:unitea States
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This
waste
Purpose of this Handbook
is handbook is designed to give local officials information they need to develop effective solid
iste contracts. Specifically, the guide assists local government officials in:
Understanding issues that must be addressed in developing contracts for solid waste programs
and facilities;
Preparing and negotiating contracts that safeguard the public interest; and
Developing contractual arrangements that will reflect major trends in the solid waste field, in-
cluding integrated solid waste management practices, regional facilities and partnerships, and
compliance with new environmental and public health protection standards.
Who Should Read this Document
Local governmental officials (e.g., mayors, city managers, department heads, and city council
members) who are interested in developing public-private partnerships or intergovernmental
agreements;
Leaders in federal and state government, business, finance, banking, and industry who want to
understand more about what goes into developing an effective contract with the private sector.
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Prepared for:
U.S. Environmental Protection Agency
by
Bureau of Governmental Research
University of Oregon
The Umversity of Oregon affirms and actively promotes the rights of all individuals to equal opportunity in education and em-
ployment at this institution without regard to race, color, sex, national origin, age, religion, marital status, handicap veteran
status, sexual orientation, or any other extraneous consideration not directly and substantively related to effective performance
This policy implements all applicable federal, state, and local laws, regulations, and executive orders. Direct related inquiries
to the Office of Affirmative Action, 472 Oregon Hall, University of Oregon, Eugene OR 97403; telephone (503) 346-3123
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Table of Contents
Table of Contents
Foreword ; e> j
Executive Summary^ jy
Chapter 1: Challenges to Solid Waste Management 1
Increasing Quantity of Waste j
Health and Environmental Risks \
Changing Regulatory Environment i
Meeting Solid Waste Challenges through Contracting ".".".'.".".'."2
Public-Private Contracts '..'.'."'.'.'.'. 3
Intergovernmental Contracts 3
Using Public-Private and Intergovernmental Contracts 4
Chapter 2: The Contracting Process 9
The Contracting Decision 9
The Initial Analysis 9
Choosing Among Alternatives \[[ -ji
Public-Private Contracting '".'"'". 13
Securing the Benefits of Competition 13
IFBSV. REPS ."."!!.'."!!!.'."!!!!!.'.'.".'.'."!.'.'.'."." 13
Invitation for Bid Process 14
Request for Proposals Process 15
Intergovernmental Contracting lg
Securing the Benefits of Cooperation 18
Types of Agreements '.'".".".'. 18
Developing Intergovernmental Contracts 18
The Final Contract 19
Contract Management "^ 2Q
Monitoring Performance 20
Dispute Resolution 21
Summary 23
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Table of Contents
Chapter 3: Solid Waste Contract Issues:
Sample Contract Provisions • 25
25
Introduction
Policy Implementation and Regulatory Compliance ^
The Solid Waste Policy/Regulatory System 25
Establishing Responsibility for Obtaining Permits 26
Allocating Responsibility for Implementation and Compliance 29
Compliance Monitoring: State v. Local Responsibility • 30
Escape Hatch for Contracts • 30
Compensation •
Compensation as Essential Element of Contract • -Si-
Money Flows from Agency to Contractor • 31
Money Flows from Contractor to Agency 32
Adjusting Provisions for Compensation 33
Liability ?j|
Contract Liability • ~°
Tort Liability • ™
Summary •
Endnotes • ••••••••
Appendix A: Case Studies - 45
Benton and TiUamook Counties, Oregon: Joint Use of Franchised Landfill 46
A. County Order ^6
B. Franchise Between County and Operator • 47
C. Application for Franchise 47
D. Conditional Use Permit 4/
E. Solid Waste Ordinance • • -J8
F. State Permit • ™
G. TiUamook County Use of Landfill • 4°
H. Tillamook County's Contract 49
I. Rate Increase Authorizations • 49
Excerpts From Documents ^
Order of County Governing Body Dated September 30,1981 50
Agreement Dated September 30,1981 • 50
Excerpts from Agreements in Application 51
Excerpts from County's Solid Waste Ordinance 51
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Table of Contents
Pierce County, Washington: Sharing Risk or Liability 54
Protection from Liability Risk 54
Dade County, Florida:
Contracting for Collection and Marketing of Recyclable Materials 57
Appendix B: Sample Contracts 61
EPA Model Landfill Operation Contract 62
Instructions to Bidders
Suggested Provisions to be Included in Instructions to Perspective Bidders 62
Model Sanitary Landfill Operation Agreement 64
Fee Schedule (Alternate methods of charge) 69
Agreement Creating Southwest Washington Inter-County
Solid Waste Advisory Board A 70
Attachment A: Draft Scope of Services 71
A. Purpose 71
B. Scope of Work j\
Phase I Existing Systems/Existing and Future Needs 71
Phase 2 Alternatives and Feasibility 71
Appendix C:
Adversarial v. Collaborative Negotiations 73
Steps in the Collaborative Process 74
Prenegotiation Phase 74
Negotiation Phase 75
Negotiators 76
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Foreword
A Message from the Acting Assistant Administrator and Regional Administrator
The economic realities of the nineties suggest that public resources will not keep up with environmental needs. The
cost of environmental protection will continue to grow significantly in coming years. This is especially true in the area
of solid waste management. According to EPA's Cost of Clean Report, solid waste management costs are expected to
increase by more than 50% by the year 2000, from 24.8 billion in 1990 to 38.1 billion in the year 2000.
The Environmental Protection Agency's Public-Private Partnership Program was set up in 1989 to help state and local
governments develop new ways to manage and finance required environmental improvements. Through this pro-
gram we have fostered public-private partnerships in communities around the nation and created how-to publications
to help local officials manage and finance their environmental programs. This publication is one of the products of this
effort.
State and local officials are under pressure to improve solid waste services as a result of Federal and state regulations
and citizen concerns for a cleaner environment. Contracting with the private sector and developing regional agree-
ments with other government units are effective models that communities can use to finance and manage their solid
waste services. This handbook will help local officials to develop these contracts and agreements.
The handbook is based on information derived from a survey of 160 local communities and interviews with local and
state officials. It provides guidelines for developing agreements as well as actual model contract provisions.
The Bureau of Governmental Research and Service, University of Oregon, prepared this document with the Seattle,
Washington Region 10 EPA under an EPA P3 demonstration grant. We at EPA and the Bureau appreciate the coopera-
tion of all the federal, state and local officials, and solid waste managers who assisted in the project.
Through public and private cooperation, we can develop effective ways to meet the challenge of financing environ-
mental protection. This handbook will help you meet this challenge.
Christian R. Holmes
Assistant Administrator
Dana A. Rasmussen
Regional Administrator
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Executive Summary
Executive Summary
Overview
The Environmental Protection Agency has estimated that the United States generated 164 million tons of municipal
solid waste in 1986, and that the amount is increasing at a rate of more than 1 percent annually. Landfills are reaching
capacity and closing. The cost of disposing of waste is growing and local officials are concerned about how they will
meet the challenge of managing solid waste. '
Local governments are forming public-private partnerships and intergovernmental agreements as part of their efforts
to solve solid waste problems. The formation of effective partnerships will require that local officials become knowl-
edgeable in the area of contracting. - "
This handbook is handbook is designed to help local officials develop contracts with private companies and other gov-
ernmental units that will protect the interests of the citizens in their communities. This handbook is based on informa-
tion and analysis derived from a questionnaire survey of 160 local governments located in EPA Region X, plus selected
other states; review and analysis of sample provisions from actual solid waste contracts and agreements; follow-up
interviews with solid waste managers in several of the states and with responding local governments; and a review of
the literature as well as state federal statutes and regulations.
Sample provisions of solid waste contracts and agreements are shown in bold type of the handbook. Some of these
samples are identical to actual contract or agreement provisions and others have been modified from the original lan-
guage, but they are all presented as "examples" rather than "models." Persons using the handbook should review
these provisions carefully for legal adequacy and substantive suitability for any particular jurisdiction. Following is a
summary of the contents of the handbook.
Meeting the Solid Waste Challenge Through Contracting
The challenges of dealing with solid waste have led local governments to seek new ways to meet their responsibilities.
Two trends are noticeable: increasing private sector involvement and more intergovernmental arrangements. Turning
to the private sector and to other governments offers advantages such as:
• access to new technology;
• reduced costs via large-scale operations;
• management expertise;
• risk sharing; and
• greater operational flexibility.
Ill
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Executive Summary
The Contracting Decision
To dedde whether to perform services in-house, contract out, or develop an intergovernmental agreement, informa-
tion must be gathered about:
• existing activities;
• needed activities;
• level of service for each activity;
• costs associated with each activity;
• jurisdiction for each activity;
• legal and policy constraints; and
• advantages/disadvantages contracting.
Public-Private Contracting
If a community decides to work with the private sector, a contract must be developed. Solid waste contracts between
local governments and the private sector are common. They range from simple purchase-of-service agreements (e.g., a
contract with a private firm to haul waste to a disposal site) to complex arrangements involving several activities and
many private vendors.
Contracts with private firms are governed by state public contracting laws. These laws vary widely in detail, but usu-
ally require competitive bidding. State laws also regulate the competitive bidding process and set requirements for
contract awards and contract management.
Intergovernmental Contracting
Intergovernmental contracts involve more than one authority, and may involve the purchase of services.
Intergovernmental contracts are used for a variety of purposes, including:
• cooperative planning across jurisdictions;
• joint ownership of facilities;
• joint responsibility for operation of facilities; and
• joint agreements on exporting and importing waste.
Intergovernmental agreements operate under state joint exercise of powers laws. These statutes set forth procedures,
time limits, and recording and content requirements.
Intergovernmental agreements stress cooperation. They allow local governments to do jointly or cooperatively any-
thing they do individually. They may be voluntary or result from state laws requiring plans and facilities to cover
state-defined districts.
IV
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Executive Summary-
There are two main types of intergovernmental agreements, service contracts and joint/cooperative agreements. In a
service contract a community sells services to another. Joint/cooperative arrangements are used when two or more
governmental units jointly own facilities or accept joint responsibility for operations.
Competitive Bidding Alternatives
Most states require communities that contract out to follow competitive bidding procedures. This usually involves Re-
quests for Proposals (RFPs) or Invitations for Bid (IFBs).
Both IFBs and RFPs seek to maximize competition and assure the selection of the best contractor. However, the RFP
process is often viewed as an exception to competitive bidding requirements, to be used when IFBs are not practical or
advantageous.
Invitation for Bid
An Invitation for Bid (IFB) requires private companies to submit a bid price. The community outlines specifications for
the project and awards the contract to the lowest responsible bidder.
The first and most important step in developing a contract under the IFB process is for the community to draft specifi-
cations for the work. These should be very clear, but not so detailed as to discourage innovation or unduly constrain
the contractor's professional and technical judgment. Once specifications are drafted, remaining activities in the pro-
cess include: drafting the call for bids; advertising; opening the bids; evaluating the bids; and awarding the contract.
Request for Proposal
A Request for Proposal (RFP) is needed when the work to be done cannot be described up front in enough detail to es-
timate the cost. RFPs are also appropriate when aspects of a contract require negotiation. For example, allocation of
liability or responsibility for compliance with federal and state regulations may need to be negotiated. Circumstances
favoring the use of RFPs could include development of a landfill, development of future markets for recycled materials,
or use of new technologies.
The Contract
Whether a public-private or an intergovernmental arrangement is involved, the agreements of the parties are incorpo-
rated in a written contract. Common contract elements are:
• Background/purpose, legal authorities and terms;
• Specifications, scope of work, or statement of undertakings;
• Regulatory compliance responsibilities;
• Permit responsibilities;
• Financing and compensation;
• Contract duration;
• Performance monitoring system;
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Executive Summary
• Disputes resolution procedures;
* Renegotiation provisions.
• Termination provisions;
Contract Management
After the contract is signed and work begins, the contractor and the public agency must continue to exchange informa-
tion. The plans and specifications describing the work to be done are never perfect and, over time, changing condi-
tions may require that contract adjustments be considered.
Regulatory Compliance
Federal, state and local regulations all may need to be addressed through the contract. While the contractor generally
assumes the risks related to regulatory compliance, a public agency is not necessarily relieved from responsibility for
compliance.
The Resource Conservation and Recovery Act (RCRA) of 1976 is the most significant recent congressional act giving
EPA regulatory authority and technical assistance responsibilities for solid waste management. It is important that lo-
cal officials know the basics of RCRA Subtitle D.
Solid wastes that pose a potential hazard to human health or the environmental when improperly managed are re-
ferred to as hazardous wastes. Hazardous waste possesses at least one of four characteristics — ignitability, corrosivity,
reactivity or toxicity. If your waste reflects any of these characteristics, you should follow RCRA Subtitle C regulations.
In addition to identifying the regulations to be observed, compliance depends on monitoring. If the contractor is the
state permittee, compliance monitoring is the state's responsibility and no explicit provision for it is needed in the local
contract. If the local jurisdiction imposes requirements beyond those of the state, or if the public agency rather than the
contractor holds the state permit, a contract provision to that effect is appropriate.
Obtaining state and local permits for siting, construction, and operating facilities may be the responsibility of either the
governing public agency or the contractor. If a facility is owned by a public agency, that agency usually obtains the
needed state and local government permits. If a contractor is involved in a public-private or intergovernmental con-
tract, the contractor is likely to be responsible for obtaining permits.
Compensation
Compensation in money or some other form is an essential contract element. Fair compensation for services or facili-
ties is necessary for satisfactory contract performance. Money may flow either way under a public agency contract, or
even both ways. The three main sources of compensation in solid waste contracts are taxes, service charges, and sales
of materials. Operations such as waste-to-energy plants and recycling or composting programs may bring in all three
sources of revenue.
VI
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Executive Summary
Liability
Liability, or financial responsibility, should be placed on each party to the contract, and be commensurate with the
risks, responsibilities and compensation of each of the parties. The two major types of liability are contractual and tort.
Contractual liability entails defective performance by a contractor and is usually covered in the contract. This can be
done using performance bonds, third party guarantees that specified work will be performed. Under certain circum-
stances, payments due the contractor may be withheld for defective performance.
Tort liability involves a wrongful act, damage, or injury done willfully, negligently, or in cases involving strict liability.
It does not involve a breach of contract for which a civil suit can be brought. A prime example of a tort is the creation
of a nuisance.
The generation and management of solid waste present many opportunities for torts. They may result directly or indi-
rectly from the conduct of a party to a contract. The contractor usually has the risk of tort liability. However, a public
agency may have indirect liability for negligent actions of the contractor. The public agency can protect itself through
indemnification provisions and by requiring the contractor to carry special insurance that protects both the contractor
and the agency.
Even if the contract places the burden on the contractor, the public agency may not be entirely free of risk. If the con-
tract language is not specific and impacts are discovered after work is under way, the public agency may have the re-
sponsibility to overcome the problem.
Landfills and waste-to-energy plant operations have the greatest risks of claims of damage because of pollution,
contamina-tion or chemical release. Transport activities carry the greatest risk of vehicle accidents and of waste spill-
age.
Contracts for facilities owned by a public agency normally leave more liability risk with the public agency. Franchised
activities or other contracts involving private ownership and operation allocate less risk to the public agency.
Conclusion
Local governments can meet the new solid waste challenges of the 1990s through alternative forms of service delivery,
including intergovernmental arrangements and contracting with the private sector. Contract arrangements require that
local governments carefully analyze their solid waste functions, establish objective standards for their performance,
and consider both the legal policy factors as well as practical considerations that bear on the decisions to perform a
solid waste activity by contracting.
Whether contracting with the private sector or with other governments, a public agency must maintain close contact
with the contractor and carefully monitor the progress of the work. Contracts should include provisions addressing
regulatory compliance, compensation, and liability. Public agencies should expect problems and disputes during con-
tract performance and should be prepared to deal with them in a variety of ways, including the use of both informal
and mediated negotiation.
VU
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Chapter 1: Challenges to Solid Waste Management
Chapter 1:
Challenges To Solid Waste Management
The growing complexity of local government responsi-
bilities is nowhere better illustrated than in solid waste
management. In the past, when there were fewer
people, when people produced less refuse, when more
open land was available, and when the health and en-
vironmental impacts of waste disposal were less fully
recognized, garbage was taken to local public dumps
or burned in backyard barrels or apartment bxtilding
incinerators.
Dumps were gradually replaced by "sanitary" land-
fills, and local governments' solid waste activities in-
creased because waste had to be collected, taken to the
landfill, compacted, and covered. Impermeable clay
liners were added to some landfills. When landfills
were filled to capacity/ they were covered with addi-
tional dirt and usually planted with grass or other
plants. Some were converted to other uses.
In most of the United States, these simple and inexpen-
sive solid waste management methods have vanished.
Their disappearance was caused by two major factors:
• steadily increasing quantities of waste, wil:h result-
ing decreases in landfill capacity; and
• widespread awareness of the public health and
environmental risks of past disposal practices.
These factors have forced local governments to become
more sophisticated in their solid waste management
plans and strategies, and these plans and strategies in-
creasingly involve contractual arrangements with pri-
vate firms and other governments.
Increasing Quantity of Waste
The Environmental Protection Agency has estimated
that the United States generated 164 million to:t\s of
municipal solid waste in 1986, and that the amount is
increasing at a rate of more than 1 percent annually.1
One direct impact of the substantial increase in solid
waste has been the closure of many landfills that have
reached capacity.
Another impact is the difficulty and growing cost of
waste disposal. These impacts, plus recognition that
portions of the waste stream possess economic value,
have produced new management activities related to
waste reduction, re-use, and recycling.
Health and
Environmental Risks
The second major solid waste management challenge
of the 1990s are the potential and actual risks to human
health and the environment that are inherent in solid
waste facilities and programs. Uncontained leachate
from landfills has contaminated ground and surface
water, and unvented gases have infiltrated inhabited
areas. Municipal landfills account for about 20 percent
of the federal Superfund sites contained in the Na-
tional Priority List. Incinerators and waste-to-energy
facilities lacking refined controls have produced air
pollution and toxic ash. These and other facilities such
as transfer stations, recycling centers, and material re-
covery plants have generated noise, odors, traffic con-
gestion, and visual appearances that are unacceptable
to the public.
Health and environmental concerns have intensified
the difficulties of coping with a growing waste stream.
Local landfills are dosing, not only because they are
full, but also because they do not meet new federal and
state regulations, and bringing them up to standard is
too expensive.
Changing Regulatory
Environment
As the problems of coping with solid waste increased,
so did the roles and responsibilities of federal, state,
and local governments. These roles include planning,
research, technical assistance, regulation, financial sup-
port, and program implementation.
The federal response to the growing solid waste prob-
lem began in 1965 with enactment of the Solid Waste
Disposal Act, which authorized programs of research
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Chapter 1: Challenges to Solid Waste Management
and technical assistance to local governments. This
legislation was succeeded by the Resource Recovery
Act of 1970, which expanded grant-in-aid programs
with conditions aimed at upgrading state and local
solid waste planning activities. The 1970 legislation, in
turn, was succeeded by the Resource Conservation
and Recovery Act of 1976, which further expanded the
federal role and authorized new programs, including
direct federal regulation of hazardous wastes.2
Although federal grants for state and local solid waste
programs were phased out during the 1980s, state gov-
ernments have continued and indeed expanded their
solid waste activities. State laws generally provide for
adoption of statewide solid waste plans, state regula-
tion and permitting of landfills and other major facili-
ties, and state oversight of local government solid
waste activities. Many states are currently expanding
their la\vs and programs to include such matters as
establishing recycling goals, developing markets for
recycled materials, regulating packaging, composting
and other source reduction measures, etc.
Local governments, primarily cities and counties, have
responded to these developments, by modernizing
their solid waste programs and operating them within
the framework of growing federal and state regulation.
City and county land use planning and regulation also
affect many solid waste activities, as do additional lo-
cal regulations with respect to such matters as noise,
visual appearance, and traffic.
The changing regulatory environment of solid waste
management presents many uncertainties for long-
range planning, as well as for program implementa-
tion. These uncertainties require special attention in
discussing the subject of contracting for solid waste
facilities and services.
Meeting Solid Waste
Challenges through
Contracting
The challenge of dealing with increased quantities of
waste while addressing health and environmental
risks and complying with increasingly complex federal
and state regulations has led local governments to seek
new ways to meet their responsibilities. Two trends
are noticeable in the solid waste field: increasing in-
volvement of the private sector; and more use of joint
and cooperative intergovernmental arrangements.
Turning to the private sector and to cooperation with
other governments offers local governments several
advantages. Local governments may
• , gain access to new technology in implementing
solid waste programs;
• reduce costs through larger-scale operations;
• coordinate planning and development of facilities
and programs throughout substate regions
extensive enough to comprise "wastesheds"
appropriate for integrated solid waste manage-
ment,-3 and
• attain other benefits, including management
expertise, risk sharing, and policy and operational
flexibility.
The legal and administrative vehicle by which most
public-private and intergovernmental arrangements
are established is the contract. Black's Law Dictionary
defines "contract" as "An agreement, upon sufficient
consideration, to do or not to do a particular thing."
That definition is broad enough to cover a multitude of
types of arrangements between the public and private
sectors and among governments.
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Chapter 1: Challenges to Solid Waste Management
Public-Private Contracts
Local government solid waste contracting with the pri-
vate sector is already common. A1982 survey spon-
sored by the International City Management Associa-
tion found that 34 percent of the responding cities and
counties contract for residential solid waste collection,
41 percent for commercial collection, and 26 percent
for disposal.4 The contracts range from simple, short-
range purchase-of-service agreements (e.g., a county
contracts with a private firm to haul waste from a
transfer site to a disposal site) to complex arrange-
ments involving a variety of activities with a large
number of private vendors. For example, the Portland,
Oregon, Metropolitan Service District (METRO) has at
least four different types of contract arrangements for
its various solid waste facilities and activities:
• Four privately owned and operated landfills and a
reload facility operate under agreements to accept
waste from METRO, but without "franchises"
from METRO.
• Two privately owned and operated recycling/
recovery centers, one transfer station, and one
composting facility operate under METRO
franchises, some with rates set by the operator and
. others with rates set in accordance with franchise
provisions.
• One landfill is owned by the city of Portland,
managed by METRO, and operated by a private
firm under a contract with METRO.
• Two transfer stations are owned by METRO, but
operated by private firms under contract.5
Public-private contracts are generally governed by ,
state public contracting laws. These laws require com-
petitive bidding, with certain exceptions, for public
agency purchases of goods and services; regulate the
competitive bidding process, set requirements for con-
tract awards and contract management, and otherwise
regulate the public contracting process. State laws
vary widely in detail, but for purposes of this hand-
book, provisions comparable to the American Bar
Association's Model Procurement Act have been as-
sumed.6
Intergovernmental Contracts
Like public-private contracts, intergovernmental con-
tracts may involve the purchase and sale of services,
but they also are used for a variety of other purposes,
including
• cooperative and joint planning and policy making
for solid waste throughout a region that includes
several local government jurisdictions;
• joint ownership and/or operation of solid waste
facilities and services; and
• establishing arrangements for exporting and
importing waste among jurisdictions.
Intergovernmental agreements7 operate under state
joint exercise of powers laws, rather than the public
contracting laws that regulate public-private contract-
ing. The joint exercise of powers laws generally pro-
vide that two or more governmental units or agencies
may enter into agreements for the joint or cooperative
exercise of any powers or functions they are individu-
ally authorized to exercise. These statutes usually set
forth some procedures, prescribe some content re-
quirements for intergovernmental agreements, and
may stipulate time limits, recording requirements, and
other matters related to the process. In addition to the
general joint exercise of powers laws, state statutes
contain numerous specific authorizations for
intergovernmental agreements relating to specific
functions or activities. As in the case of state public
contracting laws, provisions of state joint exercise of
powers acts vary widely. In discussing intergovern-
mental agreements, this handbook assumes provisions
comparable to the U.S. Advisory Commission on
Intergovern-mental Relations' model joint exercise of
powers act.8
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Chapter 1: Challenges to Solid Waste Management
Using Public-Private and
Intergovernmental Contracts
Today/ public agencies that have solid waste responsi-
bilities are increasingly likely to become involved in a
combination of public-private and intergovernmental
contracting, rather than in just one or the other of the
two types of arrangement. Often, the preparation of
solid waste management plans takes place under an
intergovernmental agreement among several adjoining
and/or overlapping jurisdictions, while actual conduct
of solid waste management activities and operation of
facilities is carried on under both public-private and
intergovernmental contract arrangements, as well as
by "force account" or in-house administration. As ex-
amples of these mixed arrangements:
• County "X" may own a landfill site, contract with
a private firm for operating it, and accept waste
under intergovernmental agreements with one or
more neighboring counties or cities.
• Two or more local governments may jointly
contract with the same private firm for design,
construction and/or operation of a major waste-
to-energy or resource recovery facility.
The Portland METRO arrangements mentioned above
and the Benton County landfill agreements described
in appendix A provide examples of mixed arrange-
ments.
Given the popularity of both intergovernmental and
public-private contracting, it is clear that solid waste
managers need to be familiar with the contracting pro-
cess and to acquire the special skills in negotiation and
contract management that are needed to protect the
interests of their jurisdictions. This handbook provides
a starting point to help local officials and managers
gain a better understanding of solid waste contracting.
City-County Facility Contract
; Spokane and Spokane County (population 358,000) have an intergovernmental agreement for managing
a regional, mass-burn, resource-recovery, steam and electricity generating facility. Although the city
owns the facility and contracts with a private firm for its operation, the county requires that waste gener-
: ated in the unincorporated area be processed through the city facility.- Major decisions concerning the
" system, such as expansion of its service territory or contract changes that cause significant additional .
costs, must be agreed to by both the city and county governing bodies. A policy liaison board, consisting
? of two city and two county representatives, functions as an oversight board for all matters concerning the
facility and its management. '.','/-
-------
Chapter 1; Challenges to Solid Waste Management
City-County Planning Contracts
;* In 1988, King County (Seattle), Washington entered Into 40-year intergovernmental agreemente with all
I Jlut ^P°Jits inc?rp°rat^fj%s ?!]d ^1? forvP9°perative management of solid waste, with particular '
f ^^Phasfs on wake>e^ductfonancf>ecycllng. Under the' agreement, edch city authorizes King County to, '
jpare a plarf for the city's solid waste management to be included Jo the^comprehensive county plan.
ie 'agreement establishes an .organizational sfructure"th;at represents the participating local govern? !
"ments and sets fortli procqdures^by which the comprehensive plan will be^reytewed/'approved-, and • '
; adopted. \ <', ','r ~ "; ''< ^'~ - ' - •- ., *^ .. ,V ,"'''.>'" -' ' ' '*;-'• -'',
Seven, soujhwesfern Washington courities amaisq participating 'in 'an inter-governmental planning-con- .
;-"sqrtiurn. These, counties ^Pacific, Qpwiitz, Gra^s Harbor, Lewiis!.lvlasonrThuVston;^ndWahkaikum),^with;'',
'-555^?.^ popula-°" ?r^'Q^ 'aie> ff)?rnj^er^ °Mlle Southwest Washington Inter-County'Solid Waste ^
C^avisoly"Board (SWfo SWAB).jThe intergovernmental agreement,cornmits them tp review and compare; ,
;; *the^solid waste planning activities of each county," assess'the feasibility and desirability of, combining "
I fteir waste Streams, apd .consider development qf'a sample bid call document tp'tmplernent cooperative'
^seWices-and facilities.' fundin'gfoitthe joint planning effortcomes from the participating counties,an'd the ^
Estate Depa'rtrneht of Ecology^/' ; ' " ^ '"" ^ """/ \~ * >/< *"'',-:* ', " ^ " .,' -'
Combinations of Intergovernmental and
Public-Private Contracting
-------
Chapter 1: Challenges to Solid Waste Management
Contracts Compared with Other Arrangements
While both public-private contracts arid intergovernmental agreements clearly qualify as "contracts," a /'
number of other arrangements between and among governments' and private firms aYe-similacto7, but -,
distinguishable from, contracts. x ', >• •< ; r f' -,' ' />
These other arrangements, all of which may be used in the context of solid waste management; are, fran-
chises, licenses and permits: ^ ' ' .'-"'/'' ', ', "' ', '" .%'„
"'"" ~ ~ ' „ -',/- » :, >'> 'i<- '," ,f '*', I-
•* " *'j ,"•x * / * s & \*
• A franchise is a device by which a governmental unit may confer a privilege (e.g., using public" ,. y
streets to engage in the solid waste collection business). The privilege rgay be' granted exclusively.
(e.g., to engage in the business within a given geographical area) or nronexciusively. If the franchis- ^
ing governmental unit imposes conditions on the privilege, which is almost alwa'ys'lhepase.-the, re/ /,
suiting arrangement is almost indistinguishable from a contract. Often the-conditions imposed 6v* ',
elude payment of a franchise fee based on the.private firm's gross receipts or anbthen'basis.,, / ^ '-
•?-"-••-•••*--••--y-?~~-r~~~i~~T~-<~rr~--'.-rri'~r'''1''''.
• A license authorizes a private company to conduct a service- (e'.g./solidW$8 'collection) that would,
not be permissible under local laws without the license.' The purpose/of fhef license is-usually to pro-;
vide an enforcement method (Ke;, threat of revocation) for certain rf gutatibnsjimposed'upon the t^pe/
of business regulated, although licenses are sometimes required rnere^fortheWpose of identify-/
ing firms that do business in the jurisdiction. Licenses are oonexclusive'and'do nbtcreate acantrac^
tual relationship with the public agency. , '[*',,', '~ * !'<, *"' "",'," *,, '^ ''*
• A permitmay be required in addition to, and in conjunction with; a business cwncjucted^under a con-
tract, franchise or license. State and local permits for landfills, foEexarftpfe, impose conditibns undfet/
which the facility must operate. To that extent, a form of contractual relationship arises between the;;
governmental unit and the permittee, but the legal consequences, of noncompliance'differ from ;
those that would arise from a breach of contract. •'••''''''.,"'''.,"".
-------
-------
:$*lftt'&?rr$ffifr&}&l''$j?
COMTRACTIWG PRO
AMA.LSSIS
SOLID WASTE ACTIVITIES
•P£RFORMAKJCE ST
COST I ktFOR MAT \ OM
ypU BUG-PRIVATE
1WTERQOVERNMENT
IN -H
-------
Chapter 2: The Contracting Process
Chapter 2:
The Contracting Process
The Contracting Decision
The Initial Analysis
Listing Solid Waste Activities. Local governments facing
new solid waste challenges of the 1990s need to sys-
tematically review their solid waste programs and ac-
tivities and consider alternative forms of service deliv-
ery, including intergovernmental arrangements and
contracting with the private sector. Such an analysis
may begin with a simple listing of existing and poten-
tial solid waste activities, such as the example in Ex-
hibit 1.
Once such a list is developed, a description may be de-
veloped for each existing or proposed activity. The
description might include:
• a brief descriptor of the activity (e.g., "operate and
provide the materials, supplies, tools, equipment,
labor and other goods for operation of the county
landfill");
» indicators of the size or volume of activity (e.g.,
"accept [ ] tons of waste annually until 19 ");
• indicators of the level of service (e.g., "waste
covered with six inches of fill at end of each
working day," "salvaged materials removed at
least weekly" etc.);
• personnel and equipment used to conduct the
activity;
• budgeted and/or actual expenditures for recent
fiscal years; and
• citation of state and/or local laws and regulations
that apply to the activity.
Performance Standards. The most important part of this
analysis is identifying indicators of the level or quality
of service expected in each activity. Even if the activity
is conducted in-house by the public agency, such indi-
cators are important, and they are even more impor-
tant if the public agency is going to provide them
through a public-private or intergovernmental con-
tract. These indicators or performance standards
should be stated so that they are objectively measur-
able and, to the greatest possible extent, they should
measure outputs or end results rather than inputs.
Some examples for activities other than landfills might
include:
Transfer station:
• Haul waste away frequently enough so that the
station remains capable of receiving all waste
delivered to it.
• All waste to be put into transfer boxes or trailers
by the end of each working day.
Recycling operation:
• Pick up materials placed at the curbside on the
scheduled day of collection for recyclables.
• Collect recyclables from at least (number of)
commercial establishments by (date).
• Submit monthly reports reporting tonnages of
materials recovered and sold, by material, and
household participation rates.
Waste-to-energy facility:
• The (public agency) will deliver (a guaranteed
tonnage) of waste to the facility during each hilling
period.
• The facility must be capable of processing (num-
ber of) tons of waste at a specified energy content
stated in BTUs per pound.
• The facility must produce no more than (a given
level) of particulate emissions.
• Waste residues are to contain no more than a
specified percent of moisture and putrescible
matter.
Cost Information. As a final step in the initial analysis, a-
public agency might identify the costs associated with
each existing activity and the estimated costs for po-
tential activities. Guidelines for calculating costs in-
clude:
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Chapter 2: The Contracting Process
Exhibit 1
Sample Listing of Existing and Potential
Solid Waste Management Activities
Planning and Organizing
* Conducting studies and analyses
• Conducting public information and
education programs
* Agreeing on amounts and conditions
of waste to be transported among jurisdictions
• Establishing intergovernmental organizations
Transporting
* Residential collection
* Commercial and industrial collection
• Transporting between processing
and disposal sites
Transfer Station or
Waste Processing Plant
• Construction
• Operation
• Providing services to the plant operation
• Conducting a materials recovery operation
Waste-to-Energy Plant or
Other Incinerator
• Turnkey" construction
• Conducting an incineration/energy
production operation
• Providing refuse derived fuel
• Disposing of ash residues
Composting
• Providing services to a composting operation,
• Shredding waste materials ' ' , " ;
• Marketing'compost ' ' \
• Conducting a complete composting program
Recycling
• Curbside or other source collection of
recyclable materials
• Operating collection stations for
recyclable materials drop-off • - - ,
• Recovering recyclable items at the tipping '
floor
< i
• Processing recyclable items for shipment
• Marketing recycled materials
• Conducting a;complete recycling program
Landfill
* Preparing a landfill site '
• Operating a landfill site
• Providing services to a landfill operation ,* ;
— Equipment maintenance -
— Supplying cover material - -
— Leachate testing
• ' Closing a landfill site
• Monitoring the site area after closure
10
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Chapter 2: The Contracting Process
Costs for existing activities may be based on actual
budgets or expenditure reports, but the analysis
should include not only the direct costs likely to
appear in those documents but also indirect
(overhead) costs. Many, if not most, agencies have
developed formulas that express indirect costs as a
percent of direct costs.
In addition, the costs of physical facilities such as
landfills and transfer stations should be calculated
on a "life cycle" basis, taking into account pro-
jected maintenance and replacement expenditures
as well as current operating costs. For some activi-
ties, it is possible to calculate unit costs (costs per
ton, per mile of haul, per residential unit, etc.).
Unit cost information is valuable both for in-house
budgeting and management and to establish a ba-
sis for evaluating the cost of contracted services.9
The cost of solid waste activities not previously
conducted by an agency can be estimated by solic-
iting informal quotations from potential contrac-
tors. The activity descriptions compiled as sug-
gested above can provide a good basis for making
preliminary contractor inquiries. Any request for
quotations should make clear the informal nature
of the inquiry, so that there will be no misunder-
standings when the agency decides either to con-
duct the activity in-house or to call for bids.10
Choosing Among
Alternatives
Having compiled information about each solid waste
activity and its costs, it's time to make some choices
among the three main service delivery alternatives:
conducting activities in-house (force account), con-
ducting them through intergovernmental agreements,
conducting them through public-private contracts, or a
combination of two or all three approaches. This in-
volves at least three types of considerations: possible
intergovernmental arrangements required to establish
jurisdiction over the logical service area for each activ-
ity; advantages and disadvantages of contracting with
the private sector for each activity; and legal and policy
constraints that may affect the choice among alterna-
tive service delivery modes.
Area and Jurisdiction Considerations. Achieving the scale
of operations required to make effective use of modern
solid waste technology, including resource recovery
and waste-to-energy processing, often requires that
neighboring counties or other local jurisdictions band
together in joint and cooperative arrangements of vari-
ous types. Larger volumes of waste increase the feasi-
bility of recycling centers, composting operations, and
other programs which, in turn, decrease the amount of
generated waste that requires disposal. Acting to-
gether, local jurisdictions can also reduce duplication
of efforts in writing regulations, developing contracts,
and negotiating with private companies. Finally, since
air pollution, ground and surface water contamination,
and unsafe hazardous waste practices know no juris-
dictional boundaries, environmental protection can be
enhanced when local governments act regionally.
Determining the combination of governmental units
that would constitute a logical grouping for any par-
ticular solid waste activity involves considerations of
both economic and political feasibility. While no easily
applied guidelines are available, the U.S. Advisory
Commission on Intergovernmental Relations has of-
fered the following general functional assignment cri-
teria which may be helpful in analyzing issues of area
and jurisdiction.
• Economic efficiency: maximize economies of
scale (theoretically, when no expansion or contrac-
tion of the service unit will produce further cost
savings) without foreclosing "consumer-voter"
choice options;
• Equity: among similarly situated local jurisdic-
tions and individuals, minimize financing dispari-
ties and externalities (i.e., insofar as possible,
contain all the costs and all the benefits from the
activity within the service area);
• Accountability: ensure that citizens have ad-
equate access and control over policies governing
the conduct of the activity; and
• Administrative effectiveness: ensure that there is
legal, financial and managerial capacity equal to
the requirements of conducting the activity.11
11
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Chapter 2: The Contracting Process
These criteria are not easy to apply to specific cases,
and they are not even internally consistent (e.g.,
achieving economies of scale may require larger ser-
vice units than would be consistent with citizen access
and control). However, they do give leads to some of
the tradeoffs and at least provide a framework for dis-
cussion of area-function relations.
Public-Private Contracting Considerations. The most
frequently cited advantage of contracting as compared
with in-house service delivery is the expected cost sav-
ings. In addition to the impact of competition on pric-
ing, cost savings through contracting may reflect a con-
tractor's lower personnel costs because of compensa-
tion and fringe benefit differentials, specialized equip-
ment and labor force skills not available to the public
agency, and possibly greater management efficiency.
If a new activity is being considered for contracting,
avoidance of startup costs (new equipment, personnel
training, etc.) may also be a factor.
The apparent cost advantages must be balanced
against some increased costs to a public agency that
delivers a service through contracting. These include
the costs of preparing specifications and other contract
documents, the time and expense of negotiating con-
tracts, and, most important, the cost of monitoring con-
tract performance, which can amount to 5 to 10 percent
of total project costs.12 In calculating contracting cost
comparisons, it is important to distinguish between
"avoidable" and "unavoidable" costs — some super-
vision, overhead, and sunk costs cannot be avoided
under contract arrangements because they will still be
required in connection with other agency functions
and activities.13
Several factors relevant to the decision to contract for
service delivery either do not relate to costs or affect
costs only indirectly. These include:
• Flexibility: Contracting may be considered a
useful alternative or supplement to in-house
service delivery if a service is subject to peaking or
other fluctuations over time. Contracting makes it
possible for a public agency to avoid long-term
personnel commitments and capital outlay that
may not be used efficiently at certain times. On
the other hand, by contracting a public agency
loses some flexibility in the potential cross-
assignment of personnel among other agency
activities.
• Control and Accountability: Public agencies
sometimes resist contracting out for service
delivery for fear of losing control over perfor-
mance and accountability to policy-level officials.
Proponents of contracting point out, however, that
the service specifications and performance stan- ,
dards that are part of a properly drawn contract
provide the tools by which an agency may assure
even greater responsiveness to program policies
than may occur with in-house service delivery.
• Risk Spreading: In providing a service such as
solid waste, which involves serious risk of health
and environmental damage, contracting may be a
. way to spread exposure to liability. In evaluating
this factor, however, the public agency should
consider any protection against liability the agency
may enjoy because of its governmental status and
specific limits provided by state law. Any risks
assumed by a contractor, of course, are reflected in
the contract price.
• Other: Numerous additional considerations enter
into decisions about intergovernmental or public-
private contracting. Possible contractor labor
problems or financial instability could produce
interruptions. The agency might anticipate policy
changes (e.g., new federal or state regulations) that
could be more difficult to implement under a
contract arrangement. On the other hand, con-
tracting can provide a "yardstick" by which an
agency may measure the efficiency and effective-
ness of its own operations. Another advantage
sometimes cited by proponents of contracting is
that it allows the public agency to concentrate on
policy rather than operations. John Rehfuss,
author of an important book on public service
contracting, underscores this point by observing
that, "After all, cities do not exist to provide
services Cities exist to meet the needs and
desires of their residents."14
Legal and Policy Constraints. Tentative conclusions
from an agency's analysis of intergovernmental
(regionalization) factors and of advantages and disad-
vantages of contracting with the private sector must be
12
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Chapter 2: The Contracting Process
weighed against various legal and policy constraints.
As pointed out in Chapter 1, statutes in most if not all
states bear significantly on both intergovernmental
and public-private contracting. The intergovernmental
options may be constrained to some extent by state
joint exercise of powers acts that in some cases identify
functions that may or may not be undertaken jointly or
cooperatively by two or more local governments, and
in all cases lay down certain procedures to follow in
developing intergovernmental arrangements. State
public contracting laws typically require competitive
bidding for capital projects costing more than a speci-
fied amount and prescribe in detail both the policies
and procedures to be followed in contracting with the
private sector. Home rule cities and counties should
also check their charters for further legal requirements
and constraints on intergovernmental or public-private
contracting.
Collective bargaining agreements may make decisions
to contract out a mandatory bargaining subject, may
require consultation with bargaining unit representa-
tives, and may impose other constraints on an agency's
options in considering public-private contracts. Al-
though the subject of employee relations in making
contract v. in-house decisions is beyond the scope of
this handbook, it is extensively covered in the litera-
ture, which contains many suggestions for addressing
this problem.13
Finally, a public agency's governing body (e.g., city
council or board of county commissioners) may have
definite policy preferences that must be taken into ac-
count while making contracting decisions. For ex-
ample, governing bodies may require local preference
where authorized by law, or they may have policy
preferences for or against in-house service delivery.
The extent to which authority to enter into contracts
has been delegated to agency heads or the
jurisdiction's chief executive officer varies among gov-
ernmental units, and in smaller units the governing
body itself is likely to exercise approval authority on
individual contracts.
Public-Private Contracting
Securing the Benefits of Competition
It is widely considered to be good public policy (other
things being equal) to deliver public services, includ-
ing solid waste services, through contracting with pri-
vate firms. Underlying the widespread preference for
contracting is a general belief that competition among
private firms is the best assurance that public services
will be delivered with maximum economy and effi-
ciency.
This philosophy is expressed in state laws relating to
public contracts, which generally require that, with
certain exceptions, public agency purchases, capital
projects, and services over a certain amount be con-
tracted under competitive bidding procedures. As a
corollary of the policy that supports competition, the
laws include numerous requirements intended to pro-
mote fair play in contracting, including such matters as
advertising, use of sealed bids, public opening of bids,
maintenance of certain records, etc.
IFBsv.RFPs
Most solid waste contracts are developed under one of
two major variations of competitive bidding: invita-
tions for bid (IFBs) and requests for proposals (RFPs).
Based on review of contracts surveyed for this hand-
book, there appears to be increasing use of the RFP
process in the solid waste field.
Although both IFBs and RFPs seek to maximize com-
petition and to assure selection of the best possible
product or service provider, use of the RFP process is
generally regarded as an "exception" to competitive
bidding requirements, to be used when IFBs are not
"practicable" or "advantageous."16 Under many state
and local laws and regulations, use of RFPs must be
specifically justified and/or approved by a special con-
tracting authority.
Major differences between the DFB and RFP procedures
are:
• Specifications for IFBs must be more complete and
more detailed than for RFPs. Indeed, the major
13
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Chapter 2: The Contracting Process
distinguishing feature between the two proce-
dures is that with an IFB, submission and accep-
tance of a bid price results in a binding contract.
While RFP specifications (or "scope of work"
statements) should be complete enough to clearly
express the agency's objectives, REP responses are
essentially starting points for subsequent negotia-
tions that fill in the details.
• The award of a contract under IFB procedures is to
the 'lowest responsible bidder" (or equivalent
terminology).17 Under RHP procedures the bid
price may be the major award criterion, but the
agency may also consider the relative merits of
alternative work tasks, methods, etc., submitted by
respondents. The IFB focuses competition on
costs, while the RFP focuses competition on the
nature of the services as related to cost concerns.
(In both procedures the qualifications of bidders
and respondents is a relevant factor.)
• As noted above, under IFB procedures, contract
elements are complete when a bid is submitted
and accepted, although formal contract documents
may be prepared and signed later. Under RFP
procedures, contracts are negotiated with the
offerers whose initial proposals are determined to
be in the competitive range. The government
selection official selects the most advantageous
negotiated contract. The selected contract is
executed when it is signed by the government
contracting officer.
Invitation for Bid Process
Preparing Specifications. The first and most important
step in developing a contract under the IFB procedure
is to draft plans and/or specifications for the work to
be contracted. IFB specifications have been defined as
"Written directions governing the procedure to be fol-
lowed in the performance of the work, the quantities
and qualities of materials to be used and the method of
measurement of work."18
The initial analysis suggested earlier in this chapter
should be the starting point for developing specifica-
tions for a solid waste contract. To the greatest pos-
sible extent, as noted above, the kinds, amounts, tim-
ing, and methods of contracted work should be de-
scribed using outputs or end products that can be mea-
sured objectively, although work inputs (personnel
qualifications, required equipment, hours of operation,
etc.) usually are required either to supplement or sub-
stitute for outputs. This is particularly true where end
results cannot be guaranteed (e.g., recycling a certain
percent of waste tonnage).
In solid waste contracts, some matters that might oth-
erwise be covered in the contract specifications are ad-
dressed in state or local permits. For example, state
landfill permits may be based on a previously ap-
proved landfill operations plan and contain numerous
specifications as to cover, kinds of waste to be accepted
or rejected, required controls for leachate and vectors,
etc. Local conditional use permits also may spell out
terms and conditions that would otherwise be covered
in a contract: for example, a 1990 Klickitat County
(WA) conditional use permit for a regional landfill con-
tained a lengthy list of conditions, including paying a
substantial annual fee for impact mitigation, conduct-
ing numerous specified monitoring activities, provid-
ing specified employee training, and specifying operat-
ing standards and requirements relating to air, water
and soil pollution, unacceptable waste, litter, vectors,
fire, accidents, noise, appearance, transportation, pub-
lic services and utilities.
In general, contract specifications should be as clear
and complete as possible, although not so detailed as
to discourage innovation or to unduly constrain the
contractor's professional and technical judgment. It is
helpful to not only describe the work or facilities to be
produced under the contract, but also to explain how
the contract relates to the agency's broad policy goals.19
Other IFB Steps. Once specifications have been
drafted and approved at an agency's appropriate ex-
ecutive and policy levels, the rest of the IFB process
can go forward. Major steps in this process include:
• Drafting the call for bids: This requires drafting
of all contract elements, including provisions
covering such matters as inspection, complaints,
reports, performance bonding and insurance
requirements, change orders, contract payments,
liability indemnification, penalties and damages
for defective performance, affirmative action,
prevailing wage requirements and contract
duration, renewal and termination. The bid call
also provides information about the bidding
process, including submittal directions, bid bonds
or deposits, pre-bid conference plans, if any,
14
-------
Chapter 2: The Contracting Process
requirements for bidder qualification, etc. Also,
the bid call usually reserves the agency's right to
reject any and all bids.
• Advertising: Since the major purpose of the IFB
approach is to secure maximum competition, bid
calls should be advertised in media most likely to
reach potential bidders — often in specialized
daily or weekly commercial publications used to
publicize bid calls. Advertisements include a brief
indication of the work to be contracted, the name
of the agency, place where bids are to be submit-
ted, time and place of bid opening, and the place
where detailed specifications and bid documents
can be obtained.
• Opening, Evaluation and Award: Bid openings
are conducted in public at a previously announced
time and place, and apparent low bidders are
identified. However, before an award is made, the
apparent winning bid must be evaluated. For this
purpose, agencies commonly establish a team of
agency personnel including representatives of the
operating unit responsible for the service or
facility, as well as agency finance and legal staff
members. This team makes a recommendation to
the chief executive, governing body or other
contracting authority after determining that the
apparent low bidder has the experience, financial
responsibility, and resources necessary to perform
under the contract, and that the bid as submitted is
responsive to the requirements stipulated in the
bid call. It is important that the evaluation be
documented in writing, including any justification
- for not selecting the lowest bid. Should the
awarding agency decide to re-open the bid
process, a written explanation also should be
provided.
Request for Proposals Process
Requests for proposals are more appropriate than invi-
tations for bids when the kinds, amounts, timing, and/
or methods of doing the work or building the im-
provement cannot be stipulated fully in advance at the
level of detail that would permit a prospective contrac-
tor tore-. : nd with merely a bid price. RFPs also may
be appropriate when other aspects of a contract require
negotiation, such as the allocation of liability or re-
sponsibility for compliance with federal and state
regulations.
Circumstances favoring the use of RFPs in solid waste
contracts might include the complexity of proposed
new major landfills, uncertainty about future markets
for recycled materials, and use of new technologies (for
example, composting operations). Contracts negoti-
ated under the RFP process might result in better solu-
tions to problems such as liability, financial responsi-
bility, and impact mitigation, which protect the public
and also protect the contractor from unreasonable
risks.
Because RFPs are generally regarded as exceptions to
the general policy favoring competitive bidding, a
public agency planning to use the process may be re-
quired to obtain prior approval (e.g., from a central
purchasing office, public contract review board, the
chief executive or the governing body). Some state
public contracting laws establish specific requirements
for the use of RFPs (as does the ABA model law).20
Several steps in the RFP process differ from those used
in the IFB process.
• Project team: While the IFB process often involves
establishing a team of agency staff to evaluate the
qualifications of apparent low bidders, the RFP
process generally requires creation of a project
team early in the process. The greater judgment
and discretion associated with preparing the RFP
and with evaluating the substantive aspects of
proposals received makes it desirable to involve
both technical and policy-level agency personnel,
as well as legal and financial staff, throughout the
process.
• Drafting the RFP:
— The RFP counterpart to specifications under
the IFB is the "scope of work" It is even more
important in the RFP to state clearly and
completely what the agency hopes to accom-
plish under the contract. The description of
the work itself obviously need not be as
detailed with respect to specific outputs and
inputs, and indeed one of the agency s major
purposes may be to elicit ideas from respond-
ers as to alternative work elements.
15
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Chapter 2: The Contracting Process
Exhibit 2
RFP Evaluation Factors for Rural Recycling Collection Services
Lane County, Oregon
1988
BASIS FOR SELECTION
> y / x ^
The successful Contractor shall be the most responsible proposer for the requested services, i.e.,
the proposer with the highest level of experience in providing the requested services, the most
thorough and intensive collection schedule, the most efficient fleet of collection equipment and in-,
ventory of collection containers, the highest level of services offered, and the lowest price re-
quested for the services. , , ', '
A point system will be used to rate and compare each proposal. An evaluation team composed of.
Waste Management Division Staff will be formed to evaluate the proposals. The Waste Manage- >
ment Division reserves the right to contact any and all proposers to supply any additional informa-
tion it feels necessary to clarify any bid. ' . ',
Points will be awarded on the following basis:
Contract Price:
Experience:
Collection Schedule:
Collection Equipment:
Services Offered:
Total Possible Points
50 Points
25 Points
25 Points
25 Points
ISPpints
140 Points
(The RFP goes on to explain that the lowest bidder will receive 50 points for the contract price; ahd -
points will be deducted from 50 for higher bids in accordance with a specified sliding scale reflect-
ing the amount of difference. A similar method of assigning points was used for'the other factors,
with points deducted in increments of five by rank order, with best proposals receiving the maxi-
mum points). , - "' ^ "
16
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Chapter 2: The Contracting Process
— The contract price is one of the items to be
negotiated, but the REP may appropriately
state a target amount, or perhaps a range.
Prospective offerers will find it hard to
develop their proposals without some general
guidance as to the amount the agency expects
to spend.
— An essential part of the RFP is the description
of factors that will be used to evaluate the
responses. Some kind of point system is
customarily used for this purpose, as indi-
cated in Exhibit 2.
— A statement should be included to the effect
that the RFP is not an "offer" (in the legal
sense) and that the final contract will be
negotiated with the contractor to whom the
award is made.
— Other portions of the RFP include various
contract terms and conditions similar to those
suggested above for IFBs, including submis-
sion instructions, a person to contact for
further information, etc. It also includes
similar disclaimers, such as the right to reject
all proposals and the right to negotiate with
more than one proposer. If the agency plans
to interview several responders prior to
making an award, that fact should be stated in
the RFP.
Publicizing the RFP: The RFP should be adver-
tised in the same manner as for IFBs, and, since
one aim of the process is to generate suggestions
for alternative ways to do the work, agencies using
RFPs should make even greater efforts to publicize
the request than they do for IFBs.
Responding to Inquiries: Since the RFP scope of
work is less complete and detailed than IFB
specifications, it is appropriate to invite and
respond to inquiries from prospective proposers.
Records of all inquiries and the response provided
should be kept and made available to other
prospective proposers.
Interviewing proposers: It is common for the
project team to conduct interviews with at least the
top two or three proposers, both to clarify points
in the response and to assess the probable compat-
ibility between the agency and the prospective
contractor. Practices vary with respect to confi-
dentiality in these interviews, but if proprietary
information is involved, competing proposers
must be interviewed separately.
• Making the award: After evaluating the propos-
als (and conducting interviews, if required), a
tentative award may be made, subject to success-
ful contract negotiations. Some state laws estab-
lish policy for making the award that is similar in
purpose to the 'lowest responsible bidder"
concept for IFBs. The ABA model statute, for
example, provides that the "Award shall be made
to the responsible offerer whose proposal is
determined in writing to be the most advanta-
geous to the [agency] taking into consideration
price and the evaluation factors set forth in the
Request for Proposals. No other factors or criteria
shall be used in the evaluation. The contract file
shall contain the basis on which the award is
made."21
Unlike the IFB process, much of the work in develop-
ing a contract under the RFP process takes place fol-
lowing a tentative award. At that point, serious nego-
tiations begin with respect to the dollar amount of the
contract, the scope of work, and other contract terms
and conditions. Indeed, some negotiation may already
have begun, at least informally, during the interviews
with prospective contractors.
For purposes of negotiating the contract, each potential
party should select one or two negotiators. The scope
of the negotiators' authority and duties should be
specified in writing. Negotiations should be carried
out at specified times in locations that are appropriate
to conducting public business. An accurate record of
proceedings should be available to the entire team at
each phase of negotiation.
In this process, the negotiators for each party focus on
reaching what they perceive to be practical perfor-
mance standards and on minimizing the risks for their
respective parties. The style of negotiation during
these efforts to develop the contract is likely to be com-
petitive, if not adversarial, in contrast to the "collabora-
tive" negotiations that are most effective during the
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Chapter 2: The Contracting Process
implementation of a finalized contract. Appendix C
contains further discussion of these contrasting styles
of negotiation, but it should be noted here that the fair-
ness of the contract for all parties and the reasonable-
ness of the assignment of risks largely will determine
the success of the resulting contractual relation.
Before completing negotiations, a draft contract may
be prepared to clarify general goals and specific terms
and conditions. Participation by legal experts is essen-
tial during this phase. The contracting body examines
the draft, makes suggestions for change, then approves
it for submittal to an authorized contracting officer
with a concise report of negotiation activities to date.
The authorized contracting officer provides the final
form and arranges for signing by all.
Intergovernmental
Contracting
Securing the Benefits of Cooperation
In contrast to public-private contracting, which seeks
to secure the benefits of competition in providing pub-
lic services, arrangements between and among govern-
mental units (intergovernmental contracts) stress the
theme of cooperation. This theme is expressed, for ex-
ample, in the "purpose" section of the model joint ex-
ercise of powers statute published by the U.S. Advi-
sory Commission on Intergovernmental Relations:
It is the purpose of this act to permit local governmen-
tal units to make the most efficient use of their powers
by enabling them to cooperate with other localities on
a basis of mutual advantage and thereby to provide
services and facilities in a manner and pursuant to
forms of governmental organization that will accord
best with geographic, economic, population, and other
factors influencing the needs and development of local
communities.
Most if not all states have joint exercise of powers acts
that often contain similar statements of purpose. In
general, these statutes authorize local governments to
do jointly or cooperatively anything that they can do as
individual units, and many of them extend to local
government cooperation with state and federal agen-
cies, as well as with other local governments. Typi-
cally, the state laws address such matters as the activi-
ties that may be conducted, matters to be addressed in
intergovernmental agreements, limitations on the du-
ration of agreements, and other matters such as special
approval requirements, records to be maintained, etc.
Types of Agreements
At least three types of intergovernmental arrange-
ments can be identified. First and probably most com-
mon is the "ad hoc" arrangement, under which two or
more governments agree to do something coopera-
tively but do not enter into a written agreement. In the
solid waste field there are likely many such arrange-
ments covering such matters as emergency or other
temporary use of landfills by adjacent local govern-
ments, arrangements for cleaning and maintaining
landfill access roads, mutual consultation on licensing
or franchising solid waste activities, and other activi-
ties.
Intergovernmental written agreements, which are the
main subject of this handbook, are of two main types:
service contracts, and joint/cooperative agreements.
In a service contract, one unit of government under-
takes to sell services to another, and the resulting ar-
rangement is quite similar to a public-private contract.
Joint and cooperative arrangements are used when
two or more governmental units agree to establish
joint ownership of certain facilities or equipment or to
accept joint responsibility for the operation or adminis-
tration of programs and activities.
Developing
Intergovernmental Contracts
Initiating intergovernmental arrangements differs
from initiating public-private contracts in that there is
no profit incentive to enter into an intergovernmental
contract. It may be more difficult, therefore, to estab-
lish communications, awareness of mutual interest,
consensus on approaches to problem solutions, and
the degree of trust that may be necessary to overcome
the natural resistance to change.
18
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Chapter 2: The Contracting Process
At least two general approaches that may facilitate the
development of intergovernmental arrangements may
be identified. First, voluntary efforts may be stimu-
lated by third parties. For example, a council of gov-
ernments (COG) may stimulate intergovernmental ef-
forts in implementing its general mission to further
cooperation among its member units; or a private firm
may bring adjoining government units together in situ-
ations where joint or cooperative arrangements are
necessary to justify major investments in solid waste
facilities, such as waste-to-energy facilities.
Another type of intervention may come about from
state laws or regulations that require solid waste plans
and facilities to relate to state-defined wastesheds or
substate districts. State landfill permits, for example,
might be conditioned upon developing intergovern-
mental agreements concerning use of the facility.
Service Contracts. Except for the greater difficulty in
inaugurating proposals, intergovernmental service
contracts are essentially similar to public-private ser-
vice contracts and must address most of the same mat-
ters discussed in the previous section. Intergovern-
mental service contracts must, for example,
• Specify and describe the work to be done, in terms
of measurable work outputs. Because the unit that
provides a service is politically accountable to its
own constituents, however, it is common in
intergovernmental service contracts to establish
priority in use of personnel and facilities for its
own jurisdiction and to limit the work provided
under the contract to "available" resources. An
obvious limitation that might be found in solid
waste contracts would be on the tonnage to be
accepted from a contracting jurisdiction.
• Specify the compensation for contract services at
an appropriate level of detail, including identifica-
tion of cost elements, time and method of billing
for services, provision for automatic or negotiated
adjustments in compensation, etc. Intergovenv
mental service contracts between overlapping
units (such as a county and a city within the
county) may adjust service pricing under a
contract to reflect taxes that residents of one unit
pay to the other.
• Include contract elements such as provision for
monitoring contract performance, required
records and reports, changes in the type or
amount of work required under the contract,
insurance and liability matters, procedure for
dispute resolution, and provision for contract
renewal and termination.
Joint Agreements. Intergovernmental arrangements for
joint ownership, operation, or administration of
facilities and services must address most of the above
matters, plus additional items including:
• Assignment of responsibility for developing and
implementing policies for the contracted activity.
Some joint agreements make one of the contract-
ing jurisdictions responsible for day-to-day
operation of jointly owned facilities, with signifi-
cant policy matters referred to the policy levels of
each participating government for concurrent
decision making. In that case, personnel and
equipment used in the joint operation may be
those of the responsible jurisdiction. Another
approach is to provide for joint appointment of a
board or commission that exercises delegated
authority over the management of the contracted
facility or activity. In that case, the joint program
may still utilize personnel and equipment of one
of the participating jurisdictions, or the joint
program.might instead employ its own staff and
develop its own real and personal property
resources.
• If the joint program or activity does acquire
property on its own behalf, provision must be
made for its disposition upon termination of the
intergovernmental contract. Some state laws and
some intergovernmental agreements provide for
third parties (courts or arbitrators) to assist with
property disposition, if necessary in such cases.
The Final Contract
Whether a public-private or an intergovernmental ar-
rangement is involved, the ultimate agreement of the
parties is incorporated into a written contract. A
model contract providing for operation of a sanitary
19
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Chapter 2: The Contracting Process
landfill and a sample intergovernmental agreement
relating to planning for solid waste management are
presented in Appendix B of this handbook.
Elements common to both types of contract include:
• Preliminaries such as identification of the parties
(including named agents), recitations of the
background and purposes of the contract, citation
of legal authority, and definition of terms used in
the contract.
• Specifications, scope of work, or statement of the
undertakings of the parties, including provisions
for change orders or other alterations during the
life of the contract. Details of work to be under-
taken are often set forth in a separate document
that is incorporated into the main contract by
reference. This technique is used in the sample
intergovernmental agreement presented in
Appendix B. As noted above, state permits (e.g.,
for landfill operations) usually include specific
performance standards that should also be
incorporated by reference into the contract.
• Regulation compliance, which is covered in
detail in Chapter 3 of this handbook.
• Financing, including methods of calculating
charges under the contract, timing of required
payments, billing documentation, provision for
adjusting rates or charges, etc. This subject also is
addressed in greater detail in Chapter 3.
• Dispute resolution, including provisions for
mediated negotiation and arbitration as discussed
later in this chapter.
• Duration, including provisions for renewal,
renegotiation, and termination of the contract.
• Miscellaneous contract terms and conditions,
including maintaining records, submitting reports,
handling complaints, employee relations, mutual
or unilateral indemnification against liability,
insurance and bonding requirements, and 'legal
boiler plate" dealing with acts of God, merger of
agreements, severability of contract provisions,
etc.
Public-private contracts may have types of provisions
not found in intergovernmental contracts, such as anti-
kickback and anti-collusion certifications and state
statutory requirements made specifically applicable to
public-private contracts, such as payment of prevailing
wages. Conversely, intergovernmental contracts may
have special provisions related to joint policy boards or
provisions requiring review and approval by state
agencies.
Contract Management
After work begins under a contract, the contractor and
the public agency need to continue to exchange infor-
mation. The plans and specifications describing the
work to be done are never perfect and, over time,
changing conditions may require that contract adjust-
ments be considered. Thus, it is important to establish
within the contract a system for monitoring perfor-
mance, a process for working out details of the agree-
ment, a method for renegotiating parts of the contract,
and procedures for dealing with violations.
Monitoring Performance
Parties to the contract must agree on a workable sys-
tem to ensure compliance with the provisions of the
contract, and the system should be described in the
contract itself. The provisions should identify who is
responsible for the monitoring function, and describe
the process for responding to concerns or violations.
In intergovernmental joint service agreements, moni-
toring may be a joint or mutual responsibility.
Effective monitoring of contract performance can be
difficult as well as costly.22 Monitoring may involve
several techniques, including:
• Developing some kind of matrix of tasks against
the contract time schedule: Several techniques are
used for this purpose, including Gantt charts,
Milestone charts, and Pert networks.23
• Periodic conferences: Depending on the nature of
the contract, daily, weekly, monthly, quarterly, or
other periodic conferences may be scheduled-for
general discussion of progress under the contract
or agreement.
• Submission of reports: Periodic written reports
from the private contractor (or, in the case of
multiple-party intergovernmental arrangements,
perhaps the agency most directly in charge of the
20
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Chapter 2: The Contracting Process
work) should cover such matters as task comple-
tion in comparison to the agreed time schedule,
costs incurred, and problems encountered in
carrying on the work.
• On-site inspection: Direct observation of work
underway or completed may include on-site
inspection, analysis of samples of recycled materi-
als or incinerator residues, etc. On-site inspection
may also reveal information about contractor
work methods, type and condition of equipment,
compliance with safety regulations, and other
indications of compliance with the contract or
agreement.
• Other direct checks on contract compliance:
Contract compliance may also be monitored by
external checks to see that required permits have
been obtained, required prevailing wages paid,
etc. Receipts and other documentation for contrac-
tor invoices may also be checked.
• Complaint processing: A specific procedure
should be established to assure prompt response
and communication among contract parties with
respect to citizen complaints.
• User surveys: Public agencies may conduct either
informal or formal surveys of citizen perceptions
regarding contract services.
While many of these monitoring techniques must be
employed whether work is done in-house or under a
contract, the context is different in the contract situa-
tion, and the skills required to monitor contracts differ
somewhat from those required to manage and super-
vise in-house projects.24 Among other things, monitor-
ing contracts requires skills in communication and ne-
gotiation that line managers of in-house work may or
may not possess. This subject is discussed in the next
section.
Dispute Resolution
Questions or concerns that arise in contract manage-
ment often can be resolved through day-to-day com-
munication between the contractor's job supervisor
and the public agency's representative. Simple, infor-
mal negotiation can occur during this routine clarifica-
tion process.
When the description of work is found to be incom-
plete or a better approach is discovered, interpretations
and changes often can be made under procedures set
out in the contract for change orders. These proce-
dures enable the public agency to order changes that
are generally within the scope of work covered by the
contract, even though they have not been spelled out
in the contract document, the specifications, or the
scope of work. The contractor must comply with
change orders, and the added costs are usually reim-
bursed on a cost-plus basis.
However, the contractor may object to a change order,
either on grounds of feasibility or on grounds that the
reimbursement approved by the public agency is inad-
equate. Such disputes, as well as other more serious
disputes over the interpretation or application of con-
tract terms and conditions, require some type of dis-
pute resolution process.
There are four ways to deal with contract questions
and disputes. The four are not mutually exclusive, and
their use depends on provisions of the contract:
• Administrative decisions
• Negotiated agreement
• Arbitration
• Litigation
Administrative Decisions. At the lowest level, the
public agency's contract manager should be delegated
express authority to make interpretations or decisions,
as noted in the sample contract provision below:
Correcting Deficiencies. A deficiency in
the contractor's work that is noted by the
[public agency] shall immediately be cor-
rected to the satisfaction of the contract
manager. The contract manager's interpre-
tation or decision is binding on the contrac-
tor, subject to the dispute resolution provi-
sions of this contract.
Any disagreement that remains after such an adminis-
trative decision can be resolved by negotiation, arbitra-
tion, or litigation.
Negotiated Agreement. Issues that do not require im-
mediate decisions or that involve basic changes in the
contract may benefit from a negotiation procedure.
21
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Chapter 2: The Contracting Process
Negotiation may not always be productive, and its use
does not prevent parties from arbitrating or litigating
unresolved issues or problems. However, contract lan-
guage that anticipates the need for negotiation and
specifically provides for negotiations is becoming more
common. A simple example of such language follows.
Negotiation. The parties shall, in good
faith, attempt to negotiate resolutions to
all disputes arising out of this contract.
Subject to the conditions and limitations of
this section, any controversy or claim
arising out of, or related to, this contract
that remains unresolved after negotiations
shall be exclusively settled by arbitration
under [section(s) relating to arbitration].
A somewhat lengthier but perhaps more suitable ex-
ample is:
Dispute Resolution.
(a) Initiation of Proceeding. To help bring
about a quick and efficient resolution of
disputes that may arise under this contract
at the lowest possible cost, the parties do
hereby establish this procedure to be in
existence and available for use during the
term of this contract.
(b) Negotiation, In the event any claim,
controversy, or dispute arises between the
parties, the parties shall undertake in good
faith to resolve the dispute. The parties
may attempt to negotiate a mutually ac-
ceptable agreement during a two-week
period after written notice requesting such
procedure is provided by one party to the
other. If the parties cannot reach agree-
ment within the two-week period, the
parties may elect to obtain the assistance
of a mediator. If after a two-week period of
assisted negotiation, the parties fail to
reach an agreement, exclusive of any other
remedy subject to [state] statute, either
party may by written notice to the other
party hereto, bring the dispute to arbitra-
tion.
As suggested above, collaborative negotiations that
involve "integrative" bargaining techniques are pre-
ferred when resolving disputes regarding performance
and/or compliance with the terms of an existing con-
tract. The assumption is that the parties to an existing
contract both (or all) have mutual interests in success-
ful contract execution that can serve as a common
ground for negotiations. Although collaborative nego-
tiations can and do take place between or among the
parties themselves, there is growing use of experienced
facilitators and mediators who can help the parties
reach agreement.
Appendix C extends this discussion of negotiating
styles, and offers a step-by-step description of the col-
laborative negotiation process.
Arbitration and Litigation. Dispute resolution by ne-
gotiation between or among the parties, whether or
not assisted by a mediator or facilitator, is advanta-
geous in that it results in a voluntary agreement that is
"owned" by the parlies themselves. If administrative
decisions and negotiations have failed to resolve a dis-
pute that arises under a contract, however, resort may
be taken to traditional third-party dispute resolution
procedures: arbitration and litigation. A sample con-
tract provision for arbitration follows.
Arbitration. All claims that have not been
resolved by dispute resolution under [section
numbers] of this contract shall be settled by
binding arbitration in accordance with the
then applicable [Commercial Arbitration Rules or
Construction Industry Arbitration Rules] of the
American Arbitration Association. Judg-
ment on the award rendered by arbitration
may be entered in any court having juris-
diction thereof. The parties acknowledge
that this contract affects interstate com-
merce and that this agreement to arbitrate
is subject to, and enforceable in accor-
dance with, the Federal Arbitration Act, 9
U.S.C. 1 et seq.
As an alternative to arbitration, any party to a contract
may seek to resolve a contract dispute by filing a suit
in court. No contract provision is necessary to estab-
lish this right, which is available to any party as a mat-
ter of law.
22
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Chapter 2: The Contracting Process
Summary
Local governments face new challenges in solid waste
and need to consider alternative ways of meeting
them. Trends such as changing technology, the obso-
lescence of existing disposal methods and facilities,
and the increasing regionalization of solid waste pro-
grams make it necessary to consider both greater in-
volvement of the private sector and cooperative or
joint arrangements among governments.
Both public-private and intergovernmental arrange-
ments are likely to be implemented through contract-
ing. Implementing solid waste management programs
through contract arrangements requires that local gov-
ernments carefully analyze their solid waste functions,
establish objective standards for their performance,
and consider both the legal and policy factors as well
as practical considerations that bear on the decision to
perform a solid waste activity by contracting.
The public-private contracting process is regulated
through state laws that promote competition and fair
dealing. Generally these laws favor the use of "invita-
tion for bid" contracting formats but they also make
provision for solid waste activities. The state "joint
exercise of powers" laws that govern intergovern-
mental contracts do not require competition but may
establish requirements relating to the purposes and
processes for intergovernmental contracts.
Whether contracting with the private sector or with
other governments, it is essential that a public agency
maintain close contact with the contractor and care-
fully monitor the progress of the work. Public agen-
cies should expect problems and disputes to arise dur-
ing contract performance and be prepared to deal with
them in a variety of ways, including the use of both
informal and mediated negotiation.
23
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Chapter 3: Solid Waste Contract Issues
Chapter 3:
Solid Waste Contract Issues:
Sample Contract Provisions
Introduction
Three cross-cutting issues of special concern in solid
waste contracting are
• structuring contracts to assure implementation of
federal, state, and local government solid waste
policies and compliance with solid waste regula-
tions;
• providing for flexibility in compensation to accom-
modate the long-term cost recovery and regula-
tory and market uncertainties associated with
some solid waste contracts; and
• allocating both tort and contract liability and/or
financial responsibility among public agencies and
private contractors to match the distribution of
exposures in different kinds of solid waste con-
tracts.
This chapter defines and discusses each of these issues
and offers sample contract provisions that may be
used to address a variety of local needs and circum-
stances. All of these issues influence long-term con-
tracts for major solid waste facilities such as landfills
and incinerators. Contracts for other solid waste activi-
ties may involve only one or two of these issues.
Policy Implementation and
Regulatory Compliance
The Solid Waste Policy/
Regulatory System
As the problems of coping with solid waste have in-
creased, so have the roles and responsibilities of fed-
eral, state, and local governments. These roles include
research, technical assistance, financial support, regu-
lation, and program implementation. The federal role
centers around imposition of standards and regula-
tions to protect human health and the environment.
Planning, enforcement, and implementation roles re-
main with state and local governments.
At all three levels of government there is significant
activity and debate with respect to municipal solid
waste policy. Among other things, this activity in-
volves the concepts of "integrated waste management"
and "materials management." Both concepts aim at
reducing the amount of waste that must be disposed of
by incineration or landfiUing.
These concepts have been defined and to some extent
promoted by two federal agencies — the Environmen-
tal Protection Agency and the congressional Office of
Technology Assessment.25 According to EPA, "Inte-
grated waste managemenf refers to the complemen-
tary use of a variety of waste management practices.
An integrated waste management system will contain
some or all of the following elements:
• Source reduction (includes reuse of products)
• Recycling of materials (including composting)
• Waste combustion (with energy recovery)
• Landfilling
For a given community, waste management practices
are matched to the nature of the waste generated and
the environmental, economic, and institutional needs
of the locality."
OTA concurs with the need for a coordinated system
involving these elements, but wants more emphasis
placed on waste prevention through a national system
of "materials management" that would provide incen-
tives and requirements to influence the decisions of
both manufacturers and consumers to "reduce the tox-
icity or quantity of products before they are pur-
chased."26
Governmental policies and regulations affecting solid
waste may be expected to evolve in these directions
over the next few years.
federal Policies and Regulations. The Resource Con-
servation and Recovery Act of 1976 is the most signifi-
cant recent congressional act giving EPA regulatory
authority and technical assistance responsibilities for
solid waste management. Regulations adopted under
25
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Chapter 3: Solid Waste Contract Issues
RCRA in 1979, referred to as the "Criteria for the Clas-
sification of Solid Waste Disposal Facilities and Prac-
tices" (40 CFR Part 257), developed the existing federal
framework for solid waste management regulation.
The criteria defined environmental performance stan-
dards for floodplains, endangered species, surface and
ground water, land application, disease, air, and
safety. EPA has recently revised the criteria to impose
stricter regulations for municipal waste disposal meth-
ods, with new standards (i.e., Federal Revised Mini-
mum Criteria for Municipal Solid Waste Landfills, part
258, subtitle D) expected to take effect in 1991. They
establish new minimum national standards for loca-
tion, design, operation, cleanup, and closure of new
and existing municipal landfills. EPA is also develop-
ing additional standards for operation of incinerators
and other combustors.
The new criteria restrict the siting options for, and in-
crease the costs of, constructing and operating land-
fills. In addition, more extensive closure plans are re-
quired to further reduce the risk that leachate and
gases will be formed or released during the post-clo-
sure period. A post-closure care period, with the first
phase expected to last at least 30 years, is now neces-
sary to maintain the landfill cover and monitor
groundwater and gas. The landfill owner or operator is
required to provide financial assurance for conducting
closure and post-closure care, including any necessary
corrective actions. No federal financing is expected to
assist state and local governments in complying with
the new subtitle D standards.
State Policies and Regulations. The states have taken
more leadership and initiative in solid waste policy
and regulation in recent years as federal funding de-
clined and virtually disappeared in the 1980s and as
long delays occurred in reauthorizing the RCRA and
in adopting new subtitle D regulations. State regula-
tory programs still tend to focus on landfill manage-
ment and other subtitle D concerns, although there is
considerable recent expansion in state programs aimed
at source reduction, recycling, and other strategies that
reflect "integrated waste management" and/or "mate-
rials management" approaches.
The states vary widely with respect not only to the
content and scope of their programs, but also with re-
spect to administrative responsibility and to the state-
local relationship. A1986 EPA survey reported that
only 15 states assign solid waste regulatory responsi-
bility to a single agency, while in the other 39, respon-
sibility is divided among from two to eight state agen-
cies. In most states there is significant involvement by
both state and local government, but a few have made
either state or local governments primarily responsible
for planning and regulating solid waste activities.27
Exhibit 3 presents a brief overview of state solid waste
programs in Washington and Oregon as examples of
some of the different approaches.
Local Policies and Regulation. Cities and counties,
and sometimes special purpose districts, are the lead-
ing actors in dealing with the solid waste volume gen-
erated by their residents and businesses. In addition to
complying with federal and state standards, cities and
counties often set additional or more stringent stan-
dards because of specific local conditions or concerns.
They also regulate solid waste activities through land
use plans. Local governments may address undesir-
able impacts inherent in solid waste operations not
covered by federal or state standards: noise, visual ap-
pearance, traffic, emergency closure, and perceived
harm to neighboring property values. The important
role of local regulations in some solid waste programs
is illustrated by the Benton County case study in ap-
pendix A.
Establishing Responsibility
for Obtaining Permits
Obtaining state and local permits for siting, construct-
ing, and operating solid waste management facilities
may be the responsibility of the governing public
agency or that of the contractor. This determination
depends on local circumstances of facility ownership
or jurisdiction. Preferably, necessary permits should be
obtained or committed prior to entering into a contract
to perform such activities, but in some cases contract
provisions may be needed to fix responsibility for ob-
taining permits after the contract is signed.
Public Agency Responsibility. If a solid waste manage-
ment facility to be operated under contract is owned
by a public agency, that agency usually obtains the
necessary state and local government permits.
26
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Chapter 3: Solid Waste Contract Issues
Exhibit 3
Examples of State Regulatory Programs
Washington
Washington state law requires counties to develop comprehensive solid waste management
plans that must include waste reduction and recycling components. The statute requires cities to
choose one of three solid waste management plan alternatives: to develop a plan separately
from the county; develop a plan concurrently with the county; or have the county develop a plan
for the city. All county and city plans are subject to approval by the state Department of Ecology
(DOE).
The DOE examines the reduction and recycling components of these plans in light of a statutory
mandate to reach an overall 50 percent recycling rate by 1994-95. (Washington currently re-
cycles about 27 percent of its total waste). The DOE's authority includes developing appropriate
regulations and overseeing compliance with standards for solid waste management. The DOE
works closely with the state Health Department, which retains primary authority to enforce solid
waste management standards as they relate to water and air quality.
A 1989 amendment requires counties to update their solid waste plans at least every five years,
and whenever requested by DOE. DOE would make such a request when the establishment of a
regional facility or other major event changes the local solid waste management environment.
This amendment also establishes a schedule with target dates for each county to complete the
first round of required revisions.
A Solid Waste Advisory Committee composed of lay citizens and representatives from various
interest groups, regulatory bodies, counties, and cities counsels the DOE Director. While the
Committee has no formal authority, its members review county and city solid waste management
plans and make recommendations to improve solid waste management practices and .policies
throughout the state.
Washington encourages local governments to use the expertise of the private sector to the fullest
» extent possible to carry out solid waste.recovery and recycling programs and provides additional
technical and financial assistance to plan for this bopperation. At the present time, the legislature
1 is particularly concerned with handling discarded vehfcle tires, and the state'also is actively pro-
moting, market development for recyclable materials. -<-.-" >/s ' '-
27
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Chapter 3: Solid Waste Contract Issues
Exhibit 3 (continued)
Oregon
Oregon law directs the state Department of Environmental Quality (DEQ) to adopt and enforce
"minimum performance standards" relating to the collection, transportation, and disposal of solid
waste, the location of disposal sites and facilities, closure and post-closure of landfills, and other s&-
pects of solid waste management. Oregon has so far not established specific recycling or waste
reduction goals, but it does require that every person in Oregon have the "opportunity to recycle."
The state has responsibility for regulating the design, management, and operation of landfills, trans-
fer stations, incinerators, and other disposal facilities, primarily through a state permit system, and
makes local governments responsible for developing solid waste management plans. The state
also assists local governments to establish landfill sites where these plans identify the need, DEQ s
also provides technical and planning advice, as well as training, to those in either the public or the I
private sector who implement solid waste management programs. State administrative rules require
submission of detailed plans and specifications for construction and operation of landfills and other
disposal facilities. "
Counties must appoint local citizen advisory committees when they submit applications for disposalf
site permits. The committees include local residents, property owners, site employees, and inter- >
ested organizations. The committees advise the counties regarding site selection, facility opera-
tions, and closure activities and provide a forum for public concerns about solid wa'ste manage-
ment ' - ;; V
Oregon imposes special requirements on the handling of a variety of wastes. Infectious waste must
be segregated from other waste at the point of generation and be dealt with under Health Division
regulations. Household hazardous waste, lead-acid batteries, and tires must be disposed of •, '
through authorized dealers or at specific depots established by the government Containers for' : <
most carbonated beverages sold in Oregon must have a refund value and are returnable-tb deal-
ers, who may not refuse to accept empty containers. ' ' ; - ', " ',
1 .1 '_'-'•; _ > " \ s ^ £ 4 *,
... ._ .,.-.,,.,,-.,-.-'..,.._ ^ t * ' ' x "J *
Site closure is closely monitored by the state through a rigorous procedure. At least five'years be-'
fore a proposed closure, the owner must supply financial assurance to close and secure,the site, to
maintain protective environmental systems around the site, and to comply with any other require- ;
ments. The state may require the owner to stay open longer than five years in order to raise addi-
tional .revenues to be used for these purposes, - '•''''-, ', ' ,
i
L_
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Chapter 3: Solid Waste Contract Issues
Public Agency to Obtain Permits. The [pub-
lic agency] shall obtain any [insert name of state
agency] or [insert name of any local government per-
mitting agency] permits or approvals for op-
erations under this contract, which shall
be in the [public agency's] name.
Contractor Responsibility. If a contractor-owned facil-
ity is involved in a public-private or intergovernmental
contract, the contractor is likely to be responsible for
obtaining any permits.
Contractor to Obtain Permits. The contractor shall
secure permits required by law to conduct activities
undertaken by the contractor.
Other contractual provisions may cite the specific laws,
rules, and regulations that apply to the contract. In
general, other permits are likely to be required in addi-
tion to those exclusively related to solid waste opera-
tions, such as building and land use permits.
Allocating Responsibility for
Implementation and Compliance
Solid waste activities must be conducted in compliance
with federal, state, and local regulations, whether or
not this is explicitly stated in a contract.
A public agency is not necessarily relieved from re-
sponsibility for compliance with state or federal regu-
lations by contracting with someone to. perform ac-
cording to standards. The question to be addressed in
developing contracts is whether the public agency or
the contractor is responsible for compliance. It is espe-
cially important to fix responsibility for state permit
compliance; if the contractor is made responsible for
obtaining a permit, the public agency may wish to
have contract language that prevents it from becoming
an enforcement intermediary between the state agency
and the contractor.
Allocating compliance responsibility in a contract de-
pends in part on the historic status of local policies and
practices related to solid waste management activities.
For example, when these policies and practices are of
long standing, the amount of risk is generally clear and
may be assigned to the contractor without difficulty.
When related standards by a higher authority are
evolving, uncertainty increases, and contract provi-
sions to renegotiate or to change compensation re-
quirements may be inserted to provide for adjustment.
This section illustrates four contract provisions, each
focusing on the assignment of various degrees of re-
sponsibility for implementation and compliance to the
contractor.
Contractor Has General Responsibility. Under this
provision, the contractor must keep informed of all
pertinent legal requirements regarding its solid waste
management activities. This provision simply states
the contractor's responsibility to comply with such
laws, without enumerating specific codes.
Compliance With Laws. The contractor
shall comply with laws, rules, and regula-
tions that apply under this contract and
shall secure permits required by law to
conduct activities undertaken by the con-
tractor.
Contractor Has General Responsibility With Partial
Enumeration. This example illustrates a more specific
identification of the applicable regulations.
Compliance With Federal, State, and Local
Requirements. The contractor agrees to
comply with federal, state, and local regu-
lations in effect on the date of this con-
tract, including, but not limited to, the fol-
lowing:
This provision is followed by a list of state and local
regulations that apply. In addition to those dealing
specifically with solid waste, others might include la-
bor laws, motor vehicle and transportation regulations,
fire regulations, and health regulations. This list re-
duces ambiguity, but leaves the contractor with the
obligation to know about other laws that could apply.
Contractor is Responsible Only for Specific Laws and
Future Amendments. A significant feature of the next
provision is the contractor's obligation to observe fu-
ture amendments to state requirements. Prior ex-
amples limit contract obligations to requirements in
effect on the date the contract is signed. The "future
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ChapterS: Solid Waste Contract Issues
amendments" feature can be added to any of these
provisions, but its suitability depends on the nature of
the specific contract.
Compliance With Cited State Laws. The
contractor shall comply with the stan-
dards, levels of service, and other require-
ments contained in [insert applicable citations to
state laws] and [insert applicable citations to state
administrative rules], and future amendments to
these laws and rules.
An obligation to comply with future amendments of
laws places an uncertainty risk on the contractor,
which is commonly offset by higher charges or a provi-
sion to allow for adjustments in charges when the laws
change. Change adjustments are illustrated in the dis-
cussion of compensation (p. 31).
Contractor is Responsible Only for Existing Laws.
This provision assumes that state laws provide for
compliance with federal requirements and the local
public agency does not have supplemental laws that
need to be identified in the contract. The consequences
of a breach of contract must be addressed in another
provision, which usually gives the governing body the
right to rescind the contract, receive damages, or both.
Permit Compliance. The contractor shall
comply with the conditions set forth in the
[insert title of state agency] [disposal site] permit
and shall be subject to other state laws
that apply at the time of execution of this
contract. A violation of these require-
ments, if found to be substantial and mate-
rial to the interest of the [public agency], may
be deemed by the governing body to be a
breach of this contract.
Additional provisions are needed to address compli-
ance with changes in state permit requirements. If a
contract is for a relatively short period or allows termi-
nation after reasonable notice, concern with potential
permit changes is less important.
Compliance Monitoring: State v.
Local Responsibility
If a contractor is the state permittee, compliance moni-
toring is the state agency's responsibility and no ex-
plicit provision for monitoring is needed in the local
contract. However, if the local jurisdiction has imposed
requirements beyond those enforced by the state, or if
the public agency rather than the contractor holds the
state permit, the following provision may be appropri-
ate:
Monitoring By Public Agency. The [public
agency] shall assume full responsibility for
installation of equipment and facilities to
monitor the facilities required to be moni-
tored under [insert reference to state law]. The
[public agency] shall collect and provide for
the appropriate analysis of monitoring
samples at the [public agency's] expense.
Escape Hatch for Contacts
Occasionally, there is a substantial, and very likely un-
certain, time lapse between the date of entering into
the contract and the date when work, other than
preparation steps, begins. The next provision provides
a very broad (some may feel too broad) opportunity
for either party to terminate the contract prior to the
beginning of actual work.
Obtaining Authorizations. Applicable envi-
ronmental and other governmental permits,
licenses, and authorizations that are nec-
essary for the [design, construction, startup, con-
duct of acceptance tests and operation] of the fa-
cility, shall have been obtained before the
closing date, which is the date on which
[actual construction is authorized]. After the date
of signing of this contract and on or before
the closing date the righlts, obligations, and
liabilities of the parties to this contract
may be terminated by either party to the
contract if any of the following shall occur:
(a) There is a change in, addition to, or
deletion of, a provision of an applicable
federal, state or local law, or an appli-
cable federal, state, or local regulation
under the law or an interpretation of the
law or regulation by an applicable
regulatory authority.
(b) A bill has been introduced in either
house of the United States Congress or
the state legislature of any relevant
state, that would, if effective, make the
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Chapter 3: Solid Waste Contract Issues
execution of this contract, compliance
with its terms and conditions, or the
consummation of the transactions
contemplated under the contract a
violation of a law or regulation, or
materially and adversely affect the
economic benefits to be derived from
consummation of the transactions
contemplated by this contract.
(c) An action, suit, proceeding, or official
investigation has been overtly threat-
ened, publicly announced, or com-
menced by a federal, state, or local
government authority or agency, in a
federal, state or local court, that seeks
to enjoin, assess civil or criminal penal-
ties against, assess civil damages
against or obtain a judgement, order or
consent decree with respect to a party
to this contract as a result of the
party's negotiation, execution, delivery,
or performance under the contract or
its participation or intended participa-
tion in any transaction contemplated
thereby.
(d) An action, suit, proceeding, or official
investigation has been overtly threat-
ened, publicly announced, or com-
menced by a federal, state, or local
government authority or agency, in any
federal, state, or local court, that af-
fects the validity of any permit, license,
or other governmental or legislative
authorization necessary for the con-
struction or operation of the facility.
These provisions to ensure compliance with regula-
tions illustrate common elements that may be needed
in a contract. Each local solid waste management situa-
tion has unique conditions that may affect these broad-
based provisions. In addition, each public agency may
have other specific concerns related to the nature of the
facility or operation involved, which might also be
protected in the contract.
Compensation
Compensation as Essential Element
of Contract
Compensation in money or in some other form is an
essential legal element of a contract, and fair compen-
sation for services or facilities provided under the con-
tract is essential to satisfactory contract performance.
Money may flow either way under a public agency
° contract: from the agency to the contractor for services
performed, from the contractor to the agency for shar-
ing of contract revenues or for other purposes, or both.
Sources of Revenue for Solid Waste Functions and Ac-
tivities. The three main sources of compensation in
solid waste contracts are taxes, service charges, and
sale of materials. If user fees provide the revenue, the
funds may come directly from charges applied at the
waste source (collection fees) or from charges applied
where the waste is deposited (tipping fees). Either fee
may be collected by the public agency, which then
pays the contractor. Or, the contractor may collect the
fee and distribute some agreed portion to the public
agency.
Operations such as a waste-to-energy plant or a recy-
cling or composting program may also bring in rev-
enue from sale of products. However, because these
product revenues generally are less than operation
costs, contracts provide additional compensation to
contractors providing these services. (Many recycling
operations have been community service activities
where costs are low because of the use of volunteers.
The move toward more extensive recycling efforts in-
volving higher volumes and more equipment is shift-
ing this activity away from volunteerism.)
Money Flows from Agency
to Contractor
Provisions for payments to contractors vary so widely,
depending on the nature of the contract, that only a
few examples can be presented here. The first example
illustrates a simple provision for payment under a
short-term contract with a firm that has undertaken to
receive waste, recover recyclable materials, and haul
31
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ChapterS: Solid Waste Contract Issues
the remainder to a landfill. The more recoverable ma-
terial the contractor separates from the mixed waste
received, the more money the contractor keeps.
Payment to Contractor. For performance
under this contract the contractor shall be
paid [$J per ton [of waste received at the transfer
station] from which the [public agency] will
withhold [$ ] per ton tipping fees for each
ton hauled to the [landfill].
More elaborate provisions are required for longer-term
contract commitments. In the following example, a
public agency has contracted the operation of its pub-
licly owned landfill to a private firm for a period long
enough to allow the firm to amortize its initial invest-
ment and to assure its ability to obtain financing for
the operation:
Payments. The contractor agrees to accept
as full payment for services under this con-
tract [over a 20 year period] the lump sum of [$
] and a unit price of [$J per ton with pay-
ments and adjustments as specified in this
contract. The contractor agrees that the
lump sum and unit price represent a true
measure of the labor and materials re-
quired to complete the contract, including
allowances for profit and costs such as
taxes and overhead.
(1) The contractor will be paid the lump
sum price in [240] equal monthly install-
ments over a [20] year period. It is ex-
pressly understood by the contractor that
payment of the lump sum price by the [pub-
lic agency] ensures waste capacity in the
disposal site for a total of [ ] tons. Even
if this capacity is not fully utilized within
the [20] years, the [public agency] is under no
obligation to continue monthly payments
beyond the [20] years. The estimates of an-
nual amounts of solid waste used to assist
in selecting the low-cost bidder do not
place an obligation on the [public agency] to
provide a specific amount of waste in any
year.
(2) For work under this contract the
[public agency] will make monthly payments
to the contractor according to the estab-
lished rates. On or about the [eighth] day of
each month, the contractor will submit to
the [public agency] a billing that indicates the
quantity of waste disposed of, including a
separate quantity for the calendar month
just past. By the [25th] day of the month the
[public agency] will pay the contractor [95]
percent of the estimated value of the unit
price work and the lump sum amount due
less any previous payments.
Money Flows from Contractor
to Agency
A contractor may collect revenue directly from users
or from a public agency other than the one with which
it has contracted. In either case, the contractor may be
required to pay part of these revenues to the contract-
ing public agency. The contract must specify the
amount and method of this flow. Other circumstances
may also require a contractor to pay the public agency:
for example, when the agency incurs extra costs, such
as monitoring or administration, specific to the con-
tract. -;.,..
The following provision might be used when the con-
tractor hills and collects revenue from users or other
public agencies:
Payment to Public Agency. The contractor
shall pay a [quarterly] fee to the [public agency]
of [ ] percent of the gross cash receipts
from revenues collected by the contractor.
The contractor shall keep complete and
accurate books which shall reflect the
gross receipts from services rendered in-
side the [county outside city boundaries/city].
These books shall be balanced at least an-
nually. A statement showing the basis for
payments shall be furnished the [public
agency] on each payment date. The [public
agency] has the right to inspect the books
and records of the contractor at all reason-
able times and places, and the contractor
shall render reasonable assistance to the
[public agency], its officers, agents and em-
ployees when the [public agency] desires to
audit or inspect the books and records.
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Chapter 3: Solid Waste Contract Issues
The next provision would apply when the contractor
collects charges (such as a tipping fee) from users, and
the public agency incurs specific costs because of the
contractor's activities:
Cost to Public Agency. The contractor shall
pay to the [public agency] an [annual] fee of [$J
for the cost of monitoring the contractor's
activities under the contract.
Adjusting Provisions for
Compensation
Almost any contract needs to provide for contingen-
cies that require some adjustment in the contractor's or
public agency's compensation. Provisions for adjusting
compensation during the life of thecontract reduce the
contractor's uncertainty and should result in lower bid
prices.
This is especially true for contracts that extend for long
periods of time — an increasingly common circum-
stance in the solid waste field due to regionalizarion,
newer and more expensive technologies, and, espe-
cially, new post-closure monitoring requirements for
landfills.
Compensation adjustment provisions are of two main
types: automatic and negotiated.
Automatic Adjustment. The most popular form of au-
tomatic adjustment uses the Consumer Price Index. An
example of such a provision that might be used with
the 20-year landfill contract illustrated above might be
(1) Automatic Payment Adjustment. The
unit price shall be adjusted upward or
downward annually, starting in [19_], by
[100] percent of the change in the Con-
sumer Price Index. The price adjustment
change at the beginning of a year shall be
in a percentage amount equal to the
change in the index between the previous
year and the immediate past year times
[100] percent. The index will be a 12-month
average for the immediate past year minus
a 12-month average for the previous year
divided by the previous year's average us-
ing the index described below.
(a) The Consumer Price Index will be
based on the index entitled ["West-A"] from
the U.S. Department of Labor, Bureau of
Labor Statistics, publication entitled: "Con-
sumer Price Indexes, Pacific Cities and
U.S. City Average." Percent changes in the
index shall be calculated with the base
year of [December 1977] until the Bureau of
Labor Statistics (BLS) publishes data on a
new base period. Calculations shall be
made from data on the new base from that
time forward.
(b) If the BLS series specified in sub-
section (a) above is discontinued but BLS
designates an index with a new title, code
number or table number as being the con-
tinuation of the index cited in subsection
(a) above, the new index will be used. If the
specific index ["West-A"] is discontinued but
the "U.S. City Average" remains, this latter
index will be used. If discontinuation does
not provide one of these alternatives, the
contracting parties shall agree upon a sub-
stitute series within [two] months of the be-
ginning of the new year.
Negotiated Adjustment. Some contracts need to in-
clude provisions for compensation adjustment that
cannot be based solely on some objective criterion such
as the cost of living index. This is true even for short-
term contracts that anticipate a need for change orders,
such as the following example:
Pay for Additional Work. If the contractor
performs additional authorized or required
work that is not specified under the origi-
nal contract or any contract amendments,
it shall be performed and paid for accord-
ing to this section. However, this section
shall not apply to work required to comply
with changes in a law, or required permit.
(a) Within [14] calendar days after the
contractor has received a request from the
[public agency] for additional work, the con-
tractor shall submit an itemized proposal
stating the actual costs to the contractor
for performing the work and the effect, if
any, on the contractor's performance of the
33
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Chapter 3: Solid Waste Contract Issues
existing contract work by reason of the ad-
ditional work. The contractor's proposal
shall be based on the least costly method
of performing the additional work in accor-
dance with all provisions of the contract.
Upon receipt of the contractor's proposal
the [public agency] shall have authority to or-
der the contractor to perform the relevant
additional work, whether or not the [public
agency] accepts the contractor's proposal,
and the contractor shall comply with the
order. However, no request for a proposal
by the [public agency] under this subsection
shall be construed as authorization for the
contractor to perform the additional work
covered by the request. To obtain authori-
zation to perform any additional work, the
contractor must be notified in writing by
the [public agency] that the contractor is or-
dered to proceed with the work. If the [pub-
lic agency] does not order the contractor to
perform additional work, the contractor
shall not be entitled to any reimbursement
for the work in the contractor's proposal.
(b) Payments or credits for additional
work shall be no greater than the
contractor's actual costs for performing
the work plus [15] percent of the actual
costs. The contractor shall keep and main-
tain accurate records of the actual costs of
the additional work in the same manner as
other cost records are kept under this con-
tract. The contractor acknowledges that
the payment formula in this subsection for
additional work includes all payment for
the interruption of schedules, extended
overhead, delay or other impacts, claim or
ripple effect, and the contractor specifi-
cally waives any reservation or claim for
additional compensation for any additional
work. In the event that the [public agency] or-
ders the contractor to perform relevant ad-
ditional work but refuses to pay the
amount which the contractor proposes for
the work, the contractor shall promptly
proceed with performance of the work in
accordance with the order. If the contrac-
tor and the [public agency] cannot agree on
the amount of payment for the additional
work performed, the matter shall be sub-
mitted to arbitration under [the arbitration pro-
visions of the contract].
Somewhat longer-term contracts may require broader
provisions for adjusting compensation. For example, a
contract for collection and/or transportation of waste
for a five-year period might include a provision along
the following lines:
Price Adjustment. Except as noted in this
section, the contractor will not be allowed
an adjustment in contract prices, since the
contractor should have established the
prices in the contract bid based on the
contractor's estimate of the contractor's
costs over the [five-year] life of the contract.
For a change in the con-tractor's bid price
to be approved, the contractor must submit
clear documentation to the [public agency]
showing the change in costs. If the change
in costs is clearly shown, the [public agency]
will adjust the bid price accordingly. A
change will be allowed only if one of the
following conditions exist:
(a) These contract specifications are modi-
fied.
(b) A state or federal ruling modifies the
existing regulations affecting the
contractor's operations.
(c) The owner of the [landfill] changes the
amount of the tipping fee to be col-
lected from the contractor.
(d) The location of the solid waste disposal
site is changed from the [present landfill]
to another site.
(e) The contractor's price for fuel changes
by more than [twenty] percent. The price
of fuel shall be the [average "Dealer Buying
Price" as established in the Lundberg Newsletter].
(f) The [fuel taxes, PUC rates or weight-mile tax
rates] paid by the contractor change.
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Chapter 3: Solid Waste Contract Issues
(g) The tonnage delivered to the contractor
changes by more than [15] percent, in
which case, the [public agency] will re-
quest the contractor to submit cost
documentation and shall adjust the bid
price accordingly. For purposes of this
contract, an initial rate of [J tons per
year is assumed.
Another contingency that must be faced in longer-term
solid waste contracts is the probability that applicable
federal and state laws and regulations will change dur-
ing the contract period. Many contractors, aware of
regulatory uncertainties, will insist on protection
against unanticipated costs stemming from these kinds
of changes. The following example illustrates one re-
sponse to this situation.
Payment Upon Change in Law. Upon peti-
tion of the contractor and approval by the
[public agency] under the limitations, condi-
tions and procedures of this section, the
[public agency] shall pay 1OO percent of the
contractor's reasonable, actual increased
costs of performing the contract if the in-
creased costs result from a change in law
or permit requirements and the change
was adopted after the deadline for submis-
sion of bids leading to this contract, provid-
ing the costs result from applying the least
costly means of ensuring full compliance
with the relevant change. The contractor
must fully demonstrate and document the
need for the requested reimbursement to
the [public agency's] satisfaction and ap-
proval.
(a) The [public agency] shall reimburse
the contractor for increased costs due to a
change in [local or county] laws or permit re-
quirements only if the change also applies
to businesses outside the waste manage-
ment industry in the relevant [local or county]
jurisdiction. No compensation will be paid
for any increased costs due to a change in
[local or county] laws or permit requirements
that apply only to the contractor, the
contractor's activities under this contract,
or to persons or entities engaged in the
waste management industry.
(b) The [public agency] shall reimburse
the contractor for increased costs due to
an increase in the rates of [federal or state]
taxes, fees, or surcharges only if the in-
crease does not also apply generally to
businesses other than the waste manage-
ment industry.
(c) No reimbursement for cost in-
creases shall be allowed for any cost in-
creases that are in any way attributable to
the contractor's property, to conditions,
structures, operations, or activities at the
contractor's property, or to conditions,
structures, operations, or activities caused
by the contractor or the contractor's sub-
contractor, employe, agent, or servant, or
which are otherwise within the
contractor's control.
(d) The contractor shall keep the [public
agency] informed as to whether any pay-
ment obligation resulting from a petition
under this section remains necessary.
Upon the [public agency's] request, the con-
tractor shall immediately provide the [public
agency] with all documents or information
or other evidence in the contractor's pos-
session or control that the [public agency] re-
quests to determine whether there is a
continuing need for reimbursement under
this section. Upon determination by the
[public agency] that the need for payment un-
der thus section has expired or that pay-
ment was made in error, the [public agency]
may terminate reimbursement under this
section and the contractor shall remit to
the [public agency] any overpayment within
[30] days of service upon the contractor of
the [public agency's] determination.
(e) The [public agency] shall determine,
subject to its accounting and budget limi-
tations, the method and manner of any pay-
ment under this section. The method may
include installment payments over an ex-
tended period of time, even extending be-
yond the termination or completion date of
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Chapter 3: Solid Waste Contract Issues
Exhibit 4
Franchise Rate Adjustments
(1) Reasonable Compensation. The franchisee may charge and collect reasonable
compensation from persons to whom it furnishes services, and according to
its published rate schedule as contained in a certified copy provided to the
[public agency]. The term "reasonable compensation" may be defined by the
governing body after a study and consideration of the following.
{a) Rates for similar service under similar conditions in other areas.
(b) The effect of local conditions on costs.
(c) An amount which allows the contractor to earn a reasonable rate of re-
turn.
An alternative to section (1) might be
(1) Grounds For Rate Change. The governing body shall support a decision to re-
vise rates with findings off fact. In making its findings, the governing body
may consider rates charged by other persons performing the same or similar
service, and the factors that were relevant to those rates, and shall consider
the following.
(a) Current and projected revenue and expense.
(b) Actual and overhead expense.
(c) The cost of acquiring and replacing equipment.
(d) Management costs.
(e) The cost of providing future added or different service.
(f) Promoting and providing source-separation services.
(g) A reasonable return to the contractor for doing business.
(h) Research and development.
(i) Systems to avoid or recover the costs of bad debts.
(j) Interest payments.
(k) Other factors the contractor can demonstrate affect the cost of provid-
ing the service.
(2) Rate Examination. The governing body reserves the right to examine the rate
structure of the contractor at any time during the period of the contract and
to make rate changes that, in the discretion of the governing body, are re-
quired.
36
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Chapter 3: Solid Waste Contract Issues
Exhibit 4 (continued)
An alternative to section (2) might be,
(2) Schedule For Rate Changes. The rates at the time this contract takes effect
shall be subject to review and change only one time in a calendar year, with
the following exceptions.
s * \
(a) Upon application by the franchisee and without prior notice, the govern-
ing body may grant an interim, or emergency rate for new or special ser-
vice. The governing body may specify the duration of the rate or con-
tinue it until final determination by the governing body on the next over-
.all rate adjustment ^ -' '
s^ ' . s N <->'• - " V
(bj In addition to an.fannuai] rate adjustment, a supplemental rate adjustment
. * may be requested by the franchisee when the cost of service is in-
, < ' creased because of compliance with governmental regulations, or when
^ there is a substantial increase Jn a single expense that was not antici-
pated at the time of^the last rate adjustment, or when the total cost of
service exceeds projected costs by [five] percent or more.
(31 Rate Change Proposal. The franchisee shall file with the [public agency] a new or
revised rate schedule at least [90] days prior to any contemplated change.
(a)
(b)
The schedule shall be examined by the governing body in a public hear-
ing. The governing body may either approve or deny the proposed rate
change, or may request additional information from the franchisee. A de-
cision by the, governing body on a new or revised rate schedule shall be
made [30] days before the effective date of the contemplated change, un-
less the delay is caused by failure of the .governing body to meet or ob-
tain a quorum to conduct business. Notification of the decision of the
governing body shall he made to the franchisee by certified mail, return
receipt requested.
In the event of disapproval, the franchisee shall not put the new rate
schedule into effect, but may file with the [public agency] further informa-
tion to justify the rate schedule changes. Upon receipt of the new infor-
matipn, the governing body shall determine whether it will rehear the re-
quest, s, ^ ,
(4) Access to Records. The governing body may require annual statements and
other records to be furnished to the [public agency] to carry out the intentions
of this section.
•>! ; fr f i '->,-
(5) Adjusting An Advance Payment Agreement. An approved rate schedule revision
T shall not apply to persons and groups who have an advance-payment agree-
ment with the franchisee until the normal expiration of the advance-payment
agreement.
37
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Chapter 3: Solid Waste Contract Issues
the contract. The determination with re-
gard to payments shall take into consider-
ation the contractor's reasonable and ac-
tual financing costs.
Regulatory change could conceivably reduce as well as
increase costs. The same would be true for other types
of compensation adjustments illustrated above (e.g.,
change orders could delete as well as add work). Ap-
propriate provisions should be included to reduce
compensation under such circumstances.
Franchise Rate Adjustment. Many solid waste activi-
ties, including solid waste collection and landfill opera-
tions, are carried on under franchises rather than con-
tract arrangements. As is the case with longer-term
contracts, franchises that include rate regulation by the
public agency should provide for rate adjustment over
time. Illustrative rate adjustment provisions of fran-
chise ordinances are presented in Exhibit 4.
Liability
Contracts should attempt to fix liability and/or finan-
cial responsibility commensurate with relative contract
responsibilities of agency and contractor. The three
major kinds of liability are criminal, contractual, and
tort. This section examines the latter two. Possible
agency liabilities from issuance of a permit or license
are not reviewed.
Contract Liability
The contractor's liability in contract for defective per-
formance is usually covered by requirements for per-
formance bonds and for withholding payments under
certain circumstances.
Performance Bond Requirement. A performance bond
is "a guarantee by a third party (surety) mat the entity
to be bonded (principal) will perform the work speci-
fied. The surety decides whether or not to bond the
principal after reviewing the technical capability of the
company and its credit worthiness. If the surety is
ever called on to pay, he or she will subsequently pro-
ceed against the principal to recover such payment.
Therefore, a bond provides no protection to the com-
pany that is bonded, but rather to the owner (obligee)
of the project."28
The following provision provides for a performance
bond to assure the contractor's performance under the
contract.
Performance Bond. Within [10] days of no-
tice of award of this contract, the contrac-
tor shall secure and deliver to the [public
agency] a performance bond acceptable to
the [public agency] in the same amount as
the amount of the contract. The bond shall
be provided by a surety company autho-
rized to transact business in the [state] and
shall have the surety's seal and be signed
by the surety company's attorney-in-fact.
Power of attorney for the attorney-in-fact
shall be attached to the bond.
Retainage. Contracts commonly provide for retaining
portions of payments estimated as due the contractor,
as illustrated below.
Retainage. The [public agency] shall retain
[5] percent of the value of completed work
except as otherwise authorized below.
Upon written request of the contractor, the
[public agency] will deposit amounts withheld
as retainage in an interest bearing account
in a bank, savings bank, trust company, or
savings association for the benefit of the
contractor and with interest earned accru-
ing to the contractor.
(a) When the contract work is [50] per-
cent completed, the [public agency] may re-
duce or eliminate the retainage on the
progress payments for the remaining work
accomplished.
(b) When the contract work is [97-1/2]
percent completed, the engineer may re-
duce the retained amount to 1OO percent of
the value of the contract work remaining.
Withholding Payments. Under appropriate circum-
stances the public agency must also be able to with-
hold progress payments. This may include reducing
amounts held in retainage. The following provision
illustrates this option.
38
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Chapter 3: Solid Waste Contract Issues
Withholding Payments. The [public agency]
shall have the right to withhold from pay-
ments due the contractor and to withdraw
from funds retained by the [public agency]
such sums as necessary, in the [public
agency's] sole and exclusive opinion, for the
purposes listed below in this section. The
right to withhold payments under this sec-
tion is In addition to the right to retain [5]
percent of contract payments under [sec-
tion]. Action taken under this section shall
not affect other rights or remedies of the
[public agency] granted by other provisions of
this contract or by law and does not relieve
the contractor from the consequences or
liabilities arising from the contractor's acts
or omissions.
(a) To protect the [public agency] against
any loss or damage that may result from
the events listed in this section and any
other negligence or unsatisfactory work by
the contractor.
(b) Failure of the contractor to perform
or abide by an obligation under the con-
tract, including, but not limited to, failure
to maintain satisfactory progress.
(c) Claims against the contractor or the
[public agency] relating to the contractor's
performance of work.
(d) Damages by the contractor to others
not adjusted.
(e) Failure of the contractor to make
proper payment to the contrac-tor's em-
ployees material suppliers or subcontrac-
tors.
(f) Probable filing of a claim against
the [public agency] or the contractor.
Alternative Provisions. The public agency and the
contractor may both prefer to allow for the replace-
ment of performance bonds with retainage over time.
If the contractor finds it more economical to avoid the
cost of maintaining surety bonds and the public
agency needs the continued protection, the following
provision may prove useful. It varies from the more
typical surety bond and retainage required in many
contracts by incremental replacement of the surety
with the cash retainer. This provision may be appro-
priate for some long-term contracts.
Performance Bonds. Within [10] days of no-
tice of award of this contract, the contrac-
tor shall secure and deliver to the [public
agency] irrevocable letters of credit or per-
formance and materials bonds on the forms
provided by the [public agency] which shall
secure the full, faithful and complete per-
formance of the contract in the initial
amount of [$_] and prompt payment of per-
sons supplying labor or materials for per-
formance of the contract in the initial
amount of [$]. Not later than [ninety] days
prior to each contract anniversary date the
contractor may deliver a reduced letter or
bond, to be effective on the anniversary
date. The amount of the reduction shall be
no more than the amount of contract pay-
ments that the [public agency] has retained
by the anniversary date. Except as pro-
vided in subsection (a), no further bonds or
letters of credit shall be due after the [pub-
lic agency] has retained payment from the
contractor equal to the initial amounts
specified above.
(a) The total amount of funds retained
by the [public agency] may reach the initial
amounts specified above and then fall be-
low that amount, or the amount of
retainage may fall below [5] percent of the
total contract obligations to pay the con-
tractor, due to the [public agency's] exercise
of its right to deduct funds from retainage.
If either of these events occur, the [public
agency] shall have the right to require the
contractor to secure and deliver new let-
ters of credit or bonds in proper form
within [90] days of service of written notice
of the {requirement from the [public agency].
The amount of the new letters or bonds
shall be not less than the initial required
amounts less the amount of any existing
retainage and shall be continued, but may
39
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ChaptarS: Solid Waste Contract Issues
be adjusted on subsequent contract anni-
versary dates in the same manner as pro-
vided for adjustment of the initial docu-
ments, until the retainage is again equal to
the initial bond amounts.
(b) Failure to deliver required letters of
credit or bonds to the [public agency] within
the time specified shall constitute a de-
fault under the terms of the contract and
under the terms of any letter of credit or
bond then in effect, in addition to other
remedies for default, to remedy this de-
fault, the [public agency] shall have the right
to retain payments due the contractor un-
der this contract until the total amount of
retainage is restored to the initial bond
amounts but not to exceed the permissible
retainage amount of [5] percent of total
contract payment obligations.
(c) The surety or banking institution fur-
nishing the bonds or letters of credit shall
deliver the appropriate bonds or letters to
the [public agency] within [10] days of award
of the contract. The surety or banking in-
stitution shall have a sound financial stand-
ing and a record of service satisfactory to
the [public agency] and shall have a rating of
at least A and the appropriate class for the
relevant bond amounts under Best's Rating
System and shall be authorized to do busi-
ness in the state of I ]. The attorney-in-
fact (resident agent) who executes these
bonds on behalf of the surety must attach
a notarized copy of his/her power of attor-
ney as evidence of his/her authority to bind
the surety on the date of execution of each
bond.
(d) The contractor shall from time to
time take additional action and furnish the
[public agency] additional documents and in-
struments that the [public agency] reason-
ably requests to secure performance of the
contractor's obligations under this con-
tract. No requirement of this section is in-
tended to, nor shall, limit or qualify the li-
abilities and obligations assumed by the
contractor under this contract.
TortLiabUity
Generation and management of solid waste present
considerable opportunities for torts such as nuisances.
Tort liability for a party to a contract may result di-
rectly from that party's conduct, or it may result vicari-
ously. A public agency may have vicarious liability for
negligent actions of the contractor and should, there-
fore, protect itself through provisions for indemnifica-
tion and by requiring the contractor to carry certain
insurance.
The contractor generally has the risk of tort liability,
but is required to demonstrate financial responsibility
by maintaining insurance under policies that also pro-
tect the public agency. Ordinary risks, such as vehicle
collision and property damage, are not difficult to ad-
dress, but solid waste operations can have features that
standard insurance policies do not cover. For example,
environmental impairment may not be insurable.29
Again, even if the contract places the burden on the
contractor, the public agency may not be entirely free
of risk. If the contract language is silent and impacts
are discovered after work is under way, the public
agency may have the responsibility to overcome the
problem.
Landfills and waste-to-energy plant operations have
the greatest risks of claims of damage because of pollu-
tion, contamination, or chemical release. Transport
activities carry the greatest risk of vehicle accidents
and also have risks of waste spillage. Contracts that
relate to facilities owned by the public agency nor-
mally leave more liability risk with the public agency.
Franchised activities or dther contracts that leave own-
ership and operation with a private company leave
less risk with the public agency.
General Indemnification of Public Agency. The first
two provisions below place liability responsibility on
the contractor. The insurance policy amount required
of the contractor depends on the nature of the opera-
tion and on state laws. An indemnity agreement mini-
mizes the public agency's risks that may exist because
of actions of the contractor.
Indemnity Agreement. The contractor
agrees to hold harmless and indemnify the
[public agency] from and against any claim or
40
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Chapter 3: Solid Waste Contract Issues
award for damages to any person or prop-
erty caused as a result of any act of the
contractor under this contract.
(1) The contractor shall be liable for all
damages or injuries to persons or property
caused by the negligence or mismanage-
ment of the contractor or any of its employ-
ees while engaged under the terms off the
contract. Should the [public agencyl or any
of its officers, agents, or employees in the
scope of their employment be sued for
damages caused wholly or in part by the
operations of the contractor under the con-
tract, the contractor shall be notified in
writing of the suit and it shall be the
contractor's duty to defend or settle the
suit. Should a judgement go against the
[public agency] or its officers, agents, or em-
ployees, the contractor shall further indem-
nify the [public agency] for costs and
attorney's fees. The record of judgement
against the [public agency] or any of its offic-
ers, agents, or employees in such a case
shall conclusively entitle the [public agency],
its officers, agents, and employees to re-
cover against the contractor.
(2) The contractor shall purchase an in-
demnity insurance policy with a company
licensed to do business in the state with
limits of liability as specified in the con-
tract, which policy shall name the [public
agency], its officers, agents, and employees
as the additional insured.
The alternative language below achieves results simi-
lar to those above, and expressly addresses the selec-
tion of legal counsel to represent the public agency.
Other points of special concern can be detailed in a
similar manner.
Indemnity Obligation. The contractor shall
defend, save harmless, and exempt the
[public agency], its elected officials, officers,
and employees from and against suits, ac-
tions, legal proceedings, claims, demands,
damages, costs, expenses, and attorney's
fees resulting from injury to persons or
damages to property out of work done in
performance of this contract. The [public
agency] reserves the right to retain counsel
of its own choice at its own expense or, in
the alternative, approve counsel obtained
by the contractor. The insurance coverage
required by this contract in no way lessens
or limits the liability of the contractor un-
der this contract, and the contractor may,
at its own expense, procure additional in-
surance.
Reciprocal Indemnity Provisions. In the next provi-
sion, each party to the contract acknowledges a re-
sponsibility. This arrangement is particularly appro-
priate when the contractor is operating only part of the
public agency's program and both parties are active at
the same physical site.
Reciprocal Indemnity Agreement. The con-
tractor agrees to and does assume all risks
of loss or injury to ... persons coming upon
the [disposal site] and shall indemnify, save
harmless, and defend the [public agency] for
and from civil penalties, claims, damages,
suits, judgements, costs, or expenses aris-
ing out of any activity of the contractor on
the [disposal site]. The [public agency] agrees
to and does assume all risks of loss or in-
jury to people, or persons, agents, employ-
ees, customers, or other persons coming
upon the [disposal site] and shall indemnify,
save harmless, and defend the contractor
for and from civil penalties, claims, dam-
ages, suits, judgements, costs, or ex-
penses arising out of any negligent activity
of the [public agency] on the [disposal site]. The
contractor shall have in effect during the
term of the contract, general liability insur-
ance in the amount of not less than [$_]
and shall have the [public agency] as an addi-
tional insured. If the cost of the insurance
increases more than U percent due to no
fault of the contractor, over the cost in-
curred by the contractor at the time this
contract is executed, the contractor may
request the [public agency] to increase the
service fee by the amount of the increased
cost.
Required Insurance Coverage. The last provision lists
the insurance the contractor must carry.
41
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Chapter 3: Solid Waste Contract Issues
Insurance Required. The contractor shall
obtain and maintain the following insur-
ance, as approved by the [public agency], and
the [public agency] shall be named as an ad-
ditional insured as respects this contract.
The insurance carried by the contractor
shall be primary over any insurance carried
by the [public agency].
Then list the required insurance and the minimum
amounts acceptable. Coverage may include the fol-
lowing:
• workers' compensation coverage required by the
state or evidence of state-approved self-insurance;
• comprehensive general liability coverage, with the
deletion of specified common exclusions if
appropriate;
• comprehensive automobile liability coverage;
• umbrella liability coverage.
Summary
The sample contract provisions in this chapter have
addressed the issues of regulatory compliance, com-
pensation and liability. These are issues that warrant
special attention in preparing contracts related to solid
waste management.
Regulations that originate at the federal, state and local
level all may need to be addressed through contract
provisions. In addition to identifying the regulations to
be observed, compliance depends in part on some sys-
tem of monitoring. This may be by the contracting lo-
cal public agency but also might be left to the state. The
local public agency's liability risk is among the consid-
erations evaluated in determining the scope and na-
ture of the compliance monitoring system.
Cost to the citizens is always of concern to a local pub-
lic agency, whether paid directly by the users or indi-
rectly through the public agency. Of course, costs un-
der the contract will be related to compliance require-
ments and can also be affected by liability risk to the
contractor. The appropriate mix of contract provisions
calling for regulatory compliance, a compensation sys-
tem, and a sharing of liability risk depends upon deci-
sions unique to each contract proposal. The sample
contract provisions are intended to identify some ap-
proaches, but do not necessarily provide exact lan-
guage suitable to individual contracts.
42
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Kndnotes
Endnotes
1 U.S. Congress, Office of Technology Assessment, Facing America's Trash: What Next for Municipal Solid Waste? (Wash-
ington, D.C.: USGPO, 1989), pi 4.
2 The RCRA expired in 1988, but its provisions have remained in force by virtue of language in annual EPA appropria-
tions acts since that time. RCRA reauthorization is being given high priority in the current (1991) session of Congress.
3 See R.C. Beck and Associates et al., An Analysis of the Potential for Regionalization of Solid Waste Management and Facili-
ties, Issue Paper No. 8, Washington State Solid Waste Management Plan, June 15,1990.
4 Martha A. Shulman, "Alternative Approaches for Delivering Public Services," Urban Data Service Reports v. 14 no. 10
(Washington, D.C.: International City Management Association, 1982).
5 Portland Metropolitan Service District, Solid Waste Information System Report (Portland, Oregon, 1990), pp. 9-10.
6 American Bar Association, The Model Procurement Code for State and Local Governments (Washington, D.C., 1981). For
the four states in EPA Region X, the citations to state public contracting laws are Oregon, ORS 279.011 et seq.; Alaska
AS 36.30 et seq.; Idaho, 1C 50-341 et seq.; and Washington, RCW 39.34.010 et seq.
'Intergovernmental contractual arrangements must be distinguished from arrangements that create entirely new gov-
ernmental entities to perform public services such as solid waste management. Independent units of government (in-
cluding special districts and authorities) are usually created by state statutes, or by local action pursuant to general
state enabling legislation, while intergovernmental entities (such as joint boards that set policy and oversee joint and
cooperative activities) are creatures of contract that exist at the pleasure of the contracting parties. Regional authorities
or districts that are independent units rather than creatures of contract are increasingly found in the solid waste field
today.
8U.S. Advisory Commission on Intergovernmental Relations, ACIR State Legislative Program (Washington, D.C.:
USGPO, 1969). Citations to the joint exercise of powers laws of states in EPA Region X are Alaska, AS 36 30 700 et seq •
Idaho, 1C 67-2326 et seq.; Oregon; ORS 190.003 et seq.; and Washington, RCW 39.34 et seq.
9See H. Edward Wesemann, Contracting for City Services (Pittsburgh: Innovations Press, 1981), pp. 35-47, for a step-by-
step method of calculating the cost of public services and activities.
10 Wesemann 1981, pp. 45-46. See also John Rehfuss, Contracting Out in Government (San Francisco: Jossey-Bass, 1989),
pp. 68-69. Rehfuss suggests that informal quotations be solicited "in such a way that (1) it is clear that no promises of a
contract are made, (2) no hint of improprieties is possible or can be raised, (3) no favoritism toward any contractor over
another exists or can legitimately be raised, and (4) every contractor asked to quote prices has complete information on
the service to be provided in order to obtain accurate estimates."
11 US. Advisory Commission on Intergovernmental Relations, Governmental Functions and Processes: Local and Areawide
(Washington, D.C., 1974), pp. 79-106.
12 Rehfuss, Contracting Out, pp. 95-96
"Marlin, John P., Contracting Municipal Services: A Guide for Purchase from the Private Sector (New York- Tohn Wilev and
Sons, 1984), p. 18. y
43
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Endnotes
"Rehfuss, Contracting Out, p. 55.
"For examples, seeMarlin, Contracting, pp. 33-39; Rehfuss, Contracting Out, pp. 200-216; and Wesemann, Contracting
for City Services, pp. 85-107.
"For definitions and discussion of these terms, see American Bar Association, The Model Procurement Code for State and
Local Governments (Washington, D.C., 1981), pp. 37-39.
17See Marlin, Contracting, pp. 53-55, for state-by-state summary of criteria for evaluating bids and awarding contracts.
18Marlin, Contracting, p. 41.
"Marlin, Contracting, pp. 41-50.
20 American Bar Association, Model, section 3-203 et seq.
21 American Bar Association, Model, p. 37.
^Rehfuss, Contracting Out, pp. 84-105..
^SeeMarlin, Contracting, pp. 79-81.
24 Rehfuss, Contracting Out, p. 86.
^The House Subcommittee on Transportation and Hazardous Materials received presentations on both these concepts
at hearings in 1989. See U.S. House of Representatives, Committee on Energy and Commerce, Subcommittee on Trans-
portation and Hazardous Materials, Municipal Solid Waste Disposal Crisis (Hearings on H.R. 2099 and H.R. 2723, June
22,1989), pp. 27-83. EPA's publication, Agenda for Action and OTA's publication, Facing America's Trash provide further
detail.
26 Howard Levenson, Testimony to House Committee on Transportation and Hazardous Materials, p. 35.
27 OTA, Facing America's Trash, pp. 304-305.
28 Clyde W. Fritz, "Special Insurance Covers Special Needs," Waste Age, April 1990,
p. 142.
»The cost of comprehensive general liability policies that cover most types of personal injury and property damage
may be prohibitive'unless the insured accepts a "pollution exclusion" clause. Such a clause states that the policy will
not be applicable "to bodily injury or property damage arising out of the discharge, dispersal, release or escape of
smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contami-
nants or pollutants into or upon land, the atmosphere or any water course or body of water...." For further discus-
*. _ _ . . . f .m •* • ii-i"i;» 1 • • T!? T~\«IPM.J T_Trt.-i1v"5»i^ "d-wl^iTirt- o Ro \mf\f^a* A l^ff\—
ronmental Law Reporter 10351 (August, 1989).
44
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Appendices
Appendix A: Case Studies
The case studies in this appendix illustrate some of the diversity in solid waste agreements. The information for the
case studies is almost entirely from contract documents received from cooperating jurisdictions. The following are in-
cluded:
Benton County, Oregon. The County has issued a long-term franchise to the owner-operator of a landfill that serves
the county and several other counties.
Pierce County, Washington. Similar to Benton County, Oregon, Pierce County, Washington, has had long-term deal-
ings with a private landfill operator. Special attention was given to tort liability matters in 1987 amendments, leading
to a new contract document.
Dade County, Florida. The county has a contract with a private firm for collection of recyclable material.
45
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Appendices
Benton and TiUamook Counties, Oregon: Joint Use of Franchisee! Landfill
This "franchising" case study illustrates an arrangement that provides a minimum of public agency involvement in the
actual solid waste operation. A landfill located in Benton County is controlled through a franchise between the county
and a private party who owns the site and operates the landfill TiUamook County uses the landfill under an
intergovernmental agreement with Benton County and a contract with the landfill owner.
Most of the controls exercised by Benton County result from the land use approval process and a county regulatory
ordinance. The private company bears all responsibility for capital investment and compliance with state and local
laws and regulations, including landfill closure and post-closure monitoring. The county enforces local landfill regula-
tions and approves tipping fee charges. Although the county can act to enforce state permit requirements, the state De-
partment of Environmental Quality has primary responsibility for monitoring compliance with state regulations and
the state permit conditions.
The operations agreement involves a series of documents, including the following.
A. An order of the Benton Board of County Commissioners granting the franchise
B. A franchise between the county and the landfill operator
C. Operator's application for the franchise, with attachments
D. Benton County ordinance regulating solid waste
E A state landfill permit
F. Benton County-TUlamook County intergovernmental agreement
G. Contract between Tillamook County and landfill operator
H. Rates for dumping at the landfill
The documents evolved over a period of years, and this review does not identify some earlier provisions that have
been modified. In addition, it does not provide background on earlier negotiations (for example, the original
multicounty service area was the result of a multicounty planning process). The program described is an extension of a
prior landfill operations agreement with the same party.
A. County Order
A1981 county order granted a franchise renewal to Valley Landfills, Inc., to operate the Coffin Butte landfill. The fol-
lowing seven conditions to the grant are listed in the order:
1. Requires compliance with the county's solid waste ordinance and agreements contained in the operator's
application for a franchise
2. Establishes a franchise duration of 25 years, but allows for modifications
3. Requires compliance with state disposal-site permit requirements
46
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Appendices
4. Waives requirements for a performance bond because the operator is experienced
5. CaUs for payment of $500 per year to the county to cover county costs of monitoring the landfill and autho-
rizes the county to review the fee annually
6. Encourages the operator to promote waste reduction
7. Conditions the order's effectiveness on execution of the franchise
B. Franchise Between County and Operator
The agreement was executed on the same date as the order and sets out the following four "mutual promises and cov-
enants." r
1. Requires franchisee to provide the landfill service at the designated site according to the conditions stated in
the order
2. Requires franchisee to comply with agreements contained in the application for the franchise
3. Requires franchisee to comply with die county's solid waste ordinance
4. Protects the county in case there is a claim or award of damages to anyone due to an act of the franchisee
C. Application for Franchise
The franchisee's application was submitted in 1974. It was a proposal to enlarge an existing landfill site to serve por-
tions of three counties. Records of deliberations that are part of the application approval are attached to the applica-
D. Conditional Use Permit
In order to approve the application, the county's land use plan required adjustment to designate the enlarged landfill
area as a regional landfill site, and the specific operation required a conditional use permit. Conditions to approval of
the conditional use permit proposed by the county planning commission March 5,1974, included the following.
1. Described the area to be served by the landfill
2. Assigned certain monitoring duties to the county sanitarian
3. Required leachate management and wells to monitor for seepage from the site
4. Required reclamation of filled areas and screening along the public road
5. Limited the approval to operation of a sanitary landfill until plans for resource recovery were submitted bv
July 1,1976 J
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Two additional conditions were added following an appeal to the county governing body.
6. Limited the acreage to be used as a landfill at any one time and required completed fill areas to be returned to
farm use or another permitted use
7. Called for efforts to encourage voluntary separation of recoverable materials
E. Solid Waste Ordinance
The county's solid waste ordinance requires a county franchise or permit before solid waste services can be conducted
in county area outside cities, (section 23.105 of county code.) The ordinance relates to a franchise agreement in a man-
ner somewhat similar to the relations between a set of specifications and a contract. It provides information on require-
ments prior to an applicant's preparation of a franchise request.
F.State Permit
Application for a state permit to expand the landfill, together with relevant plans, was submitted in October 1977 The
permit was approved by the state Department of Environmental Quality on March 16,1978, with conditions and limi-
tations.
G. Tillamook County Use of Landfill
At the end of 1987, the county governing body of Tillamook County submitted a request for permission to dispose of
solid waste from that county at the landfill under Benton County's control. The request was reviewed by the Benton
County Solid Waste Advisory Council, which recommended approval subject to certain conditions. The Benton
County governing body approved it and the resulting intergovernmental agreement has the following three condi-
tions:
1. The operator of the landfill is to maintain at least a 40-year life expectancy.
2. Tillamook County is to maintain a recycling program.
3. Tillamook County shall comply with requirements for the region dealing with hazardous materials.
The agreement sets a disposal rate for Tillamook County at $25 per ton, with the funds allocated as follows:
County Fee
Closure Fund Contribution
Leachate Treatment & Landfill Cap
Volume Reduction Expenditures
Additional Operating Costs
Income Taxes
Franchisee's Net Receipts
10%
24%
24%
24%
2%
6%
9%
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H. Tillamook County's Contract
With the approval of Benton County, the landfill operator and Tillamook County entered into a contract for the period
January 1,1989, through December 31,1993, with provisions for renewal. All waste will be delivered by Tillamook
County's transfer station contractor. In addition to the $25 per ton rate, Tillamook County is to reimburse for any fees
or increases in fees that may be imposed during the agreement by the state or county and is responsible for providing
weigh tickets for the waste delivered.
In October 1988, Tillamook County entered into a five-year contract with a private firm for operation of a transfer sta-
tion and recycling depot and transport of waste from the transfer station to the landfill in Benton County. The county
had prepared an invitation to bid and specifications. The contract bid price is fixed for the term of the contract, except
for adjustments for specific conditions described in the contract documents. The successful bidder set a price of $58.33
per ton, which includes the $25 per ton Benton County charge. The transfer station investment by the county was esti-
mated at $147,000 and equipment to be supplied by the contractor at $102,000.
I. Rate Increase Authorizations
The Benton County governing body approved rate increases in November 1978, which increases public dumping fees
from $1 minimum for up to a cubic yard and $0.50 for each additional cubic yard to $2 and $0.75. Rates for commercial
haulers were increased from $0.80 per compacted cubic yard and $0.50 per loose cubic yard to $0.90 and $0.55. Three
subsequent rate adjustments were made, the most recent in 1989.
Loose from Collectors:
Per Yard
Per Ton
Compacted from Collectors:
Per Yard
Per Ton
Public:
Per Yard
Per Ton
Prior Rates
$1.02
6.80
1.70
4.69
2.61
17.11
1989 Proposed Rates
$2.45
16.32
5.92
16.32
14.00
26.70
Five reasons were given for the 1989 increase. ;
1. Permanent closure within the next three years of the landfill cell that had been in use for about 15 years, with
closure in conformance with federal requirements
2. Operating costs associated with a new shredding program designed to reduce the volume going to the landfill
by 20 to 25 percent •
3. A $0.50 per ton state-agency fee
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4. Creation of a pollution trust fund as self-insurance against environmental impairment or pollution and to
comply.with a state-required, financial assurance plan related to closure
5. Increased operating costs and profit
After reviewing an analysis by the county's finance staff and comments from the public, the Solid Waste Advisory
Council approved the per-yard rates, but only for a period of two and one-half years. Since there are no scales at the
landfill, tonnage rates were considered without meaning. Comments in the report seemed to indicate some uncertainty
regarding how to evaluate the need for rate increases. The report noted that "there are no standards in the solid waste
disposal industry which address reasonable return."
Excerpts From Documents
Order of County Governing Body Dated September 30,1981
1) ne franchisee shall comply with all applicable previsions of the "Benton County Solid Waste Management Ordinance" and
all agreements contained in the application for service.
2) ne duration of the franchise shall be for twenty-five (25) years subject to renewal pursuant to the "Benton County Solid
Waste Management Ordinance". In the event the service area for the Coffin Butte landfill is altered or the methods of disposal
are substantially changed, the Board shall, upon written notice to the franchisee, reevaluate the term of the franchise.
3) The franchisee shall comply with all conditions set forth in the Department of Environmental Quality's disposal site permit.
4) ne franchisee is fotind to have adequate experience and a performance bond is hereby waived.
5) ne franchisee shall pay to Benton County a five hundred dollar ($500.) annual fee for the cost of monitoring thefranchised
site. Such fee shall be reviewed annually or at the discretion of the Board.
6) Benton County encourages the franchisee in the promotion of waste reduction activities.
7) ne granting of a franchise is further conditioned upon the applicant executing a written agreement which shall be attached to
this Order marked "Exhibit A" and by this reference is hereby incorporated herein.
Agreement Dated September 30,1981
1) Franchisee shall provide the solid waste services at Coffin Butte as applied for subject to the conditions stated in Board Order
dated 30 September, 1981. .
2) Franchisee shall comply with all agreements contained in the application for service, an executed copy of which is attached
hereto, marked "Exhibit B" and by this reference is hereby incorporated herein.
3) Franchisee shall comply with all provisions of the "Benton County Solid Waste Management Ordinance."
4) Franchisee agrees to hold harmless and indemnify Benton County from and against any claim or award for damages to any
person or property caused as a result of any act of franchisee pursuant to this agreement.
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Excerpts from Agreements in Application
• Wherever feasible, the scars that erode the face of Coffin Butte, when plans meet DEQ approval, shall be filled and compacted
to a condition permitting re-seeding and eventual visual reclamation of the area and including screening with natural
vegetation that portion of the subject property abutting the county road.
• That by July 1,1976, a plan including detailed elements on design, location, management, and financing of a solid waste
resource recovery system be prepared and submitted to the Planning Commission for further consideration. Until such plan is
completed, the conditional use approval shall be limited to only the sanitary landfill method of waste disposal.
• The landfill operation shall be phased so that only a small acreage is used for fill at one time and then this acreage shall be
returned to grazing, another farm-type operation or other permitted use as approved by the Planning Commission and the
Board of County Commissioners.
• That efforts be made to encourage voluntary separation of recoverable materials such as tin, aluminum, paper, glass etc to
reduce the amount of landfill materials. . >r r >s > • "
Excerpts from County's Solid Waste Ordinance
• An applicant... shall demonstrate to the satisfaction of the Board that the applicant:....
(d) Has in force, or intends to provide for, public liability insurance in the amount of not less than $200,000 00 for injury to a
single person, or $300,000.00 for injury to a group of persons and property damage insurance in the amount of not less
than $50,000.00, which shall be evidenced by a certificate of insurance or a letter of intent. Upon award of a franchise any
applicant providing only a letter of intent with the application shall provide a copy of a certificate of insurance prior to the
effective date of the franchise. The certificate shall name Benton County as an additional insured. The Board may by or-
der, increase the minimum amount of required insurance to meet inflationary costs;
• That the applicant [for a disposal site franchise] has sufficient experience to insure compliance with BCC Chapter 23.
(a) If the applicant does not have sufficient experience, the Board may either deny the application or require the applicant to
submit a corporate surety bond, in the maximum amount of $300,000.00, which guarantees full and faithful performance
by the applicant of the duties and obligations of a franchise holder under provisions of Chapter 23, guarantees compliance
with applicable laws and holds Benton County harmless.
do) In determining whether or not a bond is required and the amount necessary, the Board shall give due consideration to the
size and type of the site, the solid waste handling methods proposed, the population or type of customers to be served
alternative sites, availability of the bond, cost to customers served, adjacent or nearby land uses, the potential danger of '
failure of service and such other factors as the Board deems relevant.
• (1) The privileges granted to a holder are upon the express condition that the holder shall be liable for all damages or injuries to
persons or property caused by the negligence or mismanagement of the holder or any of its employees while engaged in the
business under the terms of the franchise or permit. Should Benton County, or any of its officers, agents or employees in the
scope of their employment be sued for damages caused wholly or in part by the operations of a holder under the terms of the
franchise or permit, the holder shall be notified in writing of such suit and it shall be the holder's duty to defend or settle the
suit. Should a judgement go against Benton County, its officers, agents or employees, the holder shall further indemnify the
County for costs and attorney's fees. The record of judgement against Benton County, or any of its officers, agents or employ-
ees, m such a case shall conclusively entitle Benton County, its officers, agents or employees to recover against the holder
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(2) ne holder sMl covenant to purchase an indemnity insurance policy with a company licensed to do business in the State
of Oregon with limits of liability specified in BCC 23.210(d) which policy shall name Benton County, its officers, agents
and employees as the additional insured.
A disposal site franchise holder shall supply disposal services covered by its permit to those persons who contractor disposal,
handKiig, or recovery of solid wastes collected under a franchise, license or permit; to those localgovemment units and public
aeetides located withinBenton County for wastes generated by activities of such units or agencies; and, subject to limitation by
tfte Board, members of the general public hauling wastes generated by such person and not collected from other persons.
All service under a franchise or permit shall be subject to applicable laws and regulations, and to permit conditions and
decisions of administrative, legislative and judicial agencies having jurisdiction.
A disposal site franchise holder shall not discontinue required service without ninety (90) days written notice to the Board and
to any collection franchise or permit holders having a contract to use the site.
No holder is required to store, collect, transport, dispose of or resource recover any hazardous waste. A holder may engage in
one or more of those activities apart from BCC Chapter 23 as long as such activity is in compliance with all applicable local,
slate, and federal laws.
Each holder shall agree in writing and it shall be a condition of the franchise or permit that whenever the Board determines that
the Mure of service, or threatened failure of service, would result in creation of an immediate and senoushealth hazard or
serious public nuisance, the Board may, after a minimum of twenty-four (24) hours written notice to the holder authorize
County personnel or other persons to temporarily provide the service or to use and operate the land, facilities or equipment of
the holder. The Board may authorize whatever expenses are necessary to operate such land, facilities or equipment consistent
with BCC Chapter 23. The Board shall return any seized property and business upon the abatement of the actual or threatened
interruption of service.
Adisposalsitefranchiseholdershallpayanannualfranchisefee. Thefeeshall beadopted by Order of the Board pursuant to the
rate change procedure contained in BCC 23,510.
ihall be payable to the Board on December 31 or each year. Where reason-
audit by authorized personnel of Benton County.
Subject to the requirements of the local budget law and other applicable laws, fees collected under this section shall be used for
the administration of BCC Chapter 23, for solid waste nuisance abatement, or for promotion or provision of source reduction,
recycling, reuse or resource recovery, or for other solid waste management expenses of Benton County.
A holder may charse and collect reasonable compensation from persons to whom it furnishes services. The term "reasonable
compensation" may bedefined by the Board after a study and consideration of rates for similar service under similar conditions
in other areas, and as affected by local conditions, and which allows a holder to earn a reasonable rate of return.
Benton County reserves the right to examine the rate structure of a holder at any time during the period of a franchise/permit
and to macerate Chang® which, in the discretion of the Board, are reasonably required.
A holder shall provide the Board with a certified copy of its published rate schedule, setting out the rates for all its operations. A
holder sMl file with the Board a new or revised rate schedule at least ninety (90) days prior to any contemplated change.
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,or
• The schedule shall be examined by the Board in a public hearing. The Board may either approve or deny the rate change, c,
may request additional information from the holder. It shall be approved by the Board thirty (30) days before the effective date
unless the delay is caused by failure of the Board to meet or obtain a quorum to conduct business.
• Notification of the decision of the Board shall be made to the holder by registered mail.
• In the event of disapproval, a holder shall not put the new rate schedule into effect, but may file with the Board further
information to justify the rate schedule changes. Upon the receipt of the new information, the Board shall determine whether it
will rehear the request.
• The Board may require annual statements and other records to be furnished to the Board to carry out the intentions of this
section. ' '
• In the event of approval of a revised rate schedule, the revised rate schedule shall not apply to persons and groups who have an
advance payment agreement with the franchisee or permittee until the normal expiration of the advance payment agreement.
• The maximum rates in effect at the time this ordinance takes effect shall be subject to review and change only one time in a
calendar year beginning January 1st; provided:
(a) Upon application and without prior notice, the Board may, by order, grant an interim or emergency rate for new, special
or different service. The Board may specify the duration of the rate or continue it until final determination by the Board on
the next overall rate adjustment.
(b) In addition to an annual rate adjustment, a supplemental rate adjustment may be requested when the cost of service is
increased due to compliance with governmental regulations; or when there is substantial increase in a single expense that
was not anticipated at the time of the last rate adjustment; or when the total cost of service exceeds projected costs by five
(5) percent or more.
The Board shall support a decision to revise rates with findings of fact. In making its findings, the Board may considefrates
charged by other persons performing the same or similar service. The Board shall give due consideration to current and projected
revenue and expense; actual and overhead expenses; the cost of acquiring and replacing equipment; management costs; the cost of
providing for future added or different service; promotion and provisions of source separation services; a reasonable return to the
holder for doing business; research and development; systems to avoid or recover the costs of bad debts; interest payments- 'and such
other factors as the Board deems relevant. '
• The holder shall keep a complete and accurate set of books which shall reflect the gross receipts from services rendered inside
Benton County outside the boundaries of incorporated cities. These books shall be balanced at least annually. A statement
showing the basis for the quarterly fee payment shall be furnished to Benton County on each payment date. Benton County
shall have the right to inspect the books and records of a holder at all reasonable times and places, and a holder shall render all
reasonable assistance to Benton County, its officers, agents and employees when Benton County desires to audit or inspect the
books and records.
• If the holder fails to promptly comply with any duty imposed, then Benton County may, after written notice to the holder and
a reasonable opportunity to comply, proceed to perform the duty at the cost of the holder, which shall immediately become liable
to Benton County for all expenses incurred by Benton County in fulfilling the obligation.
• The Board reserves the right to make further regulations as deemed necessary to protect the welfare of the public.
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Pierce County, Washington: Sharing Risk or Liability
This case study illustrates an arrangement that provides a division of financial responsibility for potential liabilities be-
tween a private landfill operator and a county. The private company bears most risk while operating the landfill, and
the county bears most post-closure risk with the assistance of assets in a self-insurance fund that increases during the
contract period.
In August 1977 Pierce County, Washington, entered into a contract with Land Recovery, Inc. (LRI), for operation of
county solid waste disposal facilities. The agreement included provisions for the contractor to establish a new major
landfill expected to serve a minimum of 20 years. The existing county facilities consisted of drop-box stations and land-
fills.
The contract had no specified termination date, but permitted either party to terminate the contract six months after
giving notice. In addition, either party could initiate an amendment to the contract and, unless the other party agreed
to the amendment, the matter would be settled by arbitration. Compensation was provided through tipping fees to be
paid by users of the facilities. The contract established the initial fees and provided for periodic rate adjustments
through analysis of costs and other factors.
The contract was amended in March 1987, in response to 1985 additions to state requirements, by replacing it with a
new contract document. The major reasons for the amended contract were related to liability risk. The risks and re-
sponsibilities were recognized as being shared. The county had conducted landfill operations prior to the 1977 con-
tract and the extent to which responsibilities since then were with the contractor was not fully definable. Insurance
was not necessarily available to cover all risks, and the state was now requiring accumulation of funds to assure the
financial ability to close landfills and provide post-closure care.
Protection from Liability Risk
The 1987 contract required the contractor to carry comprehensive public liability and property damage liability insur-
ance and comprehensive automobile liability insurance, naming the county as an additional insured, as had the 1977
contract. However, the following was added to section 4, the insurance section:
77/e parties acknowledged that environmental impairment insurance is not currently available but agree to explore the
feasibility of obtaining other or additional insurance as the County may determine is necessary or advisable.
In addition, the indemnity section (sec. 5) of the contract was substantially expanded, and provisions for a self-insur-
ance fund were added to the contract (sec. 6). Under the new provisions, the operator indemnifies the cou nty fully for
general liability and partly (up to the amount available from the self insurance fund) for claims related to pollution,
contamination, or chemical release. These sections are reproduced below.
5. Indemnity.
a With respect to claims by third parties which do not relate to pollution, contamination or release of chemicals, and which
arise from the operation of any facilities subject to the 1977 Agreement or the modification, LRI shall defend, indemnify and hold
the County free and harmless from liability from any and all claims, demands, losses of death, injury or disability from any person
and/or damage to any property or business occurring directly or indirectly, out of or suffered by any person by reason of or in con-
nection with any actions or omissions of the Company, its agents, employees or subcontractors. In the event of a suit against the
County, LRI agrees to appear and defend the same, provided LRI is notified in a timely manner of the suit. In the event judgment is
rendered against the County, LRI will cause the same to be paid or set aside within ninety (90) days after a final determination
thereof, including a final determination of any appeals.
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Such indemnity shall not include claims arising as a result of the sole negligence or intentional acts of the County, its employees
and agents, but shall include but not be limited to any liability as may arise or occur from concurrent, contributing or joint actions
or omissions of LEI and the County to the maximum extent such indemnity is allowed by law.
b. LRI hereby agrees to defend, indemnify and hold harmless the County, and its appointed and elected officers and employ-
ees, from and against all loss or expense, including attorneys' fees and costs, incurred as a result of claims by third parties regard-
ing personal injury, property damage or other loss related to pollution, contamination, or chemical release arising from operation of
any of the facilities subject to this agreement; provided, that such agreement to indemnify and hold harmless shall be limited to the
amount available to LRI from the self-insurance fund created pursuant to paragraph 6.
c-. The County agrees to indemnify, hold harmless and defend LRI and its shareholders, officers, employees, and agents from
and against all loss or expense, including attorneys' fees, in excess of the amount made available to LRI from the self-insurance
fund created pursuant to Paragraph 6, incurred as a result of claims by third parties regarding personal injury, property damage or
other loss related to pollution, contamination or chemical release arising from operation of any of the facilities subject to this agree-
ment. This provision shall not apply to future acts which are an intentional and knowing violation of any law or wanton or reckless
disregard for human health or the environment
/. It is agreed between the County and the Company, that the indemnity provisions set forth in paragraphs 5(a) of this
agreement shall not apply to any acts of the County, its agents or employees which were committed prior to the execution of the
1977 Agreement, nor to any contractual liability or obligation incurred by reason of any use made by the County of any solid waste
disposal site, or transfer station prior to the time the Company assumed operation of such facility.
6. Self-Insurance Fund.
a. The County shall establish an interest bearing self-insurance account to cover costs and expenses, including judgments or
settlements, relating to claims by third parties for pollution, contamination or chemical release related damages. Except as provided
in paragraph 8 below, facility revenues shall be allocated to this fund at the rate of $17544.00 per month to the fund, beginning on
July 1,1987, and monthly thereafter until two million dollars has been contributed. Beginning July 1,1987, the parties shall meet
every six months for the purpose of discussing and authorizing projected expenditures from the fund for the succeeding six month
period. Expenditures from the fund shall be made in accordance with this preauthorization procedure, unless unanticipated expen-
ditures become necessary which will then require specific County prior approval except in the case of an emergency. Payments from
such fund shall be made only upon the signature of a designated representative of the County and made only for costs and expenses,
including attorney fees, incurred subsequent to June 1,1986 as a result of third party claims regarding pollution, contamination, or
chemical release. No expenditures shall be made from such fund without a request for payment including written supporting docu-
mentation which shall be submitted to the County Executive. If the County Executive objects in writing to use of the fund for the
purpose or amount requested within a thirty day period, either party may submit the use of the fund to arbitration pursuant to
Paragraph 14 of this agreement. The results of any such arbitration shall be binding upon the parties. The County Executive's fail-
ure to object in writing within thirty days of the request for payment shall constitute approval of requested payment, and the
County's authorized representative shall promptly pay the requested amount.
b. For purposes of this paragraph, actions taken by LRI solely to operate the facilities in accordance with state or local stat-
utes, regulations or requirements shall not constitute costs or expenses incurred as a result of claims by third parties. However,
costs and expenses associated with remedial actions undertaken to eliminate or reduce impacts or injuries to public or private re-
sources such as ground water or property owned by others, are subject to this paragraph if not otherwise required to operate the
facility in accordance with state or local statutes, regulations or requirements.
c. 'If any monies remain in the self-insurance fund after post-closure care of the facilities is completed and approved by the
Washington Department of Ecology, all such monies shall be retained by Pierce County for it to use in its discretion for solid waste
related activities. After completion of post-closure care, the County shall, however, remain liable for its obligations pursuant to
Paragraph 5(c) above.
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Terminating the Contract.
Because of liabilify risk issues and responsibilities for landfill closure and post-closure, the former ability of either party
to terminate the contract with six months' notice was considered unsuitable. It was replaced in the new contract with a
prescribed term for the contract plus a modified ability for either party to terminate which described residual responsi-
bilities in case of termination. These provisions follow.
7. Term of Agreement.
Unless this contract is terminated in accordance with Paragraph 8 hereof, the term of this agreement shall be at least until the
Hidden Valley and Purdy landfills are closed. Obligations of the parties pursuant to Paragraphs 4,5 and 10 of this agreement can-
not be terminated except by mutual agreetnent of the parties.
8. Termination or Closure.
a. Either party hereto may without cause terminate this agreement by giving written notice of its intention to terminate to
the other party by certified matt return receipt requested. Such termination shall, thereafter, be effective six (6) months following the
date of the written notice during which period of time the terms and conditions of this agreement shall remain in full force and ef-
fect.
b. In the event the agreement between the parties is terminated by the County pursuant to this Paragraph, terminated by
LRIand LRI ceases to operate the facilities, or the Hidden Valley and Purdy landfills are closed prior to January 1,1997:
(1) LRI's obligation to contribute to a self-insurance fund pursuant to Paragraph 6 of this agreement shall cease but
the County's obligation to indemnify LRI pursuant to Paragraph 5(c) hereof shall remain in full force and effect.
(2) LRI's obligations to contribute to the post-closure funds pursuant to Paragraph 12 hereof shall cease as of the
date of termination or closure. The County will remain liable for all necessary post-closure costs and expenses in excess of the
amount contained in the fund on the date of termination or closure and for compliance with any state or local statutes, rules or
ordinances relating to such funds.
(3) LRI's obligations to fund closure at the facilities shall be limited to the closure actions completed as of the date of
termination. The County will be liable to fund all additional necessary closure activities.
c. In the event the agreement between the parties is terminated by LRI and LRI chooses to continue operation of Hidden
Valley:
(1) LRI's obligation to contribute to the self-insurance fund pursuant to Paragraph 6 of this agreement
shall remain in effect as shall the County's indemnification obligations under Paragraph 5, except that, if the parties are unable to
agree, the County may submit to arbitration pursuant to Paragraph 14 the question of necessary increases in the funding thereof.
(2) LRI's obligations to contribute to the Hidden Valley post-closure fund pursuant to Paragraphs 10 and 12 shall
remain in effect as shall the County's obligation to provide post-closure care, except that, if the parties are unable to agree, the
County may submit to arbitration pursuant to Paragraph 14 the question of necessary increases in the funding thereof. LRI's obli-
gations to contribute to the Purdy post-closure fund shall cease if the County uses Purdy as a landfill site but shall otherwise re-
main in effect.
(3) LRI's obligations to fund closure at the facilities shall continue—
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Dade County, Florida:
Contracting for Collection and Marketing of Recylclable Materials
In 1988, the Florida legislature enacted the Solid Waste Management Act. The Act mandated a 30 percent reduction in
the volume of disposable solid waste by 1994 and required every county to initiate a recycling program. In January
1990, Dade County contracted with Industrial Waste Service, Inc., for curbside collection of recyclable material.
The Dade County contract provides for a system of weekly recyclable collection in the county service area on the day
other solid waste is collected. Residents in the service area are issued two containers for separating newspaper from
glass, plastic, and ferrous and aluminum cans. Containers must be left at curbside, except that backyard or special
types of collection are provided for disabled participants. The contractor's duties include collecting, transporting, and
marketing recyclable materials.
This case study illustrates how a contract for recycling services deals with the three principal solid waste issues identi-
fied in chapter 3— regulation compliance, compensation, and liability.
Regulation Compliance. A contract for solid waste services must provide requirements for mitigating environmental
impacts. A common provision of solid waste contracts requires the contractor to obtain permits and obey applicable
laws.
Article 16: Contractor shall obtain, keep current, and pay for all licenses, permits and inspections required for
this Agreement, and shall comply with all applicable laws, ordinances, and regulations. Damages, penalties,
and/or fines imposed on or incurred by the County or the Contractor for failure to obtain and keep current re-
quired licenses or permits, or to comply with laws, ordinances, regulations or special conditions applicable to this
Agreement shall be borne by the Contractor.
The contract includes provision to mitigate public health and environmental impacts during collection.
Article 3(A)(2)(c)(6): The cleanup of any spillage caused by Contractor during collection shall be the
responsibility of the contractor.
Article 3 (A)(3)(d)(3)(A): Contractor must ensure that recycling collection vehicles are kept in a clean and sani-
tary condition. County may require Contractor to clean any recycling collection vehicle. Article 3
(A)(3)(d)(3)(B): Contractor's specialized curbside collection and recycling transport vehicles, including any sup-
port vehicles, shall be covered in a fashion that will not permit Recyclable Material to be contaminated or to al-
low loss of Recyclable Material.
One impact-mitigation standard calls for action by the county.
Article 5 (A): County agrees to take such steps as may reasonably be necessary to protect Contractor's owner-
ship of all Recyclable Materials placed at the curbside for collection by Contractor under terms of this Agree-
ment, including preparation and submission of an anti-scavenging ordinance for the County. The County staff
shall submit to the Board within a reasonable time, a proposed anti-scavenging ordinance that has been approved
by the Contractor.
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Appendices
The contract allows the contractor to dispose of recyclable or residue material under certain conditions.
Article 3(a)(3)(c): Contractor shall be prohibited from disposal of Recyclable Material at any solid waste manage-
ment or disposal facility unless Contractor is unable to sell the Recyclable Material. The Contractor will dispose
of the non-marketable Recyclable Material at County disposal sites and will pay the County the current disposal
fee up to a maximum of '$500,000. Above $500,000 the County, at its sole option, can either assume the cost of
disposal or instruct the Contractor to discontinue collecting the non-marketable Recyclable Material If the col-
lection is discontinued, the monthly fee will be reduced by the actual savings from discontinuing pickup of the
non-marketable Recyclable Material. Residue picked up on the recycling routes may be disposed of at the County
landfill free of charge, provided this amount does not exceed 5 percent of the total Recyclable Material and Resi-
due collected monthly. Any amount over this percentage shall be charged at the present County landfill disposal
rate.
Standards also are provided for operation of the contractor's processing facility.
Compensation. The compensation schedule in article 7 calls for an initial lump-sum payment by the county to the con-
tractor to defray start-up costs, including provision of special collection vehicles and support vehicles.
Article 7 (A): County shall, within 10 days of execution of this Agreement, make a lump sum payment to Con-
tractor of eight hundred thousand dollars ($800,000) to defray the costs of initiating the curbside recycling pro-
gram. Seventy-five (75) percent of this amount shall be spent for capital items and twenty-five (25) percent shall
be spent for public information activities.
The fee schedule sets rates per individual unit, with different amounts for residential and multi-family units.
Article 7 (B): Tlie Contractor's Monthly Fee shall be $1.53 per Residential Property from the date of this Agree-
ment through September 30,1991.
Article 7 (C): The Contractor's Monthly Fee shall.be $1.24 per Multi-family Unit from the date of service imple-
mentation through September 30,1991.
These fees are locked in for the first twenty months of the contract and are then adjusted according to changes in the
Consumer Price Index.
Article 7 (D): Contractor's Monthly Fee shall not change until October 1,1991. On thai-date, and annually
thereafter, the Monthly Fee shall be adjusted by 95 percent of the change in the Miami Consumer Price Index for
All Urban Consumers for the previous July through June.
Provisions are made for fee increases if the county adds "mixed wastepaper" to the list of recyclable materials.
Article 7 (E): If at any time during the term of this Agreement, either the Contractor or the County can obtain a
contract for the purchase of Mixed 'Wastepaper for the remaining term of the Agreement at a floor price of at
least $0.00 per ton, F.O.B. Contractor's Processing Facility, the County may add Mixed Wastepaper to the list
of Recyclable Materials to be collected, processed and marketed by the Contractor at a cost of the Monthly Fee
plus an additional 9 cents per Residential Property and/or Multi-family Unit per month plus any annual ad-
justments for tJie period from execution of this Agreement to the addition of Mixed Wastepaper such adjust-
ments to be described in Section D above.
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Because the market for recyclable material is unstable, article 7 provides a floor value for the contractor's revenue from
the sale of recyclable material.
Article 8: The compensation set forth in Article 7, 'Compensation for Services', is based on the assumption that
contractor will receive recyclable Material Revenue from the sale of Recyclable Materials collected by the Con-
tractor under this Agreement, equal to the Recyclable Material Revenue Floor. If the Recyclable Material rev-
enue received by Contractor during a quarterly period differs from the Recyclable Material Revenue Floor,
County's payment to Contractor shall be adjusted as follows:
A. If actual amount of Recyclable Material Revenue received in a quarter is less than the Recyclable Mate-
rial Revenue Floor for that quarter, County shall pay Contractor one-fourth (1/4) of the deficit not later
than thirty (30) days from receipt of the Quarterly Recyclable Material Revenue statement from Contractor
provided, however, that County will not reimburse the Contractor for more than 12.5 cents per month per
Residential Property and Multi-Family Unit.
B. If actual amount of Recyclable Material Revenue received in a quarter is greater than the calculated Recyclable
Material Revenue Floor for that quarter, County shall receive a credit towards the next payment to Contractor in the
amount of one-quarter (1/4) of the Recyclable Material Revenue in excess of the Recyclable Material Revenue Floor.
Article 9 covers breach of performance by the contractor.
Article 9: The following acts or omissions shall be considered a breach of contract, and for the purpose of comput-
ing damages under the provisions of this section, County may deduct from payments due or to become due to
contractor, the following amounts as liquidated damages:
• Residential collection prior to 7:00 A.M. or after 7:00 P.M.: $100.00 per route,
• Failure to collect missed Containers within twenty-four (24) hours after a make-up order is given
to the Contractor: $25.00 per Residential Property,
• Failure to provide within 24 hours the level of services required in Article 3 after notification to
correct deficiencies: $20.00 per occurrence,
• For each failure to respond to a customer complaint within 24 hours from County notification to
Contractor: $50.00 per occurrence,
• For each working day, any quarterly or annual report is submitted late: $25.00.
Liquidated damages shall be based on verified citizen complaints and/or Contractor reports, unless liquidated
damages are levied for late reports. Liquidated damages shall be subject to appeal in the manner described in Ar-
ticle IE, Section F, subsection (e) of this Agreement, except that the Contractor may appeal the decision to levy
liquidated damages only if such damages exceed either $1,000 for any given day, or $10,000 for any month, or
$25,000 for any year. Liquidated damages shall not be applicable to 'a particular Recycling Route for the first 6
weeks after a that [sic] particular Recycling Route has been added to the program.
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Liability. The contract assigns responsibility for potential tort liabilities. It contain a broad clause in which the contrac-
tor agrees to indemnify the county for liability resulting from of its performance.
i. ***
Article 20: Contractor shall indemnify and hold harmless the County and its officers from any and all liability
losses or damages, including attorneys' fees and costs of defense, which the County may suffer as a result of
claims, demands, suits, actions or proceedings of any kind or nature, including Worker's Compensation claims,
in any way resulting from or arising out of Contractor's or employees', agents', servants', partners', andprinci-
pals' performance within the scope of this Agreement...
The conbract also requires the contractor to obtain a performance bond.
Article 12: Within ten (10) days from the execution of this Agreement by all parties, Contractor shall provide the
County with a perfbrtnance bond in the amount of two million dollars ($2,000'000.00), to guarantee the faithful
performance by Contractor of the requirements of this Agreement. The surety company issuing said bond shall
be Treasury-rated, and the form of the bond itself and surety company shall be subject to approval by County.
Failure to provide such performance bond will be considered material default by the Contractor, and will result
in termination of this Agreement. Posting the performance bond shall in no way limit or relieve the Contractor
of its liability for damages pursuant to this Agreement.
Specific procedures are provided for damage to customers' property. •''
Article 3 (F)(a): Property Damage Reports. The Contractor shall be responsible for any damage to property
caused by tlie Contractor's crew and/or equipment. Contractor shall be responsible for monitoring complaints
from customers involving property damage. A foreman will be sent by Contractor to the address to inspect the
damage and loillfill out a damage assessment form to be signed by the resident. The contractor shall be respon-
sible for resolving, and, if warranted, for providing payment of the claim within sixty (60) days. If Residential
Property owner is not satisfied with the decision of the Contractor, that property owner may pursue other avail-
able remedies or may waive all other remedies except as provided herein, and the County shall serve as final arbi-
ter of claims for damages less than $250 for a single incident. If damages claimed exceed $250, either party may
appeal the decision in the manner described hereinbelow. Property owners acceptance of the procedure shall be in
writing in a form approved by the County.
The above clause also details the appeal procedure. An appeal is made to the county manager, who makes a ruling af-
ter receiving recommendations from a departmental committee. Further appeal is to the courts.
Finally/ the contract describes insurance coverage the contractor must obtain, including (1) worker's compensation in-
surance for all employees of the contractor; (2) comprehensive public liability insurance of not less than $500,000 com-
bined single limit per occurrence for bodily injury and property damage; and (3) automobile liability insurance for
noncollection vehicles used in connection with the recycling program (Section 21).
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Appendix B: Sample Contracts
Chapters 2 and 3 present many examples of individual contract provisions. This appendix presents samples of two
complete contracts.
The first is a public-private landfill operations contract prepared for use under the IFB process. It is reproduced from a
1971 publication of the U.S. Environmental Protection Agency entitled Recommended Standards for Sanitary Landfill De-
sign, Construction, and Evaluation & Model Sanitary Landfill Operation Agreement. Even though standards for operating
landfills have changed greatly since 1971, the model is still useful because it merely incorporates applicable require-
ments by reference.
The second sample contract is an actual intergovernmental agreement that is in effect in southwestern Washington. It
establishes a multi-county planning program, and includes as an attachment a scope of work drafted to be used as part
of a request for proposals for the actual planning studies to be conducted under the program."
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EPA Model Landfill Operation Contract
Instructions to Bidders
Suggested Provisions to be Included in Instructions to Prospective Bidders
1. Intent and Purpose. It is the intent and purpose of this contract on which bids are sought to assure the healthful and
aesthetic operation of a sanitary landfill, at one or more sites, where solid wastes originating within the City, or for
which the City has accepted responsibility, will be disposed of.
2. Qualifications of Bidders. All bidders hereunder must furnish satisfactory evidence to the City that they have oper-
ated or are presently operating a sanitary landfill of the type and capacity involved here. (A description of the solid
wastes, including expected daily quantities and a detailed plan of the sanitary landfill site must be included for all the
bidders.) The bidders must also show that they have successfully operated a sanitary landfill in a manner required by
the attached ordinances for a long enough period of time that they will be able to operate under varied weather condi-
tions prevailing in this area. (The-City must develop ordinances or standards similar to those included in this publica-
tion to define the site and operational requirements to assure performance and protection of the environment.) They
must list all sanitary landfill sites they have completed or are now operating; all operating sites may be inspected by
city personnel to determine the bidder's eligibility.
Bidders without the experience outlined above but with sufficient experience in a comparable field, such as excavating
or grading, should show an association with (a) consultants) and/or operator(s) qualified to assist in engineering,
planning, supervising, and operating the project in accordance with the attached recommendations or ordinances. The
namefe) and experience of the consultants) and/or operator(s) shall be contained in an attachment to the bid.
All bidders shall include as an attachment to the bid a listing with qualifications of personnel who have agreed to serve
as employees, etc. of the bidder in the operation of this contract.
All bidders shall supply detailed inventories of their equipment, showing each type by model, year of manufacture,
anticipated remaining useful life, and all accessories for each piece so listed. All leased equipment shall be separately
listed and show the time remaining on each leased machine and any options of renewal. All new equipment to be ac-
quired in fulfillment of this contract must be available on the effective date when operations start. Delivery guarantees
by manufacturers shall be attached to the bid document.
All bidders shall be required to demonstrate to the satisfaction of the City that they have adequate financial resources,
experienced personnel, and expertise to perform the services required by the specifications.
All bidders shall be held to comply with all pertinent legislation, including the Solid Waste Disposal Act of the State of
f the rules and regulations promulgated thereunder, the applicable/ attached ordinances, rules
and regulations of the City, and the ordinances, rules and regulations of the County(ies) of . The bid-
der selected shall meet all the requirements of the above, including any changes, copies of which will be supplied to
him by the City.
3. Compensation. Payment will be by ton, cubic yard, or load, of solid waste collected by the city or (its designated
agents) delivered and received for disposal as set forth in a schedule attached to the agreement. While exact quantities
of solid waste per contract year cannot be specified, a minimum contract year compensation will be paid in the sum of
$ based on an estimated weight (volume), (number), of tons (cubic yards) (loads) Adjustments
in fees due to changing costs of doing business must be provided for in the contract document.
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4. Inspection of Site. AH bidders shall visit the site of the proposed landfill and familiarize themselves with the project,
including all requirements of the plan. Submission of a bid shall be deemed conclusive by the City that a site visit has
been made, and it shall constitute a waiver of all claims of error in bid, withdrawal of bid, or payment of extras, or any
combination thereof under the executed contract or any revision thereof.
5. Bonds.
a. Performance Bond. A performance bond shall be required of the successful bidder. It shall be executed
yearly by a surety company licensed to do business in this State and be in an amount equal to 50 percent of the sum
shown in paragraph 3 for the first year or in the case of renewal, 50 percent of the total compensation paid in the past
year for each succeeding year. Said bond shall be obtained within ten (10) days of the execution of the initial contract
and each renewal thereof.
b. Payment Bond. A payment bond will be required of the successful bidder. It shall be executed by a surety
company licensed to do business in this State and be in an amount to be determined by the City. It shall be conditioned
to guarantee the payment of all wages and costs of materials, supplies, and insurance premiums incurred by the con-
tractor in fulfilling the terms of the contract and will need to be delivered to the City within ten (10) days of the signing
of the agreement. Insurance premiums include, but are not limited to, workmen's compensation, liability insurance,
and bonds. It is estimated that the payment bond will not exceed the sum expended for wages, materials, supplies, and
insurance premiums in one quarter of operation.
c. Bid Bond. Every bidder shall furnish a bid bond executed by a surety company licensed to do business in
this State. He binds himself to indemnify the City against any loss, not to exceed the sum of the bond, it incurs should
he fail to execute the signed agreement. Said bid bond shall equal 10 percent of the sum shown in paragraph 3.
A certified check, payable to the City, or other personal property acceptable to the City, may be deposited in lieu of a
bid bond. Following determination of the bids, the three low bidders' security will be held until the execution of the
agreement, at which time said security shall be returned to the respective owners.
6. Indemnity Clause. An indemnity clause, or alternatively, liability insurance, will be required of the successful bid-
der, in which he will be required to hold harmless and indemnify the City from all claims, legal or equitable (including
court costs and reasonable attorney's fees), arising out of his operations.
7. Insurance, Motor vehicle minimums for property damage and personal injury may be set by the City. Proof of all
required insurance and policy limits must be shown by certificates of required insurance provided to the City by the
respective bidders, and each policy shall have a minimum cancellation period of not less than 30 days to become effec-
tive after delivery, in writing, to the City at the address shown in the agreement. While no minimum policy period will-
be required by the City, it. is expected that the contractor will utilize long-term policies in order to obtain lower premi-
ums.
8. List of Officers and Stockholders. Bidders shall submit a list of all officers and stockholders who own over 10 per-
cent of their respective companies.
9. Contractor's Operational Plan. The contractor shall submit as an attachment to his bid a detailed plan of operation
that conforms with the attached ordinances and specifications. It shall also give details followed in case of equipment
failure brought regarding alternate procedures that will be on by severe weather.
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Model Salutary Landfill Operation Agreement
This agreement made and entered into this day of 19 , by and between (a City, Village,
County, etc.) organized under the laws of the State of , hereinafter referred to as the City (Village, etc)
and (a Corporation or a Partnership, Proprietorship, etc.) organized under the laws of the State of
and having its principal place of business at , hereinafter referred to as the Contrac-
tor.
Witnesseth:
Whereas, the Contractor is qualified to operate a sanitary landfill for the disposal of solid waste in accordance with the
attached ordinances, specifications, and Instructions to Bidders; and
Whereas, the City desires the Contractor to operate the site(s) designated to be used for a sanitary landfill operation;
Now Therefore, in consideration of the mutual covenants and agreements contained herein, and of the consideration to
be paid by the City to the Contractor, as hereinafter set forth, the City and the Contractor hereby agree as foUows:
1. Disposal Site. All solid wastes shall be disposed of at the location(s) specified herein, same being the property under
the control of the City (or Contractor), and more specifically described as follows:
(Insert Legal Description)
2. Materials to be Disposed of. The Contractor shall accept, upon payment of fees as scheduled, all solid waste created
within the jurisdiction of the City or for which the City has accepted responsibility. Toxic, volatile, and other hazardous
materials must be dearly identified to allow for special handling during the disposal operation. (Note: A definition of
the solid wastes to be disposed of under the provisions of the contract should be included here In addition, clarification
of who shall be allowed to deliver solid waste to the site must be provided.)
3. Operation ofSite(s). The Contractor shall have the exclusive right and responsibility to operate the disposal site(s) in
accordance with the provisions of this Agreement and the attached ordinances and specifications for the term of this
Agreement and any extension thereof .
4. Compliance with Laws. The Contractor shall operate the disposal site(s) in compliance with all applicable laws, ordi-
nances, specifications and regulations, including the applicable solid waste disposal act of the State of ,
the rules and regulations of the State Board of Health and the City and/or County Board of Health, and the ordinances
of the City and/or County; copies of each are attached hereto and are hereby made a part of this Agreement. Copies of
all such laws, ordinances and regulations shall be furnished to the Contractor by the City and shall include new legisla-
tion as well as amendments.
(In the event that there are no statutes or ordinances regulating the disposal of wastes, then the City may utilize the
' concepts contained in the first section of this publication to develop its own ordinances and standards.)
5. Labor and Equipment. The Contractor shall furnish all labor, tools, and equipment necessary to operate the site(s)
and shall be responsible for all required maintenance thereof. Supervision by an experienced and qualified person shall
be provided at all times when the sanitary landfill is open for use or operation.
6. Service Facilities. The Contractor shall construct and maintain at his expense any facilities, improvements, and build-
ings within the site necessary for the operation of the site.
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(To be included if the site is City property: The use of such land within the site shall be made available to the Contrac-
tor free of charge for the period of this Agreement or any extension thereof. At the expiration of this Agreement all per-
manent structures and improvements thereon shall become the property of the City or shall be removed by the Con-
tractor, at the option of the City. [If permanent structures and improvements become the property of the City, there
should be some provision for compensation to the Contractor, such as book value or fair market value. If the Contrac-
tor is required to remove such structures and improvements, he should be paid for doing so.])
7. Off site Improvements. The City agrees to provide, at its expense, aU required offsite improvements including any
required to be made to public streets or roads, drainage facilities, etc.; it shall also provide to the site all required utili-
ties, including adequate power and water supplies. (If any of this work is to be performed by the Contractor, it should
be included in a separate contract with detailed engineering plans.)
8. Charges for Utilities. The Contractor agrees to pay normal and standard charges for all water, electrical power, natu-
ral gas, and phone service utilized at the site. (If any of these services are to be-provided free of charge by the City, this
section should be modified accordingly.)
9. Salvage. Neither scavenging nor salvage operations shall be permitted at the operating face of the sanitary landfill.
Salvage operations, if any, shall be conducted at a location separate from the operating face of the landfill by persons
licensed by the City so as not to interfere with the Contractor's operation.
10. Title to Waste. Title to waste shall vest, as it is deposited, in the owner of the fee simple estate.
11. Completion of the Site. Upon completion of disposal operations, the site shall be contoured and finished in accor-
dance with the Approved Final Plan, which is attached hereto and is hereby made a part of this Agreement. Any
changes of the Approved Final Plan must be agreed to by both the City and the Contractor. The liability of the Con-
tractor under this Agreement shall cease upon acceptance of the site by the City.
12. Compensation. Compensation shall be paid pursuant to the attached schedule. (A schedule should be attached and
provide for payment by weight, volume, or load. A minimum charge should be set out. Hazardous materials should
be handled on a mandatory basis with fees paid by type and quantity. Experience should soon establish fees for such
materials.)
(If materials are to be accepted from users other than those paid for and designated by the City, a similar schedule of
prices which the Contractor can charge these users should be established. There should be clear provisions regarding
the distribution of such fees to the Contractor and/or the City.)
13. Changes in Regulations. In the event that compliance with subsequent statutes, ordinances and/or rules and regu-
lations changes operating costs, the parties hereto agree to renegotiate this Agreement so that the compensation shown
herein shall reflect such changes.
14. Change in Sanitary Landfill Site. In the event that the parties hereto mutually agree to transfer said sanitary landfill
operations to another site or additional sites, this Agreement shall be renegotiated to reflect any changes required; they
shall include but not be limited to increased compensation due to higher operating costs.
15. Change in Cost of Doing Business. The fees and/or compensation payable to the Contractor for the second and
subsequent years of the term hereof shall be adjusted to reflect changes in the cost of doing business, as measured by
fluctuations in the Consumer Price Index (CPI) published by the U.S. Department of Labor, Bureau of Labor Statistics,
for tne area. At the start of the second year and every six (6) months thereafter, the fees and/or com-
pensation to the Contractor shall be altered in a percentage amount equal to the net percentage change in the said CPI
as follows:
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Compensation made for the first six months of the second year shall reflect the change, if any, that has occurred in the
said CPI during the first year of this Agreement.
Beginning with the seventh month of the second year of this Agreement and every six months thereafter, the net
change in compensation shall be the change in the CPI over the preceding six-month period.
16. Term. The initial term of'this Agreement shall be for the
19 , and ending , 19. . The initial
successive additional.
_-year period beginning
_-year term of this Agreement shall be extended for
— - _. .- j «—'
-year terms, unless one party notifies the other that it intends to terminate this
Agreement. This intent must be conveyed in writing not less than ninety (90) days prior to the expiration of the initial
-year term or of any -year extension thereof.
17. Performance Bond.. The Contractor shall furnish a Performance Bond for the faithful performance of this Agree-
ment. Said bond shall be executed by a surety company licensed to do business in this State and to be in a penal sum
equal to 50 percent of the minimum compensation to be paid to the Contractor by the City for the first year of this
Agreement. For each year thereafter it shall be in the penal sum of 50 percent of the total compensation paid by the
City to the Contractor for the last preceding year. Said Performance Bond shall be furnished annually by the Contrac-
tor within ten (10) days of the execution of this Agreement or any extension thereof. It shall indemnify the City against
any loss resulting from any failure of performance by the Contractor, not exceeding, however, the penal sum of the
bond.
18. Payment Bond. The Contractor shall within ten (10) days of the execution of this agreement, deliver or cause to be
delivered to the City a bond in the amount of $ executed by a surety company licensed to do business in
this State. It shall guarantee payment of wages to all employees of the Contractor at the site or sites and the cost of all
supplies, materials, and insurance premiums required to fulfill this Agreement.
19. Indemnity. The Contractor hereby binds himself to indemnify and hold harmless the City from all claims, demands
and/or actions, legal and/or equitable, arising from the Contractor's operation of all disposal sites herein above de-
scribed.
(Liability insurance policies approved by the City as to type and coverage may be required as a part of the indemnity
provisions of this Agreement. If such policies as automobile liability, general liability, or owner's protective liability are
required, the type and amount of coverage should be clearly spelled out in this section. Minimum motor vehicle liabil-
ity limits set by State financial responsibility laws are seldom adequate.)
Proof of all insurance shall be furnished by the Contractor to the City by certificates of insurance. They shall have a
minimum cancellation time of thirty (30) days, said time to commence after delivery of said notice to the City at the
address shown above.
20. Workmen's Compensation. The Contractor shall carry in a company authorized to transact business in the State of
r a policy of insurance fulfilling all requirements of the Workmen's Compensation Act of said State,
including all legal requirements for occupational diseases. (Would not apply in monopoly States.)
21. Standard of Performance. The City may move to act if the Contractor fails to dispose of the solid waste herein pro-
vided for a period in excess of five (5) consecutive working days or fails to operate the site in accordance with the at-
tached ordinances and specifications for a similar period. (He shall not be held liable if such failure is due to war, in-
surrection, riot, Act of God, or any other cause or causes beyond his control.) The City may, at its option, after sending
written notice to the Contractor as provided hereinafter take over and operate any or all of the equipment he uses in
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carrying out this Agreement, and it may provide for such operation until such matter is resolved and the Contractor is
again able to operate. Any and all operating expenses incurred by the City in so doing may be deducted by it from
compensation paid to the Contractor hereunder.
During such period, the liability of the City to the Contractor for loss or damage to such equipment so used shall be
that of a bailee for hire; ordinary wear and tear is specifically exempt from such liability. The liability of the Contractor
to third persons shall cease and all claims or demands arising out of the operation and/or control of the site or sites
shall be directed solely to the City.
Provided however; if the Contractor is unable for any cause to resume performance at the end of thirty (30) working
days, all liability of the City under this contract shall cease and the City shall be free to negotiate with other contractors
regarding the operation of said site or sites. If Agreement with another contractor is reached, this shall not release the
Contractor herein of his liability to the City for breach of this Agreement.
22. Arbitration.. Any controversy or claim arising out of or related to this Agreement, or breach thereof, shall be settled
by arbitration in accordance with the Rules of The American Arbitration Association, and the judgment rendered may
be entered in any court having jurisdiction thereof. Such controversy or claim shall be submitted to one arbitrator se-
lected from the National Panel of The American Arbitration Association.
23. Landfill Inspection. To ensure that the detailed ordinances, specifications, regulations, and laws for the operation of
a sanitary landfill are complied with, a representative of the City shall inspect the landfill site and operation at least
once a month during the term of this Agreement. The City may make inspections of the sanitary landfill site accompa-
nied by designated personnel during business hours.
24. Contractor's Personnel.
a. The Contractor shall assign a qualified person or persons to be in charge of his operations in the City and
shall inform it of said person or persons' identity with a description of his experience, etc.
b. The Contractor's employees may be required to wear clean uniforms that bear the company's name.
c. The City has the right to request the dismissal of any employee of the Contractor who violates any provision
hereof, or who is wanton, negligent, or discourteous in the performance of his duties.
d. The Contractor should provide suitable operating and safety training for all his personnel. The site should
be staffed at all times with at least one employee who is trained in first aid and has a first aid kit.
e. Wages of all employees of the Contractor shall equal or exceed the minimum scales prevailing for similar
work in the locality of the project. The wages for each classification of employee shall be provided to the City as an at-
tachment to the bid document.
f. No person shall be denied employment by the Contractor by reason of race, creed, or religion.
g. Employees of the Contractor shall have the right to organize and affiliate with recognized labor unions and
shall have the right to collective bargaining.
25. Assignment. No assignment of this Agreement or any right occurring under it shall be made in whole or part by the
Contractor without the express written consent of the City; in the event of any assignment, the assignee shall assume
the liability of the Contractor.
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26. Books and Records. The Contractor shall keep daily records of wastes received, and the City shall have the right to
inspect the same insofar as they pertain to the operation of the sanitary landfill site(s). The records shall show: the type,
weight, and volume of solid waste received; the portion of the landfill used, as determined by cross section and sur-
vey; any deviations made from the plan of operation; equipment maintenance; and cost records. The Contractor shall
submit a proposed record and accounting system for approval. All information so obtained shall be confidential and
shall not be released by the City unless expressly authorized in writing by the Contractor. (A recommended set of cost
accounting records is in "An Accounting System for Solid Waste Collection" developed by the Federal solid waste
management program.)
27. Bankruptcy. This Contract shall terminate in the case of bankruptcy, voluntary or involuntary, or insolvency of the
Contractor. In the case of bankruptcy, such termination shall take effect on the day and at the time the bankruptcy is
filed.
28. Number of Copies. This Agreement may be executed in any number of counterparts, all of which shall have the full
force and effect of an original for all purposes.
29. Law to Govern. This Agreement shall be governed by the laws of the State of , both as to interpre-
tation and performance.
30. Modification. This Agreement constitutes the entire Agreement and understanding between the parties hereto, and
it shall not be considered modified, altered, changed, or amended in any respect unless in writing and signed by the
parties hereto.
31. Right to Require Performance. The failure of the City at any time to require performance by the Contractor of any
provisions hereof shall in no way affect the right of the City thereafter to enforce same. Nor shall waiver by the City of
any breach of any provisions hereof be taken or held to be a waiver of any succeeding breach of such provisions or as a
waiver of any provision itself.
32. Point of Contact. All dealings, contacts, etc. between the Contractor and the City shall be directed by the Contrac-
tor to
(Some duly designated official of the City must be identified to serve as the contact point for the Contractor. A similar
clause could designate a contact point with the Contractor.)
33. Illegal Provisions. If any provision of this Agreement shall be declared illegal, void, or unenforceable, the other
provisions shall not be affected and shall remain in full force and effect.
34. Notice. A letter addressed and sent by certified United States mail to either party at its business address shown
hereinabove shall be sufficient notice whenever required for any purpose in this Agreement.
35. Effective Date. This contract shall become effective and the City or its designated agents and citizens shall begin
delivery of the solid waste to the Contractor days after the date of execution hereof.
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City:
Contractor:
IN WITNESS WHEREOF, the City and Contractor have executed this Agreement as of the day and year first above
written.
Approved as to Form.
City Attorney
City of
A municipal corporation of the State of.
By.
By.
By.
By.
(Name of Contractor)
(Sealed, witnessed, and/or notarized as required by the laws of applicable State.)
Fee Schedule
(Alternate methods of charge)
l.
2.
3.
4.
5.
$
$
$
$
$
per ton of solid waste
per yard of compacted solid waste
per yard of uncompacted solid waste
minimum fee per load
per ton of solid waste consisting solely of material such as bricks, concrete, dirt, etc.
. for each year or yearly
6. The City shall pay to the contractor a minimum fee of $
extension of this agreement.
Toxic, volatile, or other hazardous materials requiring special handling shall be clearly marked by the City and, upon
payment of mutually agreed upon fees, shall be disposed of by the Contractor pursuant to the terms of Item 2 of the
contract.
The Contractor shall submit billings to the City at the close of business at the end of each month for all other waste
placed in the sanitary landfill and the City shall pay the Contractor on or before the tenth day of the following month;
payments shall be mailed to the Contractor at the address shown above.
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Agreement Creating Southwest Washington
Inter-County Solid Waste Advisory Board
An agreement made this 3rd day of April, 1990 by and among the counties of Pacific, Cowlitz, Grays Harbor, Lewis,
Mason, Thurston and Wahkiakum, all political subdivisions of the state of Washington and municipal corporations.
Section One, Purpose: The purpose of this agreement is to provide for funding and an organizational structure to con-
duct the necessary research and development to review and compare the solid waste planning activities of each
county; to determine the feasibility and desirability of combining the waste streams of some or all of the signatory
counties in search of regional solutions to solid waste disposal issues; and to explore the feasibility of drafting a sample
bid call document combining the waste stream of some or all of the signatory counties.
Section Two, Authority: Each county has authority pursuant to Chapter 36.58 RCW to establish a system of solid
waste handling and each county has authority pursuant to Chapter 39.34 to enter into agreements with other munici-
pal corporations to achieve governmental purposes. Each county has authority pursuant to Chapter 70.95 RCW to pre-
pare comprehensive solid waste management plans; to apply to the Department of Ecology for financial aid for the
preparation of such plans; and to adopt regulations governing solid waste handling.
Section Three, Organization: There is hereby created a Southwest Washington Inter-County Solid Waste Advisory
Board (SWICSWAB) composed of a representative from each of the signatories to this agreement.
Section Four, Duration: This agreement is for the purpose of developing plans only and shall be subject to review at
the end of task three (3) of the Scope of Work as set forth in Attachment A to this agreement. Any signatory to this
agreement may withdraw from the Southwest Washington Inter-County Solid Waste Advisory Board after the
completion of task three (3) by given written notice to the other signatories within thirty (30) days following the
completion of task three (3). With respect to signatories who decide to continue in this planning process after the
completion of task three in Attachment A, this agreement shall terminate when: (1) the plans contemplated to be devel-
oped have been completed to the satisfaction of a majority of signatories or, (2) if such a majority has determined it is
no longer useful to continue. In no event shall this agreement remain in effect longer than fourteen (14) months from
the date of adoption of this agreement by all parties.
Section Five, Funding: Funds to conduct the legitimate activities of this board shall be raised by payments from the
members. The percentage of payment from each member jurisdiction will be in proportion to the waste stream gener-
ated by each member jurisdiction. Any monies remaining in accounts at dissolution will be distributed to the signato-
ries in proportion to their respective contribution. Any debts at the time of dissolution shall continue to be a liability to
each organization as established by an accounting of each organization's unpaid balance.
Funds necessary for administration purposes and any contracts entered into by the joint agencies shall be deposited
with the treasurer of Lewis County and designated "Operating Fund of the Southwest Washington Inter county Solid
Waste Advisory Board".
Section Six, Administrator The board shall appoint an administrator from the county identified in section five of this
agreement who shall be responsible for coordinating the activities of the board.
Section Seven, Records: The administrator shall have authority to keep records of the activities of the board; to pre-
pare and negotiate contracts subject to approval by the board; and do all things necessary to accomplish the purposes
of the advisory board.
Section Eight, Property: No real or personal property shall be jointly acquired or jointly held between the parties to
this agreement.
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Attachment A
Draft
Scope of Services
A. Purpose
An intergovernmental association of seven Southwest Washington Counties has been formed for the purpose of evalu-
ating the feasibility of developing and implementing a "regional" solid waste handling and disposal system to serve
the area The need for this effort is driven by several factors including rapidly diminishing landfill space, the problems
associated with siting new landfills, and ever increasing federal, state, and local rules and regulations and the associ-
ated costs. Recognizing that each individual county is currently involved in solid waste planning at the local level, this
study will focus on the feasibility of "regional" solid waste handling and disposal for incorporation into local plans. A
"regional" approach to waste reduction and recycling issues/programs that may be integrated with alternatives for
handling and disposal will also be identified and evaluated, but only to the extent as they may rekte to the "regional"
concept. The "regional" project will not provide a disincentive for meeting the state's priorities for solid waste han-
dling.
B. Scope of Work
The main objective of the project is to assist the Counties in identifying and evaluating available options for a "re-
gional" approach to solid waste management. The anticipated result is to design, select, and implement a system, re-
sponsive to the public, complying with all applicable Federal, State, and local regulations, and consistent with local
planning documents. The project is divided into two phases and includes the following tasks:
Phase I Existing Systems/Existing and Future Needs
1) Review and summarize the existing solid waste management systems for each of the participating counties. Docu-
ment the existing municipal solid waste stream and identify future impacts such as growth, waste reduction, and recy-
cling programs.
2) Review the existing and future needs of each of the participating counties and establish common goals wherein a
regional system(s) can be developed. Document existing disposal system capacity and timelines of each county. Re-
view existing transfer/transportation systems and needs.
3) Following completion of tasks 1 and 2, a summary report will be prepared identifying the needs and opportunities
common to the participating Counties. The report will be evaluated by each participating County and a determination
made as to continued participation in the project.
Phase 2 Alternatives and Feasibility
4) Identify alternative "regional" solid waste management systems for analysis. Potential systems or combination of
for review may include the following:
a) Regional Sanitary Landfill Facilities
b) Regional Solid Waste Transfer Facilities
c) Regional Energy Recovery Facilities
d) Regional Waste Reduction Programs
e) Regional Recycling Programs/Opportunities
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5) Feasibility Analysis: Prepare a feasibility analysis of "regional" solid waste management alternatives. The analysis
shall include an evaluation of the environmental, technical, and economic issues/concerns of each of the alternatives.
6) Implementation Analysis: Provide a discussion of implementation issues regarding each alternative. The discussion
should include: legal, operational, organizational, procurement, and other issues surrounding the implementation of
each alternative.
7) Final Report: Prepare a final report including the selection of a preferred long range "regional" solid waste handling
and disposal system. The Final Report shall include a summary of the findings and recommendations, estimated oper-
ating and capital expenditures, and an implementation plan for each element of the preferred system. The implemen-
tation plan will include a schedule that identifies key implementation dates to assure the effectiveness of the recom-
mended system. The implementation plan will also include: the process for each of the participating Counties to evalu-
ate and consider participation in implementing the recommended system; an interlocal agreement for participation
and timelines for commitment to implementing the recommended system; a financing/funding plan; and, the method
by which each participating County may incorporate the report into their local SWMP.
8) Project Schedule: Phase 1 Summary Report to be completed within 90 days of "notice to proceed." Final report to be
completed within 180 days of start of tasks 4,5, and 6.
9) Public Involvement program: Develop and implement a public awareness program regarding the project including
newsletters and press releases. Each County will be responsible for distribution of information to the media and other
appropriate parties within its jurisdiction. The program will be started in Phase 1 and continue throughout the project.
revised 4/4/90
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Appendices
Appendix C: Adversarial v.
Collaborative Negotiations
Negotiation may be either adversarial or collaborative. Adversarial negotiation is probably still regarded as the "tradi-
tional" style, but there is a growing awareness and use of collaborative styles of negotiation.
In an adversarial environment, participants see the negotiation effort as a matter of winning or losing, with achieve-
ment of one party's objectives being possible only at the expense of the other party. This does not necessarily mean that
the parties are antagonists — indeed, if negotiations take place in a climate of mutual trust, they can, in the end, pro-
duce benefits and satisfactions for both or all parties. Traditional labor-management negotiations are an example, as
are some forms of court litigation.
Following are some of the basic characteristics of adversarial negotiations:
• the parties may initially take extreme positions (i.e., make excessive demands or paltry first offers);
• the parties are reluctant to make concessions, and when they do, the concessions are small;
• the parties do not share information that might reveal their real interests and needs; and
• the parties may use emotional tactics such as anger, veiled threats, or walking out of the negotiations.
The drawbacks of adversarial negotiating styles include
• they tend to focus only on the narrow issues in dispute and do not always address the main interests of the
parties;
• they tend to strain relations between the parties, making'resolution of future disputes even more difficult; and
• for those reasons, they may fail to solve problems and have little legitimacy in the eyes of the parties.
Collaborative processes, on the other hand, are joint problem-solving efforts. These processes are voluntary, informal,
and consensual, and best suited for resolving disputes concerning contract compliance or contract amendments.
All collaborative processes involve negotiation between the affected parties. The kind of negotiation that collaboration
emphasizes has been called "principled" or "interest-based" negotiation.1 It can be summarized in four basic points.
1. Separate the people from the problem.
2. Focus on interests, not positions.
3. Invent options for mutual gain.
4. Insist on using objective criteria.
1 Roger Fisher and William Ury, Getting to Yes: Negotiating Agreement Without Giving In. (Boston: Houghton Mifflin
Company, 1988).
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Gerald Cormick, president of the Mediation Institute in Seattle, has identified the following advantages of using col-
laborative processes:2
Reducing Uncertainty. Predictability is achieved through translating total opposition into self-interested coopera-
tion.
Achieving Closure. Exhausting all appeals on one issue using traditional processes may result in a challenge on
another issue. In contrast, collaborative processes can bring closure to a conflict. An agreement belongs to the par-
ties; they have a selfish interest in ensuring that it is implemented correctly.
Improved Planning and Better Decisions. Collaborative processes can provide a context in which parties discuss
their underlying interests and jointly explore possible solutions. Such a process can result in creative solutions that
none of the parties would discover independently.
Better Use of Technical Expertise. In traditional processes, technical experts are often placed in competition to
substantiate or discredit one another. Part of many collaborative processes is joint fact-finding, in which the par-
ries mutually agree on what information is needed and what methods are acceptable for obtaining it. Thus, when
the information is received, all parties are more Likely to accept it.
Advantages to an Organization. In some traditional processes, particularly judicial proceedings, the parties tend
to defer to an expert (e.gv an attorney). This can result in selection of tactics that may be effective in a particular
case, but are detrimental to an organization's long-term goals. The direct involvement of the parties in collabora-
tive processes helps to ensure that the broadest interests of the organization are served.
Steps in the Collaborative Process
As mentioned earlier, negotiation is at the heart of collaborative processes. Successful negotiations usually follow a
pattern involving the same sequence of steps. In some situations, the parties can handle all aspects of the process
themselves. In other instances, the parties need the assistance of a mediator.
Prenegotiation Phase
Prenegotiation is an important, but also very delicate, part of a collaborative process. It includes the first interactions
between the parties, which may involve a period of testing and "feeling out" to determine the parties' motivations and
operating styles. This phase can be frustrating to those who would like to move quickly. It is crucial, however, to com-
plete these steps successfully before substantive negotiations begin. It may be necessary to "go slow" through this
phase in order to "go fast" through the negotiation phase of the process.
Step 1. Getting Started. The key tasks involved in this step are (1) helping the primary disputants decide if such a pro-
cess is in their best interest, and (2) initiating contact between the parties.
The reason for negotiating is to produce a better outcome than could be obtained without negotiating. Therefore, a
party should first analyze what results can be obtained through negotiation versus other conflict resolution processes.
The costs involved in pursuing alternative approaches should be considered, as well as the concerns and objectives of
other parties. This helps determine whether all parties are likely to agree to negotiate and what tradeoffs they may be
willing to accept.
2See Gerald W. Cormick, "How and When Would You Mediate Natural Resource Disputes?" Paper presented to Al-
ternatives to Litigation Seminar, Washington State Bar Association, Seattle, Washington, July 16,1985.
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Appendices
If a collaborative process seems to be in the best interest of all parties, someone has to initiate the process. It should be
stressed that negotiations are voluntary, and any party can stop the discussions at any time to pursue other courses of
action.
Step 2. Representation. There are two parts to this step: deciding which groups should be represented in the negotia-
tions (if it is more than a two-party conflict) and finding a representative who can legitimately speak for each group.
Step 3. Ground Rules and Agenda. Before the parties begin substantive negotiations, they should agree on two points:
the procedure for working together, and the specific items they will discuss. Ground rules should be established and
agreed on by all parties before beginning even the simplest of negotiations. Ground rules should include a procedure
for changing the rules later in the process, if necessary. There is no "correct" set of ground rules; each group of negotia-
tors should adopt rules that will work best for them.
All parties should agree on the agenda, and it should be established before negotiations begin. All concerns of the par-
ties shall be included as potential agenda items. A group session to identify the concerns can be helpful, not only in
creating the agenda, but in helping each party clarify its primary interests.
Step 4. Joint Fact Finding. This step involves determining what information the parties have regarding the issues;
identifying information that is accepted as accurate by all the parties; determining what additional information, if any,
is needed to negotiate effectively; and deciding the process that will be used to obtain those additional facts.
Negotiation Phase
Step 5. Inventing Options for Mutual Gain. At this step, it is important for the parties to approach the negotiations
not as a contest to be won, but as a problem to be solved. These two approaches to negotiation are sometimes called
"zero-sum" and "positive-sum" approaches. The zero-sum, or distributional, approach assumes that only limited
gains are available; whatever one party gains, the other party loses. In the positive-sum, or integrative, approach, the
parties work cooperatively to find a mutually acceptable solution to their common problem. They focus on each
other's interests to determine if there are items they value differently and can trade with mutual benefits. They pro-
duce as many ideas as possible for solving the problem.
Step 6. Packaging Agreements. After the parties feel they have created enough options, they must decide which ones
to include in the contract. The parties should remain aware of each other's interests while working through this step.
Each negotiator should look for solutions that will leave all parties satisfied.
The key is to look for options that satisfy mutual interests or that each party values differently. One strategy that may
help in arriving at agreement is for one party to propose several agreements, all of which are equally acceptable to him
or her. This step will not always result in an agreement that is completely acceptable to all parties. They may resolve
some issues, or they may be unable to resolve any of the issues in dispute. If no agreement can be reached, the partici-
pants still can pursue other dispute resolution processes such as arbitration or other traditional approaches.
Step 7. Binding Parties to Their Commitments. An important part of an agreement consists of provisions to ensure
that the parties will honor the terms of the agreement. If the agreement will not be implemented completely by legal
means, then it is necessary to make its other provisions self-enforcing. This generally requires careful sequencing of
required actions and performance measures. It may be helpful to include contingencies in the contract to cover unfore-
seen circumstances or failure by one party to uphold his or her end of the agreement.
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Appendices
Negotiators
Negotiators need to be flexible. They also need to be personable, to communicate with others easily, to clarify the inter-
ests they represent, and to dissolve tensions that often develop during negotiations. They need effective communica-
tion skills such as active listening, perception checking, and the ability to discuss complex matters in clear, concise
terms. They must deal with peoples' natural tendencies to take stands that can obscure shared interests. They need to
communicate equally well with elected officials, who may provide them with general fiscal and general policy guide-
lines, and with the negotiator for the selected service provider.
Effective negotiators need to keep sight of overall interests while discussing and negotiating agreement over specifics.
They also need to convey to others that they believe what they are saying. This is the ability to communicate that "I
wiU do exactly what I say, when I say I will do it, and if I change my mind, I will tell you well in advance so it will not
harm you," This will contribute to a confidence in the negotiating process and encourage commitment to working out
agreements that are mutually satisfactory.
The negotiator also must thoroughly understand the solid waste service or activity that is being negotiated, have the
ability to articulate specific performance standards, and be able to anticipate where snags in contractual relationships
are likely to occur and how these may be minimized. An understanding of federal, state, and local regulations related
to solid waste contracting also is essential.
Sometimes all these abilities will not be found in one individual negotiator, or the contract is so complex that a team
approach will be used. In using a team, each member must be aware of his or her assigned role and responsibilities
and of how individual actions affect group results.
Finally, the negotiator needs to realize that contract negotiations tend to develop a fixation on price to the exclusions of
other important related issues. Obviously, costs are a primary concern and are frequently the primary context for ne-
gotiation. Still, negotiators need to be aware that long-term costs can be affected by the fairness of the returns to the
service provider. A provider receiving a minimal return may not have an incentive to do more than meet minimum
contact requirements or may not make an effort to work with the public agency in a cooperative manner if problems
arise. A fixation on price" or on any one single interest limits the ability of the negotiators to reach mutual satisfaction.
All these considerations should be kept in mind when selecting a negotiator, forming a negotiation team, formulating a
strategy, and developing a negotiation process.
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