Pinellas Partners in Recycling – Guidance for Developing Recycling Collection, Processing & Commodity Marketing Contracts

Overview: This document is a product of the Pinellas Partners in Recycling’s Contract Work Group. The Work Group consists of public and private sector recycling and solid waste industry professionals. Their goal was to create a resource for municipal and local governments to develop effective and fair contracts. Caveat: This guidance document is a preliminary tool to assist recycling and solid waste staff with a basic understanding of contracts. Municipalities and local governments should consult with their legal and purchasing departments regarding contracting.

Definitions

  1. Average Material Value (AMV) – The value of a load of mixed recyclables estimated by considering the individual values of each component recyclable. The value can be either positive or negative depending on the quality and quantity of recyclables and non-program materials and contamination collected and the commodity value of the material. The AMV is calculated by multiplying the percentage of each Program Material, as determined by a Comp Study, by the material’s commodity value. AMV is typically calculated within a time period, such as monthly.
  1. Collection – Pick up and transport of Recyclable Material to either a Transfer Station or MRF. A fee is charged for collection depending on frequency and location as well as other factors.
  2. Commodity Marketing – the sale of Recyclable Materials.
  3. Community – A group served by a municipal or local government recycling program.
  4. Contamination/Contaminant – Non-recyclable material or garbage that is collected, transported and processed. Anything other than Program Materials could be considered contamination/contaminant.
  5. Contaminated Recyclable Material (CRM) – While contamination is non-recyclable (garbage), CRM is recyclable material that contains some percentage of non-recyclable material. CRM can be still be processed and contaminants removed.
  6. Contract – Refers to a contract for recycling collection, processing and marketing service between a municipality or local government and a vendor.
  7. Florida Statute 403.706 (22) “Local government solid waste responsibilities” – Florida Governor Ron DeSantis signed HB 73 into law on June 18, 2020, effective October 1, 2020. This law specifies requirements for contracts between residential recycling collectors or recovered materials processing facilities and counties or municipalities for the collection or processing of residential recycling material. It applies to each contract between a municipality or county and a residential recycling
    collector or recovered materials processing facility executed or renewed after October 1, 2020.
  8. Invitation to Bid (ITB) – A procurement document that announces and provides details about needed recycling processing service and solicits prices from vendors. In an ITB, the price typically dictates the award.
  9. Material Recovery Facility (MRF) – A facility where recyclable material is sorted and prepared to be marketed using a combination of human labor and equipment. A MRF must be certified as a Recovered Materials Dealer by the Florida Department of Environmental Protection in accordance with Chapter 62-722, Florida Administrative Code.
  10. Monthly Material Value (MMV) – If calculated monthly, AMV is referred to as MMV. MMV may be interchangeable with the term “AMV.”
  11. Program Materials – Recyclable materials that are accepted in a community’s recycling program.
  12. Processing – separation of single stream recyclable material into separate commodities and removal of contamination in order to be prepared to be marketed.
  13. Processing Fee – Fee paid per ton to the vendor to accept recyclable material at a certified MRF, to process the material to maximize recovery of marketable commodities, and to sell the recovered recyclables for reuse as feedstock in the manufacture of new products. The processing fee can include costs related to curbside or drop off collection and transportation. Either way, it should be clearly stated in the bid documents the services that are included in the processing fee. The processing fee typically includes vendor’s profit. The processing fee may depend upon other factors, such as whether transfer costs are needed, how residue and rejects are accounted for, a community’s contamination rate, AMV calculations, etc.
  14. Non-Program Materials – Items that are not accepted in a community’s recycling program.
  15. Piggybacking – use of another municipality’s or local government’s recycling collection, processing and commodity marketing contract(s). All terms, including price, may need to stay the same. A letter of consent may be required from both parties to honor the contract terms. Check with your Purchasing department to see if this an option. May benefit municipalities/local governments with small population/staff size/annual recyclable material tonnage.
  16. Recyclable Material (RM) – Materials capable of being recycled.
  17. Recyclable Material Composition Study (Comp Study) – An audit of a community’s recycling program that helps provide consistent baselines and measures for improvement. Determines the composition of recyclable materials collected according to stated methodology. Identifies Program Materials vs. Non-Program Materials and the community’s contamination rate.
  18. Request for Proposal (RFP) – A procurement document that announces and provides details about needed recycling processing service and solicits proposals from vendors who will help provide the services being requested. An RFP allows other criteria to be evaluated and considered to determine the best proposal to meet the municipality’s need. For example, the community’s goals, such as waste diversion and avoided cost of disposal.
  19. Residue – “Residue” or “Residuals” is the portion of Program Recyclables that are accepted by the Contractor and not converted into Recovered Materials by the Contractor due to breakage, transportation, Processing limitations or inefficiencies, or because they are Contamination.
  20. Vendor – Recycling Collector, Processor and Commodity Marketer.

Essential Contract Elements

  1. Determine Community Goals – Before developing a contract, talk to residents, solid waste & recycling department staff, elected officials, and others about your community goals. What is most important? What are needs vs. wants? For example, is it most important to the community to set and reach a diversion rate, or is it most important to provide recycling service for a simplified list of recyclable materials? If so, what are the materials?
  2. Routinely Talk to Vendor – Talk to your vendor (and other vendors) about what works and what doesn’t in your current contract. Talk to vendors before preparing an RFP. Understand the recycling commodity market and regional/local MRF capacity. Discuss “deal killers.” Establish a protocol in the RFP to regularly meet with vendor. Meet with vendor at least once per quarter.
  3. Contract Timeline – Review contract expiration date and build an internal project timeline (e.g.,18-30 months prior to expiration of existing contract) to allow for time to conduct a Comp Study, prepare RFP with input from management/Risk/Legal, release RFP, conduct pre-bid meeting and Q/A period, release addendum, add time in the event submission deadline is extended, and transition vendors, especially if contract includes collection in addition to processing.
  4. Define Program Material and Non-Program Materials – Talk to vendor about the materials that are important to include in your recycling program.
    • Define “Program Materials,” and “Non-Program Materials.” This will help community effectively compare proposals received.
    • Have open discussion continuously with vendors about the materials accepted/not accepted/marketed/not marketed/dangerous.
    • To help determine which Program Materials to include, consult the “Recycling Market Analysis for Pinellas County,” prepared by RRS on behalf of Pinellas County Department of Solid Waste (PCSW), dated July 2020. Consider “taking the long view” of recycling commodity markets. For example, the report includes a Short and Long Term (1-3 years) Forecasts and Recommendations for commodity values. Consider that values have fluctuated greatly over decades.
    • Consider presenting Program Materials as an appendix to the bid documents so that they can be updated during the term of the contract, as agreed upon by both parties.
    • Consider identifying “Program Materials Accepted in Program” and “Program Materials Accepted but Not Promoted in Program.” For example, aluminum foil and bulky rigid plastics may be accepted in the program (and not considered contamination), however, they are not promoted to residents as being accepted.
    • New contracts should specify minimum recovery rates for the Program Materials and how the vendor will be held accountable for attaining the recovery rates with penalties for not meeting required goals. (i.e., the awarded vendor shall recovery a minimum of 95% of all PET containers.) This is typically done via a back end Comp Study with only your program’s material to determine where each commodity flows in the MRF (e.g., to the appropriate bunker or to wrong bunkers, or to residue). Then you measure the residue left over in comparison with what is in each bunker to be able to prove/verify the MRF is performing to standard in the contract.
    • Once Program Materials and recovery rates are determined, consider how they will be communicated and promoted to residents and by vendor. An example of a Program Material is below:
  5. Define “Contamination/Contaminant” and “Contaminated Recyclable Material”
    • Include definitions of “contamination/contaminant” and “contaminated recyclable material,” and define percentage of contamination by volume. See Definitions.
    • Address moisture content. Moisture in fiber (paper/cardboard) can reduce material value. Excessive moisture may be considered contamination and is more typical in commercial recycling due to open dumpster lids. It is difficult to quantify “excessive moisture.” Have a discussion with vendor how to address excessive moisture in the contract, whom is responsible to identify, and the measures for handling excessively moist material.
    • Define acceptable levels of contamination; clearly define the word “acceptable.”
    • Establish threshold levels of contamination. Define how both parties will agree if contamination determined to be above threshold levels. Some options are:
      1. Include percentage of contamination as determined by a Comp Study or agree with the vendor on a percentage of contamination.
      2. If your municipality does not have a Comp Study, consider establishing an early audit in the processing contract to set the contract on solid ground relative to contamination and material mix (especially where revenue share is concerned).
      3. Vendor and community may differ in opinions as to what is comparable. The best Comp Study is representation of what is in community. However, if using a comparable community’s Comp Study is the only option, consider requiring the processor to propose a comparable community for your review and approval. It may be best to request a proposal of three comparable communities.
    • Include a procedure for identifying and handling contamination. New contracts should require a written process for grading inbound loads. Typically, this a visual inspection. The contract should define the rejection process clearly (e.g., what are roles of both parties). The vendor should provide rejection data to the community for contract transparency and to help identify and target outreach to the routes that need it most.
  6. Performance standards – Consider specifying recovery rates of individual Program Materials, such as percent sold vs. percent landfilled/disposed at a Waste-to-Energy (WTE) facility. Each community will have different goals in terms of balancing cost vs. recovery targets. Performance standards should be fully considered before issuing the RFP, knowing the cost will go up with more materials being targeted and higher performance goals. Also specify how performance goals will be measured and enforced and what penalties occur when they are not met. We recommend stating that WTE is not an option as a “recycling processor.” WTE is green energy conversion, but it is not “recycling.”
  7. Recovery Incentives – Discuss the speed of processing needed for recovery targets and the equipment/technology to increase recovery of specified materials. Although a Program Material may have minimal or negative market value, it still may be cost effective to recover compared to the cost to dispose if removed from the list of Program Materials.
  8. Determine the Average Material Value (AMV) – Including AMV in the RFP has potential to allow vendor and municipality to share risk for fluctuating commodity market values. For the calculation of the AMV, there are a variety of options. Ask other municipalities about their AMV calculation or hire a consultant to develop an AMV for your community. Be aware that contamination has a zero-dollar value in most AMV calculations; however, a negative dollar value is currently being attributed to contamination to help recuperate the cost of rejections and disposal.
    • Frequency. Determine how often the AMV will be calculated. AMV can be calculated monthly, quarterly, etc. Monthly is most common. Specify the date of month in which AMV will calculated. For example, us the first value entered in the month.
    • Whom will calculate? Either the vendor or the municipality can calculate. Alternatively, the vendor can calculate, and the municipality can verify.
  9. Market Index – Commodity values are determined using a subscription service, such as RecyclingMarkets.net, which includes SecondaryMaterialsPricing.com (glass, metal, plastic) or SecondaryFiberPricing.com (cardboard, paper). In the event SecondaryMaterialsPricing.com or SecondaryFiberPricing.com no longer post or otherwise provide the applicable market indices, consider stating that you and the vendor will agree upon a replacement index and execute an appropriate amendment to the contract specifying the replacement index to be used in the monthly revenue adjustment calculations. Include the region, and whether the low, average or high price will be used. The contract should specify whether the index can change during the term of the contract and the conditions under which they can change.
  10. Processing Fee – Consider allowing vendor to “fill in” the processing fee in the RFP. The processing fee can be separate from the AMV or can be part of the AMV calculation. Ask for separate quote for curbside and drop off collection. Note that the frequency of pickups will affect the fee.
  11. Collection Fee – Consider adding a separate line item for collection. Price for processing vs. collection. Allows both parties to see true cost of each. It makes contract more complicated, but they are different lines of business.
  12. Recyclable Material Composition Study (“Comp Study”) – The standard operating procedure has been to have a current Comp Study to determine the percentage of contamination and the AMV in a contract. Be aware that best practices at MRFs are moving towards grading loads more frequently and as “real time” as possible. There are some contracts moving towards tiered pricing based on the estimated contamination in individual loads. With newer robot sorters with optics, technology will be evolving to where a MRF will have relatively accurate data on the materials processed that day.
    • A “front end” Comp Study is a measurement of what the municipality delivers to the MRF. This is the most common type of study.
    • A “back end” Comp Study is a measurement of the effectiveness of the MRF operation (i.e., how well it recovered RM and removed contaminants). This may be a good fit for municipalities who do not want to be penalized for acceptable program recyclables that end up in the residue due to operational inefficiencies or underperforming equipment and are willing to pay for this type of study (it can be expensive as it requires the MRF to process only one program’s materials at a time). This study also may be a good fit for higher tonnage recycling collection and processing contracts that specify certain recovery rates. If requiring this type of study, be sure to address whom is responsible to pay for study and who going to administer the study. Contracts should specify periodic audits of the residue in addition to audits of inbound contamination.
    • If proceeding with a Comp Study, identify the methodology, where it be conducted and by whom. If conducted at a MRF, determine if at the front end, back end, or both ends of the processing equipment.
    • Investigate the cost of a Comp Study. Determine whom will pay for it and how often it will be conducted.
  13. Education – There is a cost associated with education; be specific about what you want the vendor to do to. Ask vendor for:
    • Suggestions of ways to educate together.
    • Samples of educational programs, handouts, and labels.
      • If asking vendor to contribute to education, the bid document should set expectations, as in “We expect two mailings per year, brochures, cart labels for 70,000 homes, and assistance with our website.” This will help vendor prepare a response.
      • Investigate the educational resources are already available. For example, can you direct residents to existing resources, such as:
        • Pinellas County Department of Solid Waste (DSW) annual Recycle Guide
        • DSW’s Where Does It Go? Search Tool – For Homes and For Businesses (available to use on municipal websites)
        • The regional recycling campaign Tampa Bay Recycles has collateral that is available (municipal logos can be applied at no cost). For examples of campaigns, visit TampaBayRecyles.org.
        • Recycle Across America label artwork for recycling and garbage collection containers (coming soon!)
    • A list of municipalities or local governments who have effective education programs.
  14. Enforcement – Ask vendor for suggestions of ways to enforce together. Enforcement consists of having a person (either municipal or vendor) checking carts at the curb (involves labor). Evaluate grant opportunities or interns for an enforcement program. The goal of an enforcement program is to provide concise messaging to residents. Ask regional and local partners for examples of enforcement initiatives (e.g., SWANA Forum).
  15. Cart/Containers – Make sure to discuss type of collection container and who provides the container. In an RFP, you will dictate what you expect, frequency of service, and types of trucks. The vendor or community will buy carts. Specify the types of carts expected (warranty length) and whom will maintain. If municipality purchases carts, will be tax free and municipality keeps the carts. Consider identifying Program Materials and include program contact information on recycling collection containers. Program Materials can be identified using a hot stamp or labels. Be cautious about placing labels as program materials may change. Hot stamp fades in the Florida sun. Alternatively, a QR code can be hot stamped and will lead resident to municipality’s website, which can be updated. DSW has a licensing agreement with Recycle Across America for artwork for standardized recycling and garbage container labels. The licensing agreement includes County municipalities. Talk with DSW Recycling Outreach staff about how to obtain labels. Note that there is a cost to print the labels.
  16. Cart Colors – While cart colors are not standardized by federal or state laws or local ordinances, to reduce customer confusion, for new collection contracts, consider using black/grey carts for garbage, blue carts for recycling and green for organics. Vendors will often leave cart colors up to municipal governments.
  17. MRF Site Visits – At least once a year, visit your MRF and ask questions. Include your Solid Waste and recycling staff, contract manager, and/or public/elected officials in the visits. At least once per year, ask vendor to complete The Recycling Partnership’s MRF Survey.
  18. MRF Tours – The contract should specify if public tours are allowed, how often, what size of groups, and how much notice should be provided to the MRF.
  19. Contingency Plan –covers any type of interrupted service. Provide framework for how service will continue during disruption. State the goal during disruption is to recycle as much of material as possible. Address collection and delivery to different location, and whom will pay to haul RM to another facility. You should either have a plan or state that vendor will provide a plan at the beginning of the contract.
  20. MRF Technology – Be aware that as you enter into a new contract, technology is changing and moving toward artificial intelligence and advanced learning technology (i.e., robots).
  21. Price adjustment – Contract may include option to price adjust at some frequency (i.e., annually) during contract term. Determine index upon which price adjustment is based. Some indices are Water/Sewer/Waste Index and Consumer Price Index (CPI). State whom can request (i.e., vendor must request it), the process for requesting, at what point the index will be applied, and the date that the adjustment begins. Alternatively, you can request pricing for each year of the contact and exclude a price adjustment.
  22. Hold a “Pre-Bid” meeting – A meeting that is held after an RFP is advertised and before it is awarded. Options are “mandatory,” “non-mandatory,” or “no meeting.” A meeting is an opportunity to clarify the scope, provide guidance to potential vendors about expectations, and receive vendor input. Note that meeting may be attended by more than one vendor and may not be the most advantageous venue for open discussion. Suggest talking to vendors before developing an RFP. Understand ramifications of each option. For example, if “mandatory” and vendor does not appear at meeting, their bid may not be considered.

Takeaways

  1. Talk to residents, public/elected officials, and others about your community goals prior to developing a contract. What is most important? What are needs vs. wants?
  2. Talk to your vendor, other processors, municipalities and local governments before developing an ITB/RFP. The goal is to get responses.

Resources

  1. The Pinellas County Technical Management Committee:
  2. The Recycling Partnership’s:
  3. The Florida Legislature, Senate and House of Representatives
  4. Solid Waste Association of North America (SWANA) & National Waste and Recycling Association (NWRA)’s “Joint Advisory on Designing Contracts for Processing of Municipal Recyclables,” amended August 1, 2018.
  5. In the Public Interests’ (ITPI’s) “Best Management Practices in Municipal Waste Contracting,” November 2016.
  6. Highlights from three to five examples of regional recycling collection, processing, and commodity marketing contracts (i.e., procedures for identifying contamination, complying with 403.706(22) F.S., piggybacked contracts, etc.) (coming soon)
  7. EPA’s System-Wide Recycling Measures to Assess Recycling Performance List of Potential Measures https://www.epa.gov/americarecycles/us-national-recycling-goal
  8. PCSW’s 30-year Solid Waste Master Plan