Source: Rhino Times Greensboro

Recycling Deal Depends On Who You Believe

by John Hammer

September 20, 2012

The city is down to two bidders for the five-year recycling contract for Greensboro, but for some inexplicable reason, until Wednesday, Sept. 19, the city didn’t know if one bidder had offered to pay the city a minimum of $8 a ton or $17 a ton for recyclables.

The answer that The Rhino Times received on Wednesday from ReCommunity, the bidder who has the current contract, is $17 a ton.

To figure out how this late in the game the city would not know what the proposed payment was, you have to look at the confusing and convoluted process the city has used to get to this point.

Greensboro hired HDR Engineering to analyze the proposals that were the result of a request for proposals (RFP) in April for the contract for Greensboro’s recyclable material.

The City Council narrowed the selection down to two companies in August and requested a final and best offer from ReCommunity, the current provider of recycling services to the city, and Waste Management Inc., which just opened a state-of-the-art recycling facility in eastern Winston-Salem.

Consultant Joe Readling of HDR Engineering recommended that the City Council accept the offer from ReCommunity, and based on Readling’s figures ReCommunity’s offer is better.

But in the past week when the city was asked if a $9 per ton education and marketing fee in the ReCommunity proposal was a direct payment to the city or for an in kind marketing and education services fund. The response was mixed.

Director of Field Operations Dale Wyrick said that the city wasn’t sure. The city manager’s office was reportedly saying that their understanding was that it was to go to a marketing and education fund not a direct payment.

One reason the question is so crucial is that Greensboro city councilmembers because of a gag order put on them by City Attorney Mujeeb Shah-Khan cannot talk to representatives of the companies directly. The only interaction the members of City Council and representatives of ReCommunity and Waste Management are supposed to have is at City Council meetings. It has made it difficult for the companies to explain the complicated bids and made it difficult for the councilmembers to get questions answered.

According to Stan Joseph at Waste Management, they were asked only one question by HDR about their initial proposal.

Because of the gag order, a councilmember cannot pick up the phone and call ReCommunity and have the payment explained. Councilmembers have to call the city staff or perhaps a local journalist to see if they can get questions answered. The gag order has added a level of confusion and frustration that really is not necessary or helpful.

So in this case, councilmembers and maybe even some members of staff may be pleased to find out that, according to Karl Robe of ReCommunity, the $9 per ton listed for education and marketing is a direct payment to the city and Greensboro can use that money for anything it wants.

Considering that fact, it seems odd that ReCommunity didn’t simply raise its floor price from $8 a ton to $17 a ton, but it did not.

The floor for Waste Management is $25 a ton, and the education and marketing payment is $1, which makes it look like Waste Management has the better bid with a total payment of at least $26 per ton versus a total minimum payment for ReCommunity of $17 per ton. But Readling estimated the additional cost of transporting the material to be recycled to Winston-Salem at $10 to $11 a ton, which puts ReCommunity ahead by about $1 to $2 a ton.

It’s worth noting that ReCommunity, which has had the city’s recycling contract for 20 years, continues to charge the city to recycle its material and has said it will continue to do so until the new contract goes into effect next spring.

So while Waste Management has been paying Winston-Salem for its recycling for more than 10 years, Greensboro has been paying ReCommunity for the same service. Yet, the City Council is considering signing another contract with this company that has been making exorbitant profits on the city contract for years. The fact that the current contract with ReCommunity is so bad made some wonder if the $9 was real money or play money and the city didn’t know.

If $9 a ton was supposed to be a direct payment all along, then ReCommunity certainly did a good job of hiding it because, until Robe responded to an email on Wednesday, it didn’t seem like anyone knew what that $9 was.

Joseph told the council that Waste Management is in the business of transporting recyclables and the company’s estimate of the additional cost to the city to transport the recyclables to Winston-Salem was $7 a ton. If the city accepts that figure then Waste Management’s base is $2 higher per ton than ReCommunity.

So there are still some legitimate questions, although the answer to the $9 questions clears up a lot of confusion.

What would happen under normal circumstances is some councilmember would get interested in getting the best deal for the city and go over the transportation costs with Readling and Waste Management and try to figure out why they are so different. But the councilmembers can’t do it. It appears that the city staff won’t do it and it doesn’t appear that Readling has any interest in correcting his own figures, so the city, because of this bizarre RFP method, is going to be left with a he said she said situation and could sign a five-year contract that is not as profitable to the city as it could be.

Joseph says that Waste Management is willing to sign a three-year contract.

With the speed the industry is changing, it might be worth it for the city just so that in three years it could try waste-to-energy or something completely different.