1. Contract Compliance Review
City of Barstow
Contract Compliance Review
Barstow City Council
August 18, 2014

2. Presentation Outline Overview Objectives Methodology
Summary of Findings
Safety and Customer Service
Contract Compliance and Performance Review
Billing and Financial Review
Diversion Review
Questions and Answers

3. Overview
Exclusive franchise agreement with Burrtec Waste Industries, Inc.
Solid waste
Recycling
Street sweeping
Contract term through 2033
Review Covered 3-Year Period (January 1, 2011 through December 31, 2013)

4. Objectives
Determine Burrtec’s compliance with the performance and operational provisions of the agreement;
Verify that Burrtec is fulfilling the financial terms and conditions of the agreement; and
Evaluate Burrtec’s diversion rates and determine if Burrtec’s reported diversion and tonnage figures are accurate.

5. General Methodology
The methodologies used to meet the project objectives included:
Reviewing and analyzing documents and data provide by the City and Burrtec;
Reviewing Burrtec’s management systems;
Interviewing Burrtec’s management and administrative staff; and
Conducting field audits and observing operations.

6. Summary of Findings Safety and Customer Service
Safety - Reviewed safety record
Satisfactory ratings from CA Highway Patrol Biennial Inspection of Terminals
Reported no vehicle hydraulic or fluid spills in last three years
Injury rate significantly less than industry standard
Customer Service - Reviewed Customer Complaint Logs
100 complaints over 3 year period (~2.6 complaints/month)
Mostly billing issues; only a few related to customer service quality or employee conduct

7. Methodology Contract Compliance and Performance Review
Documented more than 100 specific contractual requirements:
Obtained documentation in support of compliance with each requirement;
Reviewed operations with respect to specific requirements; and
Assessed compliance with respect to each requirement.

8. Summary of Findings Contract Compliance and Performance Review
Burrtec is in compliance with the vast majority of contractual requirements.
Areas of Non-Compliance:
Red-Tagged Containers;
Labeling of Residential Containers;
Cleaning of Bins; and
Reporting of DOT Testing.

9. Methodology Billing and Financial Review
The methodologies included:
Route Audit;
Review of Approved Rates; and
Review Accuracy of Monthly Invoices.

10. Summary of Findings Billing and Financial Review
Route audits confirmed services levels are consistent with billings with minor exceptions.
Exceptions included:
Extra pick-up rate
Temporary bin rate
Shared containers
Monthly invoices to the City are accurate with minor exceptions.
Franchise Fee and Administrative Fee calculations are hard coded, resulting in slightly lower payments
No AB 939 fee for roll-off disposal and locking bin categories
Note: The billing and payment process established by Burrtec and the City does not utilize industry best practices.

11. Methodology Diversion Review
The methodologies included:
Reviewing the mathematical accuracy of the calculations used in the reports submitted by Burrtec;
Documenting all components of reported tonnages and determining if tonnages from recyclable materials and all other material types are accurately reported;
Reviewing Burrtec’s internal controls to ensure that all residuals and tonnages are properly recorded; and
Recalculating the diversion rate as appropriate.

12. Summary of Findings Diversion Review
Data supports the “franchise diversion rate” of 13.4%;
Data supports the City’s “State reported” diversion rate of 71.9%; and
City must divert approximately 2,300 additional tons of material to meet the State’s goal of 75% diversion by 2020.

13. Questions and Answers