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City staff favors Balcones over Texas Disposal for recycling contract

Friday, March 25, 2011 by Michael Kanin

City staff on Thursday formally recommended that the City Council contract with just one firm for handling of its residential single-stream recycling program: Austin-based Balcones Recycling, shutting out the other company Council chose to negotiate for the business, Texas Disposal Systems. The recommendation comes after six months’ worth of negotiations with both companies.


Solid Waste director Bob Gedert told Council that the best financial option for the city was to give the entire deal to Balcones for at least three years. “It saves the city … about $400,000 a year from the next closest proposal, or $1.2 million over the first three years,” he said.


According to Gedert, the next closest option to the total Balcones award is a 60 percent-40 percent spilt of the deal between Balcones and Texas Disposal, respectively. The City Council is expected to make a decision on the matter at its April 7 meeting. When it does, it is within Council Members’ discretion to award the deal solely to Balcones, or to arrange a shared deal between that firm and Texas Disposal.


Still, despite the fact it might consider accepting such a split, Texas Disposal isn’t quite ready to throw in the towel. Indeed, at a break in the hearing, the company’s CEO Bob Gregory told In Fact Daily that there were problems with the math in Gedert’s presentation. “It’s not an apples-to-apples comparison,” he said.


Gregory questioned the range of Gedert’s market data. “The current (market numbers are) at an all- time high,” he continued. “His high figure is higher than it’s ever been in history. The low is really where it ought to be … So, in other words, his analysis is unrealistic.”


He insisted that, with “a reasonable market range,” his firm has a $1 million advantage over Balcones.


Gedert defended his department’s work. He told In Fact Daily that he had shown each firm his interpretation of their proposals before he moved ahead with his math. “I believe that the numbers are accurate,” he said.


The contract is a lengthy, flexible document that would feature occasional price resets. During his presentation, Gedert noted that it would be a model for other such deals. “We’re being watched fairly carefully by Zero Waste communities across the nation,” he said. “This is a contract that will set the tone for future recycling contracts.”


Gedert said that some innovative portions of the deal were key to the wide interest it was generating. These include the opportunities for a periodic reset of pricing and a feature that Gedert calls “Most Favored Nation” – a clause which guarantees that the City of Austin will have the opportunity to negotiate for the best deal that its recycling firm (or firms) can offer.


Texas Disposal has not entirely agreed to three specific provisions that would secure each of those features for the city. Balcones has. 


Meanwhile, Greenstar Recycling’s public relations campaign against Texas Disposal’s current deal to handle the city’s residential single stream recycling continued. On Monday, the firm ran another on-line ad with the Austin American-Statesman criticizing that deal. In it, the company rehashes a theme that it has repeated for the last several weeks.


“Unfortunately, despite very good commodity prices, the city has lost potential revenues and recycling volumes have decreased since (Texas Disposal) assumed responsibility for the recycling program,” it reads.


Greenstar and Texas Disposal are longtime rivals for the city’s waste program. Both firms, as well as Balcones, were also involved in a heated fight for city staff’s blessing to build a Materials Recovery Facility.


The bidding process for that contract was eventually thrown out, and staff was instructed to begin the current negotiations with Texas Disposal and Balcones.

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