The prospect of a new collection and processing contract is always going to be daunting. This process is compounded during times of uncertainty and impending regulatory change. Under Project 1075, the City of Cornwall (City) obtained assistance from the CIF to create a new collection and processing RFP, which represents the City’s single largest municipal contract. The goal of the RFP was to facilitate desired program development and at the same time, prepare the City for market changes in the recycling industry and impending regulatory upheaval.
The previous contract, developed in 2010, was outdated and helped precipitate rising and uncontrolled costs in the face of markets issues and through the absence of change management and liquidated damages provisions. The contract was also deficient in change of law provisions and would not have positioned the City for a seamless transition with the advent of individual producer responsibility (IPR).
To facilitate program development and offer flexibility to manage program change, the City developed an RFP that:
- Is a better predicter of program costs. This was accomplished primarily through the use of a per stop rather than per tonne costs-based collection payment mechanism. In addition, the new contract prevents arbitrary compensation requests and escalating processing costs;
- Places greater emphasis on blue box material capture, quality and marketing to enhance access to markets and generate higher revenues. The RFP required proponents to invest capital into a new collection fleet and processing equipment at the MRF, in order to improve the facility’s overall efficiency;
- Contains stronger contract management language and liquidated damages. This was done in order to prevent contractual breaches by the service provider; and
- Protects the City during periods of uncertainty through the inclusion of transitional clauses. With a need to manage the risk associated with blue box market condition changes and transition to IPR, the new RFP included the CIF’s newly revamped transitional clauses. This includes the early termination clause that required the proponent to identify the cost to the City to break the blue box portion of the contract as a result of regulatory change. The early termination costs outlined by the successful bidder show an expected linear decrease in costs (Table 1). The costs noted by the successful proponent correlate to the capital investment it is expected to make in the delivery of the contractual services.
Table 1: Early Termination Costs – City of Cornwall
“Through working on this project collaboratively with the CIF, the City of Cornwall was able to develop a series of contract clauses that not only prepare and protect the City during these periods of uncertainty, but also allow the City to understand the up-front costs associated with transition should it occur that are non-negotiable.”
~ Danielle Watson, Waste Management Supervisor, City of Cornwall
| Year of Termination – Contract Term | Processing Termination Cost | Collection Termination Cost |
|---|---|---|
| 2022 - Year 3 | $1,200,000 | $1,000,000 |
| 2023 - Year 4 | $1,000,000 | $800,000 |
| 2024 - Year 5 | $700,000 | $600,000 |
| 2025 - Year 6 | $500,000 | $400,000 |
| 2026 - Year 7 | $200,000 | $200,000 |
RFP Development Challenges & Learnings
As City staff sought to award the contract to a new service provider, they encountered several communication issues resulting from the media and incumbent service provider questioning the evaluation results. This was a reminder for staff that it’s important to consider the political atmosphere when making change, especially when the change may involve a long-term service provider, and it’s equally important to educate Councilors before bringing a new contract to the table.
Also, it is recommended prior to contract change that a plan be developed to address questions about the contracting process and even prepare a public relations strategy as part of the contract announcement program.
However, one significant benefit of the media attention has been a surge in public interest in promotion and education materials combined with an increase in requests for educational presentations and tours, and an increase in blue box bin sales.
Operationally, the new contract has resulted in significant customer service system improvements with a 30% reduction in missed waste service requests. In addition, greater collection (use of split back trucks) and processing (improved material capture) efficiencies are being realized.
For more information:
Contact CIF staff or Danielle Watson at the City of Cornwall.