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The City of New Orleans

Mayor Mitchell J. Landrieu

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City reaches agreement on two sanitation contracts

October 22, 2013

NEW ORLEANS, LA – Today, Mayor Mitch Landrieu announced that the City successfully reached agreements with two of its sanitation contractors, Metro Disposal and Richard’s Disposal, to extend their respective solid waste collection contracts for two consecutive years which will maintain current per-unit costs through 2016.

“This agreement is a big win for our residents that will ensure continued trash and recycling services at a price the City can afford.” Landrieu said. “These are examples of our continuing efforts to operate in the most cost-effective and efficient manner possible. I commend Metro and Richard’s for working with our team to reach mutually agreeable terms.”

District C Councilmember Kristin Gisleson Palmer, said,  “Reaching agreements with Metro and Richard’s Disposal for large portions of the City’s waste disposal and recycling needs is very beneficial, given the fiscal demands we will face during the upcoming budgeting cycle.  Our population and demand for services continue to grow, but these expenditures are now locked in for several years.  More work remains to meet the highest standards, but as chair of the City Council Sanitation Committee, I look forward to continued collaboration with the Mayor and his team to meet those standards.”

Key points of the new extended contract are:

  • There will be no change to the per unit rate payable to Metro ($15.99) or Richard’s ($17.99).
  • Richard’s will be paid based on a 2011 unit count of 69,001 eligible and serviced units for the duration of the contract, despite the City’s continued population growth.
  • Metro’s payments will be based on a 2011 unit count of 61,828 eligible and serviced units through the end of 2014, despite the City’s continued population growth during that time period. The contract will provide 3% annual increases in 2015 (63,683) and 2016 (65,593) in consideration of additional projected growth in their area.
  • The City has issued payment adjustments to Metro and Richard’s for 2011, 2012 and 2013 to cover differences in past payments.
  • Metro and Richard’s will use NOLA 311, the City’s phone and online information service, to track and manage citizen service requests generated via NOLA 311.

City Council President Jacquelyn Brechtel Clarkson said, “I’m very proud of our Mayor and his administration, our City Council Sanitation Committee Chair Kristin Palmer and Richard’s and Metro to have agreed to extend without an increase in unit cost.”

District E Councilman James A. Gray II said, "While securing a great deal for the taxpayers, the City of New Orleans has also guaranteed significant economic opportunity for two of our most prestigious African American businesses. This is a teaching moment for our children: everyone can succeed with hard work and preparation."

As a result of the current extension to the agreement, the total cost of the City’s sanitation contracts from 2013-2016, for these areas, will be $108 million.

The City analyzed a number of alternatives, including rebidding the contracts in 2014 and conducting a new 2013 manual house count.  The analysis showed that the projected costs of the alternatives would likely exceed the cost of the selected option—potentially by as much as $7 million.  Given current market rates, it is unlikely that the City could secure a new contract at a lower total cost than the selected option.  Due to the number of outstanding cost related issues facing the City, it was fiscally prudent to have budget certainty by locking in costs through 2016.

The City’s analysis was reviewed by the Office of Inspector General.

 
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Last updated: 10/22/2013 11:29:00 AM

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