California Department of Resources Recycling and Recovery (CalRecycle) 

Integrated Waste Management Disaster Plan

Chapter 5: Contracts (Steps 1-5)

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.

Steps Section
1 Perform Contract Services Assessment
2 Coordinate with haulers
3 Assess need for short- and long-term operations
  Short-term operations
  Long-term operations
4 Select Contract Type
  Time and Material Contract
  Unit Price Contract
  Lump Sum Contract
5 Determine need to establish special engineering organization
6 Develop project cost/quantity estimates
7 Develop Diversion Requirements & Sample Language
  City of Santa Clarita Cleanup Contract
  City of Oakland, Master Contract, 1991 Firestorm
  City of Los Angeles, Building Demolition Contract, 1994 Northridge Earthquake
  City of Los Angeles, Unit Price Contract, 1994 Northridge Earthquake
  U.S. EPA Contract for Household Hazardous Waste Collection, 1995 Floods
8 Review General Considerations
9 Review Accounting Considerations
10 Review Contract Administration Procedures

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.
# Actions to take prior to a disaster
1 Coordinate development of collection, diversion, and disposal programs with your hauler(s).
2 Develop model contracts in advance.
3 Identify the kinds of work needing emergency/immediate contract services.
4 Develop a list of the equipment needed to support the disaster response.
5 Identify contractors in the area who have the abilities and equipment to handle the work.
6 Of those contractors identified above, identify those who can respond in an emergency.
7 Pre-qualify contractors to expedite the contracting process and disaster response.

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.

Contract Contract type Use when
A Time and Material Short-term

Services for first 100 hours.

Used immediately after a disaster for emergency life saving activities and debris clearance.
B Unit Price Long-term

Beyond initial 100 hours of recovery.

Use when scope of work is defined and can be quantified by actual field measure (recycle 10 tons concrete, 7 trees, etc.)
C Lump Sum Long-term

Beyond initial 100 hours of recovery.

Use when scope of work is clearly defined are areas of work specifically quantified. Establishes total contract price by a one-bid item. (Demolish and recycle 1 structure for $10,000).

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.
TIME AND MATERIAL CONTRACTS [6]
hourly rates
Advantages Disadvantages Recommendations
Extremely flexible, not scope dependent Contractor must be directed as to what work to perform Seek competitive bids or negotiate reasonable hourly rates for equipment with operations.
Wide range of uses Required full-time inspectors Specify equipment as generically as possible to encourage competition.
Great for emergency "Hot Spots" and early debris right-of-way clearance Requires documentation of actual hours worked by equipment and operators Train inspectors on documentation requirements for time-and-material contracts.

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.

UNIT PRICE CONTRACTS
cubic yard
Advantages Disadvantages Recommendations
Flexible, intervention will not change contract conditions. Full-time (specially trained) field inspectors required. For quantities less than 50,000 CY, monitor loading of trucks and log in data such as CY and truck. Check site to verify placement.
Accurate account of actual quantities removed. Contractor fraud, if loading and dumping are not closely monitored. For quantities over 50,000 CY, recommend a documentation format (ticket).
Wide range of competition because of simplicity of contract. Segregation of debris will complicate contract.  
Low contractor risk. Trucks must be measured and numbered.  

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.

LUMP SUM CONTRACTS [9]
Area Method
(debris removal based on a defined area)
Advantages Disadvantages Recommendations
Minimum labor required for management. Must have a clear definable scope of work that can be quantitatively measured by the contractor. Use any time scope of work is clearly definable.
Contractor shoulders most of the risk. Often difficult to quantify what debris will be brought to the right-of-way for removal.  
Quantities do not have to be documented as in a unit price contract. High probability of claims if debris estimates are difficult to estimate and require speculation.  
LUMP SUM CONTRACTS [10]
Pass Method
(based on a specified number of passes through the disaster area)
Advantages Disadvantages Recommendations
Minimum labor required for management. Must have accurate, up-to-date plans and information on all roads that will be included in the "pass" scope of work. Provide three to four passes depending on the magnitude of the disaster.
Defines scope better than area method and decreases the risk of claims caused by quantity speculation. Public must cooperate in the removal process. Solicit a price for each pass and a total job price.
Quantities do not have to be documented as in a unit price contract. Contracting agency must be successful in communicating with the public in the removal area. Clearly define amy debris segregation requirements, road locations by detailed scaled maps, time lapse between passes, and required time frame to complete each pass.

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:

Staff Responsibilities
Inspectors to compile the type and amount of debris within the project area
Engineers to plan the work for maximum efficiency in the operation and to develop the jurisdiction quantity/cost estimates
Contract specialists and draftsmen to prepare the contract documents
Date managers to set up computerized use of data, geographic information system

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Last updated: November 16, 2004
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