Item - 2017.PW18.3

The Public Works and Infrastructure Committee recommends that:

1. City Council authorize the General Manager, Solid Waste Management Services, and the Director of Purchasing and Materials Management Division, to undertake a procurement process for residential curbside collection services for District 4 only, including the authority to consider an in-house bid submission from internal City employees in the Solid Waste Management Services Division as part of a managed competition process, in accordance with the process set out in this report, including but not limited to the requirements as summarized in Attachment 1 to the report (January 6, 2017) from the Deputy City Manager, Cluster B and the General Manager, Solid Waste Management Services.

2. The General Manager, Solid Waste Management Services, and the Director, Purchasing and Materials Management Division report to Council on the results of the process for authorization to award a contract  for a term of six (6) years; with options to extend for an additional two (2) separate one (1) year extensions at the sole discretion of the General Manager, Solid Waste Management Services.

3. City Council further authorize the retention of:

a. external consulting support on an as required basis to support the Internal Bid Team in the development of their internal bid submission; and,

b. a Fairness Monitor to oversee the Procurement process, in consultation with the Director, Purchasing and Materials Management Division.

4. City Council authorize the General Manager, Solid Waste Management Services to consult with Toronto Civic Employees Union (TCEU), LOCAL 416 - Canadian Union of Public Employees (CUPE) representatives and invite their participation in the recommended managed competition process, in accordance with the process set out in this report, including but not limited to the requirements as summarized in Attachment 1 to the report (January 6, 2017) from the Deputy City Manager, Cluster B and the General Manager, Solid Waste Management Services, to be confirmed by Toronto Civic Employees Union (TCEU), LOCAL 416 - Canadian Union of Public Employees (CUPE), within 30 days of the Council Decision approving the managed competition process. 

5. If Toronto Civic Employees Union (TCEU), LOCAL 416 - Canadian Union of Public Employees (CUPE) decline to participate in the managed competition process, City Council authorize the General Manager, Solid Waste Management Services to issue formal notification of contracting out to the Union in accordance with the provisions of the Collective Agreement between the City and Toronto Civic Employees Union (TCEU), LOCAL 416 - Canadian Union of Public Employees (CUPE).

6. City Council direct the General Manager, Solid Waste Management Services, to:

a. delay, in consultation with the Director, Purchasing and Materials Management Division, any procurement activities with respect to residential waste collection in District 3 until the results of the District 4 Procurement are determined and an appropriate procurement timeline for District 3, taking into consideration staffing and fleet related implications, is prepared and approved by Council; and,

b. prepare, in consultation with the General Manager, Fleet Services a fleet replacement plan in District 3 and delay the purchase of any waste collection vehicles associated with service delivery in District 4 until the results of the recommended Procurement process are known.

7. The information in Confidential Attachment 2 to the report (January 6, 2017) from the Deputy City Manager, Cluster B, and the General Manager, Solid Waste Management Services remain confidential in its entirety as it relates to the security of the property of the City and labour relations matters and that the information in Confidential Attachment 3 in the report remain confidential in its entirety as it relates to security of the property of the City.

The Public Works and Infrastructure Committee requested the General Manager, Solid Waste Management Services to submit a supplementary report directly to City Council that indicates the number of employees who are employed by the City and who provide the service that is the subject of this report, being the collection of residential waste in District 4.

The General Manager, Solid Waste Management Services gave a presentation to the Public Works and Infrastructure Committee.

Since the preparation of Item PW7.4 - Curbside Waste Collection Services Review: Comparison of Curbside Waste Collection Services East and West of Yonge Street, originally scheduled at the meeting of Public Works and Infrastructure Committee on September 22, 2015, a number of circumstances have changed resulting in the need for an update to the original Staff Report.  These changes include:

- Additional detailed analyses, in particular with respect to fleet costs, have been completed as part of the 2017 budget preparation cycle and as a result, cost per tonne and cost per household forecasts have been revised from the original numbers presented in 2015.

- An updated analysis has been prepared to reflect changes to redeployment efforts and costs, primarily as a result of changes to the new TCEU, LOCAL 416 - CUPE collective agreement and staff changes since the original estimates prepared pre-negotiation of the collective agreement. 

- 2015 financial, tonnage, and performance related data has been incorporated.

- A new contract for waste collection services in District 1 (Etobicoke area) began July 1, 2015, with supporting performance has been incorporated.

- Feedback provided by Ernst & Young (EY) as part of the independent report review completed in 2015, has been incorporated into the amended Report.

- A better understanding of the financial and social implications of a deferred decision are now better understood.

These changes are sufficient in nature such that the original recommendations prepared for September 2015, should be updated.

The challenge with respect to this service delivery issue is to provide verifiable and credible information with respect to the current state of the private sector waste collection marketplace as it relates specifically to the City of Toronto, and its unique waste collection districts, and how that compares to the current internal service delivery approach.

To address this challenge, staff are recommending an alternative procurement approach, known as a managed competition, which consists of a procurement process incorporating competitive bids from both the private sector and an internal City bid. A managed competition process provides a consistent, fair and transparent approach when comparing in-house and external service delivery costs and will be conducted in accordance with all the associated standard City procurement protocols.  Managed competition procurements strike an excellent balance between conflicting positions, namely privatization and maintaining in-house service delivery, as they provide a platform to compare costs within a competitive procurement process. This recommendation is conditional on the agreement of TCEU, LOCAL 416 - CUPE to engage in the managed competition process on behalf of its employees. In the absence of such an agreement, staff recommend that the City continue to engage in a traditional procurement process to secure bids, from third party contractors qualified to provide this service.  Under the Purchasing Chapter of the Municipal Code, in-house bids may only be accepted from internal City employees or divisions, where Council has given prior approval, including approval of the process for fairly evaluating those submissions.

It is proposed that this process would be utilized for District 4 first, and the results of the managed competition in District 4 will be used as a guide for future service delivery recommendations in District 3. The preferred approach for this procurement is a Request for Pre-Qualification followed by a Request for Quotation (referenced herein as the "Managed Competition Procurement").

The material presented herein supersedes all previous information, claims and recommendations as presented in the Public Works and Infrastructure Committee deferred Item PW7.4 - Curbside Waste Collection Services Review: Comparison of Curbside Waste Collection Services East and West of Yonge Street.