By James E. O’Connor

James E. O’Connor

Throughout the United States, municipal and county governments have realized the benefits of creating public/private partnerships to manage solid waste. The primary influences behind a municipality move toward privatization in the US are the pursuit of cost savings, the ability to access new technologies while preserving capital expenditures, and the desire to reduce risks associated with providing waste management services.

For these very reasons, currently more than half of US cities now contract all or part of their refuse collection and disposal services. This number has nearly doubled from 31% in 1991.

Roles and Responsibilities

Every successful public/private partnership requires a clear understanding of the roles and responsibilities of the partnering organizations. Claims that privatization of solid waste services will eliminate government involvement in the solid waste management process are nonsense. Experience has proven that privatization actually requires an increased regulatory role from the municipality.

Government cannot disengage from its responsibility to protect public health, safety, and the environment. Therefore, the primary responsibility of a city official is to protect the public. In municipalities where solid waste services have been privatized, city officials serve as watchdogs by monitoring performance and enforcing contracts. They are the foundation for planning activities directly associated with successful, long-term management of solid waste.

The job of the private sector is to fulfill the terms of the contract, which has proven to be a quality-assured, cost-effective solution to solid waste services. The investment of capital to purchase collection vehicles, hire staff, and construct facilities is the risk the private sector acquires to ensure the collection and safe disposal of society’s waste.

The private sector also plays a vital role in the planning process by providing advice and insight to professional planners. The single most important responsibility of waste collection firms is to respect the municipality as the "customer." The goal is to always provide the customer with services that exceed their highest expectations.

Clear Expectations

In addition to each partner understanding its own particular responsibilities, successful public/private relationships have a clear understanding of the roles and expectations of the other partner. This typically begins long before a vendor is selected.

Solid waste collection can involve an array of different services. Therefore, municipal officials must first conduct a thorough evaluation and review of the options available for solid waste services. Next, the municipality must create a well-designed, fair, and complete procurement process in which the government clearly defines the services that will be transferred to the private sector. Unfortunately, there appear to be more problems in this phase than anywhere else in the privatization process.

To avoid confusion, the desires of the municipality must be explicitly detailed in the bidding document. A clear definition of the scope of work required is imperative.

Once the scope of service is defined, public officials need to clearly define minimum service-level requirements. This includes such matters as frequency of collection, permitted hours of operation, insurance and bonding requirements, health and safety restrictions, permissible service complaint levels, and other basic service parameters. Leaving room for interpretation only leads to confusion and frustration later in the relationship.

The municipality must also be fair and practical during negotiations. It should be noted that price cannot be the only factor that government considers when evaluating a vendor’s proposal. Factors such as the vendor’s past experience, financial condition, and ability to fulfill the terms of the contract must also be evaluated and taken into consideration during the procurement process.

Finally, once a contract is signed, both sides need to work diligently to be fair throughout the life of the contract. Make no mistake: The hard work for both the contractor and the municipal officials commences following vendor selection.

There is no single best way to structure the contracting of solid waste and recycling collection services. In any contracting decision, however, the twin goals of service quality and competitive cost should guide the design of the bidding process and the delineation of contract details. Ultimately, long-term success of contracting depends on depoliticizing the contracting decision as much as possible, using clear quantitative and qualitative performance standards, and clearly spelling out the responsibilities of the public and private sectors.

Win-Win Relationships

Successful public/private partnerships are often referred to as "win-win" relationships. Examining the wins, we see that the public sector benefits when it is able to provide quality services at lower costs by using its purchasing power to strike favorable terms with private waste collection firms.

The private sector "wins" are measured by profitability–that is, the return that a company realizes on invested capital. Good general managers of waste collection companies carefully and diligently work to make sure that quality services required by the contract are being delivered with the utmost efficiency to ensure a profit. Carelessness or a lack of attention to the delivery of quality service can result in financial disaster.

Experienced, business-savvy public-sector administrators know that the ability to lower organizational costs and improve the quality of service is related to route density typically found in residential waste collection. The length of contract and specific requirements for insurance, equipment, staffing, billing, and reporting are other factors that can also influence the price of service.

Throughout my 30-year solid waste career, I have seen many win-win relationships. The private sector has proven its ability to provide cost-effective solid waste services. Subsequently, municipalities have saved millions of taxpayer dollars without adversely impacting the quality of service to residents.

In the end, environmentally sound solid waste management is a service for which local government is responsible. Providing service that exceeds the highest expectations of the customer in a cost-effective manner is a responsibility that lies with the vendor. Government is there to protect public health, which means ensuring that the job gets done right.

Given the strengths and expertise on both sides, the opportunity exists for the public and private sectors to partner and create a system in which everyone benefits–a true win-win relationship.

Jim O’Connor is the president and CEO of Republic Services Inc. based in Ft. Lauderdale, FL.

MSW - September/October 2002