Agenda #: 7.2
Meeting Date: January 16, 2024
TO: Honorable Mayor and Members of the City Council
FROM: Daniel Fox, City Manager
TITLE: RESULTS OF WASTE HAULER PROCUREMENT.
STRATEGIC
GOAL: Safe, Sustainable & Healthy Community
RECOMMENDATION:
Receive presentation, deliberate and provide direction to staff.
FINANCIAL IMPACT:
None.
BACKGROUND:
Since 2000, Valley Vista Services (VVS) and Waste Management (WM) have been the City's exclusive commercial and residential solid waste haulers under three separately negotiated franchise agreements. In August 2010, the City Council granted second franchise agreements to VVS and WM. These agreements were amended and restated in 2017 and extended in 2023. Both are now set to expire August 31, 2025.
At the City Council Study Session of April 5, 2022, staff presented information regarding the status of the solid waste franchise agreements for review and discussion. The City Council directed staff to commence an exclusive procurement process with the current waste haulers in which both could submit a proposed scope of work for the service areas by sector or for citywide service, with the City reserving the right to select any combination. On June 21, 2022, the City Council awarded a contract to Sloan Vazquez McAfee, a consulting firm with extensive experience in the procurement and management of municipal solid waste collection franchises to assist with the procurement process.
The City’s project team (staff, City Attorney Omar Sandoval and Enrique Vazquez of Sloan Vazquez McAfee) developed a Request for Proposals (RFP) (Attachment A) with a focus on a transparent and ethical procurement process, high performance/quality and reliable service, value for ratepayers, compliance with state regulatory requirements (including SB 1383 organics requirements), and effective outreach and engagement with customers over the proposed ten-year (plus a two-year extension option) agreement term. Specific service requirements across sectors include, but are not limited to:
• State diversion compliance
• Standard cart, bin, and roll-off service
• Organics collection
• Backyard service
• Temporary bins
• On-call bulky item and abandoned item collection
• Household Hazardous Waste (HHW), e-waste, sharps, used oil, and holiday tree collection
• Construction and demolition collection and disposal
• Complimentary City service
• Robust community education and outreach programming
• Deployment of clean fuel vehicles
The RFP was released to VVS and WM on May 3, 2023. Three addenda to the RFP were provided and a total of 54 questions related to the RFP terms were submitted by the respondents. Both VVS and WM submitted complete proposals for commercial only, residential only, and citywide services by the August 30, 2023 response deadline.
Because the format of the RFP allowed separate proposals for each sector, there are four outcomes that can be analyzed and considered:
• Option 1 – WM (Residential) and VVS (Commercial).
• Option 2 - VVS (Residential) and WM (Commercial).
• Option 3 – VVS citywide.
• Option 4 – WM citywide.
CONSULTANT EVALUATION
To evaluate these options, Sloan Vazquez McAfee reviewed and rated each proposal on criteria including responsiveness to RFP, qualifications and experience, technical qualifications, financial resources, rate proposals, and exceptions to Draft Agreement, all compiled in the City of Diamond Bar Request for Proposals – Solid Waste Services Final Report (Attachment 2). Weighted scores were assigned to each, with the sum establishing the overall rankings. As shown in Table 1 below, the consultant’s evaluation rated Option 4 (Waste Management citywide) first, Option 2 (VVS residential and WM commercial) second, Option 3 (Valley Vista citywide) third, and Option 4 (Waste Management residential and Valley Vista commercial) fourth.
Table 1 – Evaluation Scores by Option
Criteria Available Pts. Option 1
(WM/VVS)
Option 2
(VVS/WM)
Option 3
(VVS)
Option 4
(WM)
Responsiveness to RFP N/A Pass Pass Pass Pass
Qualifications/Experience 50 49 49 50 48
Technical Qualifications 300 299 300 300 299
Financial Resources 100 90 90 80 100
Rate Proposal 500 440 460 453 460
Exceptions to Agreement 50 48 48 50 45
Total 1,000 926 947 933 952
Ranking N/A 4 2 3 1
Within these categories, the evaluation examined specific requirements, including, but not limited to these examples:
• Demonstrated collection experience and satisfaction of references. • Customer service standards and quality of service.
• Qualification and number of key personnel assigned to the Diamond Bar contract.
• Ability to meet implementation schedule and deadlines. • Ability to meet state mandates.
• Quality and nature of public outreach and education programs for diversion. • Ability to provide required operations, disposal, transfer, and processing facilities. • The number of exceptions/suggested changes to the City’s draft agreement. • The overall financial sustainability of the proposer. • Competitiveness and reasonableness of rate proposals.
While there are subtle differences between the proposals, the results of the evaluation indicate that both respondents are qualified, with proposals found to be compliant with the scope of required services for all sectors contained in the released RFP. Based on the analysis, both respondents can be expected to deliver quality service while meeting state mandates, including SB 1383 organics recycling requirements.
TOTAL RATE REVENUE
The most apparent differences between options is related to rates and total revenue generated annually. The impact of each option is best captured by comparing Total Rate Revenue, a metric that captures the total expected revenue across sectors. Tables 2, 3, and 4 provide a detailed comparison of the Total Rate Revenue by option for total revenue collected, differences in proposed revenue when compared to expected current revenues, and percentage change when the proposals are compared to current revenues.
Table 2 - Total Rate Revenue by Option
Sector Current
7/2024*
Option 1
(WM/VVS)
Option 2
(VVS/WM)
Option 3 (VVS) Option 4 (WM)
Residential $7,146,552* $6,647,976 $6,377,976 $6,377,976 $5,508,648 Commercial $2,508,763* $3,628,889 $2,328,150 $3,628,889 $2,901,767 Total $9,655,315* $10,276,865 $8,706,126 $10,006,865 $8,410,415 NOTE: * represents current rates adjusted for inflation as of July 1, 2024.
Table 3 – Total Change in Rate Revenue by Option
Sector Option 1
(WM/VVS)
Option 2 (VVS/WM) Option 3 (VVS) Option 4 (WM)
Residential ($498,576) ($768,576) ($768,576) ($1,637,904) Commercial $1,120,127 ($180,613) $1,120,127 $393,004
Total Change $621,551 ($949,189) $351,551 ($1,244,900)
Table 4 – Total Percentage Change in Rate Revenue by Option Sector Option 1
(WM/VVS)
Option 2 (VVS/WM) Option 3 (VVS) Option 4 (WM)
Residential -7.0% -10.8% -10.8% -22.9%
Commercial 44.6% -7.2% 44.6% 15.7%
Total % Change 6.4% -9.8% 3.6% -12.9%
In summary, Options 2 and 4 reduce rate revenue collected while Options 1 and 3 result in a net increase in rate revenue collected. Option 2 offers reduced rate revenue in both the residential (-10.8%) and commercial sectors (-7.2%), while Option 4 offers a more significant reduction in residential rate revenues (-22.9%) but increases rate revenues in the commercial sector (15.7%). In aggregate, Option 2 reduces total rate revenues by
9.8%, while Option 4 reduces rate total rate revenues by 12.9%.
RESIDENTIAL RATE COMPARISON
There are currently 13,092 single-family residential units and 16 multi-family accounts with a total 2,489 individual housing units that receive residential cart service. These represent 97.8% of customer accounts served in Diamond Bar and 85.6% of total residential units across sectors. As shown in Table 5 below, all four options provide a reduction in residential rates when compared to current levels, with Option 2 and Option 4 providing the greatest reduction to customers. Option 2 reduces residential rates by anywhere from 6.7% to 20.9% while Option 4 reduces rates by anywhere from 9.5% to
29.6%.
Table 5 - Proposed Residential Rates by Option
Cart
Service
Current
7/2024*
Option 1
(WM/VVS)
Option 2
(VVS/WM)
Option 3 (VVS) Option 4 (WM)
35 Gal. $32.02 $29.54 (-7.8%) $29.89 (-6.7%) $29.89 (-6.7%) $28.99 (-9.5%) 64 Gal. $39.46 $36.39 (-7.8%) $35.39 (-10.3%) $35.39 (-10.3%) $29.93 (-24.1%) 96 Gal. $47.34 $43.66 (-7.8%) $40.11 (-15.3%) $40.11 (-15.3%) $36.64 (-22.6%) 35 Gal. Sr. $27.56 $26.58 (-3.6%) $23.91 (-13.3%) $23.91 (-13.3%) $23.19 (-15.9%) 64 Gal. Sr. $34.02 $32.76 (-3.7%) $31.46 (-7.5%) $31.46 (-7.5%) $23.94 (-29.6%) 96 Gal. Sr. $40.58 $39.30 (-3.2%) $32.09 (-20.9%) $32.09 (-20.9%) $29.31 (-27.8%)
COMMERCIAL RATE COMPARISON
There are currently 269 commercial accounts and 31 multi-family accounts with a total of 2,620 individual housing units that receive bin service. These represent 2.2% of customer accounts served in Diamond Bar and 14.4% of total residential units served across sectors. Due to the variability in business service needs and generally customizable nature of commercial services, it is difficult to compare proposals based on individual rates. It should also be noted that often, commercial rates paid by a single account are often split amongst a number of tenants or residents so that a single business is not solely responsible for the cost of service established in the proposed rate schedules.
As shown in Tables 6 and 7 below, only Option 2 (WM Commercial Only) results in a commercial rate decrease, with the current structure (WM residential and VVS commercial) and both city-wide proposals resulting in an increase to annual commercial rate revenue.
Table 6 – Commercial Rates
Current
Size 1 pickup/wk 2 pickup/wk 3 pickup/wk 4 pickup/wk 5 pickup/wk 6 pickup/wk 2 Yard Bin $137.94 $239.15 $326.93 $423.08 $524.33 $609.03 3 Yard Bin $170.77 $283.12 $397.53 $516.11 $623.61 $772.08 4 Yard Bin $216.21 $347.96 $482.72 $687.50 $822.27 $998.80 Options 1 & 3 – VVS Citywide and Commercial Only
Size 1 pickup/wk 2 pickup/wk 3 pickup/wk 4 pickup/wk 5 pickup/wk 6 pickup/wk 2 Yard Bin $176.57 $326.29 $489.44 $652.58 $767.40 $874.96 3 Yard Bin $197.73 $368.62 $552.93 $737.23 $873.21 $1,001.94 4 Yard Bin $218.89 $410.94 $616.41 $821.88 $979.03 $1,128.92 Option 2 – WM Commercial Only
Size 1 pickup/wk 2 pickup/wk 3 pickup/wk 4 pickup/wk 5 pickup/wk 6 pickup/wk 2 Yard Bin $116.75 $210.15 $303.55 $396.95 $490.35 $525.32 3 Yard Bin $144.54 $260.18 $375.81 $491.45 $607.08 $722.72 4 Yard Bin $183.00 $329.40 $475.80 $622.20 $768.61 $915.01 Option 4 – WM Citywide
Size 1 pickup/wk 2 pickup/wk 3 pickup/wk 4 pickup/wk 5 pickup/wk 6 pickup/wk 2 Yard Bin $142.65 $256.76 $385.14 $513.53 $641.91 $770.29 3 Yard Bin $176.60 $317.89 $476.83 $635.78 $794.72 $953.67 4 Yard Bin $223.59 $402.47 $603.70 $804.94 $1,006.17 $1,207.41 Table 7 – Percentage Change in Commercial Rates
Options 1 & 3 – VVS Citywide and Commercial Only
Size 1 pickup/wk 2 pickup/wk 3 pickup/wk 4 pickup/wk 5 pickup/wk 6 pickup/wk 2 Yard Bin 28.0% 36.4% 49.7% 54.2% 46.4% 43.7%
3 Yard Bin 15.8% 30.2% 39.1% 42.8% 38.0% 29.8%
4 Yard Bin 1.2% 18.1% 27.7% 19.5% 19.1% 13.0%
Option 2 – WM Commercial Only
Size 1 pickup/wk 2 pickup/wk 3 pickup/wk 4 pickup/wk 5 pickup/wk 6 pickup/wk 2 Yard Bin -15.4% -12.1% -7.2% -6.2% -6.5% -13.7%
3 Yard Bin -15.4% -8.1% -5.5% -4.8% -4.0% -6.4%
4 Yard Bin -15.4% -5.3% -1.4% -9.5% -6.5% -8.4%
Option 4 – WM Citywide
Size 1 pickup/wk 2 pickup/wk 3 pickup/wk 4 pickup/wk 5 pickup/wk 6 pickup/wk 2 Yard Bin 3.4% 7.4% 17.8% 21.4% 22.4% 26.5%
3 Yard Bin 3.4% 12.3% 19.9% 23.2% 25.6% 23.5%
4 Yard Bin 3.4% 15.7% 25.1% 17.1% 22.4% 20.9%
ANALYSIS:
As established in the evaluation outlined above, the procurement resulted in proposals from two qualified candidates. This determination is supported by successful partnerships with each over a period exceeding 20 years. Of the four options that resulted from the procurement process, Options 2 and 4 warrant the most consideration since they are the only two results that result in rate relief when compared to current annual hauler revenue.
Option 4 (WM citywide) is the most robust proposal due to the following factors:
• Offers the greatest overall reduction in ratepayer impact (-12.9%), with very significant cost reductions for residents (from 9.5% to 29.6%). However, commercial customers will experience increases, particularly for those with higher service needs (more than one pickup per week).
• Offers improved contract administration efficiency because there would be only one contract to manage.
• Offers improved customer service efficiency because there would be one source for customer service (everyone gets the same).
• The WM proposal allocated more dedicated personnel to the Diamond Bar contract.
• In staff’s view, the WM proposal included more robust outreach and education components.
Option 2 (VVS residential and WM commercial) is a quality secondary proposal due to the following factors:
• VVS residential and WM commercial provides for overall rate revenue reductions (-9.8%) and rate decreases in both sectors. However, the residential reduction is less than in Option 4.
• Requires management of two hauler contracts.
• The transition between residential haulers may require additional customer service to facilitate.
NEXT STEPS
Staff is seeking direction from the Council as to which option it prefers. Once staff has received the Council’s preference, it would work with the selected hauler(s) to finalize contract language. Once finalized, the final agreement will be scheduled at a future meeting for Council consideration. This agreement will include the agreed-upon start date for both sectors.
LEGAL REVIEW:
City Attorney has reviewed and approved this report.
PREPARED BY:
REVIEWED BY:
Attachments:
1. 7.2.a Diamond Bar Request for Proposals - Solid Waste Services
2. 7.2.b City of Diamond Bar Request for Proposals - Solid Waste Services Final Report