Review of CR&R 4 MV Integrated Solid Waste Disposal Agreement

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We are coming down to the wire as it relates to the pending 10 year exclusive contract for rubbish removal in Mission Viejo. As I prepare this final bidder report it is worth noting that two members of our council, Trish Kelley and Dave Leckness, will be running for re-election in less than five months. As such their vote on Monday has major political ramifications that could become the first “information” mailer in Oct. 

I am blown away by the city consultant recommending the highest qualified bidder for this contract. Other OC cities have faced the same contract renewal challenge. As I research this service contract I discover that W/M refused to participate in the 10 year trash removal service in the city of Tustin. With Waste Management’s 2008 vs. 2009 10-K reporting a 10 percent decline in their “Income from operations” why aren’t they looking for new accounts? Someone might ask why they passed on that opportunity? 

Further review of this industry reveals that the firm of HF&H also provides solid waste consulting services in our state. According to their web site they list 250 municipal agency clients including 20 in Orange County. Those local agencies include the cities of Anaheim, Fullerton, Irvine, Orange, Santa Ana, Tustin and the SMWD. 

HF&H, who has been in the business for over two decades, consulted in the cities of
Orange, Tustin and RSM. As I look at their client testimonials I get the impression that their services were stellar. Although W/M was the existing vendor in Orange, they were the highest bidder and were not recommended losing that city contract to CR&R. 

Before reporting on CR&R’s response to question I must remind everyone of the May 17th presentation comments by Joe Sloan, the MV consultant. In his opening comments Joe Sloan stated that “they are four good companies that give you four good proposals.” 

A sticking point used against CR&R is the number of vehicles they plan to utilize to service our city. According to their proposal CR&R’s lighter LNG trucks have a street legal 12.5 ton capacity which is larger than the other bidders fleet. Being accused of underestimating the number of trucks to pick up our trash, recycle and green waste material, CR&R management has been pro-active and sent a confidential vehicle routing matrix documenting how they will be able to service our entire city with the number of trucks as reported in their proposal. According to City Manager Dennis Wilberg, every member of the council was given that package. 

One of the nine bullet points contained in their June 4th letter to the city, as to why they should be awarded the contract, CR&R states that they have sufficient excess equipment and spare trucks to insure consistent service and price in the event any anomalies that may occur.” That’s good enough for me. 

CR&R provides the same service to neighboring south County cities of Aliso Viejo, Dana Point, Laguna Hills, Laguna Niguel, RSM, San Juan Capistrano and San Clemente.  In addition to personally contacting a member of the Orange City Council I have also spoken to staff and council member in the city of RSM and did not receive any negative feedback. 

Other than Cathy Schlicht has any member of the council engaged in any due diligence? Simply pick up the phone and call your south county peers before Monday’s vote. Ask them if they are happy with CR&R’s safety, price and performance. 

I am disappointed that in responding to a question from councilman Ledesma, Joe Sloan said that CR&R requested a rate increase after getting the contract from RSM. 

Not to rely on a single source I contacted a RSM staff member and a councilman who were each involved in that contract awarded in the 2005 time frame. RSM had made a request for the potential cost increase relating to possibly changing multi family trash removal. After hearing the cost RSM dropped the request. It was not the case of CR&R low balling after getting the contract. The only other increase is the annual COLA that is in every agreement. To confirm the truth of the allegation I would suggest making a simple Public Record request to RSM’s City clerk Maria

Let’s look at another confusing number. CR&R’s proposal includes 15 hours of overtime at time and a half. When added to the basic 40 hour week it reads 62.5 which might confuse someone not understanding their calculation. The drivers will only be working 55 hours per week not 62.5. 

Another area challenged by Mr. Sloan is the valuation of recycled material. CR&R’s matrix reflects 5,000 tons per year of transformed roll off.  This begs the question. Is this revenue source being intentionally overlooked or under reported rather than pointing a finger at CR&R? CR&R and Ware each include this recycling tonnage  in the charts. 

Awarding this bid to any of the vendors whose pricing is lower than Waste Management is less of a risk than crossing the street. CR&R has offered to provide a performance bond and an increased letter of credit if that is needed to give us peace of mind. 

Having met with all three finalists I would agree with Mr. Sloan that they are all professional firms reaching out for the brass ring. In this case, potentially spending $17 million more over the life of the agreement with the highest bidder becomes more of a gold ring that is simply not warranted nor justified. 

Final thought. As we have term limits in this city, the decision that our council is about to make will impact our current and future residents for years after these council members depart.

About Larry Gilbert