COLLECTION: Cities Increase Competition With Multi-Contracts

Jill Slovin

Local government solid waste officials are tightening the leash on private companies.

No longer are cities routinely a-warding collection contracts to just one company. Times are changing and city officials, in their constant quest to pinch pennies, are changing too.

For instance, the city of Boston, with a population of 570,000, has been divided into 11 districts. Every three years, these districts are up for bids, said Carmen A-mico, the city's superintendent of sanitation.

Experience, performance and equipment are critical to a company's bid, but of greater importance, Amico said, is price.

"First we accept bids for a disposal site," Amico said. "Then we take bids for collection within the 11 districts." After they combine the disposal bids with the collection bids, he said, they select the five lowest bidders.

"Having more than one company," he said, "ensures us that we are getting the best prices."

Each geographically divided district has different collection needs. More densely populated areas re-quire a company to collect three times a week whereas others only require collection once a week, A-mico said.

In July 1994 the city's contracts will be up for bids. The current collection companies, Waste Manage-ment Inc. (WMX), Laidlaw, Brown-ing-Ferris Industries Inc., Dooley and United Waste Systems Inc., are expected to bid against eight other companies.

Lynn Scarlett of the Reason Foundation, Los Angeles, offered several reasons for cities to award collection contracts to more than one company.

"Large cities can limit competition by contracting with just one company," Scarlett said. "Cities tend to go with the larger collection companies, which can drive the small to mid-sized haulers out of business."

Seattle has contracted with more than one collection company since 1989.

Nick Pelay, Seattle's director of strategic planning, finance and information systems, said his city is divided into thirds.

The north end, which is about two-thirds of the city, is contracted to General Disposal; the south end, with about one-third of the city, is serviced by U.S. Disposal.

"We operate this way," Pelay reiterated, "because the competitive process ensures us that we are sa-ving money from privatizing."

The city's recycling services have been awarded to Recycle America (south end) and Recycle Seattle (north end). The two companies use different collection methods, which is not typical for cities with more than one collection company. For example, Recycle Seattle collects the recyclables co-mingled in 90-gallon containers once a month; Recycle America collects source-separated recyclables in three crates once a week.

"We were not sure which was the best way to collect recyclables so we let the haulers bid and determine the how-to," Pelay said. "This provided us with a means of comparison."

Pelay said the base price charges per ton vary between the companies, but in the end, the total paid is the same.

In the southwestern state of Arizona, both the city of Phoenix and WMX serve 300,000 households. This rare mix has illustrated Phoenix as a city hungry for a challenge.

Determined to hold on to some of the collection services in Phoenix, the city vigorously prepared itself for the bidding process. Audits, research and advice from other cities encouraged the city to purchase 33-cubic-yard trucks. In the bid for the north end, WMX matched the equipment in use and then bid $3.77 per household per month.

Ron Jensen, the public works director for the city of Phoenix, said that it is not anymore difficult to manage two collection operations than one.

"Just make sure they have a good reputation," Jensen added.