Title
Recommendation to Provide an Update on Two-Step Procurement Process for Alameda’s Integrated Waste Franchise;
Authorize the City Manager to Execute an Amendment to the Franchise Agreement between the City of Alameda and Alameda County Industries (ACI) Providing to the City a Maximum 18 Month Extension Option, as Needed; and
Authorize the City Manager to Execute a First Amendment to the Service Provider Agreement with Hilton Farnkopf & Hobson Consultants, LLC (HF&H) for Solid Waste Agreement and Procurement Consulting, in an Amount Not to Exceed $74,025, with the Option of Three One-Year Extensions, for a Total Five-Year Compensation Not to Exceed $403,200. (Public Works 274)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
The City of Alameda’s (City) Integrated Waste Franchise Agreement (Agreement) terminates in October 2022. In February, City Council approved 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 would initiate a competitive procurement in September 2020. At this time, staff is updating City Council on the sole source negotiations, and recommending delegation of authority to the City Manager to execute a short term extension of the Agreement to allow for additional time to complete the sole source negotiation process. Additionally, staff is recommending amending the existing professional services agreement with Hilton Farnkopf & Hobson Consultants LLC (HF&H) for continued solid waste agreement support, including support for procurement and negotiation of a new Agreement.
BACKGROUND
The City’s existing Agreement with ACI began in 2002 and expires in October 2022. The Agreement provides for the collection, transportation and processing of the City’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.
In February, City Council approved a two-step procurement process in which sole source negotiations are initiated with the current franchisee, ACI. If those negotiations are not successful, staff’s would initiate 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. The Agreement expiration and this procurement process provide an opportunity to address significant industry changes, 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.
At this time, staff is updating City Council on the sole source negotiations, and recommending delegation of authority to the City Manager to execute a short term extension of the term of the Agreement to allow for additional time to complete the sole source process. Additionally, staff is recommending amending the existing professional services agreement with HF&H for continued solid waste agreement support, including support for procurement and negotiation of a new Agreement.
DISCUSSION
On February 18, 2020, City Council gave approval to proceed with sole source negotiations with ACI, City staff and HF&H, and convened an internal team to begin preparation of a new agreement. Over the course of about a month, the team engaged in the design intake process to identify applicable elements of modern solid waste franchise agreements and review the City’s existing Agreement. The process also considered existing and future regulatory requirements (e.g., Senate Bill 1383) and Alameda’s applicable policies and plans (Zero Waste Implementation Update, Climate Action and Resiliency Plan). During this time, staff and HF&H also began preliminary negotiations with ACI to regarding programmatic components of a new and modern agreement. Staff conducted a virtual stakeholder meeting in May to share key elements of the proposed new agreement with key stakeholders within Alameda’s environmental and business community. Additionally, staff is working with ACI and a third-party survey firm to conduct a customer satisfaction survey in June.
Given the resource impacts of the COVID-19 pandemic on all parties, an already aggressive timeline, and uncertain economic conditions, staff recognizes that additional time might be needed to complete the sole-source negotiation. Staff is recommending delegation of authority to the City Manager to execute an amendment the existing Agreement with ACI, providing the City with a short-term (18-month) extension of the term, if necessary. This Amendment to the Agreement would allow for additional time to thoroughly complete the sole source negotiation process and would only be exercised if deemed necessary to allow continued sole source negotiation. This authority would allow execution of the amendment to occur, if necessary, before staff’s next update to City Council (September 2020). Given the existing Agreement’s end date of October 2022, full procurement would need to begin in October of this year and be completed by October 2021 to allow sufficient time to transition to a new provider. ACI has reviewed this amendment and has no modifications to the draft (Exhibit 1). Staff still intends to provide a negotiation update to City Council later this fall.
The Agreement procurement process began under the City’s existing Professional Services Agreement with HF&H. At this time, the agreement with HF&H would need to be amended to allow continued support of the procurement and negotiation process. Staff is recommending approval of a first amendment and authorization for three additional one-year amendments at the discretion of the City Manager or designee.
At the time of this reporting, staff has shared the draft new agreement with ACI. Following this update to City Council, staff will continue meeting with ACI with the focus on negotiating the new agreement. Following substantive response from ACI, staff will reconvene the stakeholder group and intends to report back to Council on project progress in September.
ALTERNATIVES
• Delegate authority to the City Manager to execute an amendment to the Agreement providing the City with a maximum 18 month extension option for the term of the Agreement, if needed, and execute the First Amendment to the HF&H Agreement to extend the term of that agreement and provide for three other one year extension options exercisable in the City Manager’s discretion.
• Delegate authority to the City Manager to execute an amendment of the Agreement to provide the City with an option to extend the term of the Agreement, if needed, with modifications as directed by City council, and execute the First Amendment to the HF&H Agreement with modifications as directed by City Council.
• Abandon sole source negotiations and proceed to full procurement and execute the First Amendment to the HF&H Agreement.
FINANCIAL IMPACT
There is no direct financial impact from City Council providing direction in response to the update to the integrated waste procurement process and the delegation of authority to enter into an amendment providing for a short-term extension of the term of the Agreement; however, the procurement itself and any extension may result in financial impact to the City’s ratepayers, the General Fund and to the Integrated Waste Fund.
Budget for the HF&H contract is included in the Integrated Waste Fund budget. The City Manager previously approved the original contract as presented below:
|
Contract |
Approval Date |
Authorized Amount |
Expended to Date |
|
Original Contract |
March 18, 2020 |
$ 74,175.00 |
$55,450.00 |
|
First Amendment |
|
$ 74,025.00 |
$ |
|
Second Amendment |
|
$ 85,000.00* |
$ |
|
Third Amendment |
|
$ 85,000.00* |
$ |
|
Fourth Amendment |
|
$ 85,000.00* |
$ |
|
Total |
|
$403,200.00 |
$ |
*Estimated cost based on historical contract costs and anticipated needs.
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
Provide an update on two-step procurement process for Alameda’s Integrated Waste Franchise; authorize the City Manager to execute an amendment to the Agreement between the City of Alameda and Alameda County Industries, providing for a maximum 18 month extension option, as needed; and authorize the City Manager to execute a First Amendment to the Service Provider Agreement with Hilton Farnkopf & Hobson Consultants, LLC, for Solid Waste Agreement and Procurement Consulting, in an amount not to exceed $74,025, with the option of three one-year extensions, for a total five-year compensation not to exceed $403,200.
CITY MANAGER RECOMMENDATION
The City Manager requests authorization to execute an amendment to the Agreement between the City of Alameda and ACI to provide the City with a maximum 18 month extension option, as needed to allow for continuation of the sole source process.
Respectfully submitted,
Liam Garland, Public Works Director
By,
Liz Acord, Public Works Coordinator
Financial Impact section reviewed,
Nancy Bronstein, Interim Finance Director
Exhibits:
1. ACI Amendment
2. HF&H Amendment
cc: Eric Levitt, City Manager