SUPPORTS ITEM NO. 1
CS&B COMMITTEE AGENDA

FEBRUARY 25, 1999

ADMINISTRATIVE REPORT

Date: February 4, 1999
Author/Local: P. Navratil/7239

RTS No. 00515

CC File No. 1805

TO:	Standing Committee on Planning and Environment
FROM:	General Manager of Engineering Services
SUBJECT:	Award of Tender 9900 - Apartment Recycling

RECOMMENDATION

A. THAT Council authorizes acceptance of the bids from Canadian Waste Services for Area I at an estimated annual cost of $334,000, from International Paper Industries for Area II and Area IV at an estimated annual cost of $497,000 and from Urban Impact Recycling for Area III at an estimated annual cost of $123,500, as outlined in Scenario A1, to provide Apartment Recycling Collection services for a five-year term, with options for a two-year extension by mutual agreement, subject to a contract satisfactory to the Director of Legal Services.

OR

If Recommendation A is not approved, the following is offered for CONSIDERATION:

B. THAT Council authorizes acceptance of the bids from Canadian Waste Services for Areas I, III and IV at an estimated annual cost of $661,000 and from International Paper Industries for Area II at an estimated annual cost of $291,000, as outlined in Scenario A2, to provide Apartment Recycling Collection services for a five-year term, with options for a two-year extension by mutual agreement, subject to a contract satisfactory to the Director of Legal Services.

RECOMMENDATION

C. THAT the bid bonds of the unsuccessful tenderers be returned upon execution of the service contracts.

D. THAT Council approve funding the 1999 apartment recycling operating costs, which are estimated to be $ 700,000 from the Solid Waste Capital Reserve

GENERAL MANAGER'S COMMENTS

While Consideration B represents the lowest contract cost ($952,205), Recommendation A is supported in that it furthers competition and growth in the local recycling industry at minimal increased cost ($954,840). There will be increased cost to administer three contracts but these costs are expected to be manageable.

CITY MANAGER'S COMMENTS

The City Manager RECOMMENDS approval of Recommendation A, C and D.

COUNCIL POLICY

On February 1, 1989, Council established a goal of reducing the City's solid waste stream by 50%.

On October 7, 1997, Council approved the implementation of the Solid Waste Utility effective January 1, 1998.

On April 28, 1998, Council approved implementation of the Apartment Recycling Program, whereby Vancouver Apartment buildings will be provided recycling services on a mandatory pay, voluntary participation basis.

Contracts over $300,000 in value are to be awarded by Council.

PURPOSE

The purpose of this report is to seek Council's authorization to award Contract 9900 for the collection of Apartment Recycling.

BACKGROUND

In April 1998, City Council approved implementation of the Apartment Recycling Program, which includes service by contractor and City forces. Similar to the Blue Boxes, the program will collect the following recyclable material categories: old newspaper (ONP); mixed paper products (MPP); and mixed containers (MCO). Contracted services will collect these recyclables from approximately 80,000 suites in four sub areas shown in the Appendix I.

Staff prepared a collection tender in December 1998 for core collection of the four areas as well as an optional additional bid to process and market the recyclables collected in any awarded area.

Prior to issuance of the Tender, staff invited 39 Recycling Contractors to a meeting to discuss the mechanics and timing of the proposed tender. This meeting was held December 4, 1998 and many concerns raised by the Contractors were addressed in the issued document.

The Tender was issued December 22, 1998 and closed January 27, 1999

DISCUSSION

The collection contract for each area is a unit price contract ($/suite/year), and monies due to the Contractor will be settled on a monthly basis.

Tenderers were provided with an estimate of the number of suites (dwelling units) to be serviced in each collection area. The suite count is not exact, but is estimated to be accurate within +/- 10%.

The tender was structured to allow bids on 1,2,3, or all 4 areas with the assumption that each area would be awarded independently. The bidders were asked to provide their tender service commencement date in each area. Bidders were also allowed to propose an increased cost to their core bid in order to accelerate their proposed implementation date.

An additional (and optional) bid was also accepted for processing and marketing recyclables collected from any of the four areas awarded to them. The core tender assumes delivery of collected recyclables to our current process and marketing contractor BFI (or similar).

Bid Evaluation

Bids were evaluated on the following principal criteria:

1. The Tenderer's scheduling of the Work in relation to the City's schedule and the ability to complete the Work within the time frame required by the City.

2. The overall cost impact of the Tender on the operations of the City.

3. The benefits of having multiple Contractors providing collection in the four areas.

The bid prices of the 4 submitted tenders are shown in Appendix II.

Also received and outlined in Appendix II are alternate bids that gave prices by combining certain areas into awarded packages. These produced a variety of scenarios for award as shown in Appendix III. The following three award scenarios were selected based on best value. Each scenario outlines which Contractor would win each area, and also computes the total cost to the City.

	Area I	Area II	Area III	Area IV	Total Cost
Scenario	37000 suites	19,500 suites	11,500 suites	12,000 suites
A1	Cdn Waste	IPI	Urban Impact	IPI
	$9.03	$14.92	$10.74	$17.19	$954,840
A2 *	Cdn Waste	IPI	Cdn Waste	Cdn Waste
	$10.93	$14.92	$10.93	$10.93	$952,205
A3 *	Cdn Waste	Cdn Waste	Cdn Waste	Cdn Waste
	$11.99	$11.99	$11.99	$11.99	$959,200

* In addition to bidding each area separately, Canadian Waste supplied the City with 3 bids that gave discounted prices if certain groups of areas were awarded to them. Please refer to Appendix II for a breakdown of the combination bids submitted by Canadian Waste.

All of the bids fall within reasonable ranges as determined by preliminary estimates made by staff.

With the three Scenarios tabled, the difference in all three Scenarios was only $6,995 (less than 1% of bid). This is considered insignificant in comparison to our accuracy of the suite count, which could change final costs.

In each Scenario, the proposed start dates provided by each Contractor were as good or better than the tender required.

Scenario A1 includes the results of the core tender and provides the most competitive environment. However, administration costs are higher than Scenario A2 & A3. How this will impact City operations cannot be determined at this time. Any additional resources needed can be addressed in the future, as required levels of effort become more clear.

Scenarios A2 and A3 are based on alternate tenders, and provide less competition over the 5-year contract duration.

Based on the desire to have multiple collection contractors in order to foster a competitive local recycling environment at little to no additional cost it is recommended that Council award apartment recycling collection contracts as outlined in Scenario A1. Staff puts forward for consideration Scenario A2.

Processing and Marketing

Two bids were submitted for optional processing and marketing of the recyclables collected. The core bid assumes that contractors will transport the collected recyclables to the City's existing processing & marketing (P&M) contractor. The apartment P&M bids can be compared with the City's existing P&M rate to determine if better value can be provided by having the collection contractors process the recyclables that they collect.

The City's current P&M contractor is Browning Ferris Industries (BFI). They process and market all of the materials that the City collects in the Blue Box, mini-depots and the apartment pilot project. BFI's contract expires on June 1, 1999, with three possible one year extensions. Staff are currently in the process of negotiating the first of these possible one year extensions. Should negotiations fail, a tender for a new P&M contractor will be immediately let.

It is undesirable to expose the apartment tender P&M prices while negotiating with BFI or to expose these prices immediately prior to tendering for a larger P&M contract should contract extension negotiations with BFI fail. As a result, the two bids for processing and marketing of recyclables collected in the apartment contract remain filed, unopened, with the Office of the City Clerk. It is our intention to publicly open these apartment P&M bids after an extension agreement is reached with BFI or failing that, at the opening of the larger Blue Box P&M tender. The P&M portion of Apartment Recycling will not affect this award, but may add value if the prices are cheaper than our existing P&M rates.

FINANCIAL IMPLICATIONS

As approved by Council on April 28, 1998, first year operational costs for apartment recycling would come from the Solid Waste Capital Reserve. The main reason for this is that buildings will be brought on line mid -year, and at various times. Assuming a start date of June 1, 1999 for all suites to be on-line, this contract would require approximately $554,000 (plus taxes) from the capital reserve. In addition, implementation of the City collected area is expected to require approximately $150,000 of Reserve funds.

Ongoing collection contract costs will be approximately $950,000 per year. With the City operating costs, material P&M revenues, overhead, and other recycling initiatives, staff anticipate that the per unit utility fee will be between $16 and $18 per unit. Effective January 1, 2000, the Apartment Recycling Program will be fully funded from the Solid Waste Utility user-fee system. The final Utility levy will be brought before Council late in 1999.

ATTACHMENTS TO THIS DOCUMENT THAT DO NOT HAVE ELECTRONIC COPY ARE AVAILABLE ON FILE IN THE CITY CLERK'S OFFICE

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(c) 1998 City of Vancouver