Title
Recommendation to Authorize the City Manager to Approve a Two-Step Procurement Process for Integrated Waste Franchise by First Entering into Sole Source Negotiations with Alameda County Industries. (Public Works 274)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
The City of Alameda’s (City) integrated waste franchise terminates on October 2022. Staff seeks approval for a two-step procurement process in which sole source negotiations are initiated with the current franchisee, Alameda County Industries (ACI). If those negotiations are not successful, staff’s next step would be initiation of a competitive procurement in September 2020. That competitive procurement process would conclude by October 2021, offering sufficient time to transition to a new provider by October 2022. Public Resources Code allows the City to consider a sole source procurement process for waste, recycling and organics franchise agreements; however, in an abundance of caution staff has updated the City’s existing Procurement Policy to specifically authorize single-source purchasing, when appropriate. The updated Procurement Policy is attached as Exhibit 1.
BACKGROUND
The City’s existing integrated waste franchise with ACI began in 2002 and expires October 2022. The franchise provides for the collection, transportation and processing of Alameda’s municipal solid waste, recycling, and organics. ACI is responsible for managing and paying all costs and fees associated with the collection, processing, and disposal of integrated waste, and directly billing all residential and commercial customers for these services. Through a separate agreement, the City contracts with Waste Management for the transferring and landfilling of the solid waste portion of the integrated waste stream.
The agreement expiration and this procurement process provide an opportunity to modernize the franchise-most of which was written twenty years ago-and account for the significant industry changes since then, including the disruptions in the recycling market, labor changes such as the unionization of recycling sorters, and state and local policies requiring much more recycling and composting.
DISCUSSION
Staff seeks Council’s direction to approve a two-step procurement process. The first step is to enter sole source negotiations with ACI on a new franchise. These negotiations would conclude, whether successful or not, by September 2020. Staff would report back to City Council in May or June 2020 on the progress of the negotiations and seek further direction.
If this first step is unsuccessful or if City Council prefers not to go to a sole source, staff will initiate a competitive procurement process by October 2020. That procurement is likely to take one year. A new franchisee must be selected by October 2021, and if that franchisee is a new provider, one year of lead time is required for vehicle purchases and other actions needed for the transition by October 2022.
A two-step procurement process is a common practice for cities at the end of an integrated waste franchise. The process allows the City to obtain the best services and rates possible, either through negotiation with the incumbent provider in the sole source process, or the providers responding to a competitive procurement. While it may appear that a full competitive procurement would result in the best rates and services being obtained by the City, procurement results from other San Francisco Bay Area cities suggest a more complicated dynamic. Some cities concluded competitive procurements with steep rate increases, while others faced litigation regarding the process and results. Even if successful, these competitive procurements are costly and time consuming.
The Public Resources Code allows cities to pursue sole source contracts for solid waste, recycling and organics franchise agreements. However, in an abundance of caution, concurrent with this process, staff reviewed the City’s existing procurement policy and made amendments because the existing policy did not explicitly authorize sole source contracting. Nonetheless, sole source contracting, when appropriate, is both commonly undertaken statewide by governmental agencies and necessary for effective governmental operations. Accordingly, staff has amended the procurement policy to authorize such in appropriate situations (e.g. when competition does not reasonably exist because only one vendor possesses the unique ability or capability to meet the particular requirements of the City). The City Manager and the City Attorney approved this amendment on January 30, 2020 and it is attached to this Staff Report as Exhibit 1.
If the Council approves this two-step procurement process, the City Manager’s Office will convene an interdepartmental team from Public Works and the City Attorney’s Office, with support from HFH Consultants, who serve as advisors on the City’s franchise. Staff also will convene an advisory group of stakeholders, including representatives from Alameda’s business, environmental, and solid waste/recycling communities. This advisory group will be convened at intervals through the procurement process to provide input and advice.
Staff will ensure transparency around the process through regular reporting at City Council meetings (planned for June 2020 to report on sole source negotiations with ACI), and in October 2020 (to either finalize a sole source agreement or initiate a competitive procurement).
ALTERNATIVES
• Approve the two-step procurement process.
• Direct staff to proceed only with a competitive procurement.
• Direct staff to follow up with more information at another City Council meeting.
FINANCIAL IMPACT
There is no direct financial impact from City Council providing direction on this item; however, the procurement itself may result in financial impact to the City’s ratepayers, the General Fund and to the Integrated Waste Fund.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
Alameda Municipal Code section 21, Solid Waste and Recycling.
ENVIRONMENTAL REVIEW
This project is statutorily exempt under California Environmental Quality Act Guidelines Section 15273 (a)(1) Rates, Tolls, Fares and Charges - meeting of operating expenses.
CLIMATE IMPACTS
The integrated waste franchise is an important tool in meeting the goals of the Climate Action and Resiliency Plan (2019) and Zero Waste Implementation Plan Update (2018). The increased recycling and composting of materials in lieu of landfilling helps reduce harmful greenhouse gas and methane emissions. The franchise is also a very important tool for compliance with state law and regulation.
RECOMMENDATION
Authorize the city manager to approve a two-step procurement process for integrated waste franchise.
CITY MANAGER RECOMMENDATION
The City Manager recommends approval of a two-step procurement process for integrated waste franchise.
Respectfully submitted,
Liam Garland, Public Works Director
By,
Liz Acord, Public Works Coordinator
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibits:
1. Procurement Policy
cc: Eric Levitt, City Manager