&EPA
220-B-92-005
May 1992
Office of Administration and Resource Management H-3304
Solid Waste Contracting:
Questions and Answers
Printed on Recycled Paper
-------
A Message from the Acting Assistant Administrator
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
program we have fostered public-private partnerships in
communities around the nation and created how-to publica-
tions to help local officials manage and finance their environ-
mental programs. This publication is one of the products of this
effort.
Through public and private cooperation, we can
develop effective ways to meet the challenge of financing
environmental protection. This handbook will help you meet
this challenge.
Christian R. Holmes
1
-------
Solid Waste Contract Brochure
Questions and Answers
Purpose of this guide:
We have designed this guide
to give you an introduction
to solid waste contracting.
We hope you find it useful.
If you would like more detailed information,
please call the Public Information Center
(202) 260-7751
and ask for a free copy of the EPA's
"Solid Waste Contract Negotiation Handbook."
This comprehensive guide to solid waste
contracting addresses all the issues in this brochure
in detail and provides examples of actual contracts.
-------
-------
TA 7^at are t^te ^vantages of contracting with the
\ \private sector or other governmental units?
Turning to the private sector and to other governments offers
advantages such as:
access to new technology;
economies of scale;
management expertise;
risk sharing; and
greater operational flexibility.
H
row are these arrangements formed?
Most public-private and intergovernmental arrangements are
established by developing a 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.
Private Contracts
A private contract involves an agreement with a company to obtain
certain goods and/or services. 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 arrange-
ments involving several activities and many private vendors.
Intergovernmental Agreements
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 agree-
ments stress cooperation. They allow local governments to do
jointly or cooperatively anything they do individually. They may
-------
be voluntary or result from state laws requiring plans and facilities
to cover state-defined districts.
There are two main types of intergovernmental agreements,
service contracts and joint/cooperative agreements. In a service
contract a community sells services to another community. Joint/
cooperative arrangements are used when two or more governmen-
tal units jointly own facilities or accept joint responsibility for
operations.
w
at information do I need to decide to contract?
To decide whether to perform services in-house, contract out, or
develop an intergovernmental agreement, information 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 and disadvantages of contracting.
H
row do I obtain the services of a private contractor?
Contracts with private firms are governed by state public contract-
ing laws. These laws vary widely in detail, but usually require
competitive bidding. State laws also regulate the competitive
bidding process and set requirements for contract awards and
contract management.
T A That are the types of competitive bidding
\ \procedures?
Most states require communities that contract out to follow com-
petitive bidding procedures. This usually involves Invitations for
Bid (IFBs) or Requests for Proposals (RFPs).
Invitation for Bid
An Invitation for Bid (DFB) requires private companies to submit a
-------
bid price. The community outlines project specifications and
awards the contract to the lowest responsible bidder.
The first and most important step under the IFB process is for the
community.to draft specifications for the work. These should be
very clear, but not so detailed as to constrain the contractor's
professional or technical judgment. Once specifications are drafted,
remaining activities include: drafting the call for bids; advertising;
opening the bids; evaluating the bids; and awarding the contact.
Request for Proposal
A Request for Proposal (REP) is needed when the work to be done
cannot be described in enough detail to estimate the cost. RFPs are
also used when aspects of a contact require negotiation. For
example, allocation of liability or responsibility for compliance with
federal and state regulations may need to be negotiated. Circum-
stances favoring use of RFPs can include development of a landfill,
development of future markets for recycled materials, or use of new
technologies.
Both IFBs and RFPs seek to maximize competition and assure the
selection of the best contactor. However, RFP's are often the
exception, to be used when IFBs are not practical or advantageous.
T A That provisions should be included in the
w V contract agreement?
Whether a public-private or an intergovernmental arrangement is
involved, the agreements of the parties are incorporated in a
written contact. Common contact elements are:
Background/purpose, legal authorities and terms;
Specifications, scope of work, or statement of undertakings;
Regulatory compliance responsibilities;
Permit responsibilities;
Financing and compensation;
Contact duration;
Performance monitoring system;
Disputes resolution procedures;
Renegotiation provisions; and
Termination provisions.
-------
T A That are special concerns for the community
V win solid waste contracting?
Issues of special concern in solid waste contracting include:
A. Regulatory compliance, monitoring and permitting;
B. Compensation; and
C. Liability.
A. 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 local officials know the basics of
RCRA Subtitle D.
Solid wastes that pose a potential hazard to human health or the
environment when improperly managed are referred to as hazard-
ous wastes. Hazardous waste possesses at least one of four charac-
teristics - 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, compli-
ance depends on monitoring. If the contractor is the state permit-
tee, 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 contract, the contractor is likely to be respon-
sible for obtaining permits.
-------
B. Compensation
Compensation in money or some other form is an essential contract
element. Fair compensation for services or facilities 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.
C. 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 specify work will
be performed. Under certain circumstances, 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 indirectly 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 contract language is not specific 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 pollution, contamination or
chemical release. Transport activities carry the greatest risk of
vehicle accidents and of waste spillage.
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.
T A That are some other sources of information about
w \solid waste contracting?
A. Publications
B. Organizations
C. EPA Public-Private Partnership Regional Coordinators
D. EPA Solid Waste Regional Primary Contacts
Publications
Public-Private Partnerships
Public-Private Partnerships for Environmental Facilities: A Self-
Help Guide for Local Governments. Washington, DC: Office of
Administration and Resources Management, U.S. Environmental
Protection Agency, 1989. Public Information Center: 202/260-7751.
Public-Private Partnerships Case Studies: Profiles of Success in
Providing Environmental Services. Washington, DC: Office of
Administration and Resources Management, U.S. Environmental
Protection Agency, 1989. Public Information Center: 202/260-7751.
Edwards, Howard W., Successful Approach to Privatization.
Washington, DC: Center for Privatization, 1987.
Finley, Lawrence. An Entrepreneurial Process for Privatizing at
the Local Level. The Privatization Review. The Privatization
Council, New York, NY, Winter 1987.
-------
Contracting
Huelsberg, Nancy A. and William F. Lincoln, Editors. Successful
Negotiating in Local Government. Washington, DC: International
City/County Management Association, 1985.202/289-4201.
Manchester, Lydia D., and Bogart, Geoffrey S., "Contracting and
Volunteerism in Local Government: A Self-Help Guide," Interna-
tional City/County Management Association, Special Report, 1998.
202/289-4201.
"Is Contracting the Answer? The Newark Experience," City of
Newark, New Jersey, International City/County Management
Association, Clearinghouse Report #40178.202/289-4201.
Contracting for Services. Washington, DC: National Association of
College and University Business Officers 1982.
Ferris, James and Elizabeth Graddy. "Contracting Out: For What?
With Whom?" Public Administration Review July/August 1986:
page 332-344.
Interlocal Service Delivery: A Practical Guide to Intergovern-
mental Agreements/Contracts for Local Officials. Washington,
DC: National Association of Counties Research Foundation 1982.
Rehfuss, John A. Contracting Out in Government. San Francisco,
CA: Jossey-Bass, Inc. 1989.
Sharfsten, Howard. "Procurement and Contract Issues for Recy-
cling Facilities." Biocycle November/December 1988: page 37-39.
Wisniewski, Stanley C. "Analyzing the Contracting-Out of
Government Services: Relevant Cost-Benefit Considerations."
Public Budgeting and Finance (Summer 1991): page 95-107.
Privatizing Municipal Waste Services: Saving Dollars and
Making Sense. Phone: Office of Public Affairs at the National
Solid Waste Management Association 301/585-2898.
Contract Operation and Maintenance: The Answer for Your
Town? Washington, DC: Office of Municipal Pollution Control,
U.S. Environmental Protection Agency, 1987.
10
-------
Contractors
Environmental Services Directory. Minneapolis, MN: Environ-
mental Information, Ltd., 1991. 612-831-4273.
Bassi, Joann., Directory of Commercial Hazardous Waste Treat-
ment and Recycling Facilities. Washington, DC: Office of Solid
Waste and Emergency Response, U.S. Environmental Protection
Agency, 1985.
Olstein, Myron, "Selecting a Privatizer", The Privatization Review,
The Privatization Council, New York, NY, Spring 1986.
Solid Waste Management
Decision Makers Guide to Solid Waste Management. Washing-
ton, DC: Office of Solid Waste and Emergency Response, U.S.
Environmental Protection Agency, U.S. Environmental Protection
Agency, 1990. EPA's RCRA Superfund Hotline: 1-800^124-9346.
Evaluating Residential Refuse Collection Costs. Washington, DC:
National Science Foundation, 1978. Solid Waste Association of
North America: 301 /585-2S98 (ask for Paula Novakovich).
Estimating Solid Waste Transportation Costs. Local Government
Research Corporation. Solid Waste Association of North America:
301/585-2898 (ask for Paula Novakovich).
Organizations:
International City/County Management Association (ICMA)
777 North Capitol Street, N.E.
Washington, DC 20002-4201
202/289-4262
Privatization Council
1101 Connecticut Avenue, N.W.
Washington, DC 20036
202/857-1142
Solid Waste Association of North America
P.O. Box 7219
Silver Spring, MD 20910
301/585-2898
National Solid Wastes Management Association
Suite 1000
1730 Rhode Island Avenue, N.W.
Washington, DC 20036
202/659-4613
11
-------
Directory of EPA Regional Offices
Public-Private Partnerships Regional Coordinators
George Mollineaux
EPA-Region 1
JFK Federal Building
Boston, MA 02203
(617) 565-9442
Janet Sapadin
EPA-Region 2
26 Federal Plaza
New York, NY 10278
(212) 264-1925
Cathy Mastropieri
EPA-Region 3
841 Chestnut Street
Philadelphia, PA 19107
(215) 597-4149
Tom Moore
EPA-Region 4
345 Courtland Street, N.E.
Atlanta, GA 30365
(404) 347-4728
Louis Blume
EPA-Region 5
77 West Jackson Boulevard
Chicago, IL 60604-3507
(312) 353-6148
Bob Carson
EPA-Region 6
1445 Ross Avenue
Dallas, TX 75202-2733
(214) 655-6530
Ray Hurley
EPA-Region 7
726 Minnesota Avenue
Kansas City, KS 66101
(913) 551-7365
David Warm
EPA-Region 8
Suite 500
99918th Street
Denver, CO 80202-2405
(303) 293-1621
Marsha Harris
EPA-Region 9
75 Hawthorne Street
San Francisco, CA 94103
(415) 744-1635
Matt Coco
EPA-Region 10
1200 Sixth Avenue
Seattle, WA 98101
(206) 553-0705
12
-------
SOLID WASTE REGIONAL PRIMARY CONTACTS
REGION 1
John Hackler
(617) 573-9670
REGION 2
Mike DeBonis
(212) 264-0002
REGION 3
Andrew Uricheck
(215) 597-7936
REGION 4
Jim Scarbrough
(404) 347-0077
REGION 5
Andy Tschampa
(312) 886-0976
REGION 6
Guanita Reiter
(214) 655-6655
REGION 7
Chet McLaughlin
(913) 551-7666
REGION 8
Judy Wong
(303) 293-1667
REGION 9
Jeff Scott
(415) 744-2091
REGION 10
Mike Bussell
(206) 553-2857
------- |