San Francisco will stop handing out lucrative municipal waste contracts to trash company Recology without giving other companies a chance to bid—but not until after the scandal-ridden firm gets another $26.5 million from taxpayers.
Recology enjoys a monopoly on residential trash collection in the city thanks to a 1932 voter-approved ordinance—a status it is set to retain despite being found last year to have overcharged customers by $95 million over a period of years.
On top of that, San Francisco has since 2004 contracted with Recology to collect waste from city departments without any competitive bidding. Last fall, City Administrator Carmen Chu signaled her intention to put the municipal waste contract out to competitive bidding following the corruption scandal in which Recology admitted to conspiring to bribe former Public Works head Mohammed Nuru to influence his decisions on garbage rates.
But now, Chu and her Office of Contract Administration are proposing a two-year extension to the last sole source contract that San Francisco awarded Recology to pick up trash from city facilities. Officials say they need the additional time to engage in competitive bidding and ensure “essential trash pickup” continues if Recology isn’t the winner.
The proposal runs counter to city supervisors wanting to put the exclusive contract out to bid as quickly as possible.
Supervisor Aaron Peskin said the proposed timeline “makes no sense.” He said the new contract should be in place by the end of 2022 at the latest.
“I have no intention of letting the board pursue a two-year extension,” Peskin said. “We want to put this out to competitive bid and we want to put it out in a timely fashion.”
Supervisor Ahsha Safai, who sits on a Board of Supervisors committee that was expected to vote on the proposal, also called the proposed extension unreasonable.
“I’m not in support of the timeline,” Safai said. “They need to shrink it, they need to compact it and they need to figure out a way to get out of this sole-source relationship.”
The board’s Budget and Finance Committee was supposed to hear the proposed extension next week, however, the committee chair, Supervisor Hillary Ronen, delayed any decision over concerns about the timeline.
The current municipal waste contract came about in December 2020, a month after federal prosecutors charged former Recology executive Paul Giusti with bribing Nuru.
At the time, concerns over the scandal had just prompted the Board of Supervisors to block a six-year, no bid-contract with Recology to haul city waste totaling $62.5 million. The city responded by signing a short-term agreement with Recology that didn’t initially need board approval.
The contract has since been extended twice for a total of nearly $16 million through this upcoming June. The proposed two-year extension would bring the total contract value to $42.1 million ending June 2024.
City Purchaser and Director of Contract Administration Sailaja Kurella said that her office is “on track” to begin the bidding process in June and hopes to select a vendor by November. The rest of the two-year extension is needed for “any subsequent implementation actions, such as contract negotiation, permit issuance, environmental review and logistical implementation,” Kurella said in a statement.
“The Office of Contract Administration has the right to terminate the current contract at any time should a new contract be put in place before the current contract term ends,” Kurella said.
A spokesperson for Recology declined to comment on whether the firm objected to the competitive bidding process or planned to submit a proposal, saying only that Recology “will make any business decisions about the municipal refuse contract at an appropriate time for the City, the company and Recology’s 1,100 local employee-owners.”
In June, Peskin will ask voters to reform the rate-setting process for residential trash collection with Proposition F, a measure unanimously supported by the Board of Supervisors and Mayor London Breed but one that falls short of breaking up the monopoly.