OFFICE OF OPERATIONAL SERVICES

PUBLIC WORKS DEPARTMENT

Commission MeetingMarch 20, 2012 @ 6:00 p.m.

Temp. Resolution No. R-5103

Solid Waste Disposal RFPApproval of Top-Ranked Firm to

Commence Negotiations

• Presentation team

• Overview

• Why issue an RFP

• Key RFP elements

• Procurement process

• Recommended next steps

• Process Value

Discussion Topics

• Vernon Hargray– ACM Operational Services

• Thomas Good– Public Works Director

– Resource Recovery Board – Technical Advisory Committee (RRB/TAC) representative for over 10 years w/ 4 years as Chair

• Randy Cross– Procurement Director

– National Institute of Government Procurement

• Sandy Gutner, P. E.– President Value Added Consulting

– Over 25 years solid waste management w/ 6 years as the RRB and Broward County Solid Waste Consultant

Presentation Team

• City enters into an ILA with Broward County for solid waste disposal services in 1986 becoming a “contract community”

• Other Cities executed same ILA creating the Broward Solid Waste Disposal District (BSWDD) dependent to the county

• Broward County issued bonds to support the BSWDD and required all contract communities to deliver wastes to system to ensure revenue stream (Flow Control)

Overview

Overview (cont.)

• The Interlocal Agreement (ILA) for solid waste disposal is set to expire in 2013

• City Manager recognized the City had a window of opportunity to engage in free market options that could return greater benefits to the City

• City Commission voted to not sign the ILA on November 26, 2010 and to proceed with its own RFP for disposal services

WHY RFP?

Let’s Review• 2010 Proposed Service Agreement would have

exposed City to many undefined risks and liabilities:

– Pay for capital upgrade/replacements– Cover increasing costs for treatment of ash landfill runoff– Make up lost revenues due to changes in law– Increase in property taxes

• No control on District programs and how they are funded

• Potential exists for disproportionate costs to Contract Communities

$65.19To

$140.21

$65.19To

$140.21

What Could’ve Happened?

Low range is a conservative firm price beginning 2013 and high range is potential cost increase (risks and pass-thru’s) throughout 10-year term

$53.19to

$110.02

Miramar Tipping

Fee

Service Agreement Fee

District Program Expenses

$12.00To

$30.17

• The private disposal facilities no longer require public obligation to share in risk after July 2013

• 2.5 year window of opportunity for market competition

• Commission philosophy to competitively bid services

Also Considered

Hence, City deferred ILA until results of an formal competitive process

Note: Broward County and Ft. Lauderdale voted down the ILA Extension and Service Agreement

• BCCMA Coconut Creek (1/13/2011)• Stakeholder Meeting Miramar (1/27/11)

– All City Managers throughout Broward County invited to participate;

– Total of 16 participating agencies:• Lauderdale by-the-Sea, Hallandale Beach, Coconut Creek,

Coral Springs, Margate, Broward County, Davie, Southwest Ranches, Oakland Park, Sunrise, Fort Lauderdale, Weston, Deerfield Beach, Plantation, Cooper City, and Miramar

• RFP Review by Stakeholders (3/23/11)

Disposal RFP Participation

Leadership Objectives for RFP• Minimize Risks and Liabilities• Competitive Rate Structure for Residents• Uninterrupted Waste Disposal Services at

expiration of ILA• Environmentally Sound Solid Waste Management• Service Reliability• Opportunity for Market Participation

RFP ELEMENTS

RFP HighlightsRFP Element Overview

Scope Requested Disposal services or Processing, Transfer and Disposal.

Term 5 year initial term, up to (3) 5 year renewals.

Technical Proposal • Technical and financial qualifications• Project technical approach• Business terms

Cost Proposals • Disposal (including receiving)• Revenue Sharing (optional)• Maximum Inflation (optional)

Technical Proposals

• Team experience• Financial qualifications• Technical Approach

– Direct disposal services– Receipt, Processing and Disposal– Existing or Proposed facilities– Transition plan, if facility not existing

• Acceptance/Modification of RFP Business Terms

• Scope of service• Contract Term• Project Security• Transition period responsibilities• Addresses Unusual Circumstances

General Business Terms

• Disposal charges– Service Fee ($/ton received)

• Inflationary Adjustments– Bureau of Labor Statistics index, specified in RFP– RFP allowed for optional reduced %. (% of index)– Option for maximum inflationary adjustment

• Revenue Sharing– $/ton of waste delivered– Not based on performance or market pricing

Cost Proposals

City Protections

Project Guaranty

Conditions Precedent

Letter of Credit

Unusual Circumstances

• If Unusual Circumstances result in Contractor total costs to increase > 10%, Contractor may request relief.

• Applies to total cost, not to individual cost items (e.g. fuel or labor)

• Contractor must demonstrate cost increase.• City is not obligated to grant relief.

Unusual Circumstances

• Guarantees performance of all Contractor’s obligations and responsibilities.

• If Contractor fails to perform, Guarantor is obligated to perform.

• Guarantee by corporate parent company, or all corporate parents, if Joint Venture.

Project Guarantee

• Issued by bank.• $ value equal to 6 months of total disposal

charges.• If facility not available by July 2013, City can draw

on the LOC to cover the difference between proposed cost and actual cost.

• LOC use can last for a long time

Irrevocable Letter of Credit

Irrevocable LOC Example

Assume Proposed Cost is $40/ton

Assume Miramar disposes 65,000 tons/year

Letter of Credit Value = 32,500 tons x $40/ton = $1.3M

If Actual Cost = $50/ton Cost if proposed facility not available July 2013

Difference $10/ton Amount eligible for LOC draw

LOC available 2 years [$1.3M ÷ 65,000 ton/yr] ÷ [$10/ton]

• Assures City that contractor is fully able to deliver service before City is fully committed

• If Conditions can not be met, allows City to seek alternatives.

Conditions Precedent Concept

Contractor must provide:• Evidence that all rights, permits and

approvals to provide the Disposal Services• Executed Project Guaranty Agreement• Executed Irrevocable Letter of Credit

Conditions Precedent in RFP

2nd Ranked Firm

Milestones and Check Points

RankingProposals Received

Yes

No

Notice-to-Proceed

No

Milestones and Check Points

Negotiate Agmt

Contract Date

ConditionsPrecedent

Met?

Agreement on Terms?

PROCUREMENTPROCESS

• RFP formally issued on March 9th• Pre-proposal conference held on March

28th

• RFP closed on June 2nd

• Three proposals received– Wheelabrator Technologies– Sun Recycling and Bergeron Environmental-Joint Venture – Sun Recycling and Bergeron Environmental-Joint Venture

(Alternate Proposal)*

RFP Process Timeline

* Alternate geared primarily toward C&D disposal.

Wheelabrator Proposal

Ash

Waste-to-Energy

Landfill

Sun/Bergeron Proposal

Waste-to-Energy

Landfill

OtherRecycle 25%

Ash

• Evaluation team charged with actual review and scoring of proposals.

• Evaluation Team Members represents a diversity of communities and decision makers:– City Manager, Coconut Creek;

– Public Works Director, Hallandale Beach;

– Public Works Director, Oakland Park;

– Intergovernmental Affairs Manager, Davie;

– Finance Director, Miramar.

Evaluation Team Members

• Consists of three categories;– Qualifications = 20 points– Technical = 35 points– Price = 45 points

• Proposers must receive 65 percent of max points for technical and qualifications (each) to have sealed prices opened;

• All proposals met technical/qualifications 65 percent requirements.

Evaluation Criteria

• Both proposers to submit best and final offer

• Prices to be based on a single per-ton cost– Simplified price evaluation process– Easy to recognize costs– Recognizes economies of scale

• Proposers were accorded fair and equal treatment

Best & Final Offer

Proposer Disposal Price/Ton

Revenue Share/Ton % of CPI

Wheelabrator Technologies $52.50 $0.00 100%

Sun/Bergeron $45.25 $2.00 100%

Price Tabulation

5-Year Price ComparisonYear 2013 2014 2015 2016 2017

Wheelabrator Fee/ton

$52.50 $52.50 $52.50 $52.50 $52.50

Sun/Berg.Fee/ton

$43.25 $43.25 $43.25 $43.25 $43.25

Difference /ton

$9.25 $9.25 $9.25 $9.25 $9.25

Difference @ 65,000 ton/yr

$601,000 $601,000 $601,000 $601,000 $601,000

Total 5-Year Difference for Miramar = $3.01M

• On December 12, 2011 the Evaluation team completed its review and scoring for the proposals:– Wheelabrator disposal– Sun/Bergeron receiving and disposal

• City Procurement Department completed final tabulation;

• Evaluation team ranks;– Sun/Bergeron = No. 1;– Wheelabrator = No. 2

Final Evaluation

Final Ranking

Disposal of Solid Waste ServicesProposal Ranking

Sun/Bergeron Wheelabrator

Total 447.8 426.2

Ranking 1 2

NEXT STEP

• Time to meet Conditions Precedent• Changes to disposal locations• Reporting requirements• Facility access• Logistical and administrative details

Example of Items to Negotiate

Contract Negotiation Begins ClockJuly 2013

March 20, 2012 15 months

Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13

Commission ApprovesContract 7/12

Negotiate w/next ranked

YesNo

Notice-to-

Proceed

No

Agreement on Terms?

Negotiate w/top

ranked

ConditionsPrecedent

Met?

9+ months

Commission Approves 3/12

PROCESS VALUE

Year 2013 2014 2015 2016 2017 TOTAL

ILA Proposed Fee/ton*

$65.19 $67.80 $70.51 $73.33 $76.26

Sun/Berg.RFP Fee/ton**

$47.25 $47.25 $47.25 $47.25 $47.25

Savings @ 65,000 ton/yr $1.12M $1.34M $1.51M $1.70M $1.89M $7.56M

Wheelabrator RFP Fee/ton**

$56.50 $56.50 $56.50 $56.50 $56.50

Savings @ 65,000 ton/yr

$0.56M $0.73M $0.91M $1.09M $1.28M $4.57M

* Proposed fee increases conservatively assumes risks and pass-thru’s at 4% per year** Approximately $4/ton for ancillary services

Proposed District Fee Offered in 2010 Compared to Sun/Bergeron and Wheelabrator

Competitive

Inclusive

Transparent

Fair

The Procurement Process Was:

• Approving the ranking of the solid waste disposal proposals and authorize negotiation with the top-ranked firm, Sun/Bergeron, and should negotiations be unsuccessful, begin negotiations with the second ranked firm, Wheelabrator.

Recommendation

Questions……