Wed, 14 Apr 1999 14:23:37 EDT

In a message dated 4/12/99 2:12:29 PM Pacific Daylight Time, writes:

<< One important step in doing this is to require separate bids on the
recycling and the waste removal portions of their contracts. In this way,
smaller recycling firms will be able to maintain a foothold in the market and
constrain the market power of very large combined firms. In addition, if
municipalities were to work together to establish some standardized
procurement categories and required reporting formats, the transparency of
the contracts would be much improved. This would make both the long-term
costs and the trade-offs among vendors easier to see. >>


I believe that there is an interesting opportunity developing here for small
independent waste haulers and independent reuse, recycling and composting
businesses to work together on municipal contracts.

If the multi-nationals back away from being aggressive on recycling (which I
believe is a given), and IF localities continue to require aggressive
recycling in their contractual services, then independents who don't need to
get 30-35% ROI to be "profitable" should be able to compete very well.

Although you are correct that the way to maximize competition for
municipalities would be be to separate recycling from garbage, there are
other advantages to municipalities of having a truly "integrated" system
(which unfortunately many communities have not done).
A more cost effective integrated system would include economic incentives in
the way contractors are paid for their services, to reward them for
maximizing recycling, and penalize them for continued emphasis on one-way
garbage collection/disposal systems. These systems can also integrate the
avoided costs of both garbage collection and disposal better. By contrast,
many communities today continue to pay what they had been for garbage
collection and disposal, then add recycling costs on top of that. That has
contributed to an inflated cost for combined garbage and recycling systems,
which a well-designed integrated recycling system would stabilize or decrease.

San Jose, CA did that by placing a "cap" on the amount of money it pays for
garbage collection ($/hhld) and told the garbage companies that they needed
to get their remaining costs and all their profit from a recycling incentive
fee ($/ton recycled). Seattle has proposed a similar structure for its next
round of contracts, continuing to pay for the recycling services of an
integrated waste/recycling system on a $/ton recycled basis. Hopefully other
communities will experiment with additional creative ways to pay their hauler
to give them greater incentives to recycle in the future.

To maximize competition in these systems, the key is to encourage the
partnering of independent waste haulers with independent reuse, recycling and
composting companies. The latter often do not hear about municipal RFPs, so
the key to soliciting them is to either encourage or require their
participation as part of the RFP, or to actively identify those providing
services in the region and making sure they get notices of the RFP being
available, and that cities want them to partner with waste haulers in

I have been offerring to start an informal "Contracts Network" email
discussion group for municipalities and others interested in exploring these
ideas in more depth. Please let me know if you would like to join in
subsequent email discussions about this in the future.

Gary Liss
Fax: 916-652-0485