Integrated Waste Management Disaster Plan

Chapter 5: Contracts (Steps 6-10)

• Chapter Summary
• Checklist

Step 6: Develop project quantity/cost estimates [12]

Cost estimating: Develop the project estimate as follows:

Units for payment: Quantity estimates should be expressed in the units which are going to be used in the establishment of contract line item prices.

Select units based on the method that will be used to verify pay quantities for work under the contract. Typically, there are three different units used:

• cubic yards;
• tons; and
• each.

Measurement: For debris removal, units are normally cubic yards (cy), tons, or both.

Since it is difficult in most debris operations to estimate the weight of material to be removed, it is suggested that volume and number measurements be used as a normal rule.

Estimating volume: The volume of debris can be approximated by an estimate of length, width, and depth of the material in question.

The amount of the material to be removed and the accuracy desired in the estimate will determine the procedures used for this volume measurement.

On a large-scale disaster, an approximate quantity estimate may be derived by marking the area on a scaled map and approximating an average depth.

Debris location: When developing quantity estimates, instruct inspectors to note the type and location of the debris.

Other methods used include instituting a Geographic Information System to map debris locations, scouting neighborhoods in advance, and setting up a debris hotline to take calls from the public.

Develop unit price data [13]

Unit price variables: The development of a unit price includes many variables, such as:

• types and amounts of debris;
• method of removal;
• distance to the diversion or disposal site;
• routes to the diversion or disposal site;
• permitting requirements; and
• work site limitations.

Cost estimate: The cost estimate should address all items to be included in the scope of work. These items will include the actual work which may be required to accomplish the specific tasks.

Consider the large variety of factors which will affect the contractor's pricing, and be sure to take into account the abnormal conditions encountered by contractors in debris operations.

General contracting issues

Unit price contract: When writing contracts for removal of debris or wreckage, unit price (cubic yard) or fixed price contracts are preferred over equipment rentals or hourly rate contracts (time and material) because they are usually less expensive.

The Unit Price contract is the one recommended by the City of Los Angeles for its disaster cleanup.

Do not use cost-plus-percentage: Most State procurement regulations allow for abbreviated contract procedures when the Governor declares a state of emergency. However, under no circumstances should "cost-plus-percentage-of-cost" contracts be used.

There is no incentive for the contractor to hold costs down. The higher the costs, the bigger the profit the contractor receives.

Contingency contracts: The State of California and FEMA prohibit use of the contingency contract. Under no circumstances should a jurisdiction issue a contract with a condition that payment will be made only if the jurisdiction receives funds from the State and/or the Federal governments.

Step 7: Develop diversion language for contracts

Diversion strategies: Following are some strategies to ensure that the disaster debris collected is actually diverted from landfills:

• review existing contracts to determine if there are any relevant provisions dealing with disaster debris or if the contract can be used as the vehicle to provide emergency cleanup work, either as written or modified;
• identify the kinds of work needing emergency or immediate contract services;
• develop a list of the equipment needed to support the disaster response;
• include diversion language in the contract to ensure that the collected materials are indeed diverted and not disposed of in the landfill. (See sample language on pages 22-26);
• divide the disaster area into zones or sectors; assign contractors to a zone/sector so that you can keep track of the staff and plan for a consistent approach to the cleanup;
• require the contractor to report recycling activity through source separation and the destination of remaining debris for tracking purposes;
• require a minimum source separation recycling rate in the demolition contract language; and
• consider establishing a non-compliance fee or penalty for not diverting disaster debris to the extent feasible.

Suggestion: Define what is meant by "diversion, reuse, and recycle" in the contract. Companies may guarantee a recycling rate and then burn the materials as that may fit under the definition of recycling.

Example: non-compliance fee
The City of Los Angeles, in its July, 1995, demolition contract, added a provision whereby the contractor is assessed a non-compliance fee of $400 per load for any documented mixed debris that was not delivered to a recycling center. The non-compliance fee is deducted from final payment. (See Attachment E).

Sample diversion language:
A number of contracts developed by local jurisdictions have included provisions for recycling of disaster debris. Following are descriptions of their approach or sample contract language.

Keep in mind that these contracts were developed to respond to a specific disaster and to local conditions. The contract language may not be appropriate or applicable to your situation, but is presented here to show how jurisdictions have approached the issue.

Example 1: City of Santa Clarita cleanup contract.

Notice Inviting Bids

"In response to the Northridge Earthquake of January 17, 1994, the City of Santa Clarita has stockpiled disaster related debris at a designated site. The California Integrated Waste Management Act, Assembly Bill 939, requires that the City of Santa Clarita reduce the amount of waste going to landfills 25% by 1995 and 50% by the year 2000. Consequently, the stockpiled materials shall be diverted from landfills to the greatest extent possible.

Contractor shall transport recovered material to a permitted resource recovery facility within a 40-mile radius from site.

"Contractor shall provide all necessary equipment, materials and labor necessary to remove and recover, to the extent possible, all stockpiled disaster related debris at the site.

"Contractor shall haul all material that is non-recoverable to a state-permitted sanitary landfill for disposal.

"Contractor shall provide the City of Santa Clarita with documentation of the amount and type of material removed from the site.

"'Recover' means to utilize materials which can be used as raw materials in the manufacture of new products, or as values which can be converted into some sort of fuel or energy source. Recover may include reuse, recycling, waste-to-energy, composting, and/or other components."

Example 2: City of Oakland, master contract, 1991 firestorm.

The City let a master contract for the removal, disposal, and recycling of debris. Bid specifications for the contractors to remove the debris stated that the contractor is responsible for removal and transportation of cut trees to proper recycling or recovery facilities and that the contractor must segregate metals, concrete, and other recyclables from nonrecyclable debris at the site of generation.

In addition the City provided contractors with the names of Bay Area construction and demolition waste recyclers, and required contractors to provide weekly load verification reports to prove that the materials were entering a recycling facility.

Example 3: City of Los Angeles, building demolition, 1994 Northridge earthquake

Recycle demolition materials to the greatest extent possible without delaying the project.

Summarize and document the amounts and types of materials directly recycled and material removed from the site on the enclosed recycling log found within this Contract. Documentation includes receipts of materials sold, etc.

"Demolition debris not directly recycled from the site must be hauled to the recycling facility (not landfill) located at (site). The recycling facility located at (address) charges $20/ton for inert material and $24.75/ton for mixed loads.

"Identify loads to (site) as "City Demolition Debris," state the demolition site address, and pay all allocated fees. Copies of weight tickets from the previous day's work will be collected at the demolition site on a regular basis by a representative from the Integrated Solid Waste Management Office. Copies of weight tickets must also be turned in to the Engineer at the completion of the project.

"Note: Contractor will be assessed a non-compliance fee of $400 per load for any documented mixed debris that is not delivered to the recycling center at (address). The non-compliance fee will be deducted from final payment."

Example 4: City of Los Angeles, unit price contract, 1994 Northridge earthquake.

Although the City did not use the unit price contract it had developed after the Northridge earthquake recovery, it is presented here as an example.

Following is a summary of pertinent contract provisions related to recycling disaster debris.

Incentive payment: The City will pay tipping fees using the existing authorization letter; however, only source separated recycling facilities and (name of recycling facility) (mixed debris recycling) will be authorized. Contractors will receive an incentive (10% of unit price) to use source separated facilities, since the City saves over $200 per load when using these types of facilities.

Collection plan: The Contractor will submit a "Collection Plan" that details how the debris will be collected as well as specifics on equipment and personnel that will be utilized.

City Inspectors will ensure that the Contractor implements the Collection Plan. This will include ensuring that all debris is collected, that Contractor mobilized equipment greater than or equal to equipment bid in Collection Plan, as well as ensuring that the Contractor conducts work in a safe manner.

Example 5: USEPA Contract for Household Hazardous Waste Collection, 1995 floods

Following are excerpts of contract provisions relating to the waste management hierarchy and recycling.

Waste management hierarchy: "Contractor shall follow the waste management hierarchy during this contract period unless directed by Agency to do otherwise:

1. Source reduction (reduction, reuse);
2. Recycle;
3. Neutralize, stabilize, or deactivate; and finally
4. Environmentally sound incineration or land disposal. 

Recycling: "In accordance with the waste management hierarchy described above, Contractor shall place an emphasis on reuse and recycling materials rather than disposing of them.

"Contractor shall separate all latex paint for recycling. Contractor shall stabilize and landfill all contaminated or dried paint.

"Contractor shall, at a minimum, recycle the following materials: motor oil, oil filters, antifreeze, nickel cadmium batteries, mercury batteries, aerosol cans, florescent bulbs, latex paint, and paint cans.

Contractor will arrange for the recycling of lead acid batteries with a local recycler. Contractor is responsible for the collection of these batteries and determining if they are non-recyclable."

Step 8: Review general considerations [14]

Documents on record: For work performed by contract, the following must be on record:

• copy of C-21 license;
• copy of contract;
• copies of requests for bids;
• copy of bid documents;
• invoices submitted by contractor, complete with a detailed breakdown of all costs;
• warrants authorizing check issuances;
• checks issued in payment;
• certified payroll; and
• verification of insurance coverage and any bonds required.

Debarred contractors: The jurisdiction may not enter into any contract with parties whose names appear on the FEMA Consolidated List of Debarred, Suspended and Ineligible Contractors.

Bonding: Federal and state program regulations require that contractors be bonded. Contractors must have a payment bond and a faithful performance bond. Bonding protects the jurisdiction from failures by the contractor to perform.

Licenses: Contractors must be licensed. This requirement also extends to subcontractors and to the prime contractor. Contractors should have a C-21 license.

Contractors State State License Board: Require the contractor to prove he/she is licensed. If you have questions, contact the Contractors State License Board. This board maintains the current status of licenses of all contractors licensed in the State of California.

Step 9: Review accounting considerations [15]

Document contract price: Document how you arrived at the contract price. This is easy if you use the Request for Proposal or competitive bid processes. This is not so easy if you are procuring emergency contract services without formal bidding.

Damage Survey Reports Disaster-related activities must be accounted for separately from normal activities.

Each damaged site has the potential to generate one or more Damage Survey Reports (DSR), the FEMA document used to obligate reimbursement funds. Your jurisdiction must account for the costs by DSR then by site (DSRs are by segment [subsite] of a "site.").

Segregate costs

Require the contractor to segregate costs on the invoices by site or damage survey report (DSR) for work performed.

• A problem could arise if one contract covers several sites. In this case, FEMA and the jurisdiction may have to prorate the contractor's costs to each DSR site. This could cost your jurisdiction funds if there are allocations to ineligible sites.
• To avoid this problem, include the requirement to cost out the services by site in the contract under the section instructing the contractor as to how and when to invoice its services.

Develop contract documentation

Take the following actions to ensure that adequate documentation is established for state and federal reimbursement:

• Use load tickets as accountable forms;
• Require contractor to submit reports and payment estimates;
• Set up accounting system to track contract payments;
• Document how contractor was selected; and
• Keep a file of all documents related to the contract, such as requests for bids, invoices, checks issued in payment, etc.

More information: For more information, refer to the Guidelines for Documenting Disaster Costs for Federal and State Public Assistance Programs, contained in the Public Assistance Resource Manual. Contact OES for a copy).

Step 10: Review contract administration procedures [16]

Contract modification: During the administration of the contract, different types of modifications may be necessary to incorporate new requirements in order to provide contractual coverage for situations which develop after award.

Put it in writing: All modifications shall be in writing in order to protect the interests of both parties. The contract should contain a clause which permits the contracting officer to make changes unilaterally within the scope of the contract, subject to an equitable adjustment of the contract price.

Acceptance and payment: Final inspection and the method of interim and final payments are a part of the general conditions of the contract and should be set forth in the original specification or other contract documents.

Suggestion: Consider including a retention clause; 20 percent is typical. This can avoid problems by ensuring that the work is completed to the satisfaction of the contract manager before the final funds are released to the contractor.

Verification: Local governments should accept parts of all of the work only after it is verified through the inspection process that the completed work was performed in accordance with the standards stipulated in the contract.

Progress payments: In the event the authorized work tenure exceeds a period of one month, provisions can be made to make progress payments at least monthly to the contractor.

If the contract period is less than one calendar month, normal payment should be made in one total sum.

Contract closure: A contract is complete when all of the services or items called for have been delivered or performed and accepted.

The contract is not administratively complete, however, until all actions taken in compliance with the contract have been properly documented and final payment is made.

Attachments

1. Model Time and Material Contract
2. Model Unit Price Contract
3. Model Lump Sum Contract
4. City of Los Angeles Unit Price Contract
5. City of Los Angeles Demolition Contract

References

• Debris Management Course, Reference Manual, FEMA, Emergency Management Institute.
• Debris Removal Guidelines for State and Local Officials, FEMA, DAP-15 (Draft), Dec. 1991 Modified.
• San Joaquin County Disaster Recovery Manual, 8/95.
• Disaster Planning Financial Considerations, State Controller's Office.

Endnotes

1. Debris Removal Guidelines for State and Local Officials, FEMA, DAP-15 (Draft), December 1991, Modified.
2. Ibid.
3. Ibid.
4. Ibid.
5. Ibid.
6. Debris Management Course, Reference Manual, Emergency Management Institute, FEMA, page 22.
7. Ibid.
8. Ibid.
9. Ibid.
10. Ibid.
11. Ibid.
12. Ibid.
13. Ibid.
14. San Joaquin County Disaster Recovery Manual, 8/95;
15. Ibid.
16. Debris Removal Guidelines for State and Local Officials, FEMA, DAP-15 (Draft), Dec. 1991 Modified;

Last updated: June 03, 2008