Thursday, November 13, 2008

The Facts on Trash

Councilwoman Head has written a primer on Council's inquiry into our city's sanitation contracts.

I have reproduced it with a couple of readability/formatting edits.

I. We bought a Rolls Royce when we could only afford a Camry

In late 2006, during hearings for the 2007 Budget, Cm. Midura and I questioned the judgment of entering into a solid waste contract that was double the cost of the previous contract and more expensive than sanitation services in similar metropolitan areas. We lost that debate. The administration, through its Sanitation Director, Veronica White, defended the choice to embark on a very expensive solid waste removal program for a variety of reasons. One reason was that this new program would provide superior service because of the “automation” required under the contracts. Specifically, Ms. White testified that the automated trucks, which were “high tech,” would reduce physical stress on the sanitation workers by mechanically lifting the cans into the trucks and would also reduce trash escaping from cans during pick-up. In addition, these contracts called for removal of “unlimited bulky waste.”

II. The obligations under the contract are not being met

As stated above, the city opted to engage in a very expensive solid waste removal program that required automated truck pick-up. The problem is that the automation component is not being used. The sanitation workers almost uniformly physically pick up the cans, just as they did under the prior and less expensive sanitation system. A fundamental reason for the high cost was this high-tech component. Regardless of whether the ultimate result of the collection is good, the reason for the high cost has been retroactively deleted from the contracts.

III. Retroactive revisions of the contracts are unfair to other potential bidders

Mandating automated collection in the public bid for solid waste collection services arguably discouraged companies from bidding on the work when the bids were published in 2006. And now, to retroactively relieve the winning contractors of this obligation is fundamentally unfair. This retroactive revision of the contracts is not limited to the automation issue. In addition, after the contracts were executed, the administration proposed an ordinance to prohibit New Orleans residents from placing bulky waste items out for collection. This was in direct conflict with terms of the contracts, which require that the contractors provide “unlimited bulky waste” removal. This onerous bulky waste requirement did, in fact, discourage several vendors from bidding (for example, SWDI and Waste Management). For the administration to retroactively remove that obligation reeks of foul play. Ultimately, after much wrangling, the laws were changed back to allow citizens to put out for collection unlimited bulky waste. But this scenario illustrates how the entire sanitation contract bidding and management process has been flawed since 2006.

IV. There has been no basis for payments of roughly $60,000,000 over two years

For two years, the city has paid roughly $30,000,000 per year for garbage collection and another $9,000,000 for dumping. The sanitation contracts clearly call for monthly garbage collection payments based on the actual number of “approved service locations” from which garbage was collected. Per the contracts, the lists of serviced locations were to be contained on a monthly report, in spreadsheet form, delivered to the sanitation department by the 10th of each month. Contractor payment was to be calculated by multiplying the contract fee (depending on the contractor, between $18.15 and $34.00 per month) by the “approved service locations” from which garbage was collected that month.

Instead, the city has been paying based on a set number of 106,500 households every month since the inception of the contracts in January 2007. This number, 106,500, was an arbitrary number provided in the bid documents for bid comparison only. The payments defy logic. How can a city with a fluctuating and growing population have the exact same number of garbage collections every month since January 2007? When I learned that the basis for the payments was not based on the actual house count, I began requesting the rational from Ms. White for the payments. My requests included any monthly invoices, house counts, monthly reports, serviced locations or the like. In response, the administration provided the following justifications for payments:

1) Three notebooks full of listings of cart delivery addresses; and

2) Billing records from the Sewerage and Water Board (customers receiving solid waste collection services should pay $12-24 per month on their S&WB bill).

The first basis, the cart delivery lists, was fraught with problems. For example, those lists contained only 72,132 cart delivery addresses (not 106,500). In addition, an audit of those lists showed that there were many errors and duplications (at a rate of almost 30%). And the Sewerage and Water Board records for 2007 total payments of only $9,493,669, which indicates that the actual number of households paying for services was substantially lower than 106,500.

V. A $250,000 audit will not solve the problems

Now, the administration has engaged a firm at a cost of $250,000 to conduct an actual house count audit. This audit ostensibly will allow the city to determine what current payments should be made, and will allow corrections in prior over or under payments. To use this audit in any meaningful way to correct prior over or underpayments will be difficult at best. How will the city use data from winter 2008 to establish what appropriate payments would have been in the spring of 2007? Moreover, the obligation to provide a monthly accurate house count was with the contractors. And their failure to do so, under the contract, is cause for termination. The sanitation department should have been receiving these monthly house count reports for two years, auditing them for accuracy all along, and requiring improvement from the contractors where needed.

Guess what? It really does sound a lot like NOAH, from the disclosure of 'wrong' lists right down to the illegitimate in-house audit.


Leigh C. said...

I think she had me on buying the Rolls when we could only afford a Camry.

Who's hurting YOUR recovery today? ought to be the question everybody asks of the Walking Id from here on out. The man is worse than my five-year-old.

Civitch said...

This is NOAH on gamma rays. Substantially more money involved, and more high-level people (i.e. Cynthia Willard-Lewis).

There's an directly proportionate relationship between the level of (absurd) defensiveness of the Nagin administration and the level of corruption. So this is going to be a doozy.

Clay said...

It's an obvious Nagin Charlie Foxtrot to add to the pile.

I think Nagin's letter could end up as a brilliant political maneuver: fire up black voters on the eve of the December 6th election. When the electorate is angry and divided, people like Nagin and Jefferson win handily.

E said...

Well Jefferson was going to win pretty handily anyway.

It's an interesting maneuver because it perverts the coattails of the Obama victory. I don't know how to calculate it's value though.

Anonymous said...

Stacy's HOT!