Vote Delayed on Houston's Recycling Contract as Councilman Calls Deal "Rotten"
Mayor Turner announces the new recycling deal with FCC at a press conference in June.
Photo by Meagan Flynn
Amid charges from some council members that a deal with a new recycling company was "rotten," Houston City Council delayed a vote on the contract for another week while members sort out what some have called an unfair bidding process shrouded in secrecy.
Mayor Sylvester Turner jovially announced last month that the city had reached a "great deal for Houston taxpayers" with the recycling company, FCC — a deal that would lock the city into a 15-year, $46 million contract with the Spain-based trash collectors and again allow Houstonians to recycle glass. Turner repeatedly touted that FCC had agreed to build a $20 million "state-of-the-art" facility in Houston, transfer its headquarters from The Woodlands, and offer 75 to 100 jobs to homeless people and others in need of work.
But on Wednesday and earlier this week, council members, including Dave Martin and Greg Travis, took a closer look at the bidding and evaluation process, reaching the conclusion that "it smells," as Martin put it. Travis even said that if he were looking to evaluate bid proposals in hopes of choosing FCC, he would have done it exactly as Houston did — a statement that Turner called irresponsible. Going further, George Gitschel — the CEO of a company called EcoHub that would have gone forward with the One Bin recycling proposal, but who said he was snubbed out of the bidding process—even called for a criminal investigation into the business dealings on this contract.
EcoHub was not part of City Council's discussion Wednesday. But when it came down to it, both Martin and Travis argued that the facts and figures contained in all the five other recycling companies' proposals in no way could have added up to FCC being the best deal for Houston — despite Mayor Turner's repeated assurances that the city legal department and the controller's office rubber-stamped the bidding process.
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"My problem deals with one thing and one thing only: the evaluation, not the process — the evaluation of the pricing," Martin said."What I find highly ironic when I talk to folks in favor of FCC, they talk about their operational structure: They're gonna build a new facility; that's gonna be great for us; they have great experience all over the globe. But if you look at the scoring matrix, they were rated last in those particular categories. So everybody touts their experience and their operational plan, but they were rated last, fourth out of fourth in those categories!"
So what was it, then, that sealed the deal for FCC?
Largely, one category: proposed prices, which affect Houston taxpayers the most.
Despite the fact that, within most categories, such as experience and operational plan, the top-rated recycling company was rated only a few percentage points better than the second-place one, the pricing category is an extreme outlier. FCC won the pricing category with a score that was 53 percent higher than that of the next-best company. And what's weird about that, to Martin and Travis, is that the company's pricing proposal really wasn't that much better than those of the rest of the companies to warrant such an outstanding score.
FCC wants to charge $87 per ton to collect our trash and recyclables over the next 15 years — which, on its face, is the third most expensive per-tonnage rate among the five recycling companies. Independent Texas Recyclers, for example, was offering a rate as low as $63 per ton (which the company said had for some odd reason been misrepresented in documents as $76 per ton. Solid Waste Director Harry Hayes told the Houston Chronicle Tuesday that the adjustment was due to "other fees" in its proposal). Waste Management — which handles Houston's recycling currently and has agreed to add back glass under a new contract — proposed $85 per ton. Mayor Turner repeatedly maintained that FCC had the best rate because it contained a "ceiling" price that the city would pay in the case that the recycling commodities market collapsed, as it did last year, which he said was a key protection. But Travis and Martin point out that others, like Independent Texas Recyclers, contained similar provisions such as "hedges" that achieve the same protection.
On top of that, many council members feared that the length of the 15-year contract, with the option of a five-year extension, was far too long. FCC was the only company to submit a 15-year proposal, despite the fact that the request for proposals stated multiple times that the proposals should be limited to ten years. Had the other companies known they would have been allowed to offer 15 years, Travis and Martin said, it's highly likely their cost-per-ton would have dropped, too, achieving far better deals than FCC's $87 per ton.
"Something doesn't seem right about this whole process," Travis said. "I recommend we reject the [request for proposals] and reissue it more clearly and give everybody another chance to bid on this."
Turner said that his recommendation would be rejected. He accused Travis and Martin at various points of appearing to be gunning for a specific company, such as when Travis pulled out Independent Texas Recyclers as an example of a more affordable deal. But if anyone was gunning for any one specific company, it was Turner, who dismissed Travis's and Martin's concerns, saying that to him, everything appeared to be a fair-and-square win for FCC.
Council members will take up the issue next week to continue this debate.
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