How Municipalities and Counties Chose Winning Waste Service Contracts

Municipalities and counties have plenty to ponder when going out to bid for waste management services, and in deciding who wins the contract. Here, three large communities discuss terms that most matter to them. And a waste management consultant further illuminates on what government entities should prioritize and how to land a good deal.

Until July 2024, Baltimore County, Maryland paid WM, BFI, and Goode Services to haul the region’s commercial waste. Now public works has turned the entire job over to one provider—BFI—and has signed the company on for 20 years.

Transitioning to a long-term, single-provider contract seemed like a good move for a few reasons, says Nick Rodricks, chief of Baltimore County’s department of public works and transportation solid waste bureau.

Experience had taught that coordinating operations with outside vendors can be difficult. Having one provider it seemed would allow more operational stability and streamline processes while saving time and toil in rebidding every several years.

Albeit locking in for 20 years can be a gamble. Pricing and other conditions can shift in different directions over time.

“But as markets change and landfill space becomes more limited, we felt it was important to have a long-term plan. And, generally, we don’t feel that disposal costs are going down any time soon,” Rodricks says.

The county still included safeguards, setting up an initial eight-year term followed by three, four-year options to be able to reevaluate. Public works keeps a close eye on transportation and disposal expenses; particularly should changes in law drive increases in the county’s costs.

Residential collections is a very different market than commercial, so the agency took another approach.

“Given the high number of Baltimore residences, we would likely view it as a large risk to go with just one hauler. Trash collection specifically isn’t optional, so you want to make sure that if one company has a major issue you have a backup,” Rodricks says.

Currently 39 different companies service 51 routes. They truck Baltimoreans’ tonnage of trash to BRESCO, a mass burn facility in the city.

While going with multiple residential haulers can have benefits, there are caveats. Coordinating between vendors can come with more operational issues and more work in general.

But there’s plenty to weigh in on with each service contract type—collections, disposal, and processing recyclables.

They are fundamentally very different and there are separate lines of discussion for every one of them, says John Culbertson, principal MSW Consultants.  

“Disposal contracts are the easiest because you are simply looking to secure capacity.  There is an established price based on tonnage of materials and relatively few terms or conditions,” he says.

Though he advises: Do your homework to understand the current disposal rates before going out for bid.  Then determine the best contract term length. From there on it’s straightforward. 

Collections contracts are more complicated. At top level Culbertson advises: Ask for clear, well-defined service levels and include environmental and health and safety provisions. Have reporting requirements. Consider the duration terms. And get clear on who will own, maintain, and replace lost or broken carts.

The carts especially are a huge consideration, particularly in large communities where they could carry a multimillion-dollar price tag. And all those carts must be assembled and distributed, presenting logistical challenges.

Culbertson also punctuates contract duration.

“You are looking for the ‘Goldilocks’ contract – not too long; not too short. It it’s too long you could be tied up paying prices that exceed going market rates. If it’s short you could pay more as haulers need to amortize the cost of their trucks,” Culbertson says.

There’s more to consider if collections and disposal are provided by different vendors. A good takeaway is to align the contracts and require detailed documentation. Culbertson tells clients to expect haulers to report exactly what materials are delivered where. And get clarity on financial terms to ensure transparency, such as whether landfill operators bill tipping fees directly to municipalities or if haulers pay it as a pass- through expense.

Processing recyclables comes with its own focus areas. The big one is around pricing structures as commodities markets fluctuate.

“The agreement should be crafted to fairly share the risk of low commodity prices and fairly distribute windfall profits in high markets, and there is an art to that,” Culbertson says.

Incorporate transparency both about processing fees and revenue share. And know that the revenue calculation should be based on a published index of commodities values. How to best divvy out profits and share in losses depends on multiple factors. But generally, it’s largely determined by routinely evaluating the mix of recyclables to understand changing values.

The City of Tampa Solid Waste Department contracts with WM for recycling; Waste Pro for commercial collection/hauling; Veransa for yard waste; and Angelo’s (a GFL subsidiary) and Blue Monkey for disposal.

Certain terms are nonnegotiable, though absolute requisites depend on each agreement. Tampa tends to prioritize location, capacity, vehicles and equipment, experience, prior performance, references, and previous liquidated damages, says Larry Washington, City of Tampa director of solid waste.

Flexibility is at the forefront.

“We are a very resilient department, so adaptability is important. We expect provisions such as a CPI increase option or related market indices (fuel, garbage, etc.) to ensure fees based on current market conditions.

“We also look for contract renewal options,” Washington says.

When renewal is an option, having well-defined contract extensions can avoid challenges that come with having to renegotiate terms later, Culbertson advises.

The City of Detroit provides solid waste collection services to 225,500 residences through WM and Priority Waste. Commercial businesses can opt for private- or city-provided trash and recycling services.

“What we look for in proposals is [that vendors] have the resources and the documented ability to provide the services, as well as cost,” says Ron Brundidge, director Detroit department of public works.

Recyclers must provide bins with hot stamped instructions and a list of accepted materials. And Detroit has the flexibility to modify contracts to accept new or different materials for recycling or composting.

Among the most defined expectations in the city’s disposal contracts are around performance. They include completing routes and servicing all residences on scheduled collection days; thorough removal of bulky items set at curbside; and timely responses to citizen complaints of missed collections.

With any contract for any service what really matters is planning ahead.

Culbertson says, as a rule of thumb, begin thinking about your next agreement about two to three years before the current contract ends, though the more lead time the better.

“That is one of the most important messages. Don’t wait until the last minute. And the bigger your community the more lead time you need.”