Frequently Asked Questions
Plans notwithstanding, the Waste Free Ontario Act, 2016, which received Royal Assent in June, 2016, has the potential to disrupt many recycling service and processing contracts in Ontario by changing the legislative framework under which the parties operate. If the parties are unwilling or unable to negotiate a new operating arrangement following a change in legislation, it is possible that a “force majeure” contract event may be triggered potentially resulting in the cancellation of the contract by one or both parties. To increase the chances of a contract surviving the change in legislation, without unreasonable cost increases, a modification to the force majeure clause, specifically referencing change of law, is now considered a best practice. Read more and see samples.
A better practice is to permit different types of acceptable, in the sole discretion of the municipality, security. Smaller contractors may be assisted because, for example, a small contractor may be better able to obtain an acceptable line of credit from a local lender but may not be able to secure an acceptable bond in time to meet an RFP submission deadline. A bond and a Letter of Credit (LoC) are both forms of a performance surety (financial guarantee) by the contractor to satisfactorily complete the work. The surety amount should cover additional costs for service, tender and administrative expenses, above ongoing operating costs, if the contractor defaults. If surety amounts are set too low, the municipality risks paying for some or all of a major default, if set too high small/local contractors may be unable to bid. Typical ranges are 25% – 75% of 1 yr. total contract bid price. Under a bond, a claim must be made using a formal procedure, to the 3rd party bonding company which then investigates to find out if the contractor failed to perform its obligations. This can be a lengthy procedure involving litigation. Banks will pay a LoC upon a formal demand. LoCs cost more than bonds but may be easier to obtain for small companies. (Bond 0.5% to 1% vs. LoC 2% to 4% of surety value annually) Bonds are not as liquid as a demand LoC or cash on deposit so if time or emergency funds are short in your municipality then a LoC may be preferable.
Councillors are not typical evaluation team members because, as the final decision makers tasked with awarding a contract, their presence on the evaluation team can be challenged by proponents/bidders, possibly resulting in litigation or a do over, on the grounds that submission evaluations were:
- Biased, (a Councillor has personal issues with my family/friends/company/politics so scored my submission harshly)
- Intimidation, (staff/consultant(s) report to/paid by Council so a Councillor on the evaluation team has too much influence over the final scores because staff won’t challenge them)
- Conflict of interest, (Councillor, family, associate, etc. actually has, or is perceived to have, an economic benefit if a contract is awarded to a specific proponent/bidder)
- Councillor(s) may not be technically qualified, (staff, consultant(s), engineers perform waste management tasks and existing waste contract administration every day, Councillors do not)
For the above reasons, it’s better not to have Councillors on the evaluation team. Let your qualified team independently come to a preferred supplier recommendation and let Council question, explore and debate the recommendation in open Council before making an award. Contact CIF staff for friendly advice, no charge evaluation team training, sample evaluation spreadsheets and help when you need it, including council presentations if necessary.
The practical limit should not exceed 6. Councils/staff can fall into a trap with RFP options because they want to know/compare the real (bid) cost of the next possible recycling or diversion opportunity. With too many options to analyze, your evaluation team and/or Council, may be confused and doubt if they understood/compared all the variables correctly. This can lead to “paralysis by analysis” and a subsequent failure to act. Suppliers may interpret an RFP containing too many options as a signal that a municipality is not serious about awarding most, or even any, options and decline to bid. Solutions:
- Do your homework first. Call other municipalities and use information in the RPRA Datacall to estimate the cost of options that you may be seriously considering and to set aside those you are not ready to actually award.
- Make sure your Council understands the challenges inherent in issuing “fishing” RFPs and help them understand how it benefits your program to design RFPs strategically to obtain solutions and pricing for options that are most relevant to your program.
- Limit your RFP options to no more than 6 and reduce unnecessary variables like pricing all options three different ways. (e.g. by stop, household, tonne)
- Contact CIF staff for friendly advice, RFP samples and help when you need it including council presentations if necessary.
- Read the CIF Fishing Expeditions Blog for more information and pass it on to Councillors and senior management.
Typical procurement timelines are:
- 5 months from start up to publishing the RFP, plus
- 2 months for proponents/bidders to respond, plus
- 1.5 months to evaluate the RFP, sign a contract/issue purchase orders, plus
- 10 months to prepare the sites, acquire and set up equipment and develop/deliver P&E for the conversion to a new contract.
Don’t give up. You can politely point out that CIF has been assisting over 200 municipalities with waste management procurement for over a decade so we actually do have some better practices for waste management procurement. We understand that purchasing departments like to do things their own way, but omitting some of the things we have identified as better practices can, and has, come back to bite municipalities in the past. Take advantage of our experience and let us take the heat for you by offering to let CIF staff speak directly to purchasing and legal to discuss any inclusion/omission issues with them. Contact CIF staff.