On behalf of a Joint Powers Authority (JPA) that includes Sunnyvale, Mountain View, and Palo Alto, the City of Sunnyvale manages an agreement with a company for operation of a publicly-owned transfer station and materials recovery facility (the SMaRT Station). In 2000, HF&H assisted Sunnyvale with the procurement of the facility operator and that operating agreement was to expire December 31, 2007. Neither the City nor the current operator was in favor of an extension due to labor difficulties related to interpretation of the prevailing wage requirement of the existing operating agreement. In addition, the City was seeking to design and install new mixed waste processing equipment for the SMaRT Station in a separate, concurrent process, in order to replace aging equipment, improve efficiency, and increase diversion. The JPA’s member agencies were also interested in considering new services such as use of alternative fuel vehicles, single-stream recyclables processing and transfer of residential and commercial food scraps to a composting facility.
HF&H Solutions
HF&H managed the 2000 operator selection process that resulted in a $3.3 million annual savings. When the 2000 operating contract was nearing expiration, HF&H retained to assist with the next operator procurement. In 2006, we drafted the RFP and managed the RFP process. We tailored cost proposal forms to reflect the clarified prevailing wage and benefit language included in the new operating agreement. We solicited cost proposals assuming use of: (a) existing mixed waste processing equipment; and, (b) proposed mixed waste processing equipment. We assisted the City and its legal counsel in determining how operator’s compensation would be adjusted during transition from the existing to the new equipment. HF&H assisted in evaluating the proposers’ responses, and analyzing their effects upon the JPA’s overall costs given the agreement’s innovative revenue sharing / operator’s diversion incentive mechanism and the JPA’s put-or-pay disposal agreement.
Results
An estimated rate increase of only 2.7%, despite the required increases in wages and benefits;
The guaranteed minimum diversion level increased from 14.5% to 17.5%;
Agreed-upon compensation rates for use of the existing equipment, use of the proposed equipment, and the interim demolition/construction phase; and,
Agreed-upon compensation should the JPA wish to implement the several new services proposed by member agencies such as food waste collection and processing.
City of Sunnyvale