Pickup Schedule for 2007

One local firm likes to remind us "This business stinks, but it's picking up."

In October 2006 Nagin announced award of a new seven year garbage contract. It would be let to two local minority (African-American) owned firms, Richard's Disposal and Metro Disposal of Harvey. It would replace the contract with Waste Management. The new contract will provide for twice a week pickup and include semiautomated trucks with robotic arms. The new contract will cost $20-25 million per year to pickup twice weekly from 100,000 homes and small businesses around the city.

The French Quarter and the CBD were not included in the inital contracts although Nagin announced his intention to let a third contract for round the clock pickup and aggressive (Disney like) cleaning of the French Quarter. SDT another local firm, a post Katrina startup headed by entrepreneur Sidney D. Torres IV, picked up this contract for a price tag  in the $9-10 million dollar range.

The city will face additional charges to dump the garbage collected under these three contracts.

There are a number of questions swirling around this award:

1. The announcement came out of a vacuum. Little information preceeded the award. The proposals from the bidders and the city's evaluation were not available at the time of the announcement.
2. The two winning firms are apparently the only companies that bid. Waste Management and River Parish Disposal declined to bid claiming the RFP was too vague to provide a meaningful response.
3. The amount of the award is higher than the $18 million per year contract it replaces. This is the case even though the number of people being served is fewer than the 450,000 people and 250,000 locations that received twice weekly pickup preK.
4. Seven years seems like a long term  with all the uncertainties about the future of the city.
   
5. The amount of the award is disputed. The mayor says it's $20 million and his staff in a press release says $25 million is more accurate. ($24.6 million per year was the actual amount for thse contracts in the 2007 budget, so much for the mayors arithmetic)
   
6. The mayor indicated the $12 per houshold disposal fee assessed in monthly Sewerage and Water Board bills would not be increased and any difference between costs and revenues would be made up by the city.
   
7. Details about the trash bins to be provided by Cascade Engineering of Michigan are sparse. These new trash bins are presumably required for robotic pickup arms on the trucks to work properly. The purpose and value of the robotic arms is not clear.
   
8. Metro Disposal's share of the Waste Management contract was cut back from 10% because of performance problems. Metro was contracted by Waste Management to fullfill a minority set aside in their contract. Metro may also have other problems.
   

Thinking about this deal a little more:

1. preK the contract was based on two pickups per week at 250,000 locations. That's under  $0.70 per pickup. $12 in fees per month per location generated $36 million per year in revenues.
   
   
2. The new contract calls for two pickups per week at 100,000 locations.  That translates to $2.40 per pickup or 400% of preK cost. What are other cities paying per pickup?
   
   
3. Expected revenue for 100,000 locations would be $14,400,000 per year. That's $21,600,000 less revenue than preK. With costs up $7 million, we are looking at a $28 million negative impact on city operations.Nagin may be able to eat that much this year while federal funds are available, but next year and beyond you can expect pressure to increase fees.
   
   
4. Does the city council have a role in approving this contract?
   
   

Finally what wouldn't garbage pickup per week and one recycling pickup per week be a better deal for the citizens and the city? Even if we only recycled paper, we'd come out way ahead.