One sleek garbage truck
The elected leaders of Mission Viejo are in the same boat as hundreds of their peers in other California cities. Serving on city councils, for the vast majority, is a part time job. As candidates for office there is no prerequisite for having any experience in writing or negotiating major contracts. As such they generally rely on city staff for direction. My suggestion to members of the council was to reach out to those of us who have had contract experience. While I cannot confirm or deny anyone following that suggestion I took a pro-active initiative which follows this opening commentary.
As the Mission Viejo city council is about to select our next trash hauler, for an exclusive 10 year agreement that will approach $100 million dollars, I interviewed Mission Viejo watchdog Joe Holtzman and compared notes of the pending trash contract and our personal experiences in contract negotiations. In our discussions about this pending agreement, and we surely have spent a considerable amount of time on this the largest single contract under consideration by Mission Viejo, Joe has repeatedly reminded me that the spread between the highest bidder Waste Management and CR&R is $1,750, 807 per year or $17,508,070 over the 10 year term of this pending selection. The total package is based on four categories. single family, bin service, roll off service and temporary bins.
Joe also pointed out that of the four candidates, only Waste Management, our current provider, requested exceptions to the contract. I will share Mr. Holtzman’s analysis in part 2 of this post.
Note: Unlike other contracts that we issue, in this case the citizens and business community will be locked into personally writing the checks every month for the next decade based on their selection.
Mr. Holtzman had served as Director of Procurement at McDonnell Douglas in Long Beach, CA where, in that position, he supervised in excess of 100 people.
Among his top duties and responsibilities at McDonnell Douglas was evaluation and negotiation of major sub contract proposals for commercial aircraft, that collectively, were in the billions of dollars. His team was also responsible for overseeing the performance of service contracts.
On Monday, May 17th the Mission Viejo city council may select the firm to have this exclusive service contract. We’re not talking about the space shuttle “Discovery.”
This is a service contract where the key elements are driver and truck safety while quietly picking up our residential and commercial trash in a timely fashion at the lowest cost to the residents and local businesses. Obviously sound financials and future rate increases are also evaluated.
I would consider Mr. Holtzman to be a forensics contracts expert based on his credentials as stated above. Having spent a considerable amount of time with Joe over the past 10 years I would say that his only agenda is to retain the vendor who will provide the best cost for the community.
His biggest concern is the variance between the highest bidder, Waste Management, and CR&R whose proposal is 25 percent lower. According to Joe’s math this differential will cost Mission Viejo taxpayers and local businesses a $17 million premium over the life of the contract that Joe opine’s cannot be justified.
Joe Holtzman’s Observations on the MV Waste Collection Candidates
The proposer evaluation process has been done without transparency to the MV public.
The foundation of the evaluation done for the city is based upon a proprietary and secret financial pro forma tool that is being withheld from the public’s view.
Only one of four proposers has requested corporate relief via exceptions and deletions to the MV Waste Collection Franchise Agreement.
Only one firm was unequivocally qualified by the city’s consultant and is the lowest cost.
Only one firm was unequivocally qualified by the city’s consultant and is the highest cost.
The lowest cost firm removes the rubbish from most of Mission Viejo’s neighboring cities.
The highest cost firm removes rubbish from two of Mission Viejo’s neighboring cities.
The lowest cost firm has transitioned two large OC sister cities in the last few years.
The highest cost firm has lost OC franchises in recent years.
The lowest cost firm has developed a service plan with the smallest carbon footprint.
The lowest cost firm has a plan for service that removes trucks from our interchanges.
The lowest cost firm proposes to supply the city with free mulch.
The lowest cost firm is headquartered in Orange County.
The highest cost firm is headquartered outside of California.
And, ladies and gentlemen the firm recommended to the Council for selection is: The most costly to the residents, based out of state corporation, requesting the most corporate relief, which also affects the larger carbon footprint on Mission Viejo.
WHAT PART OF THIS AM I MISSING MEMBERS OF THE COUNCIL?
Select the lowest cost, qualified bidder for the benefit of the residents and lock in the savings with contractual safe guards that set a new standard for municipal procurement.
Email response from Tustin City Councilman Doug Davert (posted with his permission)
“Larry:
Tustin made the switch a couple of years ago. CR&R was both the lowest and the best bidder there, too. Their service has been great, Tustin’s waste diversion (recycling) rate has doubled, and the City’s residents and businesses are saving money. In my experience, CR&R has done an exemplary job at a significant savings.
Doug Davert
Tustin”
Gilbert Note: Councilman “DOUG DAVERT is currently Chairman of the Orange County Fire Authority. He also serves as Chairman of the Orange County Sanitation District.”
This is a good analysis but I am still unsure how the lowest cost bidder can actually perform ALL of the services for 25% less. It seems like a sham to me. Let me look at it this way, the lowest and highest cost bidder are not the only ones in the ballgame here, so why haven’t the highest cost bidder come down in price or the others that are higher than that lowest cost bidder? Do they know that the services to provide real service to MV would cost more than what the lowest cost bidder is projecting? What happens when the Council approves the lowest cost bidder and comes to find out that the services that we are accustomed to are not there? Also, what are they paying their workers? Are we willing to go with a low bidder b/c they are now paying their workers a lower wage….that wouldn’t be right.
Pete. K. While I lack access to wage scales of the bidders there are those of us who shop at Macy’s while others shop at Wal-Mart. My sense is that the former’s employment package including wages might be better, however in today’s climate, when Wal-Mart has job openings, my guess is that applicants will line up around the block for a chance to be interviewed at either store.
CR&R displaced Waste in Orange also—and the city of Orange is well satisfied. They also underbid Waste there–with significant cost savings to the citizens and the business community.
With the surrounding communities all selecting CR&R there is no doubt they can and have done the job. Also CR&R pays their employees well and they are all well trained and committed.
Jack,
Amen! I know the safety director at CR&R. He is a former CHP officer. He has worked hard to improve their safety record and currently it is excellent.
Waste Management is my vendor here in Santa Ana. We got ripped off by them. Never again! I hope CR&R gets the contract next time.
Pete K.
This is not the case on one bidder being well below the others. If the top 3 were bunched together I would take a longer look at the low bid. However, that’s not the case in this RFP as confirmed below.
Pg. 14 Total annual revenue:
CR&R $6,189,419
Athens $6,899,052
Ware $7,009,771
Waste Mgmt $7,940,226
Even Ware disposal, the 3rd highest bidder, was $9.4 million dollars lower in cost that W/M.
As a MV taxpayer my advise to our council is simple. While some take campaign contributions from these vendors “we will remember in Nov.”
Well, with the Holtzman/Gilbert brain trust behind it, I’m sure they will be able to get to the bottom of this unfolding scandal. Larry, don’t hang around the garbage too long, otherwise you’ll start to stink too.
Fonzi.
All joe is promoting is for the council to look into facts that might have been overlooked.
W/M can begin saving money by eliminating the quarterly council meeting awards and gift certificates for those of us who gift wrap our trash.
Folks. That is not a joke. Watch our current or past city council meetings on any computer. These awards are under Presentations which precede Public Comments
I agree with the comments that a smaller company with fewer resources cannot provide the same level of services. Plus, CR&R has or is seeking rate hikes in several of the cities they operate. Do a few Google searches. We’ll still end up paying in the end so why not just stick with what we’ve got!?!
Mindy.
Welcome to the debate.
Rather than allegations can you provide any specifics as to which cities CR&R is seeking a rate increase?
kindly go back to Google and give us the story links. Thank you!
Larry, you got quite a diatribe going on for CR&R, especially when people state their opinions. Here is a little bit against CR&R that may YOU SHOULD HAVE GOOGLED rather than try and tell others that CR&R trash don’t stink: http://voiceofoc.org/oc_south/article_fe587af4-4dba-11df-8c00-001cc4c03286.html
CR&R got a contract under a set of promises and then later tried to renegotiate those contracts after they knew they couldn’t provide the services.
Keep what we got and let’s not go with the cheap version.
M. Walsh.
diatribe? This analysis was written by Joe Holtzman and was based on his experiences in contract negotiations. While I did suggest that council members have the city conduct a survey of the CR&R customers to get feedback, as of today, that has not happened.
I have no idea who you are, where you live, or if you are an employee of Waste Mgmt.
I did receive feedback from a member of the Tustin City Council who is surely in a better position than yourself to provide actual CR&R performance, unless you are connected to any of the waste haulers.
On that basis I respectfully must question your agenda!
http://www.wavenewspapers.com/news/local/herald-american/78456502.html
They seek rate hikes just like all the others.
Here’s another one, Larry.
http://articles.latimes.com/1999/may/28/local/me-41940
Mindy. For starters I have lived in Mission Viejo long before we became a city. As such I have enjoyed the performance of Waste Management and know some of their past and current staff including David Ross.
While I question variances in contract bids, and future rate cost increases, I did express that in my earlier writings. However there are three vendors, each of whom have provided lower sealed bids for consideration. No matter how you slice it, providing a Pro Forma with only 20% attributed to the actual cost for residents and businesses is below reality.
Let me also add that once the vendor is selected, I believe the city retains the right to engage in further negotiations. However once you show your cards I question how effective that becomes.
I guess my first posting didn’t go through? Anyway, here’s another example:
http://www.wavenewspapers.com/news/local/herald-american/78456502.html
My point is that CR&R seeks rate hikes to cover increases in their operating costs like any other company. So while it looks in the short-term, we might pay more in the long-term.
Larry, typical of you. You attack people who leave comments here and question a motive of someone’s opinion. Almost as if you are painted into a corner to defend your position, you attack others. And the diatribe? I was pointing to your comments and absolute support of Joe’s analysis. Am I connected to a waste hauler? Sure. In the same way everyone else is. They haul my trash. The point of my post was to point out the lack of fair and balanced (sounds like Fox, eh) reporting of both sides of this issue. CR&R isn’t the second coming of trash hauling. They have their issues as much as any. And when you can get me more than one Councilmember’s opinion, you can have an impressive argument here. I am sure that the Councilmember wouldn’t want to say that CR&R is horrible especially when he voted for their contract. His opinion is biased in that effect. I put more credibility with local residents and their views.
I am not interested in giving CR&R a monopoly in Orange County. Once they control the entire county they’ll dictate any rate they see fit.
Interesting article, M. Walsh. A small firm like this, operating with less equipment, will need to make-up their lost revenues by underbidding somehow.
My brother’s family is longtime residents of Rancho Santa Margarita. They are disappointed with CR&R’s recycling efforts. In their opinion, there is a lack of community recycling containers and services are ‘poor.’ My brother summed up CR&R’s services as such, “…you pay for what you get.” I’ve done some research on the company and they are low-balling every city bid throughout Orange County. Perhaps they are offering such low prices because they are not reinvesting in recycling or composting programs? Mission Viejo should consider the firm that has the best plan and resources to get us away from landfill dependency.
I appreciate your thoughts, Larry. I still have questions. I’m concerned we’re going to get binged later.
Mindy.
I have asked a member of the council to request a survey of the surrounding cities to see what their homeonwers think about CR&R in that they are the lowest cost provider on our RFP.
As we already take surveys on a variety of topics I would support our spending $15,000 to ask a few basic questions to random homeowners and businesses where the feedback would not be biased.
As it now stands our five council members have to rely on Sloan Vazquez whose efforts have not been transparent. Even council members were denied earlier access to their report.
Larry,
Now we know where all these anon fans of Waste Management are coming from…
http://orangejuiceblog.com/2010/05/waste-management-has-developed-quite-an-interest-in-the-orange-juice-blog/