Saturday, March 28, 2015

Trash Contract's True Value for City of San Angelo


San Angelo Live reported:

The City of San Angelo negotiated higher prices for trash pickup last year than the winning bidder, Republic Services of Texas, originally proposed.
Republic proposed $11.54 per month for residential curbside trash pickup with recycling.  In negotiations the city took that amount up $2.93 per month to $14.47.  Most negotiations have the vendor giving on price or throwing in extra services.  This went the opposite way.  Why?

City Council minutes from November 2013 stated:

Mr. (Shane) Kelton noted this process would allow staff to know the true value of the City’s asset and what is best for citizens. He noted upon review, the proposals maybe rejected and staff may renegotiate the contract with Republic Services
Was Republic's bid of $11.54 per month rejected and then the city renegotiated the contract with Republic for $14.47?  Don't count on a clear answer from city officials.

The City of San Angelo colluded with Republic to hide how unauthorized charges were foisted on commercial customers over a decade's time.  The City never released its investigation as to how these charges occurred, i.e. who knew what within City Hall.  It's was the city's responsibility to ensure Republic was compliant with contract terms.

The "true value" of the City's trash franchise came via large upfront cash payments in the renegotiated contract.  The parties colluded to charge 32,200 customers more over the contract period so the city could obtain $8.7 million upfront.

Residential customers paid 25.4% more than Republic's original proposal, while commercial customers paid 17.7% more than the original bid.  These dramatic increases funded the city's nearly $9 million cash back option.  Think about that the next time you pay your integrated utility bill. 

Update 4-29-15:  Trash is a major subject in San Angelo's Mayoral race.   Texas Disposal Systems President and CEO Bob Gregory felt a need to weigh in.  It's worth the read.

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