Integrated Waste Management Disaster Plan

Chapter 5: Contracts (Steps 1-5)

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Background: Contracts and franchise agreements are pivotal to ensuring a successful debris management program. Unless diversion is specified, it is likely the collected debris will be disposed of.

Regardless of the diversion program selected, the best way to divert disaster debris from landfills is to ensure that the contracts for debris removal include provisions requiring that the disaster debris be diverted from landfills through reuse, recycling, or other waste diversion techniques.

Contents: This chapter contains ten sections.

Step 1: Perform contract services assessment

Develop in advance: The best approach to disaster response is pre-disaster planning. Taking the following actions in advance allows time for the development of contract terms and conditions, cost estimating, legal review, and identification of potential contractors.

Identify and review existing contracts, franchise agreements, and mutual aid agreements in effect to help determine your contract needs based on the type of work to be performed.

In assessing your contracts and other agreements, make note of the following:

• any services that are provided relating to disaster debris;
• whether the contracts contain any relevant provisions dealing with disaster debris;
• whether the existing contract can be used as the vehicle to provide emergency cleanup work, either as written or modified; and
• what you can require in terms of diversion programs if they are not specifically included in a franchise agreement.

Contractors: When developing a list of pre-approved contractors, update the list every six to 12 months. At the same time, check to see that the contractors are holding the appropriate licenses and that those licenses are valid.

Note: Contractors will have to show proof of worker's compensation and liability insurance before entering into a contract. The local jurisdiction's risk manager will have to determine the minimum levels of coverage. Verify with OES/FEMA that insurance premiums are reimbursable.

Non-disaster waste: The best approach is to keep disaster-related debris separate from non-disaster debris. Commingling the two wastestreams can compromise the city/county's reimbursement for the diversion program. As an alternative, set up separate contracts for disaster debris and non-disaster debris and keep separate records for each.

Note: This was not possible in the City of Los Angeles. Many victims were still removing earthquake debris while neighbors were rebuilding. There was no clear end to one activity before beginning the other.

Step 2: Coordinate with haulers

Do in advance: The franchise and independent hauler can be instrumental in establishing a diversion program and in expediting debris cleanup.

It is important to coordinate with your franchise hauler in advance to:

• determine the services and equipment they can provide in an emergency, and
• develop a contingency plan should they not have the staff or equipment available.

This could include writing contracts for services the franchise hauler normally would provide but is unable to do so because of a shortage of staffing or equipment.

Disaster clause: Determine if your franchise agreement contains a "disaster clause" requiring the franchisee to provide emergency cleanup services in the event of a disaster (provide equipment, labor, and diversion or disposal of collected materials). If not, it would be wise to include such a clause at the time the franchise agreement is renegotiated.

Ensure that your disaster clause includes the use of the franchisee's facility, equipment, and labor.

Example: At the time of the Northridge earthquake, the City of Santa Clarita did have a franchise agreement with a disaster clause. It allowed them use of the franchise equipment and facility; however, it did not include the city's right to use franchise employees. As a result, the City did not have the staff needed to operate the equipment.

Waivers from subcontractors: Be sure to get waivers from subcontractors releasingthe jurisdiction from liability. If the contractors do not pay their subcontractors, the subcontractors can then place a lien on the property where they removed debris and sue the jurisdiction to recover payment. Or, as an alternative, include such a provision in the contract for services.

Step 3: Assess need for short- and long-term operations [1]

Short- and long-term operations: A jurisdiction will probably need both short- and long-term contracts in its recovery program. Define the scope of the project and then select the type of contract needed depending upon the type of operation undertaken.

Short-term operations [2]

First 100 hours: Short-term operations are defined as those undertaken during the first 100 hours after a disaster. One method of contracting early in a disaster is the "time and material" type of contract.

This contract type is used immediately after a disaster for emergency life saving activities and debris clearance. Under this type of contract, the contractor is paid on the basis of time spent in accomplishing a particular task. This contract is acceptable if a cost ceiling is placed on the contract to build in cost controls.

Since short-term debris operations primarily involve equipment usage, the contract should be set up on an hourly basis. The "time and material" contract then becomes a "time" contract only.

Bid requests: Bid requests should specify that the hourly rate will include all fuel, maintenance, repair, etc., and the operator. This can greatly simplify the bookkeeping, auditing, and monitoring of the work.

Advantages: Short-term agreements allow for more flexibility in program operations. After the Northridge earthquake, the City of Los Angeles used only short-term (1-2 week) contracts with haulers. Longer contracts, which corresponded to the terms of the City's Damage Survey Reports, were written for the use of the various disposal and recycling facilities.

Long-Term Operations [3]

Services after first 100 hours: If your jurisdiction determines that the situation is beyond the capabilities of existing resources (mutual aid, State and volunteer labor and equipment), then you should consider developing an organization to administer and manage a long-term contract operation.

Since the after effects of a disaster can be felt for months or even several years, the local jurisdiction cannot necessarily rely on short-term agreements for assistance. In addition, the prolonged recovery by local forces and contractors likely will require a long-term operation.

Primary factors: The primary factors influencing the size and complexity of the long-term debris operations are:

• the composition and volume of debris;
• the area of debris concentration;
• the location of temporary storage sites, recycling sites, and disposal sites; and
• the need for private property debris removal.

Options: There are two contracts typically used for long-term debris removal operations. They are the Lump Sum contract and the Unit Price contract.

As an alternative, a jurisdiction can establish a special engineering organization, either with force account personnel or with a local engineering firm, to undertake all project management operations related to debris collection, diversion, and/or disposal. Each of these options is discussed below.

Step 4: Select contract type [4]

Three types: There are three contracts typically used in obtaining disaster debris services . They are:

1. Time and material contract;
2. Unit price contract;
3. Lump sum contract.

A sample contract for each contract type above is found in Attachments A, B, and C respectively.

Examples

Following are three methods to obtain disaster response services:

• Master Contract,
• Individual contracts, and
• Special Engineering Organization. 

Master contract

Jurisdictions may choose to write a master contract covering all phases of debris collection, diversion, and/or disposal. In this situation, a prime contractor is hired with subcontractors, reporting to the prime contractor, hired to carry out specific tasks.

Example: City of Oakland

After the 1991 firestorm the City of Oakland wrote a master contract covering debris removal, recycling, and disposal. The prime contractor then subcontracted with a number of subcontractors for different aspects of the cleanup activities.

Individual contracts

Enter into individual contracts of short duration with a number of different contractors. This method can provide flexibility in changing contract provisions as the program is refined.

Example: City of L.A.

The City of Los Angeles selected contractors on a weekly basis for the 45 areas the City had designated for disaster cleanup.

A. Time and material contract [5]

  When to use: Time and material contracts should only be used:

• during the first 100 hours of the recovery operation to perform emergency life saving debris clearance, and
• only after all available local and State government equipment has been committed.

Contract provisions: The contract should clearly state that:

• the price for the equipment applies only when the equipment is operating;
• the jurisdiction reserves the right to terminate the contract at its convenience;
• the jurisdiction does not guarantee a minimum number of hours; and
• there is a cost ceiling for total work performed.

B. Unit price contract [7]

Description: The Unit Price and Lump Sum contracts are recommended after the immediate response phase.

The Unit Price Contract utilizes construction units and prices for these units to develop line item costs and total contract cost.

Scope of work: The Unit Price Contract is used when:

• the scope of work may be defined, and
• generally quantified by actual field measure, (e.g., 200 cubic yards of sand, 10 tons of rubble, 7 trees, etc.).

Bottom line: The total "bottom line" of the contract may increase or decrease depending upon the accuracy of the unit quantity.

For this reason, it is as important to properly estimate units as it is to estimate unit cost.

Use accurate units: The unit used in the Unit Price Contracts must be as accurately estimated as units possible; otherwise, the final bottom line amount of the contract will be significantly different from the contract bid received at the bid opening.

Attachments:

Attachment B contains a model Unit Price Contract.
Attachment D contains the City of Los Angeles' Unit Price Contract.

Payment under unit price contract

Load ticket: Payment under a unit price contract is normally made on the basis of a load ticket.

• Load tickets should be treated as accountable forms. The operations office should know what forms have been issued, how many have been issued and to whom.

C. LUMP SUM CONTRACT [8]

Description: The Lump Sum Contract establishes a total contract price by a one item bid from the contractor. For this type of contract, the price for the work is fixed unless there is a change in the scope of work to be performed. The bottom line of the contract is not in question as it is with the Unit Price Contract.

Scope of work: If the scope of work is not well defined, this method of contracting puts the responsibility of the quantity estimate and the definition of the scope of work on the shoulders of the contractor bidding the project.

Consequently, experience has shown that the contractor will pass this burden back to the owner in the form of contingencies which will be incorporated into the bid price.

When to use: As mentioned before, the Lump Sum Contract should be used only when the scope of work is clearly defined and the areas of work can be specifically quantified. A model Lump Sum Contract can be found Attachment C.

Step 5: Determine need to establish special engineering organization [11]

Purpose: To undertake long-term operations, a special engineering organization can be formed immediately for the purpose of identifying the full scope of the project. This organization can handle all project management operations related to debris collection, diversion, and/or disposal.

Local firm vs own staff: The jurisdiction may wish to hire a local engineering firm for this purpose, if the community's internal engineering staff is heavily involved with the repair and replacement of publicly owned facilities damaged by the disaster.

Funding limitation: FEMA will only pay overtime for force account personnel performing emergency work (e.g., debris removal). However, FEMA will pay ALL eligible costs for contracted labor.

This is an important point to keep in mind when deciding whether to undertake the debris removal operations with force account personnel or to enter into a contract for the work.

Example: After the 1994 Northridge Earthquake: The Mayor and City Council decided that City forces could handle the recovery operations at a cost savings as compared to contracting out for the recovery work. In response, the City of Los Angeles' Department of Public Works implemented an earthquake debris removal program. The program was led by the Bureau of Engineering, with support from the Bureau of Contract Administration, which provided field monitoring of contractors, and the Bureau of Sanitation, Integrated Solid Waste Management Office, which directed the recycling efforts.

Engineering organization: Within the Bureau of Engineering, the Northridge Earthquake Recovery Division was created. Staff from various Divisions within the Bureau were assigned to the new ad hoc division and assumed responsibilities for different aspects of the earthquake recovery. After the work was completed, the Division was subsequently disbanded.

Advantages: Establishing this Division aided in coordinating all earthquake-related activities and simplified FEMA billing for disaster-related costs. In this way, the City could document that all activities performed by this Division were earthquake related and therefore reimbursable by FEMA.

Staffing requirements At a minimum, the engineering organization will need:

Last updated: June 03, 2008