So, they're assuming this would begin January 1, 2009.

OK ...  let's see ....

1. Budgeted Direct Operating Costs.  In 2006/7, these were around $1.8 million, excluding "Capital Equipment," so that's within reason.  We're not going to argue a couple of hundred thousand dollars.

2. New Equipment Purchases.  Hmmm ... the city sold all of the equipment to the contractor for $366,500 and we're going to get all new stuff for over $2,000,000?  When the average age of the packers is/was 8 years old?  We should check to see how much an 8-year old packer is worth.  Why are they budgeting for all brand new equipment?  Did they give away the farm when they sold the equipment to the contractor? 
 
3. Inland Base Contract Commitment.  Anyone who is familiar with contract law knows that you're NOT on the hook for the entire contract amount, only the lost profits.  As we wrote yesterday, the contractor's approximate profit is only $430,000 for the remaining contract period, NOT $4,056,408. 

So ... remember the "Kool Aid."  If they're trying to sell this to Council and to us, then they must think we're pretty stupid.  And if Council buys it ... no comment.

September 15, 2008

The City says it's estimated that it will cost $8 Million in the first year to transition back to the old service.

That seems just a tad sensationalist.

Now, just where's that credibility meter?
Ah ... there it is.



What is the City buying?  Gold plated packers?

They sold 10 of them, plus a "Roll-Off" plus 3 "Roll-off Containers" (whatever the heck they are) to the contractor for a mere $366,500 just 6 months ago.  And, they "transferred" to them (i.e. GAVE them FREE) two of the buggies.  The remaining buggies are still in the city's possession, being used by other departments.

And in terms of bringing back the now-ex-workers, all the city needs to do is send these folks a letter and ask them if they would be available to come back to work on thus-and-such-a-date.  There is a 3-year recall provision in the Severance Agreement. Plus, three of the highest longevity (and highest paid) workers have now retired, so they could bring in employees at a far lower rate.

So .. where is that $8 Million coming from?

From damages claimed by the contractor?  I don't think so.
The whole arrangement was rushed into by both parties, and from the outset, it has been on shaky ground.  The city wrote a contract that in no way incorporated the scope of work necessary to match what the city employees did (and is incurring extra costs because of it).  It forgot to include garage-side pickup of recyclables and yard waste for medical exemptions, its "pilot program" that picked up paper at the schools and select local businesses, and background checks. 

And the contractor didn't follow its own "Deployment Schedule" during the transition period, resulting in an April 7 start in which contractor employees were learning the job on the fly.  Their facility was leased with just one month to go until start, the project manager started the week before service start, and they never, ever shadowed the city workers to see how the whole thing operated.  No wonder there was no readily-apparent schedule. 

 

More importantly, no one in the city monitored nor held the contractor accountable for these missed milestones.  And they still don't.  The contract called for "Weekly Meetings" between February 1 and April 7.  That would have amounted to 9 meetings.  They had just 2.

The one milestone they did meet was ordering equipment ... they ordered it BEFORE they had been let the contract.  On December 3 -- a week before the city manager had been given Council's approval to enter into the contract -- the contractor's representative told staff and Council that the equipment had already been placed on order "ummm ... not for this contract ... but for safety purposes."

 

That does not make sense.  Why would a company order close to a million dollars worth of equipment "for safety purposes" before the contract award decision had been made?  

And NONE of the promised "penalties" (click here to see the Scope of Work and the Penalty Schedule)
have ever been levied in spite of the City Manager's promise of February 25.  The city had every reason to collect a boatload of fines, but it never held the contractor accountable. (Remember .. this is YOUR money.)

It hasn't been a joy ride for the contractor, either.  They've had to deal with long wait times at the recycle facility (made worse by the fact that the container/paper recycle trucks that were brought in only hold 3-4 tons rather than the 10+ tons of a regular packer), and awkward pickup logistics for some of the private drives/condos.  Plus, they can't be around schools during certain hours, can't go down the middle of streets, must abide by both a Ohio Revised Code and a City Ordinance that prohibits workers from hanging off of vehicles while in transit, and no, I'm sorry, you can't pull 35,000 lb packers into resident driveways.

BUT, here's the clincher.  Contractor representatives were FULLY AWARE of the initiative before they signed the contract, and, according to a January 16, 2008 email (before the contract was signed) from the Finance Director to one of the contractor's representatives, they were "concerned" about it.   But they still signed on. (Click below to see the email.)



And what about potential claims for lost profits?

A tabulation in one of the contractor's memos shows that approximately 12% of the total cost to the city is in the form of profit.  The yearly cost is around $1.6 million, and the contract lasts for 3 years with an optional 2 years.
So ... 12% of $1.6 million times 2.25 years (we've already gone through 6 months of this) is $430,000.
  
And that's assuming that the contractor really is making a profit.  Remember that back in May, they offered a no-fault termination with NO DAMAGES WHATSOEVER.  Would they have done that if they were raking in the bucks?

So, you see?

Both the city and the contractor contributed to the problematic situation that ensued after April 7.  The city licked its chops because it thought it had found a company that claimed it could do the job for less than what the city was paying at that time (the other two bidders were over the city's then-current costs), and the contractor found an "opportunity" through a clipping service that looked like a run-of-the-mill job.  But it wasn't quite that easy.

 So ... to return to the old service, the city could buy back the equipment it sold to the contractor (for obviously less than the original $366,500 sale price), retrieve the buggies from the other departments, rehire the old solid waste crew (and find new workers to make up for those who've already found jobs), and pay the contractor AT THE VERY WORST $430,000 for lost profit.

That's a far cry from $8 million.
 
We have a PRR into the city to see their spreadsheet showing just from where the $8 Million number is coming.

We also have a PRR into the city to see from where their publicized $200,000 per year savings is coming, because based on our calculations, there's a good possibility that they're LOSING money ... even compared with the old back door service.

Don't drink the "Kool-Aid" the city is serving.  From the outset, this whole thing has been a fiasco, and the city's been trying to save itself for the last 7 months ... at our expense.

If they end up incurring the $8 million in charges, it won't be because of the initiative.  Remember? It has no power whatsoever.  At least that's what we've been told over and over again.

So, we'll ask it yet again ...

Why don't they want us to vote on this????

Why are they in the Ohio Supreme Court to preventing a vote in November???