GREAT WESTERN RECLAMATION, INC.1978

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SA 3� a� REQUEST FOR ` ° fa COUNCIL ACTION AMU Rc PREPARED BY Pity Negotiating Taam DATE OF COUNCIL ACTION DATE 12-11-77 PHONE 4186 SUBJECT REPORT ON N??GOTTATTONS FOR EXTENSION OF TRASH COLLECTION CONTRACT APPROVED DEPARTMENT HEAD DEPUTY CITY MANAGER ASSISTANT CITY MANAGER CLERK OF THE COUNCIL RECOMMENDED ACTION That the City Council authorize termination of negotiations between. the City and Great Western Reclamation, Inc. , and direct staff to prepare general specifications to bring back to City Council , preparatory to authorizing a call for competitive bids on a new contract to begin November 1 , 1978 . CONCLUSION The negotiations between the contractor' s team and the City' s team are at a deadlock. The contractor' s preferred proposal contains an increase of 7% in the residential rate and continues the Consumer Price Index (CPI) methodology with a re-open clause if labor or other costs escalate beyond certain levels, and would cost the City an estimated $3,719, 771 during the three-year period, 1978 , 1979 , and 1980 . This offer is predicated on retention of an exclusive franchise for the furnishing of commercial bins and further provides for a 4 . 7% increase in bin rates . The contractor has submitted an alternative offer for residential service only, with open competition on bins , at a three- year cost of $4 ,137 ,950. In comparison to the alternative proposal, the City' s consulting engineer, Ralph Stone and Company, estimates that under competitive bidding conditions , the cost for residential collection for the same three-year period be about $3 , 577, 000 with open competition for all bin service. This amounts to a difference of $561 ,000 over the three-year period or about 16% . The consultant recommends that if the contractor cannot agree to a three-year price at or below the $3,577, 000 figure , then the City should seek competitive bids for a new contract and proceed with development of general specifications for Council review prior to development of detail specifications for bidding purposes. The City negotiating team agrees with this recommendation--we feel that open competition in the market place is the best way to achieve the most favorable price for the citizens of Santa Ana. The attached chart shows how much other Orange County cities are paying their contractors . The average payment for a single-family home is $2. 14 per month for 18 cities and $2.16 for the largest seven cities . Our contractor now receives $2.13 but is asking $2. 29 starting January 1, 1978 . BACKGROUND The present contract with Great Western, Inc. , started November 1 , 1963 and was to run for a period of seven years . Two four-year extensions have been granted, the last of which extends the contract period to October 31 , 1978 . In December, 1976, the City Council , after considering a new request for an extension, appointed Councilman Ortiz as the chairman of a City negotiating team consisting of Mr. Ortiz, City Manager Bruce Spragg, and Assistant City Manager Ron Wolford. The team was to negotiate acceptable terms for the City in exchange for a contract extension. Two negotiation sessions were held in January, 1977. The contractor' s team agreed that they would present a multi-year fixed price proposal to the City e��0Wrio,90 615 U z ,3/ 1 7"F6 g16