HomeMy WebLinkAbout10 FEDERAL DISPOSAL PROPOSAL: EXTEND CONTRACT & INITIATIVE 07-03-06AGENDA REPORT
MEETING DATE: JULY 3,2006
TO: WILLIAM A. HUSTON, CITY MANAGER
FROM: CITY ATTORNEY AND PUBLIC WORKS DEPARTMENT
SUBJECT: FEDERAL DISPOSAL SERVICE REQUEST TO EXTEND THE
INTEGRATED SOLID WASTE SERVICES CONTRACT AND PLACE AN
INITIATIVE ON THE NOVEMBER BAllOT RELATED TO THE SOLID
WASTE CONTRACT BIDDING PROCESS
SUMMARY
Federal Disposal Service (FDS) has requested that the City Council consider a 3 year
extension to its current contract. FDS also requests that the City Council place an initiative
on the November ballot to change the City's solid waste contract bidding process.
RECOMMENDATION
The City Attorney and Staff recommend that the City Council: (1) Deny request for a three-
year extension of the FDS contract; (2) Deny the ballot measure wording proposed by FDS;
and (3) If the Council wishes, direct the City Attorney and Staff to return with an alternative
ballot measure wording at the July 17th, 2006 City Council meeting, followed by a revised
solid waste ordinance.
FISCAL IMPACT
There is no fiscal impact associated with this action.
DISCUSSION
1. Franchise Extension
Federal Disposal Service (FDS) has been the City's exclusive solid waste franchisee since
October of 2001. The current franchise was awarded to FDS by the City Council in May
2001 following a formal bid process pursuant to Section 4333 of the Tustin City Code.
Section 4333 of the Tustin City Code provides:
CONTRACTS FOR REMOVAL AUTHORIZED
The Council may enter into contracts for the collection and
disposal of solid waste material, and may establish such
rules for the regulation thereof as it may from time to time
deem best and necessary. The terms, as set forth in Part 4,
shall be the minimum terms of any contract approved by the
City Council. At least every seven (7) years City contracts
5135631
for the collection and disposal of solid waste and for the
collection of recyclable material shall be competitively bid in
accordance with California Public Contracts Code Section
20162 et seq. This requirement shall apply upon the
termination of each City contract for the collection and
disposal of solid waste material that is in effect as of the date
of this Ordinance No. 1130.
Note that Ordinance No. 1130 was adopted by voter initiative. This initiative added the 7-
year contract limitation and the public bidding requirement. Thus, the contract term cannot
be extended without voter approval (or amendment or repeal of Ordinance No. 1130 by the
voters). This is the reason why the current contract with FDS has a term of seven years and
contains no provision for an extension. The current contract will expire on September 30,
2007.
2. Ballot Measure
FDS has suggested the City Council consider adopting an ordinance for submission to the
voters that would allow the City to award a solid waste disposal franchise on a "best value"
basis rather than the current "lowest responsible bid" basis. Although staff appreciates the
potential benefit of a "best value" approach, the language proposed by FDS in its
memorandum is an awkward reconstruction of California Public Contracts Code Section
20175.2, which authorizes cities in Solano and Yolo Counties to use alternative procedures
such as "design-build" and "best value" rather than the traditional "lowest responsible bid"
procedure for construction of public improvements such as streets, sewers, parks and
buildings. FDS proposed language has been modified from that of the State's statute to try
to make it suited for a services contract, rather than a construction contract.
The draft concept presented by FDS is cumbersome and requires many subjective
decisions. Additionally, many key programmatic decisions are left to the contractor rather
than the City. Given the nature of the proposed process and the services we can expect the
City to require, challenges to a bid award are almost guaranteed.
Staff recognizes that the current "lowest responsible bid" process required by the City Code
is inflexible in regards to the bid award process and can be detrimental to the City during
contract administration. Although it is a proven process for bidding and administering public
works construction projects, it may not be the best process to award and administer a
performance based services contract. "Lowest responsible bid" is not a procedure utilized
for any of the other services contracts administered by City staff.
The City Attorney and staff propose to review various bid and proposal processes and return
to the City Council with an alternative to the City's current process and to the proposal
received from FDS. For example, one alternative is to provide for an open competitive
process based upon objective criteria adopted by the City Council in a public hearing. The
criteria may rank proposers based upon price, experience, qualifications, financial strength,
and regulatory compliance. Another alternative would be to include a requirement for each
513563.1
proposer to identify programs for meeting stated service and recycling goals with emphasis
on price and cost savings for the City, its residents, and its businesses.
Staff is already in the process of rewriting the entire Solid Waste Collection Ordinance (Title
4, Chapter 3 of the City Code, commencing with Section 4300). The current Ordinance is
out of date and does not reflect current contracting conditions and solid waste programs. By
combining these two efforts, staff believes that the entire solid waste program will be made
more effective.
SUMMARY
In conclusion, the City cannot extend the term of the current franchise agreement without
voter approval, and the language of FDS proposed ballot measure is not an effective
alternative worthy of further consideration. Staff recommends that the City Council direct
staff to return to the July 17th City Council meeting with alternative ordinance for submission
to the voters and return at a later date with the fully revised Solid Waste Collection
Ordinance. In the alternative, the Council has the option to simply reject Federal Disposal's
proposal for an initiative and leave the solid waste contracting process as is.
Douglas Holland
City Attorney
Joseph Meyers
Public Works
Administrative Services Manager
Omar Sandoval
Assistant City Attorney
513563.1
/..:- ~
FEDERAL
DISPOSAL
SERVICE
l\ijr[En~ : . 'I !:-;Tfm
\~n\{~ ' - :~~ l\l
\u ~ /:" a Z006 IS!!
I-n l::.l~-:"-'-~;-'~" ' "1::-11.K:~-;!:PT \
~~.~'_\~::~~~.=-;~.:'_~~
Corporate Office: 15031 Parkway Loop, Su~e A. Tustin, CA 92780
Mailing Address: PO Box 14730. Irvine, CA 92623-4730
Telephone: 714 25~0534 . Fax: 714259-0975
May 31, 2006
Honorable Mayor Davert
300 Centennial Way
Tustin, California 92780
Re: Federal Disoosal- (1) Expansion of Recycling Program. and
(2) New Initiative
Dear Mayor,
The purpose ofthis letter is to provide you with a synopsis of two requests that
Federal Disposal ("Federal") intends to make to the Tustin City Council ("Council").
Allowing Exoansion ofRecyclimz Progran1
As the Council may be aware, starting in April 2005, Federal embarked on the
expansion of commercial recycling progran1s in Tustin, in conformance with an SB 1066
extension. What we came up with was an innovative approach, coupling newly designed
equipment with an affirmative outreach effort. The result has successfully boosted
recycling participation at targeted multi-family, office, and restaurant establishments in
Tustin. I believe Tustin current progran1 to be an1ong, if not the top in the state right
now. Generally speaking, the progran1 ("Program") provides tailored half bins that allow
two new bins to fit within the footprint of existing single bin space, in-house receptacles,
along with affirmative and effective outreach and promotion.
We anticipate that the current Program will provide a significant increase in
recycling, resulting in direct benefit to the City. We further anticipate that with the
continued full development of the current effort, Tustin's hauler diversion rate may be
increased from today's 32% to near 40% within 3 years. Unfortunately, Federal's current
Franchise Agreement with the City expires in September 2007, prior to when the
Program will be fully implemented. Federal believes the current momentum and progress
should, if possible, be maintain at this particular time.
As such, Federal intends to request that the City extend the term of its current
Franchise Agreement(s) by three years to allow the full and continued implementation of
the Program, to the benefit of the City. City staff have been involved with Federal during
the development of the Program and we believe that they see the long term benefit of the
continued development of the current Progran1 for the City. Weare prepared to attend a
Council meeting and answer any questions that the Council may have.
Donald Shubin
Page 2
New Initiative
As the Council may also be aware, there has been a significant shift in public
procurement at the various governmental levels towards "best value" contracting, as
opposed to "low bid" contracting. Best Value contracting is an approach which allows a
public entity to analyze technical and qualitative factors in an award decision. A low bid
award is one where the government entity writes the specifications, and makes an award
based on price alone. Comparatively, in Best Value contracting, the proposer provides the
latest state-of-the-art technical specifications along with its price offer. The later
approach provides numerous benefits to the public entity including the opportunity of
comparing the costs and benefits of one program with the costs and benefits that might be
offered by other proposers. In Best Value contracting a public agency may pre-qualifY
proposers and thereafter factor in past performance, experience and management plans --
in addition to cost - when making awards. Best Value contracting is particularly well
suited for procurements which have as a goal the achievement of transformational
improvements, such as exists with the recycling program in Tustin. In contrast, low-bid
contracting tends to perpetuate the status quo and rarely offers innovation or capital
improvement when needed. Importantly, when properly executed, Best Value
contracting can balance the public's desire for integrity in contracting, the City's need for
fiscal responsibility and the customer's evolving and changing service needs.
Federal requests the City Council direct the City Attorney to draft an initiative for
the November 2006 ballot to change Tustin Municipal Code section 4333 that I)
retroactively extends the bidding requirement from seven (7), to ten (10) years; 2) and
modifies the bidding provisions in City Code in line with Best Value contracting. Should
that process be successful, the Council would be required to revise the language of
Municipal Code ~4333, which governs the bidding process for waste hauling/recycling
contracts, and which currently requires bidding through the low bid process. Attached as
Exhibit "A" is proposed statutory language which the Council could adopt as the
replacement to ~4333, and which details a Best Value bidding process. It is premised on
an existing California Best Value statute (Public Contracts Code ~20175.2).
Thank you for your time.
siDe~
' '4<
D a ubin
President
C: City Council
City Attorney
Mr. Joe Meyers, Admin. Service Manager
Mr. Tim Serlet, Public Works Director
WICKWIRE GAVIN, LLP
MEMOB,A,NDUM
TO:
Don Shubin (Federal Disposal)
May 24, 2006
FROM:
Kayhan M. Fatemi
File No.: 060216-003
RE: Proposed Language For Tustin Municipal Code 94333
Following please find suggested replacement language for Tustin Municipal Code
j4333. The language is premised on the language of Public Contracts Code j20J75.2,
which contemplates Best Value Contracting related to public works construction. } The
language of j20175.2 has been changed so that it is applicable to the procurement of
contracts for the collection and disposal of solid waste material.
[proposed) & 4333 - CONTRACTS FOR REMOVAL AUTHORIZED
(A) The Council may enter into contracts for the collection and disposal of solid waste
material, and may establish such rules for the regulation thereof as it may from time to time
deem best and necessary. At least every ten (10) years the City contract for the collection
and disposal of solid waste and for the collection of recyclable material (collectively the
"solid waste contract" or "contract") shall be bid in accordance with subsection (8), below.
This bidding requirement shaH apply, retroactively if necessary, upon termination of the solid
waste contract that is in effect as of the date this legislation is proposed (May 2006).
(8) (1) The City shall award its solid waste contract using the best value method.
(2) As used in this section, "Best value" means a value determined by objectives
relative to price, past performance, experience, features and functions, technical approach
and expertise, potential cost savings, benefit of continuity of service providers, and safety
record.
(3) The bidding shall progress in a four-step process, as follows:
( a) The City shall prepare a document( s) setting forth the minimum requirements for
the solid waste contract, which shall include the information deemed necessary to describe
adequately the City's needs.
] Note that the current Tustin Municipal Code requires CQmp/iance with Public Contracts Code 920162 which
is a/so applicable to public works construction.
060216\OO3\memo\OO04.a.doc
(b) Based on the document(s) prepared in paragraph (a), the City shall prepare a
request for proposals that invites interested parties to submit competitive sealed proposals in
the manner prescribed by the City.
(i) The request for proposals shall include, but is not limited to, the following
elements:
(1) Identification of the basic scope and needs of the contract and
other information deemed necessary by the City to inform interested parties of the
contracting opportunity, to include the methodology that will be used by the City to evaluate
proposals.
(2) Significant factors which the City reasonably expects to consider
in evaluating proposals, including cost or price and all non-price related factors.
(3) The relative importance of weight assigned to each of the factors
identified in the request for proposals.
(ii) With respect to clause (i)(3) of subparagraph (b), if a non-weighted
system is used, the agency shall specifically disclose whether all evaluation factors, other
than cost or price, when combined are:
(1) Significantly more important than cost or price.
(2) Approximately equal in importance to cost or price.
(3) Significantly less important than cost or price.
(iii) If the City chooses to reserve the right to hold discussions or negotiations
with responsive bidders, it shall so specify in the request for proposal and shall publish
separately, or incorporate into the request for proposal, applicable rules and procedures to be
observed by the City to ensure that any discussions or negotiations are conducted in good
faith
(c) The City shall establish a procedure to pre-qualify entities using a standard
questionnaire developed by the City. This questionnaire shall require information including,
but not limited to, all of the following:
(i) If the entity is a partnership, limited partnership, or other association; a
listing of all of the partners, general partners, or association members known at the time of
bid submission who will participate in the contract.
(ii) Evidence that the members of the entity have completed, or demonstrated
the experience, competency, capability, and capacity to complete contracts of similar size,
scope, or complexity, and that proposed key personnel have sufficient experience and
2
training to competently manage and complete the contract, as well as a financial statement
that assures the City that the entity has the capacity to complete the contract.
(iii) Evidence that establishes that the entity has the capacity to obtain all
required payment and performance bonding, liability insurance, and errors and omissions
insurance, as required.
(iv) Any prior serious or willful violation of the California Occupational
Safety and Health Act of1973, contained in Part I (commencing with Section 6300) of
Division 5 of the Labor Code or the federal Occupational Safety and Health Act of 1970
(Public Law 91-596) settled against any member of the entity, and information concerning
workers' compensation experience history and worker safety program.
(v) Information concerning any debarment, disqualification, orremoval from
a federal, state, or local government public contract. Any instance where an entity, its
owners, officers, or managing employees submitted a bid to a public entity and were found to
be non-responsive, or were found by an awarding body not to be a responsible bidder.
(vi) Any instance where the entity, its owners, officers, or managing
employees defauhed on a public contract.
(vii) Information concerning the bankruptcy or receivership of any member
of the entity, including information concerning any work completed by a surety.
(viii) Information concerning all settled adverse claims, disputes, or lawsuits
between a public entity and any member of the entity during the five years preceding
submission of a bid pursuant to this section, in which the claim, settlement, or judgment
exceeds fifty thousand dollars ($ 50,000). Information shall also be provided concerning any
work completed by a surety during this period.
(ix) In the case of a partnership or other association that is not a legal entity, a
copy of the agreement creating the partnership or association and specifying that all partners
or association members agree to be fully liable for the performance ofthe contract.
(x) The information required pursuant to this subdivision shall be verified
under oath by the entity and its members in the manner in which civil pleadings in civil
actions are verified. Information that is not a public record pursuant to the California Public
Records Act (Chapter 3.5 of Division 7 of Title I of the Government Code) shall not be open
to public inspection.
(d) The City shall establish a procedure for final selection of the entity. Selection
shall be based on the following:
(i) The City shall use a competition based upon best value and other criteria
set forth above in section (B)(3)(b). The competition shall include the following elements:
3
(I) Competitive proposals shall be evaluated by using only the criteria
and selection procedures specifically identified in the request for proposal. However, the
following minimum factors shall each represent at least 10 percent of the total weight of
consideration given to all criteria factors: price, technical approach and expertise, past
performance and experience, potential cost savings and acceptable safety record. Each of
these factors shall be weighted equally.
(2) Once the evaluation is complete, the top three responsive bidders
shall be ranked sequentially from the most advantageous to the least
(3) The award of the contract shall be made to the responsible bidder
whose proposal is determined, in writing, to be the most advantageous.
(4) Upon issuance of the contract award, the City shall publicly
announce its award, identifying the entity to whom the award is made, along with a written
decision supporting its contract award and stating the basis of the award. The notice of award
shall also include the City's second and third ranked entities.
(5) For the purposes of this paragraph, a bidder's "safety record" shall
be deemed "acceptable" if their experience modification rate for the most recent three-year
period is an average of 1.25 or less, and their average Total Recordable InjurylIllness rate
and average lost work rate for the most recent three-year period does not exceed the .
applicable statistical standards for its business category, or if the bidder is a party to an
alternative dispute resolution system, as provided for in Section 3201.5 of the Labor Code.
4