Tendering of Contract for Nine Hired Garbage Packers in

Scarborough Community Council Area

The Works and Utilities Committee recommends the adoption of the report dated May 8, 1998, from the Interim Functional Lead for Solid Waste Management.

The Works and Utilities Committee reports, for the information of Council, having requested that the sub-committee established to discuss with the Union a strategy for tendering bulk lift waste collection contracts, include in its forthcoming report a process for facilitating bids by the Union on work that is being considered for contracting out.

The Works and Utilities Committee submits the following report (May 8, 1998) from the Interim Functional Lead for Solid Waste Management:

Purpose:

To report on the results of discussions with CUPE Local 416 (368) as related to this matter and as directed by the Works and Utilities Committee at its meeting of March 25, 1998.

Funding Sources, Financial Implications and Impact Statement:

The approval of recommendations contained in this report will result in an estimated annual net saving of approximately $63,400.00 from the 1998 actual cost of nine contracted trucks. While one truck is being totally eliminated, the saving is largely offset by the new hourly rate for the remaining hired equipment, which has increased from the former range of $66.57 to $71.50 per hour to $75.99 per hour for all of the hired trucks. As the number of trucks will only be reduced for the second half of the year, the 1998 saving is further reduced to $31,700.00.

Sufficient funds are available in Scarborough=s portion of the amalgamated Toronto operating budget to fund this service in 1998.

Recommendations:

(1)That three of the nine garbage packers traditionally contracted in the former City of Scarborough be eliminated as a contracted service with the expiry of the current contract on June 30, 1998;

(2)that the contracted service for six garbage packers and associated staff be reported to the Bid Committee for award to the low bidder;

(3)that two surplus City-owned garbage packers be placed into service effective July 2, 1998, to be operated by members of CUPE Local 416 (368); and

(4)that dependent upon the approval of Recommendations Nos. (1) to (3), the nine trucks previously in service be reduced to eight.

Background:

The Works and Utilities Committee meeting on March 25, 1998, had before it a report dated March 3, 1998, from the Interim Functional Lead for Solid Waste Management. This report provided historical data on the use of hired garbage packers in the former City of Scarborough; advised that the current contract for this service will expire on June 30, 1998, and was in the process of being tendered; and recommended that the report be received for information.

The Committee received the aforementioned report and requested that:

(1)the Commissioner of Works and Emergency Services proceed with the tendering process, invite the Union to submit their proposal as part of that process, and submit a report to the Committee on whether the Union has expressed interest in bidding, and on the tender award;

(2)the tendering process permit bids by outside individuals based on the use of City-owned vehicles;

(3)the nine best vehicles be retained to ensure that there are sufficient vehicles in-house; and

(4)the Commissioner of Works and Emergency Services further report on the use of hired garbage packers elsewhere in the City.

Discussion:

For the past six years, management has worked closely with the former CUPE Local 368 Executive in a concerted and generally cooperative effort to make the services provided by Scarborough=s Waste Management Division cost competitive with the private sector. In the area of waste collection we have succeeded. In 1997, the actual cost to collect garbage with the nine hired trucks, as provided by four independent contractors, ranged from $42.38 to $47.61 per tonne. Scarborough=s cost using City staff was $46.70 per tonne. The contract cost includes $1.35 per tonne for staff supervision of the contract. The Scarborough cost is based on a loaded labour rate of $40.00 per hour which includes all overhead such as benefits, clothing, supervision and the provision of replacement staff during illness, vacation etc. In actual fact, 1997 staff productivity averaged 9.5 percent higher than that of the hired trucks but this saving was offset by the difference in the hourly rates.

At a meeting with the Union, the concept of them bidding on this work was discussed. It is the Union=s position that it does not bid on City work. Notwithstanding, it is management=s position that the interests of the tax payer can best be served by eliminating the two least productive hired trucks and replacing them with our own forces. As the trucks tendered are 25 cu. yd. tandem axle vehicles, the contractor(s) will be expected to attain the same productivity improvement that the City gained when converting to these larger vehicles. This will enable management to completely eliminate the need for one truck.

An inspection of the City=s fleet of surplus garbage packers has revealed two units, in excess of our requirement for daily operational spare vehicles, that could be made operational with limited expense. As productivity improvements are introduced across the City, it is anticipated that newer units will become available.

The cost to operate six hired trucks in combination with two City vehicles is estimated at $1,216,145.00 for a full year. This estimate is based on the actual hours charged in 1997 and allowing for the improved productivity of the larger tandem vehicles. The actual cost in 1997 was $1,279,513.00. This represents an annual cost saving of approximately $63,400.00.

As directed by the Committee, bids were also requested for the provision of labour only with the intent that the contractor=s staff would operate City equipment. Competitive bids were received ranging from $17.80 to $48.00 per hour. However, this method of operation is not considered a viable option. As an Aarms length@ relationship would not be maintained, these employees could be deemed employees of the City under the terms of the applicable collective agreement. Further, as they would be taking daily direction from City supervisors, our liability in the event of an injury would be greatly increased.

The Committee=s request for a further report on the use of hired garbage packers elsewhere in the City has been complied with in the form of a staff report entitled AProcedures for Retendering Existing Contracts for Waste Collection and Provision of Opportunity for the City=s Unionized Workers to Propose Having This Work Carried Out on an In-House Basis.@ This report dated April 9, 1998, was submitted to Committee at its April 22, 1998 meeting and approved as submitted.

Conclusion:

Waste collection staff in the former City of Scarborough have worked diligently to reduce operating costs in realization and acceptance of the need to be competitive with the private sector. The reduction of hired garbage packers from nine to six will reward that effort while further reducing this year=s operating costs by $31,700.00 from the 1997 level.

Contact Name and Telephone Number:

Ron Gordon, Director, Solid Waste, Recycling and Fleet Services

Scarborough Community Council Area

Phone: (416) 396-4771; Fax:(416) 396-4156

E-mail: gordon

Internet: gordon@city.scarborough.on.ca.

(Report dated March 3, 1998, addressed to the

Works and Utilities Committee fromthe Interim Functional Lead for Solid Waste Management)

Purpose:

To provide historical data on the use of hired garbage packers in the former City of Scarborough, and to advise that the current contract for this service will expire on June 30, 1998, and is in the process of being tendered.

Funding Sources:

Funds have been provided in Scarborough=s portion of the amalgamated Toronto operating budget for vehicle and operator service rental associated with garbage and yardwaste collection in the amounts of $1,100,000.00 and $50,000.00 respectively.

Recommendation:

That this report be received for information.

Background:

The former City of Scarborough has contracted for the provision of hired garbage packers since 1953 when the first truck and operator was hired. The number of hired trucks has remained constant at nine since 1992. These vehicles are assigned on a daily basis and work in unison with City forces. Prior to 1992, the contracting of these services was done on a negotiated basis with the owner/operators. The trucks are currently provided by four independent contractors.

In 1992, the first formal contract was tendered to ensure that competitive pricing was being received. A three-year contract expiring on November 30, 1995, was subsequently awarded by Council. In negotiating a rate increase for 1995, all four of the contractors requested a two-year extension until November 30, 1997, in order to amortize their equipment over its full projected life. This extension was awarded by Council with the condition that prices would remain stable for its duration. A subsequent extension was granted until June 30, 1998, in order to help facilitate the amalgamation process.

The rate for these contracts currently ranges from a low of $66.57 per hour to a high of $71.50. For this amount we receive a garbage packer complete with a driver and labourer. The trucks vary in age and capacity, hence the variation in hourly rates.

Discussion:

The use of hired trucks working in tandem with the municipal fleet has proved very successful. On a typical day, these trucks constitute 31 percent of the fleet assigned to residential and commercial garbage collection in the Scarborough District. On occasions when tonnages are extremely high, the contractors are always willing and able to work the extra hours needed to get the garbage off the street.

The use of hired trucks allows staff to monitor and evaluate the performance of private sector versus municipal forces, while still maintaining total control of the operation. The infusion of contract workers into the work force has created a healthy and competitive environment in which both sectors are required to perform to a high standard.

Absenteeism is never an issue with the hired operators. If a contractor=s employee is ill or on vacation, it is the contractor=s responsibility to ensure that trained and competent staff are available to operate the vehicle.

Through the use of these contractors, the high cost of vehicle purchases and ongoing maintenance is avoided. To replace these nine trucks with City-owned vehicles would cost in excess of $1 million in capital costs alone.

The current tender calls for a three-year contract expiring on June 30, 2001, with an option for a two-year extension. This enables the contractors to amortize their equipment over a longer period and often results in lower pricing.

Conclusions:

While the total contracting of collection services would necessitate an ability to adjust to significant price fluctuations, the blending of City and contract forces creates an environment in which a low unit cost for garbage collection has proven to be both attainable and sustainable.

Contact Name and Telephone Number:

Ron Gordon, Director, Solid Waste, Recycling and Fleet Services

Scarborough Community Council Area

Phone: (416) 396-4771; Fax: (416) 396-4156

E-mail: Gordon

Internet: gordon@city.scarborough.on.ca.