The city of Fort Worth is poised to extend an about $38 million annual contract with Waste Management without considering other vendors.
If approved Nov. 6, the contract would last until 2033 and potentially forgo savings of up to $60 million. Scott Pasternak, who consulted with the city on this, said he initially thought the city might be able to find a vendor who would agree to provide residential waste collection services for between 7-10% less than Waste Management.
But now, with the pandemic, there’s uncertainty in the market, and Waste Management has agreed to waive the consumer price index adjustment for fiscal year 2022. That’s estimated to decrease the contract for that year by 4%. It also has to commit to maintaining and raising customer satisfaction.
“We think having a bird in the hand, if you will, is a better place to be, given the situation where the city of Fort Worth is, since you do have very good customer service levels,” Pasternak said.
Waste Management collects garbage, recycling and yard waste once a week and bulk waste once a month for about 244,000 Fort Worthians. It has a service success rate of 99.5%, said Robert Smouse, assistant director of the city’s solid waste department.
The city also isn’t required to go out for bids for this contract because it has to do with health and safety, he said.
At least one vendor would like the chance to bid on it, though.
Inigo Sanz, CEO of FCC Environmental Services, wrote so in an Oct. 16 letter to City Manager David Cooke and copied Smouse and the City Council members.
“We strongly recommend the city to put the contract through a public competitive procurement and purchasing process, which may save the city $3.5 million to $5 million per year, offering much-needed relief for Fort Worth constituents during these trying budgetary realities,” Sanz wrote.
In an interview with the Fort Worth Report on Thursday, Sanz said his company did not come to this conclusion overnight but after hundreds of hours of study.
FCC Environmental Services started in 1911 and is in more than 500 cities across the world, Sanz said. Some of its North Texas operations include a recycling center in Dallas and collecting trash in the cities of Garland and Rowlett.
Waste Management is a great company, Sanz said, but most cities shop around first and some cities have multiple companies contracted to collect trash in different parts of the city rather than one contracted for the entire city.
“This is not only very unusual, but it’s also very unusual to make a 12-year extension. Why not one or two years? Twelve years is even longer than the life of the trucks that are going to provide the service,” Sanz said.
The trucks’ lifespan is between 7-10 years, he said.
Smouse, of the city’s solid waste department, told City Council during a work session on Tuesday that longer contracts are the norm.
“The solid waste industry has very intensive capital required for its programs and services so most of all the solid waste service contracts are written to capitalize on that depreciating asset… that’s why you see 10-year terms with even extensions,” he said.
The city first entered into its contract with Waste Management in 2003. It had two options to renew the contract, each for a 10-year term. It did so in 2013 and that first extension is set to expire on March 31, 2023.
Money for this contract comes from the city’s solid waste fund, which the city has struggled to keep healthy over the past few years.
Garbage collection fees
- A 32-gallon cart is $12.50 per month
- A 64-gallon cart is $17.50 per month
- A 96-gallon cart is $22.75 per month
Source: City of Fort Worth
During a budget presentation on Sept. 10, city staff said they expected the fund to be about a million dollars in the red at the end of fiscal year 2021 and about $4.5 million in the red at the end of the fiscal year 2022. Some of the reasons for this included an increase in not only the city’s population but the amount of services the fund covers, Assistant City Manager Valerie Washington said then. “Another wrinkle” occurred when the consumer price index the city selected jumped. That jump required the city to pay under contract Waste Management more than it had anticipated for compressed natural gas trucks.
City staff said they’d exhaust all other options to balance the fund before seeking a residential fee increase. The fees were last increased in 2006.
The Report asked the city to explain the performance metrics Waste Management will have to meet and whether other companies besides FCC Environmental Services had expressed interest in bidding on the contract.The city did not respond by deadline.
During the work session Tuesday, few City Council members had any negative comments about the company, which will soon be recording eight-second clips of what residents put in their trash bins to send to city staff. It says city staff can use them to educate residents on what not to throw out, thereby extending the lifespan of the landfill. It does this in cities in California and Washington.
That technology already comes standard on all FCC Environmental Services trucks and the company demonstrated that to city staff and elected officials, said Erica Holloway, FCC Environmental Services’ director of public and government affairs.
District 5 City Councilwoman Gyna Bivens asked the company to pay for paving a road that she says the trucks are tearing up.
“If you look at Parker Henderson Road, it looks like a street out of the Middle East, and it’s because of those trucks,” she said.
District 6 Councilman Jared Williams praised Waste Management subcontractor, Knight Waste Services, which is a minority- or women-owned business.
“I was impressed to know that a driver employed by the Waste Management or Knight Services can earn up to $100,000 a year,” he said.
Prior City Councils were wise to partner with the private sector, Mayor Mattie Parker said.
“Because a lot of cities haven’t done this. They’ve left it in-house. And I think there’s a huge value-add for taxpayers and to Gyna’s point earlier, that’s who we’re all serving. It’s about the bottom line, but also superior service,” she said.
Jessica Priest is an investigative journalist for the Fort Worth Report. Contact her at jessica.priest@fortworthreport.org or via Twitter.
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