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TDS tries to unseat rivals with end run around recycling bid process

Wednesday, February 10, 2010 by Michael Kanin

Texas Disposal Systems has submitted a proposal for the Materials Recovery Facility (MRF) after all. Its plan was delivered directly to the Austin City Council and the Solid Waste Advisory Committee just after the deadline for responses to the city’s MRF request for proposals had passed on Tuesday. The document is part of a 33-page proposal for a broad extension of TDS’ current contract with the city of Austin. As such, the firm claims it has kept the promise it made to not submit a response to the RFP. (Link to letter).


That action has probably derailed, at least for now, the contract extension for Mid-America Recycling, which does business as Greenstar. The Council is set to consider that extension at Thursday’s Council meeting.


Council Member Bill Spelman told In Fact Daily last night, “I think TDS’ proposed amendment complicates the situation enough that we need to take a look at our options, and at this point, everyone on the Council I’ve talked to supports taking a couple of weeks and thinking about it. I think the thing we’re likely to be voting on Thursday is to postpone the vote (on Greenstar’s extension) for a couple of weeks and look at the responses to the RFP and the legality of amending the TDS contract.”


In a letter that accompanied the proposal, TDS Chairman and CEO Bob Gregory tried to be clear about the nature of his latest move. “In lieu of a formal response to the RFP,” he wrote, “we have elected to submit a proposal to amend our existing 30-year Waste Disposal and Yard Trimmings Processing Contract executed May 12, 2000, which is permitted by the contract itself pursuant to the fully incorporated 1998 RFP under which that contract was originally approved. Today’s proposal is not a submittal under the current RFP process.”


If TDS had responded to the MRF RFP, it could have been found in violation of the city’s anti-lobbying rule (see In Fact Daily, Jan. 29, 2010; Feb. 8, 2010). Those responses were due yesterday (Feb. 9) at 11am.


TDS’ proposal calls for two variations of a MRF plan. The first, what it terms a “short term MRF processing proposal,” would turn all of Austin’s recycling over to TDS on October 1, 2010. The company says it will charge the city nothing for the service. In exchange, there would be no sharing of whatever revenue might result from the sale of the recyclables.


In the process, TDS claims that it can save the city between $2.4 million and $7.5 million “over the term of the contract.” TDS included short-term contract length options of 12, 24, and 36 months and said that the city could roll itself into the longer-term deal with a month’s notice.


The savings figures were calculated with respect to the city’s existing recycling contract with Greenstar. That deal is set to expire in September of this year, though the city can choose to exercise one or more of four six month extensions. Greenstar and the city have been working on a redo of the contract since it became clear that the city had lost $2.6 million since the company assumed recycling duties in Austin. As part of the contract extension, the city would pay Greenstar the $2.6 million it owes for transport and processing of recyclables.


City Council is scheduled to decide whether or not it will extend Greenstar’s existing contract. The new deal would offer the city $400,000 in savings and would be separate from any MRF proposal Greenstar submits. Even before TDS delivered its proposal, some Council members were saying they would like to postpone consideration of the Greenstar contract. Mayor Lee Leffingwell and Council Member Chris Riley had indicated they would like to see a lot more information than they thought they could get by Thursday.


Assistant City Manager Robert Goode said in a memo last week that he won’t be able to tell Council what companies have bid, as well as many other relevant factors.


However, Goode says he will be able to tell Council if any of the proposals indicate that they could have a MRF up and running before March 2011 — six months into the Greenstar extension. TDS says it can have its own MRF ready to go in September so that no extension of the Greenstar contract would be needed.


On Tuesday, Council Member Randi Shade said she wants to find out from Goode what timelines the MRF bidders offered in their proposals. “If they all say they can be ready in March 2011, then it probably makes the most sense to not extend the current contract,” she said, because “we have a current contract that has in it the opportunity to exercise two six-month options.”


In late 2008, the city began its single-stream recycling program, which quickly generated significantly more material than the previous program. The city does not have a sorting facility, however, so it contracted with Greenstar to haul its recycling to out-of-town MRFs, first to suburban Dallas then to San Antonio.


TDS’ short term MRF proposal was submitted as a direct challenge to an extension of the Greenstar contract.


Greenstar has also been tentatively disqualified from the MRF RFP (see In Fact Daily, Jan. 29, 2010, Feb. 8, 2010). A decision on its appeal is expected on Feb. 18. The company has indicated that it will submit its response pending that ruling.


Greenstar’s chief operating officer, Dennis Soriano, did not return multiple calls for comment. The company may believe that doing so would be a violation of Austin’s anti-lobbying ordinance.


TDS’ long term MRF proposal was part of a larger body of substantial changes that the company proposed in its relationship with the city. These could include:


§       A reversal of the respective roles that TDS and Austin play in their current recycling contract. Under the old provision, TDS is allowed to ship its recyclables to “any city owned or utilized MRF.” TDS then reimburses the city “for its actual processing costs” and pays a 7 percent  “processing fee.” According to the new proposal, the city would ship its goods to a planned TDS MRF, and the money would go the other way. In its proposal, TDS reiterates that it will have its MRF “fully operational on or before September 30, 2010”;


§       The implementation of a compost facilities sharing plan that TDS says could lead to citywide compost collection and a “Commercial Food Waste Recycling Ordinance”;


§       A shared facilities plan that would combine TDS’ and Austin’s purchasing power “to create significant unit cost reductions.” Tires, gas, on-site vehicle maintenance, and, eventually, “renewable fuel or fueling” technology would all be included; and


§       The construction of a “North Austin transfer station for processing and transferring solid waste, organics, and recyclables.” TDS claims that “city access to such a facility would significantly improve collection efficiency and reduce the carbon footprint of the city’s solid waste and recyclables operation.” It further suggests that the facility could also “serve as a public drop-off point for solid waste, organics and recyclables, as well as household hazardous waste and e-waste.”


All told, the complete deal would extend TDS’ purview to include nearly every aspect of solid waste in Austin. If, as TDS proposed, the city chose to lengthen the contract for another 20 years, this would continue until 2050.


SWAC Vice Chair Rick Cofer said that he hadn’t yet had a chance to review TDS’ proposal. “It sounds impressive,” he says. “I look forward to reading it.” His SWAC colleague J.D. Porter had also not had a chance to look over the proposal. When contacted, Porter said that he had just returned from Houston and that much of his Wednesday schedule would be spent dealing with the Greenstar extension.


Gregory says that he will attend both Thursday’s Council hearing on Greenstar and this evening’s SWAC meeting. He expressed some regret about how things have transpired. “I intended to do an RFP,” he said.

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