: customers would have to pay both the WM fee and the City -imposed fine required by the State. f. Implementation Plan: i. Both proposers submitted reasonable collection implementation/transition plans with clear tasks and schedules for acquisition and deployment of new vehicles and equipment (bins, carts, etc.) public outreach, and other tasks to transition to the new contract and new rates. g. Training Programs: i. CR&R submitted a detailed and comprehensive training program. ii. WM submitted a systematic training program that was developed for wide -scale implementation throughout WM operational programs. iii. In response to questions during the interviews, both proposers described almost identical driver training programs; the main difference was WM's takes place in another state at their central driver training location, CR&R's takes place locally. Both then include final driver "on route" observation ride -along followed by "hands on" driving with a trainer, and ultimately solo driving and sign off by two separate managers. h. Environmental Responsibility: i. Both WM and CR&R submitted acceptable information about their environmental efforts, sustainability policies and training. i. Reporting_ i. CR&R submitted a detailed and comprehensive reporting methodology with program -specific references. ii. WM submitted a reporting process that was developed for wide- scale implementation throughout WM operational programs. Summary of Proposal Evaluation Page 10 of 23 5. Financial Capability (Proposal Form 23) a. Financing Capacity and Strength: i. Both proposers have financial capacity to finance purchase of the new fleet and equipment required by the contract, hire required employees and implement their proposed implementation plans. Both have proven track records in fleet management/preventative maintenance. The size and condition of their existing fleets in use in California show the fleets are well- maintained and operated. Both companies have owned their own transfer stations and processing facilities (e.g. materials recovery facilities and construction and demolition debris processing facilities) in Southern California for decades. Now they also own composting facilities (CR&R) and bioengineered feed stock facilities (WM). Nothing presented in the proposals, answers to follow-up questions or in the interviews raised doubts about either company having the financial capacity and strength to undertake and perform all the requirements of this contract for the City of Tustin. ii. Waste Management of Orange County is a subsidiary that has the financial strength of a national and global company behind it; the City would be contracting with the local subsidiary backed by a parent company guaranty. WM's parent company total revenue in 2017 was reported at $414.5 billion, with an asset base of $22 billion and outstanding debt of approximately $8.7 billion. WM is a NYSE -traded company and is regulated by the Securities and Exchange Commission, which requires WM to disclose matters and conditions that may affect its finances and returns to shareholders. iii. CR&R is a privately held large regional company with long-term contracts throughout Southern California (in Orange, Riverside, San Bernardino, Imperial, Los Angeles and San Diego Counties) and in Arizona and Colorado, that has been operating for over 54 years. It currently serves 2.5 million customers including over 50,000 commercial accounts and has 50+ municipal franchise agreements/contracts throughout California. This represents a reliable revenue stream for the company. b. Understanding of rate impact of required diversion programs and 75% diversion: i. Both proposers indicated, through their proposed rates, projected diverted tons and diversion program descriptions, that they understand the rate impact of the required diversion programs and the shift to 75% diversion. c. Abilitv to handle risk factors: Summary of Proposal Evaluation Page 11 of 23 i. Both companies have the financial resources to handle the risk factors associated with the contract, including those that can be covered by insurance (including deductibles and self-insured retentions) as well as the risk of commodity markets for sale of recycled materials, compost and other recovered materials. ii. CR&R demonstrated its willingness to manage risk through not taking any exceptions to the contract. CR&R has also demonstrated its capability to anticipate market downturns and the tightened standards in China by responding proactively and switching to new foreign and domestic markets. iii. As noted above, WM expressed concern over global markets and through its contract exceptions. These would shift the risk of market downturns, drops in materials prices and any future lack of markets for materials to the City/ratepayers. WM's proposed exceptions would also shift the risk of a Proposition 218 challenge to the City. The exceptions involving indemnifications would also shift risk to the City. d. Consistent and accurate financial reporting: i. Both companies have a history of accurate and thorough financial reporting. e. Ability to perform scope of work for rates quoted in the proposal: i. As noted above, the proposed rates were compared to existing rates and were also tested for consistency with the following: number of collection vehicles and support vehicles to be provided to perform the scope of work, number of each category of employee to be provided, tons of solid waste and of each recyclable material projected to be diverted by the required recycling programs and the cost required for that effort. The rates of both proposers were found to be adequate to cover the costs of performing the scope of work in the contract. f. Demonstration of corporate ethics: i. Both companies described their sustainability efforts, participation in the communities they serve, and internal training procedures, including safety training and hiring practices. 6. Diversion Strategy (Proposal Form 14) a. Does proposal maximize diversion and oarticiaation rates/levels. and minimize contamination of diverted materials: i. CR&R provided a detailed and comprehensive approach to maximization of program participation and minimization of contamination of diverted materials. ii. WM exhibited an understanding of the need for implementing programs in a comprehensive manner in broad terms. Summary of Proposal Evaluation Page 12 of 23 b. Demonstrated ability to meet diversion requirements of AB 939, AB 34, AB 1826, AB 1594, and SB 1383 in another jurisdiction the size of Tustin or larger: i. CR&R achieved 80% compliance with AB 341/AB 1826 (Tier 1 and 2) in Lake Forest and a 99% compliance with AB 341/AB 1826 in Laguna Niguel using in-house Recycling Coordinator staff to implement programs. ii. WM has achieved a near 70% AB 1826/AB 341 compliance in Mission Viejo, utilizing City -designated 3rd party consultants for program implementation. c. Elimination of Yard Trimmings from Alternative Daily Cover use and diversion to facility(ies) that provide CalRecycle-approved diversion credit: i. CR&R proposed use of 3 compost facilities so Yard Trimmings would be composted. ii. WM proposed use of 2 compost facilities for Yard Trimmings. WM did take an exception to the contract to change the City's prohibition on use of any materials collected in Tustin, to allow materials to be used for ADC if CalRecycle still provided diversion credit (the example given was auto shredder waste, which is unlikely to be generated in Tustin). d. Number of FTE devoted to implementation and maintenance of diversion programs. Experience of assigned FTE's with diversion program implementation in other cities or counties: i. CR&R provided a detailed approach for staffing program implementation and maintenance. They identified the supervisor responsible for hiring the Recycling Coordinators and would promote Tustin's existing Recycling Coordinator to the new City Liaison position. ii. WM provided a more generic approach with generalized descriptions. WM expressed willingness and interest in hiring in- house Recycling Coordinators for Tustin per the contract. e. Total proposed diversion in tons and as percent of collected tons: L CR&R's proposal included a very clear, concise, detailed program -by -program diversion chart including sub -waste stream components and corresponding program -specific projected diverted tonnage totals along with percent diversion by program and sub -waste stream. The projected annual diverted tonnage during the first year of the contract (4/1/2019) totaled 25,402 tons and as of 1/1/2022 a total of 34,854 tons was projected to be diverted. These tonnage figures result in a projected increase in diversion of 11 %, an increase of 9,452 tons. This increase of 11 % in diverted tonnage is reasonable considering the scale of Summary of Proposal Evaluation Page 13 of 23 new diversion programs that the contract requires to be implemented in this 3 -year period. ii. WM's proposal did not include the projected diverted tons/percentages. It appeared the instructions on Proposal Form 14 did not clearly state projected diverted tons were to be included. In response to Question Set #2, WM provided monthly projected tons to be diverted in 2 timeframes (as requested by the City). Additional clarification was requested during the interview and provided shortly thereafter. The projected annual diverted tonnage during the first year of the contract (4/1/2019) totaled 35,388 tons and as of 1/1/2022 a total of 45,912 tons was projected to be diverted. These tonnage figures result in a projected increase in diversion of 11 % (an increase of 10,524 tons). This increase of 11 % in diverted tonnage is reasonable considering the scale of new diversion programs that the contract requires to be implemented in this 3 -year period. iii. In summary, although each proposer used different assumptions in terms of starting diverted tonnage, both proposers arrived at a projected 11 % increase in diverted tonnage. Both proposers also arrived at similar amounts of tonnage projected to be diverted: Waste Management 10,524 tons and CR&R 9,452 tons. Given that the projections are forecasted for a three year period, assumed different diversion levels for each of the multiple diversion programs, and had to incorporate changing patterns of waste generation, the resultant 11% diversion increase projected by both proposers is reasonable and was thoughtfully calculated. f. Reasonableness and technical feasibility of proposed diverted tons and percentages: i. As noted above in 6.e, CR&R and WM appear to have used slightly different assumptions about growth and changes in the waste stream over time, however, the projected tonnage diverted for each company cross-checked with their proposals by corresponding reductions in the generation of residential and commercial MSW and also by the projected increase of waste generation as the Legacy project builds out. The MSW tonnage and the diverted program tonnage are reasonable and cross - validated between tonnage diverted and reductions in tonnage disposal. ii. The absolute tonnage difference between the proposals for the amount diverted and landfilled is within the 4-7% range. The projected diversion percentage for both proposals is the same at an 11 % increase in diversion between 2019 and 2022. Overall, Summary of Proposal Evaluation Page 14 of 23 the numbers provided to support each firm's diversion projections, in terms of both tonnage and percentage, are reasonable given the number of variables that need to be accounted for over the 3 -year projection. 7. Cost Evaluation a. Proposed Costs - Background: The City requested that proposers provide MSW (trash), recycling, and organics recycling rates for residential, commercial, temporary (i.e. roll -off) bins, and special service lines. The state is mandating higher levels of landfill diversion, therefore the rates requested by the City were designed to allow the City flexibility and cost-effectiveness in its compliance approach as new diversion requirements were mandated. For example, the RFP requested rates for residential curbside food scrap collection, which will be mandated for all residents by January 1, 2022 per SB 1383. The City may not implement this rate prior to January 1, 2022, but it will have a rate in 2019 dollars that was procured in a competitive environment. This approach also provides the City with guaranteed access to processing capacity at an organics processing facility; locks in a rate for this service during a competitive process; and gives the City cost- effective compliance options in advance of the deadline. In general, the rates requested by the RFP respond to current and pending legislation that will require increasing levels of landfill diversion. The rates requested provide a rate incentive for commercial and multi -family customers to implement diversion programs by providing these service lines at half the cost of equivalent trash service. This rate structure aligns generators' cost -incentives with the City's state diversion mandates and allows generators to reduce disposal costs while also complying with state diversion requirements. b. Rate Evaluation Methodology: In order to evaluate the rates provided by the proposers, staff multiplied the rates provided by each proposer by current service levels and inventories to calculate the projected annual rate revenues. This methodology was provided as part of the evaluation criteria in Section 5.2 of the RFP. The results of this analysis are included as Figure 1. Also included in this section are charts comparing current rates to proposed rates received from CR&R and Waste Management. These charts compare current vs. proposed rates for all requested residential curbside service configurations (Figures 2.1 and 2.2); commercial 3 -yard trash service 1-6 days per week (Figure 3); and commercial 3 -yard recycling service 1-6 days per week (Figure 4). The City ran scenarios of the rate impact of the proposed rates on a selection of individual generators to determine the cost impact of the proposed rates and if the cost impacts could be mitigated by Summary of Proposal Evaluation Page 15 of 23 implementing or expanding recycling programs. A summary of this analysis is included as Figure 5. Lastly, the proposed rates were compared to rates from other Orange County cities to determine comparative costs. c. Basic Services Analysis — Aggregate Revenue: Both companies' proposed rates result in an across-the-board increase in rate revenue (i.e. cost to customers) for all service lines compared to current rate revenues of approximately $10.2 million per year. Specifically, CR&R's projected total rate revenue for Year 1 of the contract was $10.8 million (a 6.3% increase compared to current rate revenues) and Waste Management's projected total rate revenue for Year 1 was $12.1 million (a 19.3% increase compared to current rate revenues). Figure 1 shows these projected revenues compared to current revenues. FIGURE 1: AGGREGATE ANNUALIZED RATE REVENUE COMPARISON FOR FIRST YEAR OF NEW CONTRACT ■ Residential ■ Commercial MSW ® Commercial Recycling ■ Commercial Organics ■ Roll -off CURRENT ` $2,689,57] CR&R WM As shown in Figure 1, the projected aggregate annualized rate revenue (i.e. cost) from Waste Management's proposed rates exceed that of CR&R for all service lines EXCEPT for roll -off, where Waste Management projected revenue is approximately 2% less than that proposed by CR&R. Both proposers provided rates for roll - Summary of Proposal Evaluation Page 16 of 23 off service that resulted in less annual revenue than the rates that are currently being charged. CR&R's proposed residential rates for the most likely rate bundle effective upon contract initiation (i.e. curbside trash and recycling collection with yard trimmings being delivered to a composting facility) of $18.03 per household per month were also marginally less than those proposed by Waste Management, at $18.19 per household per month. Notably, CR&R's projected aggregate commercial municipal solid waste (MSW, or trash) rate revenue is over $1 million less than the annual rate revenue from the rates proposed by Waste Management. CR&R also provided lower proposed rates, and projected rate revenues, than Waste Management for food scrap recycling and for single - stream recycling. Therefore, commercial customers will likely see less of a rate impact if CR&R is selected. Staff calculated projected rate revenue for Phases 1 (2022) and 2 (2025) of the contract and determined that, even after key performance metrics are met and diversion programs are expanded to comply with state diversion mandates, CR&R's projected revenue will be lower than that of Waste Management's for both phases. Identical service projections were applied to both proposed rate structures to project future rate revenues. Three comparison tables of selected rates compared to current rates is included below for residential (Figures 2.1 and 2.2), commercial MSW (Figure 3), and commercial recycling (Figure 4). d. Basic Services - Residential Rate Evaluation: The City requested rates that, when combined, result in 16 different potential service combinations for residential customers as configured in Figure 2.1. The City has discretion to implement any of these rates at any point during the contract at the price provided by proposers in the competitive RFP process. The current per household monthly rate of $17.28, shown as red bars, is included in Figure 2.1 for reference. CR&R provided rates for all requested service lines, which are displayed as blue bars in Figure 2.1. Waste Management provided rates for 4 service configurations, which are shown as green bars. Of the 4 rates provided by Waste Management, 2 were provided at a lower cost than CR&R (4 -cart system with a cart for food scraps that is processed at a co -digestion facility and the yard trimmings cart processed at a composting facility with trash serviced either weekly {Option 7} or every 14 days {Option 7.11). Due to the high per household cost of these residential rate configurations and the perceived inconvenience of the 4t" cart for food scraps, it is unlikely that these rates will be utilized by the City to comply with the requirements of SB 1383 to provide curbside food scrap recycling service prior to January 1, 2022. Summary of Proposal Evaluation Page 17 of 23 e f The residential rate configuration that is most likely to be implemented when the new contract becomes effective is included as Option 1 and is similar to the existing curbside program configuration except yard trimmings would be taken to a composting facility instead of being used as Alternative Daily Cover (ADC), which will be disallowed in 2020 per AB 1594. CR&R proposed a monthly per household rate of $18.03 for this service (a 4.3% increase compared to the current residential rates) and Waste Management proposed a monthly rate of $18.19 for this service (a 5.3% increase compared to the current residential rates). This curbside rate not only complies with the ADC restrictions of AB 1594, but also provides residents 4 bulky item collections per household per year, provides free, unlimited sharps collection for all households, and provides 2 household hazardous waste drop-off events per year. Additional Services - Residential Rate Evaluation: The lowest cost compliance option for SB 1383 (i.e. a service configuration that includes curbside food scraps collection) provided by both proposers that will likely be triggered by the City prior to January 1, 2022, is Option 3. This service configuration allows residents to place food scraps into their existing yard trimmings container. The co -collected yard trimmings and food scraps would be processed at a composting facility. CR&R provided a rate of $18.40 per household per month for this service (a 6.5% increase compared to current rates) and Waste Management provided a rate of $18.75 per household per month (an 8.5% increase compared to current rates). Additional Services — `Proposer Preferred' Residential Rate Evaluation: Proposers were asked to provide their `preferred configuration' in Proposal Form 24 for which processing option best met the needs of the City. Waste Management recommended that Option 7 be implemented, which would add a fourth cart for source - separated food scraps at a cost of $19.63 per household. CR&R recommended that Option 4 be implemented, which would process co -collected food scraps and yard trimmings at its anaerobic digestion facility at a cost of $19.72 per household per month. Figure 2.2 compares the proposed rates for the most likely residential configuration with the initiation of the new contract (Option 1), the most cost-effective SB 1383 compliance option that will be triggered prior to January 1, 2022 (Option 3), and each company's recommended option. Summary of Proposal Evaluation Page 18 of 23 Figure 2.1: Comparison of All 16 Residential Rate Options Requested $30.00 $25.00 $20.00 - $15.00 $10.00 $5.00 $- O O OO O O ,, O O O O y 0 O O O O O 0 o a o 0 0 0 0 0 0 0 �b o 0 0 0 0 0 0 0 0 0 0 0 o o w o 0 0 o y 0 0 O O O O O O Z O O `J O 'J Cj O O R, C7's ,Ny C, 'z7 01 CA V V 00 00 .•� F-+ 1-� A w n n v n oO n �. n 0 �. n p O p p p N rt c�c,O,fc�c�� O COs. `C r daq O G O w Cf] Ln a ° �' ° o G cn o o En °o � f D1 ccnn v r, c�i�cn ami Ln o o oy 0L C7 0L o �O o n r� O. n �-' n �• '" o n n Ln ILnD2 w cc x' CD p w co 't' w n CD p w rr cc w w y cc w p'ci n n ID n+ o m w R ID a w A Q x M< R (D p ti 0 0 m y Ts c g ti C ti u 0 0 3 a c y m 3 R 0 0 0° o a 0 w 0 w 0 w 0 cn d 0 w w o En 0 0 w a w :z�' LnC 4 x w wC 4 �' 'Cn o w m -cDs w aq O. G w N rOr O. G o O. O. �• AOi K cyo N ww ^�� C CD 0. o C IDs o C ° C C_ p ° Q o n p ''0 a o a¢ 0 r �a �o a Ln a'-:' 0d w w = B 0 CDD g a m o� C a M* f* a w rn y �' ti d w ti Ciq y ti O�q uwi o. y 0 O O N N v K ('1 -n eyY fD 4A rt ,..y ri ITI rt m '' D' CD w y CD w w 0 cn m O O O. O O 'J '�' M 0 o G a ¢ o w o w 171 wy a 0 0 ■ Current Rate ■ CR&R Rate ■ WM Rate Summary of Proposal Evaluation Page 19 of 23 Figure 2.2 Selection of Proposed Residential Options Compared to Current Rates $20.00 $19.72 $19.63 $19.50 $19.00 $18.75 $18.50$18.03 $18.40 $18.19 $18.00 $17.50 $17.28 $17.28 $17.28 $17.00 $16.50 $16.00 Initial Option (April 2019) Compost Option Hauler Preferred Option (before 2022 per SB 1383) (before 2022 per SB 1383) ■ Current Rate ■ CR&R Rate ■ WM Rate g. Basic Service - Commercial and Multi -family Rate Evaluation: The commercial MSW rates for a 3 -yard trash bin provided by both proposers compared to the current rates are included as Figure 4. CR&R proposed lower rates for each service frequency (1 — 6 days per week) compared to Waste Management's proposed rates. In general, CR&R is proposing a 13.3% increase for 3 -yard MSW service whereas Waste Management's proposed rates represent a 32% increase over current rates. Summary of Proposal Evaluation Page 20 of 23 FIGURE 3: COMMERCIAL 3 -YARD MSW MONTHLY RATE in a � N � b4 Lq M O Ln n Ln N O Ln a' 0� �--� N O 10 O �0 10 M 'zi' Ln c -I O1 b4 b4 Ln 6� (f? d iA M N d' 0� rn co cr T co d" Nr4 M rn N 6� 1A ER b4 114 b4 I I CA I I Un x x a a x x F U F U F v F v F U F U z w z w z z w w z w z w x x cc cc cc x cc x x x cc cc U U U U U U 1X/WK 2X/WK 3X/WK 4X/WK 5X/WK 6X/WK Summary of Proposal Evaluation Page 20 of 23 h. Additional Service - Commercial and Multi -family Recycling Evaluation: The commercial and multi -family rates for a 3 -yard recycling bin provided by both proposers compared to the current rates are included as Figure 5. CR&R proposed lower rates for each service frequency (1 — 6 days per week) compared to both Waste Management's proposed rates and the current recycling rates. In general, CR&R is proposing an average 16.2% decrease in cost for 3 -yard recycling service whereas Waste Management's proposed rates represent an average 1.3% decrease in cost compared to current rates. (The larger decrease means a lower cost) Cost Incentives and Impacts - Individual Generator Imaact Analvses: An analysis of the proposed rate impact on six individual commercial customers (two restaurants, two businesses, and two multi -family properties) indicated that CR&R's proposed rate would result in an average rate increase of 9% if no service adjustments were made. If additional recycling service was implemented and trash service 'right -sized', the rate impact would be a 3% rate reduction. An identical analysis that applied Waste Management's proposed rate to six individual commercial customers (two restaurants, two businesses, and two multi -family properties) indicated that WM's proposed rate would result in an average rate increase of 26% if no service adjustments were made. If additional recycling was implemented and trash service 'right -sized', the rate impact would be a 9% rate increase. The findings from this analysis are included in Figure 5. Summary of Proposal Evaluation Page 21 of 23 FIGURE 4: COMMERCIAL DIVERSION SERVICES - 3 -YARD RECYCLING BIN o N LtdC Co d" N M � M M y? � n 00 00 p � N Nh N to to h N Lo N Lq `D r- l� M L� � 'y O Vi N �A M M N b4 r: l� M d' ry {v4 Ei7 b~4 H3 1)0 Ellbq Oj M n bq .�-I I I F z I x as F- x z a3 E- z a F at z x 0 t F x z 0 j F z x a3 w 0.' U w CC U w CG cC w U CL a U w CC U w Z U x c< cc a x x U v v U U v 1X/WK 2X/WK 3X/WK 4X/WK 5X/WK 6X/WK Cost Incentives and Impacts - Individual Generator Imaact Analvses: An analysis of the proposed rate impact on six individual commercial customers (two restaurants, two businesses, and two multi -family properties) indicated that CR&R's proposed rate would result in an average rate increase of 9% if no service adjustments were made. If additional recycling service was implemented and trash service 'right -sized', the rate impact would be a 3% rate reduction. An identical analysis that applied Waste Management's proposed rate to six individual commercial customers (two restaurants, two businesses, and two multi -family properties) indicated that WM's proposed rate would result in an average rate increase of 26% if no service adjustments were made. If additional recycling was implemented and trash service 'right -sized', the rate impact would be a 9% rate increase. The findings from this analysis are included in Figure 5. Summary of Proposal Evaluation Page 21 of 23 Figure 5: Analysis of Impact of Proposed Rates on Individual Generators Increase Percent Percent Increase change over change over over over Baseline Baseline Baseline Baseline with CR&R with WM Scenario Description with with WM Proposed Proposed CRproposed Rates with Rates with Proposed Rates Service Service Rates Adjustments Adjustments Scenario Most Common 13% 32% -5% 4% 1 Trash Service Most Common Scenario Trash and 3% 19% -6% 7% 2 Recycling Service Levels Tier 2 Restaurant Scenario with Recycling 6% 22% -1% 13% 3 but no Food Scraps Scenario Tier 1 Restaurant 4 with Food 9% 24% -3% 11% Recycling Scenario Multi -family 5 Property with 6% 22% -1% 8% Recycling Multi -family Scenario Property 13% 36% -1% 10% 6 WITHOUT Recycling j. Comparison of rates to other Orange County cities - Residential: According to an annual rate survey conducted by the City of Irvine, Tustin currently has the 14th lowest rates for residential trash and recycling service out of 33 cities surveyed in Orange County. The average County -wide cost for curbside trash and recycling service is $18.01 per household per month. The City's residents currently pay $17.28 per month, which is in the 42nd percentile. Residential rate Option 1, the option the City is most likely to direct for curbside recycling and trash collection, would cost each resident $18.03 with CR&R's proposal and $18.19 with WM's proposal. CR&R's proposed rate would increase the City's residential rates to the 16th lowest cost (48th percentile), slightly (0.09%) above the County average. WM's proposed rates would increase the City's residential rate to the 17th lowest cost (52nd percentile) in the County, slightly (0.97%) above the County average. k. Comparison of rates to other Orange County cities - Commercial: According to an annual rate survey conducted by the City of Irvine, Tustin currently has the 12th lowest rates (38th percentile) for 3 -yard Summary of Proposal Evaluation Page 22 of 23 commercial trash service out of the 33 cities surveyed in Orange County. CR&R's proposed commercial trash rate would increase the City's trash rates to the 16th lowest cost (48th percentile) in the County. WM's proposed rates would increase the City's 3 -yard commercial trash rate to the 24th lowest cost (74th percentile) in the County. I. Proposition 218: Staff will be returning to City Council with setting of rates after issuance of a 45 -day Proposition 218 notice, which will occur early in 2019. Staff and CR&R will be preparing public education to businesses ahead of the implementation date for new rates in April 2019 so customers can begin implementing new and enhanced recycling/food scrap collection programs to achieve the cost savings described above and offset rate increases or come close. 8. Procedural Compliance a. Both proposers complied with the procedures required for the RFP process including: i. Following the requested proposal format and requirements ii. No additional or alternate programs proposed iii. Adherence to City Council RFP Process Protocol iv. Prompt and complete responses to the City's requests for additional information and explanations about proposals 9. AB 1669 Employment Offers to Incumbent's Employees a. WM proposed to follow the AB 1669 requirements and offer employment to the employees of the existing contractor in the City of Tustin. b. CR&R is the incumbent so this requirement would not be applicable. CR&R proposed to retain its employees in the City. Summary of Proposal Evaluation Page 23 of 23