View Agenda '24'

Leon County
Board of County Commissioners
Agenda Item#24

February 21, 2023

To:	Honorable Chairman and Members of the Board

From:	Vincent S. Long, County Administrator

Title:	Bid Award for the Exclusive Franchise to Provide Waste Collection Services in Unincorporated Leon County

Review and Approval:	Vincent S. Long, County Administrator
Department/Division Review and Approval:	Alan Rosenzweig, Deputy County Administrator
Lead Staff/ Project Team:	Maggie Theriot, Director, Office of Resource Stewardship

Statement of Issue:

This item seeks Board direction regarding the bid for unincorporated area curbside waste collection services.

Fiscal Impact:

This item has a fiscal impact to the County. The County receives a 5% franchise fee from the solid waste contractor. Based on the proposed bids, the County is estimated to receive an additional $185,000 annually. Franchise fee revenues are used to offset the cost of the County’s solid waste program.

A monthly subscription will be paid by residents opting to receive curbside residential or commercial solid waste collection service in unincorporated Leon County beginning on October 1, 2023.

Staff Recommendation:

Option #3: Board direction.

Report and Discussion

Background:

Leon County is authorized by Section 403.7063, Florida Statutes, and Leon County Code Section 18-156 to provide for the collection of solid waste in unincorporated Leon County. Pursuant to County Code, the County may approve an exclusive franchise for the collection of solid waste collection services. An exclusive franchise ensures the most competitive rates are procured for this service. An exclusive franchise also requires the vendor to provide this service to any unincorporated area resident or business that wishes to subscribe.

In summary, the franchise agreement (Attachment #1) includes the exclusive collection of residential solid waste, recyclable materials, yard debris, and bulky waste on a subscription (i.e. voluntary) basis. By subscribing, residents pay for the convenience of weekly curbside collection. Residents who do not wish to subscribe may utilize one of the County’s four Rural Waste Service Centers. These Centers are operated by Leon County, offering free disposal of garbage, recycling, yard debris and bulky items to unincorporated County residents. The Rural Waste Centers also remain available to curbside subscribers should they have a disposal need outside of routine weekly collection. Currently an estimated 30,000 residents in the unincorporated area subscribe. Additionally, the agreement grants an exclusive franchise for commercial collection service in unincorporated Leon County. Commercial services are provided to an estimated 400 sites. The vendor is also required to offer commercial recycling collection service within the unincorporated area.

The County’s current contract for unincorporated area waste collection services will expire on September 30, 2023. As detailed in the Board’s September 13, 2022 agenda item to approve the issuance of the invitation to bid (ITB), a sizable residential collection rate increase was anticipated due to the state of inflation, labor shortages, and supply chain costs. Currently, County residential rates are disproportionally low with customers paying 75% less than residents in other counties in the State. Residents are paying this reduced rate as the direct result of the County’s competitive procurement in 2013, and the negotiated rates for the subsequent three-year contract extension in 2019, thereby suppressing the current rate to lower than it was for residents in unincorporated Leon County a decade ago.

Extensive efforts have been made in the solicitation of this ITB to ensure the anticipated cost increase to customers in unincorporated Leon County is mitigated to the greatest extent possible without a reduction in services. As detailed below, these efforts included utilizing a competitive bidding process; a review of best practices and collaboration with industry experts, resulting in modification of the scope without reductions in service; and rejecting the results of the initial solicitation to foster additional competition, all in an effort to reduce costs.

In September 2022, the Board approved the issuance of the ITB for the exclusive franchise. The ITB was advertised in September 2022, one year ahead of the expiration of the current contract to ensure ample time for any transition of providers. Four bids were received by the ITB deadline; however, based on the minimum requirements of the ITB only one bid was ultimately deemed responsible and responsive. Rather than present only one bid to the Board on such a critical service, and to generate additional competition, the bids were rejected in accordance with Purchasing Policy. Minor modifications were made to the bid specifications, and the revised bid was immediately readvertised (Attachment #2).

In January 2023, three responsible and responsive bids were received as a result of the readvertisement, with Waste Pro of Florida, Inc. (Waste Pro), being the lowest responsive and responsible bidder (Attachment #3). While the lowest responsible bid constitutes a significant increase to the current residential subscription rate, as detailed below, this residential rate is comparable to the residential rate charged in other counties and remains below the average across the state. By contrast, Waste Pro’s bid includes commercial rate increases of 58% - 116% depending on the type of waste container. Although the residential rates in the Waste Pro bid are aligned with state average, commercial rates in the Waste Pro bid exceed market rates.

This item provides two approaches for Board consideration. First, award a new exclusive franchise agreement to Waste Pro as the lowest responsive and responsible bidder. This approach would result in higher residential rates that are comparable with the state average, but commercial rates would increase to rates that are above the state average. Alternatively, as discussed below, the Board may wish to reject all bids, waive the requirement in the Purchasing Policy to issue another competitive solicitation, and authorize the County Administrator to negotiate with the low bidder, Waste Pro, to reduce the rate increase to commercial customers while keeping the residential rate in line with the state average. The implications that the options may have for the pending bid protest filed by one of the bidders, FCC Environmental Services, LLC (FCC), are also discussed below.

Analysis:

The analysis includes two approaches, awarding the bid to the lowest responsive and responsible bidder or, alternatively, rejecting all bids, waiving the requirement in the Purchasing Policy to issue another competitive solicitation, and authorizing the County Administrator to negotiate with the intent of reducing the commercial rate while mitigating any increase to the residential rate.

Bid Award: Lowest Residential Rate

As noted in the Background, in January 2023, three responsible and responsive bids were received as a result of a readvertisement, with Waste Pro being the lowest responsive and responsible bidder. The bid was readvertised locally on December 22, 2022 in order to ensure competition. A total of 1,957 vendors were notified through the automated procurement system. A total of 22 vendors requested bid packages, and 4 vendors attended the mandatory pre-bid meeting. On January 30, 2023, three bids were received. As instructed, bid prices were submitted in a separate sealed envelope, allowing staff to verify each bidder met minimum qualifications prior to opening the sealed bid prices. Submissions were first reviewed for responsiveness, which includes whether the bidder adequately documented that it meets the minimum qualifications. Each of the three bidders were deemed responsive, meeting minimum qualifications. The price proposals of the three bidders deemed responsive were opened on February 2, 2023.

Responsive bids were submitted by three vendors: FCC, Waste Management Inc. of Florida (Waste Management), and Waste Pro (Attachment #4). As depicted in Table #1, Waste Pro is deemed the lowest responsive and responsible bidder.

Table #1: Residential Bid Rate Comparison

	Monthly Rate	Quarterly Rate	Annual Rate	% Increase
Current Rate	$ 15.03	$ 45.09	$ 180.36
Waste Pro	$ 23.17	$ 69.51	$ 278.04	54.2%
FCC	$ 23.99	$ 71.97	$ 287.88	59.6%
Waste Management	$ 28.18	$ 84.54	$ 338.16	87.5%

As detailed in the Board’s September agenda item, to approve the issuance of this ITB, a sizable rate increase was anticipated in the current bid due to the state of inflation, labor shortages, and supply chain costs. Consistent with state and national trends, the low bid does represent an increase over current residential subscription rates; however, the extent of the increase was abated with intentional adjustments to the agreement as detailed below. In part the rate increase represents a return to market norms, as the County rates have been disproportionally low for the past decade with customers currently paying 75% less than residents in other counties in the State. Residents are paying this reduced rate as the direct result of the County’s competitive procurement in 2013. In addition, to keep rates as low as possible under the current franchise agreement, the County negotiated the current rates for a three-year contract renewal in 2019. These efforts suppressed the current rate to lower than it was for residents in unincorporated Leon County a decade ago.

As depicted in Table #2, the residential monthly rate of $23.17 bid by Waste Pro is in line with other jurisdictions in the state, including the City of Tallahassee. The level of service provided by the counties listed in Table #2 is consistent with Leon County’s weekly collection of garbage, recycling, yard debris and bulky service.

Table #2: Residential Rate County Comparison

County	Monthly Rate
Leon / Current Rate	$15.03
Leon / Waste Pro bid	$23.17
City of Tallahassee	$23.62

Alachua	$26.89
Escambia	$27.67
Lee	$26.59
Martin	$22.75
Okaloosa	$29.99
Osceola	$27.75
Santa Rosa	$33.43
Sumter	$25.31
Suwannee	$25.00
Volusia	$21.83
St. Lucie	$23.01
Average County rate	$26.38

Rates received in response to municipal waste collection solicitations across the nation have increased notably, with many municipalities opting to reduce the level of service to mitigate pending increases. The current Franchise Agreement was re-evaluated prior to drafting the ITB. A review was also conducted of over a dozen collection agreements from other jurisdictions including the agreements used for two recent South Florida solicitations. Furthermore, staff engaged industry experts to ensure specifications and standards are in line with best practices. The new agreement adds greater clarity of performance standards and accountability, along with detailed liquidated damages for violation of such standards, to ensure the vendor has clear expectations for service and performance. The standard level of service will remain unchanged, with subscribers continuing to receive weekly collection of waste, recycling, and yard debris. However, as previously stated, specifications have been closely examined in light of cost mitigation opportunities. In some cases, level of service can be increased with no cost impact, such as shifting bulky service from on-call to weekly, while in other cases such as yard waste, the total maximum weekly cubic yards collected would be decreased while still meeting the vast majority of the demand. The following outlines specifications which are modified in the proposed Franchise Agreement.

Adjustments to the existing service include:

Yard Debris: Adjusting the weekly maximum amount of yard debris to the industry standard will meet the needs of nearly all customers, while helping to mitigate price increases. This industry standard allows for 8 cubic yards per week (or a pile measuring 6 feet long and 3 feet in width and height), which is still significantly more than most customers set out for collection. Currently customers place an average of less than 1 cubic yard per week curbside, while the current contract allows for 17 cubic yards per week. Although very few residents ever dispose of the maximum yard debris in a week, vendors must increase their bid price to accommodate for the potential of such large volume from each customer. This in turn requires the vendors to contemplate additional staff and equipment capacity as part of their bid. There will be no limit on the number of piles a residential customer may place at the curbside, but the vendor is not required to collect more than 8 cubic yards, per customer, each week.

Consistent with current practice, the proposed limits do not include yard waste placed in containers or paper bags. Residents may place small sticks or loose material such as clippings and leaves in customer owned containers for weekly service in addition to piles. In the event that a resident has more than 8 cubic yards and is unable to wait until the following week for service, unincorporated residents may drop off yard debris for free at any of the County’s four Rural Waste Service Centers or elect to pay the vendor for a special service collection.

Plastic Yard Bags: To mitigate cost increases, customers will no longer place loose debris, such as grass clippings or pine needles, in plastic bags. Paper bags or customer provided containers can continue to be utilized. All collected yard debris is delivered to the County’s Solid Waste Facility where it is chipped into repurposed mulch. Plastic and other contamination would ruin the mulch and, therefore, plastic bags must be removed. Currently the vendor is required to debag yard debris at the curb, slicing the plastic open and emptying the bag contents manually. This process is very labor intensive and has a direct impact on a vendor’s cost and bid price. In addition to reducing cost, the prohibition of plastic bags has a positive environmental impact and increases the vendor’s worker satisfaction and safety.
Bulky Items: To increase level of service, customers will no longer have to call to request service of bulky items (furniture, carpet, appliances, etc.). The new standard shifts from an on-call model, requiring the customer to call for service, to a standardized weekly service. Customers will place bulky items curbside on the scheduled day for routine waste/recycling, and bulky will be serviced within three days. It is not anticipated this level of service change would influence the bid rate. Currently customers must call to request a bulky service, and such service can occur anytime over the following seven days. Customers who call are not currently provided a specific day to anticipate the service, and bulky items must be placed at the curb in anticipation of the forthcoming pick-up. As a result, items can be at the curb for up to seven days, which can result in unsightly neighborhood conditions. Residents may be in violation of Homeowner Association standards, and the customer’s grass can be compromised during such a lengthy time.
Disaster Response: Guidelines for disaster preparedness have been refined to reflect lessons learned over past storms, resulting in enhanced procedures, proactive documentation, and greater accountability for vendor performance post-disaster.
Technology: To increase quality of service and vendor accountability, fleet management technology is required. The software/hardware is to be utilized by the vendor as the primary means for drivers to identify routes and active accounts, avoiding reliance on paper maps or person-to-person knowledge. Technology continues to advance since the drafting of the 2013 agreement. For example, new industry standard web-based systems offer far broader functionality with less manual labor and failure rate than the older chip-based technology. Fleet optimization is now commonplace for the waste industry and will reduce field training as well as errors for new or substitute drivers.
Vehicles: The vendor is encouraged to maximize the environmental value of their fleet, but a singular fuel source is not mandated. The previous Franchise Agreement required 50% CNG at commencement, and 100% CNG within seven years. Under the ITB, a minimum of 50% of trucks will be powered by Compressed Natural Gas (CNG) or electricity at commencement. Natural gas prices have experienced notable fluctuation in recent years and other technologies continue to rapidly advance, providing greater flexibility to achieve environmental considerations. By not restricting the fleet to a single fuel source the vendor is positioned to adapt to changing market conditions, pricing, and emerging technology throughout the contract term.

Services remaining unchanged are:

Weekly Service: Once weekly collection of household garbage, yard debris, and recyclables.
Single-Stream Recycling: All paper/cans/bottles are placed into the 65-gallon recycling roll-cart.
Education: A continued partnership with the vendor for education of customers.
Carts: Customers will retain existing waste/recycling carts. The vendor will be responsible for cart repair, with the County owning the carts at the end of the initial term of the Franchise Agreement.
Customer Service: The vendor is required to host an office within Leon County to provide locally based customer service. Additionally, a phone number secured by the County (850-606-1899) will be ported to the vendor’s office located within Leon County. This phone number serves as the published phone number for the vendor, providing consistency for customers.
Franchise Fee: The 5% franchise fee will be maintained.

In addition to residential services, the Franchise includes commercial waste collection service. There are approximately 400 commercial customers which can select among various container types and the frequency of collection. Though commercial waste collection is exclusive, the vendor does not have an exclusive right to collect commercial recycling, but must provide such service upon customer request. The ITB required the vendor to provide a “not to exceed” rate for various container types. The Franchise is awarded based upon only the residential rates to ensure the lowest rate for 30,000 residents. Despite being low bid, under the Waste Pro bid commercial customers will see rate increases of 58% - 116% depending on the type of waste container.

Table #3: Commercial Bid Rate

Container Type ¹	# of Customers	Current Rate	Waste Pro Bid Rate	% Increase
2 Cubic Yard	75	$92.80	$146.79	58%
4 Cubic Yard	62	$185.59	$293.57	58%
6 Cubic Yard	31	$278.39	$440.36	58%
8 Cubic Yard	63	$371.19	$587.15	58%

95 gallon cart	128	$25.27	$41.95	66%
Compactor	18	$210.56	$455.00	116%

Footnote 1: Each category of container type has differing collection frequency. The 2/4/6/8 cubic yard containers and also the 95-gallon carts are serviced weekly, and the rate is per month. The compactors are charged per instance of service, with commercial customers opting for a myriad of frequencies including on-call, weekly, monthly.

As depicted in Table #3, the largest category of commercial accounts are 2/4/6/8 cubic yard containers, making up more than half of the total 400 commercial accounts. The rate increase of 58% is consistent with the residential rate increase (54%). The 18 compactor customers would be most heavily impacted by the pending rate increase. Within this category of commercial accounts, half are large national chains, and half are locally operated business centers or apartment complexes. Although the proposed residential rates are aligned with the state average, the current commercial rates exceed market rates, and the proposed commercial rates would continue to exceed market rates.

Should the Board opt to award the bid to Waste Pro as the lowest responsive and responsible bidder, such award would be subject to the successful defense of the pending FCC bid protest. On February 7, 2023, the County received a timely bid protest from FCC. As provided in the County’s Purchasing Policy, Section 5.13.C.5., the Purchasing Director cannot proceed further with the solicitation or award of the contract until all administrative remedies related to the solicitation have been exhausted. However, the County Administrator may determine that the award of a contract without delay is necessary to protect the substantial interest of the County. On February 10, 2023, the County Administrator made the substantial interest determination for the specific purpose of bringing this agenda item to the Board for consideration and obtaining Board direction. Specifically, the alternative approach discussed below of rejecting all bids and authorizing the County Administrator to directly negotiate with Waste Pro to reduce commercial rates would correspondingly make the bid protest moot.

If the Board opts to award the bid to Waste Pro as the lowest responsive and responsible bidder, and the County successfully defends the pending bid protest, work will immediately begin to ensure a smooth transition for the October 1, 2023 commencement of services under the new Franchise Agreement. Parameters were included in the ITB to assure the successful bidder will transition service with minimal impact to current customers. Waste Pro would commence service at a new market adjusted rate of $23.17. Although Waste Pro is the current provider and may be awarded the new Franchise Agreement based upon its low bid, the new agreement features extensive standards for transition prior to commencement. In part it is required that the vendor submit a transition plan that provides a detailed description on how the contractor will plan, with specific performance requirements outlined by the County. Examples of required detail include but are not limited to:

a schedule for obtaining all necessary vehicles and equipment
procedures for validation of all existing customer contact and billing information
activation and testing of the fleet optimization software and data reporting
preparation of public education and service guides
submittal of route adjustments and dry-run operations
schedule of customer notification of changes in route, collection procedures, and rate adjustments

Should the Board direct, staff is prepared to work closely with Waste Pro to assure the service transition has minimal impact to current customers and all deadlines are met. Detailed requirements and related violation standards are included in the new Franchise Agreement. The County will work closely with the contractor to ensure all customers will be informed of any adjustments to collection procedures, rates, and contact information prior to commencement.

Negotiation as Alternative Method of Procurement

Under the ITB, the Franchise will be awarded based on the residential waste collection service rate to ensure the lowest rate for 30,000 customers. The current residential bid rate demonstrates the success of this method. However, the existing commercial rates are above market rates, and will increase further under the bid award. Notably, when combining both the residential and commercial rates, Waste Pro is still the lowest overall bid. However, to mitigate the rate increase to commercial customers to the extent possible, the Board may wish to consider an alternative approach to awarding the Franchise to Waste Pro based upon its most recent residential waste collection service rate. Should the Board wish to pursue an alternative, the Board may reject all bids, waive the requirement in Section 5.08 of the Purchasing Policy to issue another competitive solicitation, and authorize the County Administrator to negotiate with Waste Pro. Negotiations would be predicated upon the existing scope of service, and focused on reducing the commercial rates while constraining any increase in the residential rate to remain within the state average of $26.38. Should negotiations be unsuccessful, the County Administrator would proceed to negotiate with the second lowest ranked bidder, and further to the third bidder if necessary. With respect to the pending FCC bid protest, direction from the Board to reject all bids would render the bid protest moot, and the County Administrator would be authorized to proceed immediately to negotiation.

Conclusion

This agenda item includes two approaches for Board consideration: awarding the bid to Waste Pro as the lowest responsive and responsible bidder or, alternatively, rejecting all bids, waiving the requirement in the Purchasing Policy to issue another competitive solicitation, and authorizing the County Administrator to negotiate with the intent of reducing commercial rates. The $23.17 residential rate bid by Waste Pro is comparable to other counties and remains slightly below average compared to rates charged around the state. County rates have been disproportionally low with customers currently paying 75% less than other representative counties in the State. Residents are paying this reduced rate as the direct result of the County’s competitive procurement in 2013. In addition, to keep rates as low as possible under the current franchise agreement, the County negotiated the current rates for a three-year contract renewal in 2019. These efforts have suppressed the rate to lower than it was for Leon County residents a decade ago.

The County took several steps to mitigate the full extent of the anticipated rate increase to 30,000 residential customers. Steps include thoroughly evaluating opportunities to modify current level of service, reject bids submitted in response to the initial solicitation, and issuing a new ITB with modified terms. Demonstrating success, the proposed rate increase is slightly below state market average. Nevertheless, the proposed commercial rates continue to exceed market rates.

While the residential rate would be lower than the state average if the Franchise is awarded to Waste Pro, 400 commercial customers will see rate increases of 58% - 116% depending on the type of waste container. Consistent with the residential rate increase of 54%, over half of the commercial accounts would see a rate increase of 58% while the remaining commercial customers would see greater rate increases. The 18 compactor customers would be most heavily impacted by a 116% rate increase, many of which are large national chains. Although residential rates are aligned with the state average, commercial rates have and continue to exceed market rates.

Based upon Board direction, staff is prepared to proceed with next steps. Should the Board opt to award the bid to Waste Pro as the lowest responsive and responsible bidder, such award would be subject to the successful defense of the pending FCC bid protest. If the County successfully defends the pending bid protest, work will immediately begin to ensure a smooth transition for the October 1, 2023 commencement. Alternatively, should the Board elect to direct the County Administrator to negotiate, the results would be provided for approval in the March Board meeting. Negotiations would be predicated upon the existing scope of service, and focused on a smaller increase in the commercial rates while constraining any increase in the residential rate to remain within the state average of $26.38. With respect to the pending FCC bid protest, direction from the Board to reject all bids would render the bid protest moot.

Options:

Approve the bid award to Waste Pro of Florida, Inc., for the exclusive franchise to provide waste collection services in unincorporated Leon County (Attachment #1), and authorize the County Administrator execute the Agreement, subject to legal review by the County Attorney, and contingent upon the successful defense of the pending FCC bid protest.
Approve the following:
1. Reject all bids for the exclusive franchise to provide waste collection services in unincorporated Leon County.
2. Waive Section 5.08 of the Leon County Policy No. 96-1, “Purchasing Policy.”
3. Authorize the County Administrator to negotiate with Waste Pro of Florida, Inc., to reduce commercial rates and mitigate any increase to residential rates.
4. If negotiations are unsuccessful with Waste Pro of Florida, Inc., authorize the County Administrator to negotiate with the remaining bidders in rank order.
Board direction.

Recommendation:

Option #3 – Board direction.