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Council questions staff over Austin Energy waste handling contracts

Friday, March 8, 2013 by Michael Kanin

A clerical oversight by a city contractor is forcing deeper consideration of an Austin Energy waste-handling contract. And Austin City Council members are questioning the procedural operations of two city departments in the wake of that development.


The immediate issue is a $264,000 deal to process class-two non-hazardous waste. According to materials from the Texas Commission on Environmental Quality, an example of such material “include(s) waste-activated sludge from biological wastewater treatment.”


When Texas Disposal Systems, the firm that currently holds the contract, inadvertently omitted the pricing section of its bid to renew the agreement, city purchasing staff recommended Allied Waste Services (formerly BFI) – the  only other bidder – for the contract. Staff brought that agreement forward for Council approval Thursday.


However, before Council members could vote, Texas Disposal distributed a letter to Council members that it originally wrote to purchasing staff. In it, Texas Disposal President and CEO Bob Gregory argues that the Allied bid is “approximately 16 percent higher than current contract rates, and approximately 17 to 19 percent higher than the rates TDS prepared for this bid.”


It was enough to bring questions of purchasing about its procedures and Austin Energy about whether it had collaborated with the city’s Resource Recovery department in determining its disposal needs. It was not enough for Council Member Bill Spelman to vote for postponement.


After calculating the reported difference between Texas Disposal’s bid and the one from Allied, Spelman came to a conclusion. “Mayor, I’d love to save $40,000 same as every body else, but it seems to me that the integrity of our bid process is worth a lot more to us than $40,000 a year, so I’m going to vote ‘no’ on this motion.”


Spelman offered the only objection, and, in the end, Council postponed the deal until April 11, 2013. In the interim, the city’s Zero Waste Advisory Commission as well as Resource Recovery staff will have a change to weigh in on the agreement, the companies involved, and, presumably, whether Allied can handle the deal at a reasonable price.


Still, Austin Energy Chief Operations Officer Cheryl Mele told Council members that not everything will be up for discussion. “We just need to look at the types of waste here and look at how many of those fall in to the purview of the (Zero Waste Advisory Commission).


One issue that resurfaced Thursday was the fact that Allied’s landfill is scheduled to close before all of the options in the proposed contract expire. The company told Council members that it would setup an arrangement at the nearby Waste Management landfill.


Texas Disposal Systems is no stranger to contract disputes. Though the firm processes roughly 40 percent of Austin’s residential single-stream recycling, its publically vocal opposition to and open agitation over portions of that deal brought it what some might consider negative attention even as it won its fraction of that contract.


Texas Disposal maintains that Allied’s proposal is 16 percent more expensive than its current deal. Deputy purchasing officer Yolanda Miller told Council members that the new agreement with Texas Disposal featured some line items that were as much as 25 percent above BFI’s pitch.


Council Member Kathie Tovo wondered if Texas Disposal lobbyist Michael Whellan was correct in a statement that contradicted Miller’s suggestion – that the complete Texas Disposal bid was indeed lower than the one offered by Allied Waste.


Miller did not directly answer the question, and Tovo did not press the issue. The question will likely return as the contract takes its bureaucratic detour.


The deal will go before the Zero Waste Advisory Commission on April 10.

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