SR 09-24-2019 3B
City Council
Report
City Council Meeting: September 24, 2019
Agenda Item: 3.B
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To: Mayor and City Council
From: Susan Cline, Director, Public Works, Resource Recovery & Recycling
Subject: Interim Recyclable Materials Transferring and Processing Services
Recommended Action
Staff recommends that the City Council:
1. Authorize the City Manager to negotiate and execute a second modification to
contractual services agreement #9011 (CCS) in the amount of $900,000
(including contingency) with Southern California Disposal Company, a
California-based company, for recyclable materials transferring services for the
Public Works Department. This will result in a 15-year amended agreement with
a new total amount not to exceed $36,900,000, with future year funding
contingent on Council budget approval.
2. Authorize the City Manager to negotiate and execute a first modification to
contractual services agreement #4603 in the amount of $1,950,000 with
American Reclamation, a California-based company, for recyclable materials
processing services for the Public Works Department. This will result in an 18 -
month amended agreement with a new total amount not to exceed $2,200,000
(including a 30% contingency), with future year funding contingent on Council
budget approval.
3. Authorize budget changes as outlined in the Financial Impacts and Budget
Actions section of this report.
Summary
In the midst of a statewide recycling market crisis, the City’s long-standing service
agreement for on-site recyclable materials processing and community recycling center
expired on June 30, 2019. At its May 28, 2019 meeting, the Council directed staff to
reject all proposals and procure services on an interim basis to transfer and process
curbside recyclable materials off -site beginning July 1, 2019 and present additional
longer-term recyclable materials processing and community recycling center options at
a future Council meeting (Attachment A). The timeframe of interim services is
anticipated to be a sufficient period of time to bid out services after Council direction
next month. Staff solicited quotes from various qualified companies for these contracts
and deemed Southern California Disposal (SCD) the best qualified bidder for curbside
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recyclable materials transferring and American Reclamation the best qualified bidder for
curbside recyclable materials processing.
As interim measures, staff kept SCD’s existing contract with the City at the original
contract authority and established American Reclamation’s new contract at $250,000 to
stay within the City Manager’s contract approved threshold. At this time, staff
recommends: 1) executing a second contract modification to increase SCD’s 15-year
contract by $900,000 to an amount not to exceed $36,900,000, and 2) executing a first
contract modification to increase American Reclamation’s 18-month contract by
$1,950,000 to an amount not to exceed $2,200,000. Staff will return to Council next
month to seek direction on the rebidding of longer-term recyclable materials transferring
and processing services and present options for recycling or redemption services for the
community.
Discussion
The City had contracted with Cedarwood-Young Inc. (dba Allan Company) for curbside
recyclable materials processing and the operation of the Santa Monica Community
Recycling Center, also known as the Buy-Back Center, since 1993. That agreement
expired on June 30, 2019. Staff issued a request for proposals for a new recycling
contract beginning July 1, 2019. After a formal bidding process and an evaluation of the
two proposals received, staff recommended Allan Company as the best qualified
company to process the City’s curbside recyclable materials and operate the Buy-Back
Center on City property at approximately $67 per gross ton of recyclables or $951,000
in the first year (or $1.24 million including a 30% contingency).
Due to a variety of factors, including long-term cost concerns, at its May 28, 2019
meeting, the Council directed staff to reject all bids, which included services for on -site
recyclable materials processing and the management of a Buy-Back Center, and
proceed with interim arrangements with off-site processing of recyclable materials. To
implement Council direction for off-site recyclable materials processing, staff sought
quotes from qualified companies for interim recyclable materials transferring and off-site
recyclable materials processing services only. A request for quotes for a Buy-Back
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Center was not initiated, which was consistent with Council direction to return at a later
date to present options for recycling or redemption services for the community. These
options are scheduled to be presented with the Zero Waste Plan update at the October
22, 2019 Council meeting. The interim arrangement has required two separate
agreements. First, the recyclable materials collected curbside by the City’s Resource
Recovery and Recycling personnel need to be transferred to a recycling processor
outside of the City. Second, the collected materials need to be processed and sold into
the recycling market.
Interim Recyclable Materials Transferring Services – Southern California Disposal
SCD has an existing 15-year contract with the City that was approved by Council in
2008 (Attachment B). As memorialized in a Notice to Proceed issued by the City, the
initial term of the 15-year contract commenced on December 1, 2011, and expires on
December 1, 2026. The original contract authority was $2.4 million per year, or up to
$36 million over the initial 15 years, with three five -year renewal options afterwards
through 2041. The original scope of services includes transferring services of refuse,
organics (green waste and food waste), and construction and demolition debris
generated by City capital improvement projects and City facilities only.
As part of establishing an interim recycling arrangement, staff contacted several
qualified companies for interim recyclable materials transferring services. Three quotes
were received, and SCD was deemed the best bidder because of its low price as
compared with the other bids and its experience with transferring the City’s
curbside solid waste materials since 2008.
Following the bidding process, a first contract modification was executed with SCD in
June 2019 to clarify its scope of service to include interim transferring of recyclable
materials for up to 18 months from July 1, 2019 through December 31, 2020. The
interim recyclable materials transferring services were quoted at $25.18 per ton and are
estimated to cost up to $600,000 in the first year in FY 2019-20 and $300,000 for six
months in FY 2020-21 for a total amount of $900,000 over 18 months, including a 30%
contingency.
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Interim Recyclable Materials Processing Services – American Reclamation
Staff contacted multiple qualified companies for interim recyclable materials processing
services off-site. Three quotes were received, and American Reclamation was deemed
as the best bidder at a cost of approximately $69 per gross ton of recyclables. An
interim contract was established on a month-to-month basis with a six-month
termination notice requirement.
The contract term is up to 18 months from July 1, 2019 t hrough December 31, 2020.
The interim recyclable materials processing services are estimated to cost up to
$1,470,000 in the first year in FY 2019-20 and $730,000 for six months in FY 2020-21
for a total amount of $2,200,000 over 18 months, including a 30% contingency.
Given the short time of needing a new contract, staff decided to limit American
Reclamation’s initial contract cost to $250,000 under the City Manager’s maximum
contract approval threshold and return to Council to seek additional funding au thority
after contract execution.
Overall Interim Recycling Costs
The overall interim recyclable materials transferring and processing services cost is
estimated at slightly over $2 million in the first year and $1 million for the six months in
the second year. This amount includes a 30% contingency to address any unforeseen
circumstances during this interim period, including a potentially increased amount of
materials collected at curbside due to the closure of the Buy-Back Center. Any unused
funds set aside for these contracts will be released back to the Resource Recovery and
Recycling Fund.
Estimated Interim Recycling Cost (July 1, 2019 – December 2020)
Service & Service Provider FY 2019-20 FY 2020-21
(6 Months)
18-Month
Total
Recyclables Transferring: SCD $600,000 $300,000 $900,000
Recyclables Processing: American Reclamation $1,470,000 $730,000 $2,200,000
$2,070,000 $1,030,000 $3,100,000
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Past Council Actions
May 28, 2019
(Attachment A)
Council directed staff to reject proposals for recyclable
materials processing services and return with recyclable
materials processing and Buy-Back Center options
November 25, 2008
(Attachment B)
Council awarded contracts to Southern California Disposal
and Cedarwood-Young Inc. dba Allan Company for transfer
and recycling services
Financial Impacts and Budget Actions
Materials Transferring – Southern California Disposal
Contract Action
Based on the estimated costs outlined above, staff recommends increasing the total
contract authority of SCD’s contract #9011 (CCS) by $900,000 through a second
modification, which increases the not-to-exceed contract amount from $36,000,000 to
$36,900,000 for the interim transferring services of recyclable materials through
December 2020 and transferring services of refuse, organics, construction and
demolition debris through December 2026. The revised estimated contract expense for
FY 2019-20 is $3,660,000.
Contract Modification Request: Agreement # 9011 (CCS)
Current
Authorized
Amount
FY 2019-20
Modified
Request
Amount
Future Year
Funding Account # Total Revised
Contract Amount
$36,000,000 $600,000 $300,000 54500002.550150 $36,900,000
Budget Action
Staff recommends an additional budget appropriation of $600,000 in FY 2019 -20 and
$300,000 in FY 2020-21 in account number 54500002.550150 to cover the cost of
interim recyclable materials transferring. Any unused budget amounts will return to the
Resource Recovery and Recycling Fund.
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Interim Recyclable Materials Processing – American Reclamation
Contract Action
The total cost of American Reclamation’s processing services is estimated at an amount
not to exceed $1,470,000 in FY 2019-20 and $730,000 in FY 2020-21, including a 30%
contingency. (The interim recyclable materials processing arrangement expires six
months into FY 2020-21, hence the lower estimated expense in the second year.) Since
American Reclamation’s contract was originally established at $250,000 and the total
estimated contract cost is $2,200,000, staff recommends modifying American
Reclamation’s contract #4603 to increase the total contract authority by $1,950,000 for
interim processing services of recyclable materials through December 2020.
Contract Modification Request: Agreement # 4603
Current
Authorized
Amount
FY 2019-20
Modified
Request
Amount
Future Year
Funding Account # Total Revised
Contract Amount
$250,000 $1,220,000 $730,000 54500002.523010 $2,200,000
Budget Action
Staff seeks authority for an additional budget appropriation of $556,000 to account
54500002.523010 in the Resource Recovery and Recycling Fund in FY 2019-20 for this
unbudgeted expense. Any unused budget amounts will return to the Resource
Recovery and Recycling Fund, and future year budget action requests can be evaluated
at a later time upon Council approval.
Prepared By: Yvonne Yeung, Principal Administrative Analyst
Approved
Forwarded to Council
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Attachments:
A. May 28, 2019 Staff Report - Recyclable Materials Processing Services
B. November 25, 2008 Staff Report - SCD and Allan Company Contract Awards
C. Oaks Initiative Disclosure - Southern California Disposal
D. Oaks Initiative Disclosure - American Reclamation
REFERENCE:
Agreement No. 10941
(CCS)
&
Modified Agreement
No. 9011 (CCS)