Owners of Summerland Waste are disappointed that the local garbage collection contract was awarded to an international company, but officials with the municipality say they were bound by the rules of a trade agreement.
The contract was awarded to BFI Canada Inc. at the end of February.
The five-year contract with BFI came in at $311,337.30 a year, plus an annual Transportation Consumer Price Index increase or decrease to a maximum of three per cent and HST.
The company will also receive $6,839.60 a year, plus the transportation index increase or decrease and HST for the collection, processing and marketing of recyclables deposited at the landfill depot.
This bid is almost 20 per cent below the nearest Summerland bid and results in savings of almost $60,000 a year for the municipality.
As a result, residential garbage and recycling collection fees will drop from $14.50 a month to $11.10 a month while multi-family collection fees will drop from $4.50 a month to $3 a month.
Andy Tiel of Summerland Waste calls the price from BFI a predatory bid.
“Their price was at or below the break even point and it’s 20 per cent below the price they could do in Penticton,” he said.
He added that the wages paid by BFI are lower than the wages paid by his company.
“This town is going to lose two or three young couples because they can’t pay their mortgages on what they’re paying,” he said.
Janet Groome of Summerland Waste has questions about how the bidding process was conducted.
“We were emphatic that it would and could not be a fair process with the likes of BFI in the race,” she said. “We were assured by city staff that they would be watching for any unfair bidding practices and would be retaining all rights on who would be chosen to perform the services.”
Groome said BFI also is able to undercut local garbage collection services with special introductory offers and incentives.
“It’s predatory pricing,” she said. “The question becomes how long can a little company like ours hang on?”
Joe Rajotte, Western Canada vice president for BFI Canada, said the bid was made carefully.
“This went through a public process,” he said. “We carefully considered the scope of the work and put together a proposal we believed was competitive.”
Dave Hill, public works superintendent for the municipality, said Summerland was bound to follow the rules of a trade agreement.
The New West Partnership Trade Agreement, formerly the Trade, Investment and Labour Mobility Agreement, stipulates how contracts such as this one are to be awarded.
It affects British Columbia, Alberta and Saskatchewan.
For municipalities, school boards, health boards and some public colleges, the agreement must be followed for the purchase of goods or services greater than $75,000 or for construction contracts worth $200,000 a year or more.
“No obstacles: government standards and regulations cannot restrict or impair trade, investment or labour mobility between the three provinces,” the agreement states.
Hill said the municipality could have faced legal action had it not followed the agreement.
He added that the concern about a predatory bid from BFI was considered but rejected.
“That’s always something we consider, but in this situation, we have no reason to think that it this is the case,” he said.
Mayor Janice Perrino said the price difference between the BFI bid and the local bid was substantial and could not be overlooked.
She said the interprovincial trade agreement results in lower prices and more competitive bids.
“It forces companies to sharpen their pencils and it’s not always pleasant or easy,” she said.
At the same time, she said the loss of a local garbage collection service will affect the community.
“It’s a terrible loss. Summerland Waste was an excellent company.”But we can’t not follow the law and the law you follow is the TILMA agreement.”
The agreement is expected to save householders an average of $40 a year.
Groome said the savings are offset by the effects on Summerland Waste employees.
“Our company relied 100 per cent on local people to perform all the services for the residential contract,” she said. “Summerland has lost at least six full-time jobs and numerous part-time jobs. The spin-off effect of our business and our employees who live in the community will be dramatic.”