Toronto's Integrated Solid Waste Resource

and Price Proposal Submission by Rail Cycle North

The Works Committee recommends that Rail Cycle North be requested to remove the exceptions relating to Toronto's rights to contract separately for the transportation component of its proposal and to include a preferred customer clause, by the next Works Committee meeting of February 7, 2000, failing removal of which the Rail Cycle North proposal be considered informal and disqualified from further evaluation in the TIRM Request for Proposals process.

The Works Committee submits the following joint report (January 26, 2000) from the Commissioner of Works and Emergency Services and the City Solicitor:

Purpose:

The purpose of this report is to seek direction from Council on the matter of the exceptions taken in the price proposal submission of Rail Cycle North.

Financial Implications and Impact Statement:

The failure to waive the exceptions contained in the price proposal submission of Rail Cycle North and to declare the submission informal will result in the disqualification of the RCN proposal from further evaluation.

Recommendations:

It is recommended that:

(1) in the event that Council wishes to continue to insist on the reservation of its rights to contract,

(a) separately for the transportation component of a proposal, and/or

(b) with the benefit of a preferred customer clause,

as currently set out in the TIRM Disposal Request for Proposals (RFP), Council declare the Rail Cycle North proposal as informal and disqualified from further evaluation in the TIRM RFP process;

or, alternatively,

(2) Council waive the requirement as contained in the TIRM Request for Proposals that there be no exceptions to a base bid and acknowledge the bid price submitted by Rail Cycle North in Envelope 2 of its proposal as an acceptable base bid for purposes of further evaluation with the other proposals in the TIRM process;

and

(3) in the event that Council adopts Recommendation No. (2), all respondents be notified that the reservation of Toronto's rights as referred to in Recommendation No. (1) are not absolute requirements of the TIRM Disposal RFP but will be the subject of negotiation in the next phase of the RFP process.

Background:

Following the submission of proposals on December 15, 1999, the TIRM Project Team proceeded to evaluate the submissions in connection with the evaluation criteria set out in the Request for Proposals document ("RFP"). Specifically, the Project Team examined the Envelope 1 submissions which contain the declarations and securities, proposed service plans, and technical performance data (macro-environmental impacts and job creation potential). Following this step, the Project Team proceeded to examine the Envelope 2 submissions which contain the price proposals. The contents of Envelope 1 and 2 form the base bid from each respondent.

The following statement is contained on the first page of Envelope 2 of the Rail Cycle North ("RCN") proposal submission:

"BECAUSE OF THE UNIQUE NATURE OF OUR PROPOSAL, WHICH REQUIRES THE INTEGRATION OF THE WASTE TRANSPORTATION AND DISPOSAL FUNCTIONS, THE PRICES SET OUT IN THIS ENVELOPE 2 ARE CONDITIONAL ON, AND SUBJECT TO, THE EXCEPTIONS SET OUT IN ENVELOPE 3."

Section 5.4 of Toronto's RFP states clearly that the comparative evaluation which is to follow after the opening of Envelope 2 takes place in respect of "… 'base bids' (i.e., those proposals that do not involve exceptions and/or Toronto partnership offers)". Therefore, Lawson Oates, the Project Contact Person for the TIRM Disposal RFP process, has sought clarification about the exceptions in order to determine the implications for any waiver of the RFP requirements by Council.

RCN has responded by stating that it believes its Price Proposal to be compliant with the terms of the RFP. RCN states that the price in Envelope 2 is a firm binding price subject only to certain exceptions. At issue are two exceptions. The two exceptions conflict with Council's stated position on the inclusion within the RFP of (1) a preferred customer clause, and (2) the right of Toronto to contract out separately in respect of the transportation component of any proposal.

Direction is accordingly required from Council on the issue of whether subjecting the base bid to certain conditions in respect of these rights should be waived.

Comments:

RCN is arguing that there is nothing in the RFP which prevents reference to exceptions in its Envelope 2 and further that, because of the uniqueness of its proposal, there must necessarily be exceptions to its base bid. It also understands and accepts that because it has put forward its proposal in effect as a package, it may be rejected in its entirety as a package.

Because the conditions relate to reservation of contract rights in favour of Toronto and not mandatory criteria to be met, Council can consider waiving them. The RFP does contain language giving Council that discretion. Section 4.2.6 of the RFP addresses deficiencies in proposals. In part, that section states as follows:

"Toronto reserves the right to request clarification where any Respondent's intent is unclear and may waive or request amendment of any irregularity or omission in the information that is required to be submitted."

In addition, the Declaration of Proposal Submission to be executed by each respondent includes a statement that the respondent agrees as follows:

"4. Agrees that any or all Proposals may be rejected, that any irregularity in any Proposal may be waived by Toronto and further agrees that the Proposal Call process, or any part thereof, may be discontinued at any time."

In exercising its discretion, the following may be borne in mind by Committee and Council:

(1) the exceptions relate to reservation of contract rights which are typically the subject of negotiation and not to mandatory criteria or comparative criteria which might impact the method of conducting the RFP evaluation. Therefore, waiver of those rights would not affect the outcome of Step 3 (evaluation to identify the top-ranked respondents); and

(2) associated with any waiver is a recommendation that all respondents be given a chance to negotiate on the issues of preferred customer status and separate transportation components.

Overall, the issue is whether or not Council wishes to retain its reservation of rights to have a preferred customer clause and to contract separately for the transportation component.

Conclusions:

(a) RCN has provided two exceptions to its base price bid which negate the reservation of rights to Toronto to contract with a preferred customer clause and to contract separately for the transportation component of any proposal.

(b) Council has the discretion to declare the RCN proposal informal, and therefore disqualified from further evaluation, as not meeting the requirements of the TIRM Disposal RFP.

(c) Alternatively, Council has a discretion to waive the exceptions.

Contact:

Lawson Oates

Manager, Strategic Planning

Solid Waste Management Services

Tel: 392-9744; Fax: 392-4754

loates@toronto.ca

James Anderson

Director, Municipal Law

Tel: 392-8059; Fax: 397-5624

janders1@toronto.ca

_________

The Works Committee reports, for the information of Council, having also had before it during consideration of the foregoing matter a confidential joint report dated January 26, 2000, from the Commissioner of Works and Emergency Services and the City Solicitor respecting the price proposal submission by Rail Cycle North, a copy of which has been forwarded to all Members of Council under "Confidential" cover.

The following persons appeared before the Works Committee in connection with the foregoing matter:

- Mr. Gord Perks, Toronto Environmental Alliance;

- Mr. Bob McCaig, President, Green Lane Landfill;

- Mr. Nigel Guilford, Vice-President, Rail Cycle North;

- Mr. Bill Guthrie, Vice-President, Toronto Civic Employees' Union, Local 416; and

- Councillor Joan King, Seneca Heights.