In an attempt to aid all municipalities in crafting their RFPs, and hopefully improving pricing in the process, Rick Clow from Quinte Waste Solutions (QWS) agreed to share some thoughts on the bidder’s response side of the RFP process.
QWS receives RFPs from non-member Ontario municipalities for services that include Blue Box recycling collection, processing, promotion and material marketing. After review, where it is geographically feasible, QWS will complete and submit a proposal in response to a request.
Rick’s comments: a Window on Bidders’ perspectives
Bidders dislike risk – the more risk, the higher the bid price needs to be to prevent winding up in negative financial territory. Unaddressed, the issues below would increase bidders’ risk and in turn the price bid on contracts.
A recent RFP mentioned the recycling depot and also ‘attendants’ but didn’t clarify whether the depot is staffed in a manner that reduces contamination. Contractors are responsible for processing material that may have fluctuating or significant contamination levels, and must price in that risk in the absence of information about efforts to contain/reduce contamination.
Historical data from a previous contractor or waste composition study allows a bidder to assess this risk. It is also helpful for bidders to know how attendants are trained and expected to manage non-recyclables on site.
Multi-year terms with no price escalation
Multi-year terms need to have a method to escalate the price of the contract relative to a published benchmark or index to reflect the increased cost of doing business in future periods. Often a CPI adjustment and/or Fuel Adjustment clause will cover this.
Annual lump sum pricing
Annual ‘lump sum’ bids make it very easy to calculate the needed annual budget number for council, but don’t necessarily reflect the cost of doing business. Consider using per tonne amounts instead, as this metric better reflects the cost of providing service.
If you stick with a lump sum, then you need to address the risk of material volume/tonnage fluctuations. Including a clause such that in the event annual tonnages collected go above an expected amount (i.e. above 10% of historical) an additional price per tonne available to the contractor will help to mitigate this risk.
Wording such as “additional materials may be added to the recyclable material list” sounds good from a ‘covering all bases’ viewpoint, but the bidder wonders how much volume, weight and processing difficulty will result. Consider specifying how pricing may be adjusted to incorporate new and/or potentially difficult to manage materials.
As bidders/prospective contractors we want to offer fair and competitive pricing after factoring in risks and unknowns. When municipalities identify how risk related to the contract will be mitigated and/or shared, the bidder feels more confident in their understanding of the costs to provide the service and are able to offer a price with less buffer for unknowns, built in.
Rick Clow – General Manager, Quinte Waste Solutions
- The CIF website houses many useful resources to help in developing RFPs and Contracts – https://thecif.ca/procurement-2/
- Training opportunities for contract writing and management are periodically available for municipal staff – https://thecif.ca/training/
- Funding to hire consultants to assist in the procurement process is available through the Request for Expressions of Interest (REOI) process – https://thecif.ca/request-for-expressions-of-interest-reoi/
Contact CIF Staff
CIF staff is always ready to help. Please contact any member of the team to discuss your issues and questions.