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HomeMy WebLinkAboutCOM 0212.006 2010-2012PETE HOFFMANN Council Member District 9 — North & South Kohala TO: FROM: Date: Subject: HAWAII COUNTY COUNCIL County of Hawai `i Hawai `i County Building 25 Aupuni Street Hilo, Hawai `i 96720 Dominic Yagong, Chair and Members of the Hawai`i County Council ete Hoffmann, Council Member October 14, 2011 Resolution 80 -11, Draft 2; Regarding a Multi Year Contract for Collection and Hauling of Recyclables Phone: (808) 887 -2043 (Kamuela) (808) 961 -8273 (Hilo) Fax: (808) 887 -2072 Email: phoffmann @co.hawaii.hi.us Attached is a report summarizing discussions with the Department of Environmental Management (DEM) regarding Resolution 80 -11, Draft 2. At the June 15, 2011 Council meeting, the Council Chair initially suggested that an ad- hoc committee be established to review this issue. In early July, that was subsequently altered and our office was charged by the Chair to study this matter and bring recommendations to the Council for further consideration. The attached report contains those recommendations. The change in the Director of Environmental Management caused a delay in preparing this report and bringing it before Council. The report comprises initial questions prepared by our office and submitted to the DEM for comment. Two meetings attended by DEM staff, the Legislative Auditor and our office also form the background for the recommendations in this report. Our initial questions /comments are in bold print, DEM's responses are italicized. In the recommendations, Section E was altered and Section J was added after responses from DEM, as reflected by the underscored text. Thank you. PH /dh att. Serving the Interests of the People of Our Island Hawai `i County is an Equal Opportunity Provider and Employer Comm. No. Z/Z .4 Ref. To Co Wic / Ref. Date QCT 18.2011 RFP IFB RECYCLE REPORT AS OF 12 OCT 2011 1. Is it cheaper to place recyclable materials in the landfill? - DEM presented updated figures (through 2010) to the Council on 15 June that reflected the rates for the current 2 -Bin Recycling hauling contract which was an average of $137 /ton. In addition to the hauling cost, under a separate contract, the County pays a landfill diversion payment for the recycled materials. The cost for the landfill diversion varies by materials and decreases or increases depending on the value of the recycled materials. This information is obtained from independent publications and is reviewed quarterly. The estimated total rate for the 2- Bin recycling program (hauling & diversion) is $175 /ton. The landfill operating costs are approximately $130 /ton but do not include capital costs like equipment, facilities, closure and post closure costs, estimated to be millions. Managing solid waste costs money whether it is to build and run a landfill, waste to energy facility, compost operation or to recycle. It involves equipment, labor, management and overhead costs. To only consider the value of recycling as compared to the cost to landfill is not the complete picture. True, some of the recycling costs are offset by the value of the commodities but in most cases, the value does not cover all the cost of the recycling. For instance, the State HI5 program uses a portion of the 6 cents per bottle to pay the recyclers. Also, the market value of each commodity varies and fluctuates. The conclusion is that the County does pay a premium to recycle. 2. Will the County reach the stated recycling goal of 80% in 2014? - Not much of a chance regardless of the RFP IFB situation. - However, very likely that the County's current recycling rate of 36% will decline if the program is eliminated. In 2001, Hawaii County's recycling rate was only 14 %, lagging behind most of the other Counties & the State rate of 28 %. By 2004, the recycling rate had increased slightly to 16 %, the lowest in the State. By 2006, the County's recycling rate had increased to 26% and hit the highest level in 2010 of 36 %, same as Maui, higher than Kauai and below the State 40% recycling rate. 3. Why is there a $190 /ton maximum in Resolution 80 -11? - The Council had demanded that some figure be included, however, current DEM Director was not involved with how the $190 figure was chosen. Speculation is that the $190 /ton was to include cost increases over the length of the contract. DEM stated that they do not recommend including an amount in the resolution because the risk is if it is too low, it will discourage competition and if the number is too high, it may result in a higher bid. The State procurement laws and rules were established to ensure competitive bidding and prices. - While a specific figure might not be included in the resolution, DEM should conduct an analysis in -house to obtain a cost effective objective for future discussions. 4. Would it be better to prepare two RFPs IFB 's one for each zone? - The last IFB included 2 zones (East & West Hawaii) and DEM plans for two zones in the new IFB. As with most contracts, there is an "experience factor" that must be considered, but nothing limits the County to only one contractor. More than two `zones' could also be established, each `zone' with a separate contract. However, it is important that each zone include a high- volume transfer station site like Hilo or Kona to avoid higher costs in the smaller, more rural sites. For example, under the current contract, the bidder provides the same rate per ton to haul the mixed recycle bins from Kona as they do for the bins from Keei. - To expand competition, it would make some sense that, if a bidder could meet basic criteria but is limited in servicing all of the transfer stations within a zone, then an RFP could be prepared for more than two zones. 5. Why do we maintain only a two -bin system? - The two -bin system was developed from the 2002 ISWMP Plan Update that recommended expanding the number and scope of its recycling programs. The 2 -Bin recycling program was an integral part of the 2009 IRSWMP Plan Update which includes the specific recommendation "Expanding the availability and increasing the convenience of reuse and recycling opportunities available to both residents and businesses ". 2 - The County looked to other communities to determine how to increase the recycling and participation. A key element to participation was convenience. Most municipalities offered more convenience by offering "single stream" recycling where all the materials were mixed together and no pre - sorting was required. Because co- mingling glass & paper was a problem, the County opted for a "two stream" or what today is called 2- Bin recycling. One bin is for mixed (paper, plastic & metals) and one for glass only. In locations where space is available, additional recycling bins are provided. - While some residents were willing to separate their materials & recycle, many were not willing to do so. Also, source separated recycling services could not be provided at all the stations due to space constraints, requiring some residents to drive to a station out of their area to recycle. - We live primarily in a rural environment with no curbside pickup, no mandatory recycling, no PAYT which makes it more important that the County provide the convenience of the 2 -Bin Program 6. Are supplemental costs (paid to the hauler after collection) included in any calculations? - The County has two (2) contracts for the 2 -Bin program, one (1) for the hauling and one (1) for the landfill diversion as stated in the response to question no. 1. Because the costs vary by type of recyclable materials and are adjusted quarterly there is difficulty determining these costs, but an approximate average cost is $175 /ton total is for both contracts; hauling and processing. - Landfill diversion rates remain flexible based on the commodity market. As the value for the recycled commodity increases, the County pays a lower diversion rate. For instance, the County pays $0.00 for recycling of cardboard & paper because the recycling market for these materials is strong. - If a two -bin system is in effect, has any study been accomplished to consider a diversion payment on that basis? Why not a diversion incentive for glass and another for `mixed'. If this is established, verification becomes much simpler. 3 7. Why is there such a differentiation in costs to haul glass and mixed? - The initial IFB requested prices for each transfer station for the commodities separately (primarily glass & mixed). The rates for glass were less because the payload per haul is greater — more tons per 30 yard bin of glass haul than it is for a 30 yard bin of mixed recycling. The new IFB will look at methods to reduce the costs for hauling, possibly by providing compactors for the lighter mixed recycling which would reduce the frequency of hauling the bins. - DEM will examine this situation and get back to us with further information. At the moment DEM relies on whatever the bidder gives as the unit price. The weight of the glass might be one explanation, but it does not resolve the issue that in hauling from transfer stations, it is bulk hauling and /or cubic space that should be a principal determinant. - As a suggestion, perhaps only one price should be used for hauling. DEM is reviewing this option. 8. Why does the County look to a multi -year contact? - A multi -year contract is considered to hopefully generate more competition, lower prices and be more fair since the contractor must make some investment (bins, vehicles, etc) to bid on the RFP IFB. A one year contract would in most instances not allow the bidder to recoup his investment in a single year. 9. Are sufficient verification measures included in the RFP IFB? - There was considerable discussion on this point. Some issues included independent verification, certified scales, reconciliation with vouchers /invoices, etc. - There is concern that `arms length transactions' don't exist and DEM agrees that many involved in this industry are related. - The Legislative Auditor is ready to sit down with DEM to review current and proposed verification procedures as part of this process. 4 - DEM has implemented detailed verification procedures based on the audit recommendations. DEM welcomes discussions with the Legislative Auditor to explore options for improved processes. 10. Why not have only one contract for both hauling and diversion? - No specific answer. DEM is reviewing this option. MISCELLANEOUS COMMENTS: a) There are costs involved with trying to meet the goals established by previous Council resolutions, by the Zero Waste resolution and by the IRSWMP. b) We must recognize that it costs money to maintain a recycling program for the County. c) The so- called `experience' factor should not be the reason to limit the RFP regardless of the administrative and verification advantages. County normally has experience as criteria for bids to assure that bidders are capable of performing the services. d) Some analysis should be made to determine whether a `one size fits all' is the best possible solution regardless of vendor `experience'. The current system may be better for rural areas of the County, but in the urban parts of the island perhaps PAYT or curb -side pick up might be a more effective alternative. The analysis was done as part of the IRSWMP Plan Update in 2009 where the 2 -Bin program was included in the recommendations. DEM believes it is important for education and communication that the DEM provides consistent services at all the transfer stations and provides the same conveniences for all residents in our County. RECOMMENDATIONS: a) No price should be indicated in the RFP, particularly since there are so few bidders in the process. DEM strongly agrees for reasons stated above in response to question No. 3. 5 b) DEM should arrive at an in -house economical /feasible figure per ton for this service. DEM does make an estimate but relies on the bidding or procurement process to determine the market conditions and obtain the most fair and competitive pricing for services. c) DEM and the Legislative Auditor must work on an agreement regarding verification measures. DEM welcomes working with the Legislative Auditor as stated in response to question No. 9. d) Environmental Management Commission should be provided the opportunity to review the resolution before submission to Council. DEM agrees. e) The RFP should stipulate (or make it clear) that more than one contract /zone is possible. DEM agrees. After further review, more than 2 contracts /zones are possible. f) DEM might consider offering incentives to defray investment costs in order to generate the potential for smaller bidder in the RFP process. DEM will review with Finance and Purchasing. g) Examine if we should have one cost for hauling per ton. DEM is reviewing as stated in response to question No. 7. h) Examine if we should have only two diversion incentives. i) Examine if we should have one RFP that includes both hauling and diversion. DEM is reviewing as stated in response to question No. 10. It is recommended that an RFP be prepared rather than an IFB. An RFP is used when there are certain mandatory outcomes, requirements and restrictions but where the methodology, technology, or processes employed to achieve those mandates could vary and where qualitative and subjective criteria may be just as relevant and important in deciding the best offer as is cost. With an IFB, however, everything is essentially defined and mandated. There is no room for deviation in process or method... ie: you want a building of xx dimensions, with a concrete foundation of y material and x dimension, with wall heights of n feet , and so on. Because the product or outcome is very specifically defined, the only relevant factor in comparing offers is price. J) 6