Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

TO:

Vancouver City Council

FROM:

General Manager of Engineering Services

SUBJECT:

Award of Contract 2002 - 05 for Processing and Marketing of Residential Recyclable Materials

 

RECOMMENDATION

POLICY

Contracts over $300,000 must be awarded by Council.

Contracts are awarded on the basis of best value for fee.

PURPOSE

The purpose of this report is to obtain Council approval to award the contract for Processing and Marketing of Residential Recyclable Materials to C.K. Fibres Corp..

BACKGROUND

The City currently collects approximately 28,000 tonnes of recyclables each year from the Blue Box and Apartment Recycling Programs. Recyclables are collected in three material categories; old newspaper (ONP), mixed paper products (MPP) and mixed containers (MCO). All of this material is received by the City's Processing and Marketing (P&M) contractor, where the material is checked for contamination and then shipped for further processing.

Every 2 to 5 years the P&M contract is retendered to ensure the City continues to receive best value for our product. The P&M contract has been tendered and awarded 3 times since the Blue Box Program began in 1989.

In previous contracts the contractor supplied the land and facility for receiving the recyclables. Finding and obtaining suitable land has been the most challenging item for tenderers, and required a long tender process for a new contractor to develop a site (including all necessary permits) prior to contract changeover and receiving of recyclables. To allow quick and seamless change of P&M contractors and to increase the number of competitive bids, Council approved the development of a City owned, contractor operated, receiving yard for Blue Box and Apartment recyclables on July 20, 1999. The estimated facility cost of $1,375,000 is being funded from the Solid Waste Capital Reserve. The receiving yard is located at 1100 East Kent Avenue and is expected to be completed by the July 1, 2002 commencement of the P&M contract.

DISCUSSION

The processing and marketing contract is a unit price contract ($/tonne), with monies due to either party (depending on bid prices and market conditions) settled on a monthly basis.

The tender is structured such that the unit prices of the fibre materials, old newspaper (ONP) and mixed paper products (MPP), are tied to published market indicator values. The Newstech indicator is used for ONP, and the Pulp & Paper Weekly indicator is used forMPP. Each tenderer is required to submit a fixed market indicator adjustor value (either positive or negative) for ONP and MPP, which is added to the appropriate market indicator value in a given month to determine the monthly unit price for the fibre materials. As the market indicator values fluctuate from month to month in response to changing market conditions, the unit prices of ONP and MPP also fluctuate.

The unit price for the mixed container (MCO) material category is not tied to a market indicator value, since MCO is comprised of a combination of dissimilar materials for which no published indicator value is available. The unit price per tonne of MCO is fixed for the duration of the contract, regardless of market conditions.

Each tenderer is also required to submit a fixed price per tonne for contaminated loads, which are loads of recyclable materials that contain excessive amounts of non-recyclable materials. These contaminated loads are defined as Mixed Loads and account for roughly 2% of the City's annual tonnage of recyclable materials.

The City owned receiving yard at 1100 East Kent Avenue South will be available for the commencement of contract 2002-05, July 1, 2002. Contract 2002-05 is for a three year term with an option for a two year extension by mutual agreement.

Tenderer's were asked to submit prices for processing and marketing the three recycling material categories in the City's current recycling collection program, as well as prices for expanding the MCO material category to include rigid plastic containers with Society of Plastics Institute (SPI) Codes #4 and #5 (the City currently collects rigid plastic containers with SPI Codes #1 and #2). Tenderer's were also permitted to submit alternate bids proposing other expansions of the material categories.

Tenders for Contract 2002-05 Processing and Marketing of Residential Recyclable materials were opened May 16, 2002. A summary of the bids received with a calculated annual value based on February 2002 market prices is shown in Table 1.

Table 1: Estimated Annual Tender Value (based on 2001 tonnages and Feb. 2002 market prices)

 

C.K. Fibres Corp.

Metro Materials
Recovery

International Paper Industries

Canadian Waste Services

Current Contract 9701

Core Tender

$1,025,446

$870,296

$805,846

$391,431

$564,174

Add #4 & #5 rigid
plastic containers

$981,646

$870,296

$785,746

$391,431

  

Add #5 rigid plastic containers

$1,025,446

        

Comingle ONP & MPP

$843,171

        

The bid submitted by C.K. Fibres Corp. meets all contract requirements and provides best value. The bid by C.K. Fibres Corp. to expand MCO processing to include rigid plastic containers with SPI Codes #4 and #5 adds a cost of $6 per tonne of MCO to their core tender bid. C.K. Fibres Corp. also submitted a bid to expand the MCO material category to include rigid plastic containers with SPI Code #5 (only) at no additional cost to the City.

It is recommended that C.K Fibres Corp. bid to include rigid plastic containers with SPI Codes #4 & #5 be accepted. Expanding MCO collection to include rigid plastic containers with SPI Codes #4 & #5 (currently only #1 & #2 are collected) increases the amount of material that is diverted from the landfill and supports the City's sustainability goals by increasing the use of materials in cycles. It is noted that plastic bags, even if labelled with SPI Code #4, will still not be accepted in the City's Blue Box and Apartment recycling programs.

FINANCIAL IMPLICATIONS

With the development of the City owned Recycling Receiving Yard at 1100 East Kent Avenue South, approved by Council July 20, 1999, the annual revenue to the City under the recycling P&M contract is significantly improved. Comparing the current P&M contract prices (where the contractor is providing the land and the facility) to the bids received, it appears that providing the receiving facility accounts for an increase in annual revenue of approximately $275,000 per year (judging by the competitive bids submitted by International Paper Industries and Metro Materials Recovery). The increased competition generated a bid from C.K. Fibres Corp. which increases the revenue to the City by approximately $417,000 per year over the current contract. The increase in revenue is dependant on the volume of material received, however the volume of material has been steady and increasing over the last few years.

CONCLUSION

Tenders for Contract 2002-05 Processing and Marketing of Residential Recyclable Materials have been reviewed, and staff recommend acceptance of the bid from C.K. Fibres Corp. which includes expanding the MCO category to include rigid plastic containers with SPI Codes #4 and #5.

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