&Jonki~~ Fo h you. REPORT Meeting E)ak*Br& 7,201 3 Waste Management Committee. DATE: February 22,201 3 REPORT TITLE: 2016 WASTE COLLECTION CONTRACTS

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1 4 &Jonki~~ Fo h you. REPORT Meeting E)ak*Br& 7,201 3 Waste Management Committee DATE: February 22,201 3 REPORT TITLE: 2016 WASTE COLLECTION CONTRACTS FROM: Dan Labrecque, Commissioner of Public Works RECOMMENDATION That Regional staff proceed with a competitive procurement process for waste collection services for the Region of Peel, as described in the report of the Commissioner of Public Works, dated February 22, 2013, titled "2016 Waste Collection Contracts". 's current Brampton and Mississauga Waste Collection Contract with Waste Management of Canada Corporation expires on December 31, The Region of Peel's current Caledon Waste Collection Contract with Green for Life expires on March 31, Staff has begun preparing the procurement document for the 2016 Waste Collection e Key considerations for the 2016 Waste Collection Contracts include: number of collection zones; collection frequency; collection methodology; the potential use of compressed natural gas vehicles; how best to service infill developments; and the most appropriate time off of the road. In the time since Peel's last tendered for waste collection, the industry standard has moved to multiple collection zones to maximize competition during the procurement process and maintain competitive tension over the term of the contract. Staff is therefore recommending that the 2016 Waste Collection Contracts include three waste collection zones/contracts; Southeast, Southwest and North. This combines the existing Brampton and Mississauga Waste Collection Contract area and the existing Caledon Waste Collection Contract area into the new procurement Staff will prepare and issue procurement documents and award contracts by June 2014, giving the successful vendors an approximate 18 month lead time between the waste collection contract award date and contract commencement date to procure trucks and

2 4b -2- February 22, WASTE COLLECTION CONTRACTS DISCUSSION I) Background a) Waste collection services in Brampton and Mississauga Waste Management of Canada Corporation (WMCC) currently provides waste collection services to approximately 305,000 households in the Cities of Brampton and Mississauga. The Waste Collection Contract with WMCC is the largest single collection contract in Ontario. The Contract with WMCC, with a waste collection term of nine years and nine months, expires on December 31, The current waste collection services provided by WMCC in Brampton and Mississauga include: A four-day-week collection schedule, from Monday to Thursday Weekly collection of curbside garbage and bulky items (B Weekly co-collection of curbside single-stream recyclables and organics Weekly collection of yard waste from April to June and from October to November, and bi-weekly collection from July to September e Once-a-week or twice-a-week litter container collection e, Twice-a-week collection of cart-based garbage from Business Improvement Areas (BIAS) and other locations that receive cart-based garbage collection services b) Waste collection services in Caledon Green for Life (GFL), formerly Turtle Island Recycling Corporation and previously Sandhill Disposal and Recycling Inc., currently provides waste collection services to approximately 20,000 households in the Town of Caledon. The Contract with GFL, with a waste collection term of ten years, expires on March 31, The current waste collection services provided by GFL in Caledon include: o A four-day-week collection schedule, from Tuesday to Friday (B Weekly collection of curbside garbage and bulky items a Weekly co-collection of curbside single-stream recyclables and organics e Bi-weekly cart and bag-based collection of yard waste in urban areas and rural subdivisions from April to November and yard waste collection in rural areas of Caledon three times in the spring and three times in the fall m Once-a-week litter container collection 0 Once-a-week collection of cart-based garbage and recycling from the Bolton BIA Front-end garbage collection Q Bi-weekly collection of white goods on a call-in basis Other current waste collection service providers Table I below outlines the Region's other current waste collection service providers, by collection area, collection services provided and expiry dates of the contracts.

3 February 22, WASTE COLLECTION CONTRACTS Table 1: Waste Collection Service Providers Collection 1 Collection I Service 1 Expirydate I services I Area / provider / of firm base Front-end garbage and front-end recycling Cart-based recycling in apartments, Business Improvement Areas (BIAS), I schools Brampton and Mississauga Brampton and Mississauga Brampton and Mississauaa Miller Waste GFL GFL term Oct. 31, Nov. 1, June 30,2016 Expiry date(s) of optional extensions Two 12-month options: Oct.31, 2016 Oct.31, Two 12-month options: Nov. 1,201 6 Nov. 1,201 7 It is staff's intent to continue to tender separately for front-end garbage and front-end recycling collection services. Staff intends to re-incorporate cart-based collection services and white goods collection services into the curbside Waste Collection Contracts as the contracts expire. 2) Waste Collection Contracts The Region's current Brampton and Mississauga Waste Collection Contract with WMCC expires on December 31, 2015 and the Caledon Waste Collection Contract with GFL expires on March 31, As a result, there is a need to establish new contracts for the provision of waste collection services for the subsequent contract term(s), to take effect January I, and/or April 1, A combined tender for waste collection services in Brampton, Mississauga and Caledon would require the incorporation of Caledon waste collection services at the expiry of the current Caledon Waste Collection Contract, either through outlining a separate collection start date for collection services in Caledon in the new tender document, or, establishing a common contract start date for collection services in both Brampton/Mississauga and Caledon, through potential contract extensions. Short-term extension options are being discussed with WMCC and GFL to allow for a common start date and a smooth transition. a) Benefits of competitive tendering and multiple collection zones Currently, the industry trend within large Ontario municipalities is to divide the municipality into multiple collection zones. Doing so increases competition during the tendering process and creates competitive tension throughout the life of the contract as the service providers in the various zones naturally compete against one another. Competition is enhanced when individual service provider performance is monitored, measured and reported, showing a comparison among service providers.

4 February 22, WASTE COLLECTION CONTRACTS 4b-4- According to a 2010 study completed by the C.D. Howe Institute (Dachis "Picking up Savings: The Benefits of Competition in Municipal Waste ServicesJy, cities save money through competitive tendering of waste services contracts. According to the study, municipalities who contract out waste services through a well-designed contracting mechanism can reduce the costs of providing waste services. The study notes that competition motivates firms to keep prices low or improve service at a given price. The report also indicates that competitive tendering can create an incentive for service providers to maintain quality of service if they want to be considered a potential candidate for future contracts at time of re-bidding. Further, as reported by the Executive Director and Chief Executive Officer of the Solid Waste Association of North America (SWANA) in an article published in the Solid Waste & Recycling magazine, competition is essential for the marketplace to operate efficiently, in order to provide consumers with high quality services at a reasonable price. Competition is the driving force for higher levels of customer service and efficiencies that result in a more economic delivery of the services. These findings are supported by,tender results in cities that have utilized competitive procurement processes and adopted multiple collection zones. The City of Hamilton, for example, has found that the competitive atmosphere between service providers (in their case, a split between public and private service providers) reduces complacency and instils a competitive attitude among service providers. The establishment of zones in Peel will help ensure continued competition throughout the length of the contract. 3) Considerations for the 2046 Waste Collection Contracts Some of the fundamental elements to consider regarding the preparation of the 2016 Waste Collection Contracts include the following: a) Collection zones The establishment of multiple collection zones, in which multiple service providers may be awarded contracts, and where successful bidders may be awarded multiple zones, offers the following positive results: encourages competition; allows for a diversity of bidders (service providers of different sizes); B) offers potential cost savings and service delivery efficiencies (with the ability to address area specific requirements); e encourages continuous improvement from all service providers; 8) enhances the Region's transparency on contract performance; and, B provides the Region with the flexibility to deploy different service providers if an individual service provider is unable to provide service (for instance, in the event of a service disruption from one service provider, such as a labour disruption, another service provider could provide back-up service). Refer to Appendix I for a summary of other municipalities' experience with collection zones.

5 4b -5- February 22, '16 WASTE COLLECTION CONTRACTS b) Collection frequency and collection methodollogy The new collection contract will be developed to reflect Council's ultimate decision on waste collection frequency (e.g. weekly or bi-weekly) and methodology (e.g. bags or carts). In AprilIMay 2013, staff expects to present the findings from the Bi-weekly Garbage Collection Pilot Project to Council, and make recommendations on collection frequency and methodology. c) Potential use of natural gas waste collection vehicles In accordance with the Region's Term of Council Priority to reduce green house gas emissions (GHG) and protect the community by managing the negative impacts associated with climate change, staff will be conducting an analysis on the possible use of natural gas waste collection vehicles and associated infrastructure and will report back to Council with their findings, including the costs, benefits and drawbacks of a natural gas fleet. Preliminary research is showing that numerous municipalities and waste collection companies operating in Canada are using natural gas vehicles (NGVs). d) Collection of infill developments and other special considerations Staff will be reviewing the unique needs of infill developments and will report back to Council with recommendations on how to best service this growing sector. Staff will also be reviewing whether Peel should provide collection services to small Industrial, Commercial and Institutional (ICI) customers located in residential areas along a residential collection route and will report back to Council with recommendations. Staff will also review whether Peel should change the required time-off-the-road and will report back to Council with recommendations. The procurement documents for the 2016 Waste Collection Contracts will reflect the outcome of these reviews. 4) Proposed Collection Zones A collection zone represents a separate collection area andlor contract. The delineation of zones is based on geographic size, populati.on, collection efficiency and other factors. The collection zones have distinct geographic boundaries such as major roadslhighways or rivers to minimize confusion among service providers and residents. They also take growth into consideration (e.g. in the north Brampton area) and balance the heavy yard waste collection tonnages in south Mississauga. While it is important for collection zones to be reasonably balanced, they do not require an exact house count balance or equally-sized zone boundaries. As indicated above, staff considered size, balance and natural geographic features in developing zone options for consideration. Zone size Peel currently collects from approximately 305,000 curbside customers in Brampton and Mississauga and another 20,000 in Caledon for a total of approximately 325,000 households. That number is expected to grow to approximately 375,000 over the seven to ten year term of the contract.

6 4b-6- February 22, WASTE COLLECTION CONTRACTS Experience in Ottawa, Hamilton and Toronto (see Appendix I) shows that zone sizes from approximately 50,000 to 150,000 generate significant competition. Staff considered two options, each with Peel divided into three collection zones. Option 1 simply divided the Mississauga and Brampton collection area into two collection zones and kept Caledon as a separate zone. Option 2 better balances the three zones by including approximately 50,000 Brampton households north of Bovaird Drive with the Caledon (North) zone house count. Zone Southwest Southeast North Size (approximate number of households) Option 1 Option 2 156, , , ,000 20,000 70,000 For comparison purposes, Option 1 and Option 2 zone boundary maps are displayed below. Option 1 Option 2 SOUTHWSTZONE SOUTHWEST ZONE.. r -4 A,.,.,.

7 4b -7- February 22, '16 WASTE COLLECTION CONTRACTS The following outlines the proposed collection zone options. a) Option I Appendix II contains a more detailed map of Option 1, which includes proposed waste collection day boundaries. This option simply involves separating the existing Brampton and Mississauga contract area into two similar sized collection zones. The Caledon collection area remains unchanged and as a separate collection zone. In this option, the North zone (Caledon) could be included in the same procurement process as the two southern zones or tendered separately. The Southwest zone contains approximately 156,000 households. The Southeast zone contains approximately 148,000 households. The North zone contains approximately 20,000 households. Bidders would be allowed to bid on more than one zone as described more fully in Section 6 of this report. Advantages: Q Distinct geographic boundaries; The Southwest and Southeast zones will generate significant competition; Allows bidders to be awarded more than one zone, which would allow for greater interest and competition and may result in combined bids at a potentially lower price; 0 No anticipated increase to the Region's collection contract administration costs. Disadvantages: 0 The two southern zones are still quite large and the North zone (Caledon) would remain quite small at only 20,000 households, limiting competition for that work; s It may not be economical or cost-effective for successful service providers to obtain a natural gas fleet and yardlfacility for the Caledon contract area. b) Option 2 Appendix Ill contains a more detailed map of Option 2, which includes proposed waste collection day boundaries. This option is similar to Option 1, except it includes the 50,000 households north of Bovaird Drive in the North zone. This option incorporates the Caledon waste collection services into the procurement process. This can be achieved by incorporating these services at the expiry of the existing Caledon Waste Collection Contract or through a short-term extension of one or both existing BramptonIMississauga and Caledon Contracts. In this option, the Southwest zone contains approximately 135,000 households, the Southeast zone contains approximately 119,000 households and the North zone includes approximately 70,000 households (including approximately 50,000 urban addresses from Brampton, north of Bovaird Drive).

8 February 22, '116 WASTE COLLECTION CONTRACTS 4 b -8- Bidders would be allowed to bid on more than one zone as described more fully in Section 5 of this report. Advantages: Q Distinct geographic boundaries; e This option is attractive to medium and large service providers, thereby maximizing competitive bidding in all three zones; 0 Allows bidders to be awarded more than one zone, which would allow for greater interest and competition and may result in combined bids at a potentially lower price; This option contains slightly smaller zones and requires the service providers to have less resources (staff, manpower and vehicles) per collection zone than Option 1; s Expanding the North zone to include an additional 50,000 urban addresses and new development areas from Brampton, which brings the zonelcontract size to approximately 70,000, should result in better pricing than the existing Caledon Contract, due to efficiencies; e Provides for more balanced zone sizes than the existing Contracts, allowing for easier comparisons of service provider performance; o All three zones are large enough so that all successful service providers have the ability to assist during service disruptions andlor poor service provider performance among other zones, as necessary; More economical and cost-effective for all successful service providers to obtain a natural gas fleet and yardlfacility in Peel; Q Supports a standard level of service in Peel; Q No anticipated increase to the Region's collection contract administration costs. Disadvantages: F) The Caledon Waste Collection days would change from Tuesday-Friday to Monday- Thursday. Based on the analysis of the two options, staff recommends the implementation of Option 2. Proposed Collection Days & Growth Considerations The procurement documents will include proposed collection day boundaries, as shown on the Option 2 map in Appendix Ill; however, each successful service provider will be responsible for separating its area into four collection days (Monday through Thursday), subject to certain limitations that will be set out in the procurement document. Final approval of collection days will be given by the Region. The Region can direct the service providers to consider and incorporate certain requirements, such as limiting the number of collection days within the individual Wards and starting with Monday collection in the south and progressing through the week northwards in the Southwest and Southeast zones. The proposed collection day boundaries were delineated to contain the fewest number of households in the south, where heavy yard waste tonnages are experienced. Growth was accounted for in the new development areas in north Brampton. Similar to the existing Waste Collection Contracts, future growth will be accounted for in the new Waste Collection Contracts, in which the service provider will be required to add the appropriate number of vehicles, based on average number of households serviced, when the number of new additional households increases in a collection day area. Alternatively, the service provider

9 4b -9- February 22, WASTE COLLECTION CONTRACTS will have the option to propose to the Region further rerouting as an alternative to the purchase of additional waste collection vehicles, subject to the Region's approval. 5) Option to Award Multiple Zones to Successful Bidders As previously mentioned, the ability to award multiple zones to successful bidders would allow for greater competition, in which service providers of different sizes may compete. Including all three zones in one procurement process allows multiple zones to be awarded to a single bidder, which allows large firms to take advantage of economies of scale. Staff is therefore proposing, with the adoption of the three zone system, that service providers be allowed to bid on the following zones or combination of zones: Southeast; Southwest; North; e Southeast and North; or e Southwest and North. Successful bidders may therefore be awarded up to two zones. No bidder will be awarded more than two zones and no bidder will be awarded both the Southeast and Southwest zones. Otherwise, the expectation is that zones would be awarded in a way that results in the lowest total cost to Peel. Regardless of the number of contracts awarded, a competitive process and multiple performance-based contracts, which include liquidated damages for failure to meet the contract requirements, will ensure that a standard level of service is provided to all Peel residents. 6) Anticipated Timelines Staff will require a sufficient amount of time to prepare procurement documents and award contracts. A minimum 12 to 18 month lead time between the contract award date and contract commencement date is required to allow for the service providers' acquisition of new equipment, permits/approvals, and hiring and training of staff. In order to commence a new collection contract on January 1, 2016, the procurement process (contract award) needs to be completed by June As such, the procurement document will need to be issued by January Staff will spend the balance of 2013 getting Council direction on the key elements of the contract (e.g. bi-weekly etc.) and preparing the procurement documents. Should Council opt for cart-based collection, staff will also need to initiate a tender for the acquisition and delivery of carts. A lead time of 24 months would be needed to manufacture and deliver the carts, requiring the purchasing document to be issued by September 2013 and contract awarded in January Staff would also develop and distribute promotion and education materials to inform residents of any upcoming changes to the Region's waste management programs and services. Table 2 below outlines some of the key anticipated timelines related to the 2016 Waste Collection Contract process.

10 4b -10- February 22, WASTE COLLECTION CONTRACTS Table 2: Anticipated 2016 Waste Collection Contract Timelines Task Council decision on collection frequency (e.g. weekly or biweekly) and methodology (e.g. carts) Council decision on compressed natural gas usage Issue procurement document for 2016 waste collection contracts Award to successful vendors Project Update on contract award Commencement date of waste collection contract(s) Timeline AprilIMay MayIJune 2013 January 2014 June 2014 July 2014 Januarv Table 3 below outlines some of the key anticipated timelines related to the cart procurement and distribution process, if necessary. Table 3: Anticipated Cart Procurement and Distribution Timelines Task Timeline 1 Council decision on collection frequency (e.g. weekly or bi- AprilIMay 2013 weekly) and methodology (e.g. carts) Issue procurement document for cart purchase, fabrication, I September 2013 su~~lv and distribution / Award to successful vendor(@ January 2014 Project Update on cart contract award February 2014 Cart manufacture January I Cart distribution January December 2015 Commencement date of waste collection contract(s) January 1,2016 7) Next Steps Staff intends to present the findings from the Bi-weekly Garbage Collection Pilot Project to Council with recommendations on collection frequency and methodology in AprilIMay Staff intends to present the findings and recommendations on the use of natural gas waste collection vehicles in MayIJune Staff will continue to solicit information from other municipalities and the waste industry in regards to major contract elements such as special collection considerations (e.g. infill developments), performance measures (including times-off-of-the-road and liquidated damages) and general terms and conditions of waste collection contracts. 8) Proposed Direction Based on the findings of the C.D. Howe study, other municipalities' experience using multiple collection zones and our analysis of two collection zone options, staff recommends that Peel be divided into three collection zones for the 2016 Waste Collection Contracts, as shown in Option 2 in this report and that the competitive procurement process for the 2016 Waste Collection Contracts proceed as described in this report.

11 4b -11- February 22, WASTE COLLECTION CONTRACTS Dan Labrecque Commissioner of Public Works Approved for Submission: D. Szwarc, Chief Administrative Officer For further information regarding this report, please contact Ben Shepherd at extension 7925 or via at ca Authored By: Andrea lvanovs slative Services ager, Financial Support Unit (FSU) acintyre, Director of Purchasing and Project Management. Lee, Director, Waste Management

12 -j- February 22, WASTE COLLECTION CONTRACTS 4b-$2 APPENDIX I OTHER MUNICIPALITIES' EXPERIENCE WITH COLLECTION ZONES City of Ottawa The City of Ottawa's Request for Tender (RFT) for the provision of solid waste curbside collection services for 2012 provided for five geographic collection zones with approximately the same number of households, ranging between approximately 50,000 to 60,000 households per zone. The City of Ottawa looked to balance zone sizes and took natural geographic barriers into account. One zone was previously awarded to the in-house (City) group and four zones were tendered for award of up to four different contracts. The in-house group was awarded one additional zone during the procurement process, Miller Waste was awarded two zones and WMCC was awarded one zone. Citv of Hamilton In 2001, the City of Hamilton's Council approved the creation of a (publiclprivate) service delivery model for curbside services, except recycling (all zones had contracted recycling services). The City was subdivided into six collection zones (two urban, two suburban and two rural) and the zones were split between public and contracted service providers. The delineation of zones was based on each pair of urban, suburban and rural zones having similar collection characteristics (as best as possible) and a similar number of households (approximately 44,000 and 55,000 units in the urban zones, 12,000 and 15,000 in the suburban zones and 15,000 and 20,000 in the rural zones). GFL was awarded all three contracted zones for the City of Hamilton's 2013 waste collection contract. City of Toronto The City of Toronto is divided into four collection zones, with two zones receiving collection by a contracted service provider (GFL) and two zones receiving in-house (public) waste collection services. The two in-house zones contain a comparable number of households of approximately 115,000 (based on 2010 house counts). The zone west of Yonge Street to the Humber River, recently contracted to GFL, has approximately 165,000 households. The other contracted zone, also serviced by GFL, west of the Humber River (former Etobicoke), contains approximately 65,000 households. Citv of Edmonton To improve customer service in the contract areas (which were previously serviced by one service provider), for the City's curbside collection contract, the contract area was divided into three zones, ranging between approximately 33,000 to 37,000 households (including multifamily units) per zone. The contracts were awarded to three different service providers. The smaller contract areas increased the competitive bidding process to help control costs and provide manageable service areas. The City expects that the smaller areas should allow the service providers to provide consistent customer service and allow the City more flexibility in managing the contracts should a service provider not be able to perform the work as required.

13 February 22, Waste Collection Contracts APPENDIX II OPTION # 1 : PROPOSED COLLECTION DAY MAP - LEGEND MAJOR STREET ZONE BOUNDARY MONDAY TUESDAY WEDNESDAY I-""- THURSDAY 7 FRIDAY, WARDPEEL MAP SCALE 1 : 250,000 MAP ID: PW~lMG-ID-62525VVSVVSPO~IALALCOLLECTION~ZONE_MAP DAE: FEBRUARY CREATOR INFORMATLON lmanagementgroup OPERATIONS SUPPORT

14 February 22, Waste Collection Cont APPENDIX Ill OPTION # 2: PROPOSED COLLECTION DAY MAP I ~OUTHW - ZONE LEGEND MAJOR STREET BOUNDARY 7 MONDAY I TUESDAY WEDNESDAY 1 1 THURSDAY WARDPEEL Pmdw Whir - T 1-W-WS_PDT~IALIALCOLLECTIONN33ZONE~ MAP ID. PW-lMG-ID-61 DAIE: JANUARY CREATOR: INFORMATIONMANAGEMENT GROW OPERATIONS SUPPORT MAP SCALE 1 : 240,000 Kilometers