How to Ensure that Waste and Recycling Contracts Are Fair

Mike Durfor & Duncan Watson, who are, respectively, Executive Director of the Northeast Resource Recovery Association and Assistant Public Works Director, City of Keene, NH

contract-2As public budgets come under ever more scrutiny, it is incumbent upon Solid Waste Managers and City Councils to take the time necessary to understand all of the variables built into modern contracts for waste and recyclables.

A waste and recycling contract’s basics involve moving material from point A to point B, the length of term, and the cost of processing the different materials collected.

Confirming the adage that no one size fits all, waste and recycling contracts can be complicated, confusing and even deceitful; the ultimate cost to a municipality can be unsustainable if attention is not paid to the details.

Reading the many pages of “fine print” in these contracts can be overwhelming for small town Boards & Councils that are basically comprised of volunteers, and for the overworked managers of larger jurisdictions, who have limited legal backgrounds. Unfortunately, the devil really is in the details and the scope of waste and recycling contracts varies widely depending on whether they are serving a municipality, a District comprised of several towns, or a school or a School District with many schools.

During the first year of the contracts, some of the costs like the tip fee, haul rate and rental expenses are usually fixed. Typically, subsequent years’ costs increase by a regional Consumer Price Index based percentage, an agreed upon not-to-exceed percentage, or a fixed percentage.

Now the fun really begins! There are other “fees”—Fuel Surcharges, Environmental Fees, Sustainability Fees, Regulation Recovery Fees, Container Maintenance Fees and Administrative Fees—that can add up to a substantial amount of the monthly payment. And, because these fees can vary from month to month, it can be quite cumbersome to calculate these fees each month to insure that what is being charged is what was agreed to or, in the case of recyclables, what is owed is being fairly paid.

In addition to keeping track of all of these variables, it is helpful to verify the value of the contract by sampling like contracts that your neighbors have already negotiated. This, at least, gives you a starting basis for comparison to see if your contract is in the ballpark. The City of Keene, NH, for example, worked with the Northeast Resource Recovery Association (NRRA) during its latest contract negotiation because NRRA had information from other communities in the region that served as a benchmark of the basic costs and fees that communities are paying.

Every negotiation must balance the goal of the customer to pay the least amount and the need of the contractor to charge enough to cover costs and make a profit. Unfortunately, this balance is not always successfully achieved. While the City of Keene always does the due diligence necessary to ensure the balance of fairness, the NRRA has seen countless horror stories of contracts that on their face seem almost too good to be true but, in the end, turn out to be financial disasters that have multiple year impacts.

Only by investing the time, and, sometimes, securing the necessary professional expertise, to review waste and recycling contracts carefully, can you be confident that the balance struck is fair and that the contract will serve both parties’ interests over its term, ensuring a mutually productive relationship. Otherwise, the primary thing you’ll be throwing away is money.

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