Until now, the City of Los Alamitos has never sent its trash hauling contract out to bid, so when it did this year, it hired a consulting firm to help with the process. As required by ordinance, the city sent out a request for proposals, RFP, to potential trash haulers. After reviewing the responses to the RFP, the City Council selected the second highest bidder to get the 10 year, $25 million contract.

The City Council appointed an Ad Hoc Subcommittee to review the details and make recommendations to the full council. Seven proposals were received, but the subcommittee decided to reject the two lowest ranked competitors. That left a field of five proposers, including the current provider, Consolidated Disposal Service, of Santa Fe Springs.

The next major step in the evaluation of these five remaining candidates was to consider their proposals over the full ten year contract term. The consultants, Sloan Vazquez, LLC, calculated an estimate of total revenue each trash hauler would receive under the terms of their respective proposals. The amount of revenue which will flow to the selected trash hauler is the total amount which the residents and businesses will pay. These charges have several components, including monthly rates each household and business will pay for the next ten years, the costs of temporary bins, and inflation adjustments.

After considering these total revenue numbers, plus several other criteria, the subcommittee recommended, and the council approved, initiating contract negotiations with Consolidated Disposal Service. But, the difference in costs to Los Alamitos residents and businesses over the ten years of the contract for the proposal submitted by Consolidated and the lowest of the five companies which made it through the first vetting is not small change.

According to the report by Sloan Vazquez, over the full ten year term the cost for the Consolidated proposal is $21,916,343, while the cost of the lowest priced proposer, Athens Disposal, is only $15,373,731. The difference, 6,542,612, works out to about $55,000 per month, or, assuming a population of 12,000, about $4.54 per resident per month.

The selection of a trash hauler has been a subject of discussion at the last two city council meetings. The council made the decision to select Consolidated at the May 3, 2010 meeting and at the May 17, 2010 meeting, about six or seven residents spoke against giving the contract to Consolidated. those speaking against the selected company were supported by a few additional applauding people in the audience. No member of the public spoke in favor of Consolidated at either meeting.
Some of the speakers complained about the higher cost of Consolidated’s proposal and the suggestion that lower priced proposals were rejected by the subcommittee.

The staff report from the May 3 meeting included the following comments regarding the selection process:
“Those firms whose expected revenues, as based on the rates stated in their proposals, fell under the required revenue stream estimated by the City’s consultant by more than 20% were excluded because the subcommittee concluded that an underpriced proposal could become problematic during a ten-year commitment. If a proposer is not financially able to sustain its operations, the City might have to consider financial relief (which could be reflected in a substantial increase in rates) to minimize potential service disruptions. Based on those criteria, two firms were recommended for further analysis: Consolidated Disposal Services (CDS) and EDCO.”

EDCO was the highest priced proposal and Consolidated was the second highest. Even though penalized for having a higher price tag, Consolidated received the highest overall score of 899, compared to a score of 849 for Athens’ low priced proposal.

The selection analysis prepared by Sloan Vazquez has an item for “cost”. According to Joe Sloan, of Sloan Vazquez, this item is comprised of a competitive component and a reasonableness component. The total points allowed for the cost item is 200, out of a total of 1,000. The 200 points are made up of 100 for the most competitive proposal and 100 for any proposal which produces the same revenue to the trash hauler as the Sloan Vazquez cost standard. Any proposal which varies—either up or down—from the cost standard was penalized for the amount of the variance.

If the cost reasonableness factor was excluded from both the Consolidated and Athens scores, their respective scores would have been the same. Since Athens was the lowest priced proposal, they earned the maximum 100 points for that component of the cost item. With a total cost score of 140 out of a possible 200, it means they were penalized 60 points for being divergent from the cost standard. Thus, if the reasonableness penalty was removed, Athens’ score would improve by 60 points.

At the same time, Consolidated was penalized by 10 points for being 10% over the cost standard. This means their score would improve by 10 points if the reasonableness test was removed from the measurement. So, consolidated improves by 10 and Athens gets better by 60, so Athens gains 50 points on Consolidated—exactly the difference in their scores.

Los Alamitos City Manager Jeffrey L. Stewart, told www.OC180NEWS.com he expects to bring back the finalized contract with Consolidated at the June 7, 2010 City Council meeting. We expect there will be additional descent from some residents at that meeting.