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SR-112707-8C~_~ City Council Report City of ~/ Santa Monica City Council Meeting: November 27, 2007 Agenda Item: ~G To: Mayor and City Council From: P. Lamont Ewell, City Manager Subject: Review of responses to Solid Waste Request for Proposals to provide commercial collection services Recommended Action The City Manager recommends that the City Council: 1) Direct staff to proceed with developing an implementation plan for the Solid Waste Management Division to be the sole provider for commercial collection citywide. 2) Direct staff to keep Roll-Off Service an open market activity and implement permit criteria to establish diversion rates and use of alternative fuel vehicles. Executive Summary On October 30, 2007, Council held a Study Session on the results of the Request for Proposals for Commercial Solid Waste Collection and Solid Waste Transfer and Disposal Services. The recommendation of the Evaluation Committee was to award citywide commercial collection services to the City of Santa Monica Solid Waste Management Division (SWMD). This was based on the conclusion that SWMD provided the best overall proposal when considering all factors outlined in the RFP. At that time, Council took no formal action on Commercial Collection and requested greater analysis and information. This report provides clarification, additional information and staff analysis related to commercial solid waste collection services. Specifically, it provides clarification of cost proposals, an update on efficiencies implemented by the City and a review of Best Management Practices. With the City as the sole provider of commercial collection services and the Public/Private Transfer Station partnership, the City has the best ability to control its waste stream, meet its diversion goals and ensure flexibility in addressing staffing assignments. Background The Commercial Collection Request for Proposals (RFP) requested proposals for the collection of refuse, recyclables and food waste from commercial establishments in three sectors of the City: Downtown/Main Street, Outside Downtown/Main Street or 1 Citywide. Proposal options included one entity providing the service or a private company competing with the City. Roll off service was covered under a distinct option of this RFP. Specific goals articulated in the RFP included: • Provide efficient and cost-effective commercial collection services to all business establishments in the City; • Utilize competition to ensure that the commercial establishments have commercial collection services that are market driven; • Maximize the opportunities for recycling by businesses and commercial facilities and thereby increase their contribution to the City's diversion as mandated by AB939; Achieve the sustainability goal of seventy percent diversion; • Increase the cleanliness and aesthetics of the Municipal Solid Waste (MSW) set- out areas and containers; • Reduce the number of individual collection vehicles providing MSW Commercial Collection service in the City and thereby reduce traffic congestion, particularly in the Downtown District/Main Street; and • Reduce air. pollution and the emission of green house gases. The RFP also highlighted some specific implementation requirements: • Automation of lifting and emptying containers where practicable; • Cooperate with the City on the incorporation of waste and recycling containers in building and area design; Optimize route structure utilizing geographical information system (GIS) based computer routing software; Maximize recovery of recyclable materials; • Right sizing of service through container selection and collection frequency; • Requirement to use compressed natural gas (CNG) or Liquefied natural gas (LNG) fuel (clean fuels, as defined by the Air Quality Management District); and Increasing the education of waste "best practices" for the commercial sector. A total of seven companies submitted responses to the Request for Proposals for Commercial Collection of Solid Waste. Of those, five companies, Allied Waste Services, Athens Services, City of Santa Monica Solid Waste Management Division (SWMD), Consolidated Disposal Services and Southern California Disposal submitted proposals for all commercial collection services. Looney Bins and Interior Removal Specialist responded only to provide roll off service. The Evaluation Committee was charged with reviewing the responses against the criteria established in the RFP and defined by Santa Monica Municipal Code Section 2.24.072: 2 Criteria Weight 1) Price. 40% 2) Quality of service offered. 15% 3) Ability, capacity and skill of the Proposer to 15% perform or provide the material or service. 4) The sufficiency of the Proposer's financial 15% resources. 5) The ability of the Proposer to provide such Pass/Fail future maintenance or service as may be needed. 6) Any other factor which will further the intent set 15% forth in Section 608 of the City Charter. As outlined in detail at October 30 Council Study Session, each member of the Evaluation Committee individually scored each Proposal in each of the areas above by assigning a number from 1-10, with 10 being best. The weight was determined by the City Manager's Office and not shared with evaluators, Proposers or Gershman, Brickner and Bratton, Inc. (GBB), the City's consultant. The Assistant to the City Manager for Management Services received each individual score sheet and tabulated the weighted score. The results for those companies that proposed all services were: Allied Athens Ci Consolidated SCD Criteria Average Weighted Average Weighted Average Weighted Average Weighted Average Weighted 1 7.17 2.87 7.83 3.13 9.67 3.87 5.00 2.00 7.60 3.04 2 6.33 0.95 8.33 1.25 9.00 1.35 6.50 0.98 6.33 0.95 3 6.83 1.02 8.67 1.30 8.67 1.30 7.17 1.08 6.33 0.95 4 10.00 1.50 7.00 1.05 9.00 1.35 10.00 1.50 5.00 0.75 5 6.83 0.00 7.67 0.00 9.00 0.00 7.00 0.00 6.00 0.00 6 6.00 0.90 7.00 1.05 9.50 1.43 7.20 1.08 7.00 1.05 Total 7.24 7.78 9.29 6.63 6.74 The results for those companies that proposed only to provide roll-off services were: IRS Criteria Average Weighted 1 4.40 1.76 2 5.33 0.80 3 4.67 0.70 4 3.00 0.45 5 3.83 0.00 6 5.40 0.81 Total ~ 4.52 Looney Average Weighted 6.00 2.40 7.33 1.10 6.17 0.93 3.00 0.45 6.17 0.00 7.00 1.05 5.93 3 Discussion The Evaluation Report presented on October 30 outlined the results of the Evaluation Committee's unanimous recommendation that the Solid Waste Management Division is the best overall proposer, specifically, SWMD: Proposed the lowest cost. • Demonstrated providing quality level of service. Well thought out business plan and experienced team with knowledge of the City • Has the financial capability to deliver all commercial collection services. Already the largest commercial provider in Santa Monica. Demonstrated commitment to alternative fuels, specifically, Compressed Natural Gas (CNG) Excellent knowledge of AB 939 diversion requirements, ability to change to meet new requirements without renegotiating a contract The sections below provide clarification, additional information and the results of additional staff analysis in response to questions raised at the October 30 Study Session. Cost Proposals The City's cost, as proposed, was the lowest. As detailed in the Commercial Collection Evaluation Report, the Advisory Team questioned the number of lifts (bins) that could be accomplished in a day. SWMD has been consistent in stating their position that the productivity adjustment from 225 lifts per day, as included in their proposal, to 150 lifts per day, as used in Table 2 on page 10 of the Evaluation Report, was too dramatic a change. In order to ensure that the productivity number used to determine the final cost is achievable, the City Manager's Office engaged GBB to oversee a route audit of SWMD's current commercial routes to confirm the number of lifts per day was achievable. The route audits were conducted on each commercial route between Thursday, November 8 and Wednesday, November 14. The route audits confirmed 190 lifts per day. It is believed that this level can be maintained as long as the efficiencies discussed in detail below are maintained. Therefore, the cost table is revised in Attachment 1. 4 Additionally, it was unclear as to whether the 10% franchise fee proposed in Southern California Disposal's (SCD) cover letter was included in their cost proposal forms. Due to the uncertainty, two SCD numbers were presented in the Evaluation Report to account for whether the 10% was included or not included in the price proposal. SCD has since clarified that the price proposed includes the 10% franchise fee, therefore the number presented in Table 2 on page 10 of the Evaluation Report is the correct number for comparison. It should also be noted that SCD proposed a 5% reduction if they were awarded both commercial collection and transfer services. Since this was conditional, the proposed cost was not reduced by the 5%. On November 14, staff received a letter (attached) from Athens Services stating that their cost proposal included a range of franchise fees, which should have been adjusted for the analysis. The letter provides cost figures that they state are equal for comparison purposes. In Athens' proposal Options 3-7, Athens' included a 12% franchise fee. The amount in the original report used the 10% franchise fee used in other Athens' options. The additional 2% is reflected in the table in Attachment 1. They also included a 2% payment to the City for administrative fees or to reduce rates and an optional 5% fee if they were awarded both commercial collection and transfer services. The cost number was not reduced by the total 19% due to the fact that 7% was attributed to other factors than a franchise fee. Staff had a follow up conversation with Athens and they re-stated their belief that the comparison amount should reflect the reduction of the additional 7%. Attachment 1 includes a price table reflecting all modifications noted above. This table and additional analysis re-confirms the Evaluation Committee's review and recommendation. It is important to note that much of the focus of debate has been on cost. While the cost component was weighted 40%, it was one of several factors that the Evaluation Committee considered. The final cost would be subject to the results of any negotiations. The Committee felt that SWMD provided the best overall proposal, when considering all factors. It is also important to note that SWMD ranked highest in 5 quality of service, ability to provide future service changes and any other factors (which also included environmental considerations). Level of Service SWMD is currently the largest commercial collection provider within the City with 720 accounts. The Evaluation Committee felt that SWMD's proposal reflected an experienced and knowledgeable management team that also benefited from the local yard, ability to implement changing Council initiatives and included a business plan that continued to build on efficiency improvements recommended by GBB. Below is a summary of what SWMD has accomplished to date in the areas recommended by GBB: 1) Optimize routes to reduce collection time -- To date, SWMD has conducted field surveys to reconfirm the refuse and recycling container database and develop a current baseline for labor and equipment productivity levels. This information is being used by SWMD to assign staffing and equipment resources for both residential and commercial routes. 2) Document operational practices and improve reporting -- SWMD has developed and documented standard operating procedures for most of the division's operations and will complete the SOP development process by the end of the fiscal year. The importance of adhering to standard operating procedures is reinforced with the collections staff as a part of ongoing employee performance reviews. 3) Develop training to reinforce procedures related to California's Requirements for Commercial Driver's Licenses -- SWMD has implemented procedures to ensure that pre-trip and post-trip inspections are performed and documented by drivers in accordance with California requirements. 4) Train drivers to develop ownership of vehicles and routes -- SWMD has begun implementation of a driver accountability program to assign drivers to specific routes .and vehicles. This new approach should .result in greater "ownership" of routes and condition of vehicles by the drivers. The new approach should also result in improved delivery of customer services. 6 5) Develop team approach between drivers and mechanics -- SWMD and Fleet Maintenance personnel have convened regular meetings to better coordinate preventive and scheduled vehicle maintenance and identify any areas concern related to the frequency and expense of vehicle repairs. This closer coordination has greatly improved the delivery of maintenance services to the SWMD. Additionally, SWMD employs a variety of industry proven and acceptable best management practices (BMP) for improving organizational performance and customer service. These BMPs include: 1) Source Reduction & Recycling -The practice of reducing the amount of waste, reusing whenever possible, and recycling whatever is left continues to be one of SWMD's priority education and outreach efforts. Staff works with residents and businesses that use City collection services, as well as businesses that use private collection services, to employ innovative methods of diverting recycling materials from the waste stream. The City has adopted a goal of 70% waste diversion by 2010, and the City's current diversion accomplishment is over 60%. 3) Customer Service & Satisfaction Surveys -Surveying our customer base to determine quality of services being delivered. The practice of consistent and high quality delivery of service to City customers has been one of SWMD's hallmark performance indicators. Customer surveys consistently show a high level of satisfaction with SWMD services. SWMD strives to maintain this high level of satisfaction and continues to work diligently to identify and resolve all customer requests as quickly and effectively as possible. SWMD also has the greatest ability to respond to changes and meet the needs of its customers. The 2007 Resident Satisfaction survey showed a 76% positive response for solid waste services. This was equal to Fire and Parks and only Library services were higher. The full results for 2005 and 2007 were: 2005 2007 Excellent 34% 30% Good 46 46 Total Positive: 80 76 Fair 14 17 Poor 6 6 Total Ne ative 20 23 Don't Know 0 1 These examples of best practices highlight some of the effective measures that SWMD has employed in working towards a High Performance Organization. 7 Environmental Considerations SWMD has a proven track record of environmental sustainability, they • have the most extensive fleet of AOMD-approved alternative fuel vehicles (Compressed and liquefied Natural Gas) of any Proposer. • Have a stated goal of 100% diversion. • demonstrated excellent knowledge of AB 939 diversion requirements. • demonstrated the greatest ability to respond to changes, without necessitating a contract modification. Roll Off Service The Committee concluded that roll off was best left open and competitive. The operation of the roll off service require bins to generally be delivered one at a time in a manner that can not be on a regular route, the industry as a whole achieves high diversion rates and the City's demolition permit could be used to provide limits or policies to achieve the City's goals without closing the market. Financial Impacts and Budget Actions There are no fiscal impacts associated with this item at this time. The fiscal impacts will be determined based on Council's direction. Prepared by: Donald Patterson, Assistant to the City Manager for Management Services Approved and Forwarded to Council: 8 Attachments: Revised Cost Comparison Table October 30 Council Report Additional attachments available in City Clerk's Office.