Contracting Best Practices: Limit or Eliminate Disposal Payments
Contractor payments can be structured to eliminate or limit the collection contractor's waste disposal cost.
When contracting for landfills, avoid flow control and "put-or-pay" commitments that require payments to be made to the landfill or incineration company if the established quantities of waste are not discarded.
Consider structuring the contract so it does not reimburse landfill or incinerator costs but instead pays contractors for reuse, recycling and composting services. Some communities cap disposal capacity allocated to contractors. Anything above that amount has to be paid for by the hauler without reimbursement. This works best where the government operates the scales and contractor payments are not based on customer rate payments.
Case Studies: Napa Case Study | San Jose Case Study
Advantages
- Strong waste reduction incentive: By not paying for disposal costs, local government provides a major incentive for contractors to work with generators to reduce waste and recycle and compost more.
Disadvantages
- Complicated cost calculations: Reviewing actual costs can be expensive, often requiring outside accountants. By contrast, many rates are adjusted by the Consumer Price Index or a bundle of indices.