HOW TO GET CONTRACTS FOR MUNICIAPAL SWEEPING WITH THE GOVERNMENT

STREET SWEEPING
September 26, 2002

The shortage of public funds is affecting every American city and county. In an attempt to save money in the everyday maintenance of our municipalities, every avenue of Privatization is being considered. The argument of Privatization of public services is a very hotly contested issue. The battle lines are drawn, and there are articulate spokespeople on each side.

The Tax Reform Act of 1986 slowed the rash of sales of government assets to the private sector by eliminating many of the investment deductions that businesses found attractive. However, municipal governments interested in Privatization of certain functions are still finding ways to do it.

A survey by Touché Ross, the International City Management Association (ICMA) and The Privatization Council indicated that 99 percent of respondents in cities with more than 5,000 residents and counties with more than 25,000 had contracted out at least one service. More then 80 percent said they saved 10 to 40 percent by contracting out services than they would have if they had done the job themselves.

Public agencies and unions are not as thrilled with the Privatization movement. The American Federation of State and County Municipal Employees (AFSCME) is leading the fight against the movement. "The cost savings realized by contracting out are often grossly exaggerated," argues one official, "the benefits tend to be in what is avoided, like government red tape and personnel problems, rather than in what is actually saved." Opponents also argue that hidden costs are not factored into the equation, costs like liability insurance coverage. These types of cost can greatly effect the profitability of a private company, whereas governments enjoys sovereign immunity. AFSCME, has a long list of complaints of Privatization which include, cost overruns, lower wages, stifling affirmative action to women and minorities and corruption just to mention a few.

Advocates of Privatization argue that there are many defenses and precautions to make Privatization work. Some actions taken by municipalities include, incentives and penalties and bonuses to maximize work production and minimize dishonesty. Performance bonds also prevent sudden abandonment of default of contracts. Dividing up contracts also helps local government control the work and increase the potential of getting the work done on time and within budget.

The Harris County Toll Road Authority in Houston, is a good example. A 21-mile span of road running along interstate 45 to interstate 610 was divided among various contractors to perform general maintenance, street sweeping and litter control. To make sure that the contract was executed correctly the Toll Road Authority hired an engineering firm to monitor the effectiveness of the program. This freed up the authority to focus on these primary tasks. The program came in under its $293,000 budget, with actual costs of $178,000.

Hunter Garrison, a 30-year veteran of the Texas Department of highways and Public Transportation and manager of the engineering firm says that the benefits to Privatization include access to hundreds of specially-trained employees, operating cost efficiencies and reduction of municipality's future debt obligations. "Using privatized services for maintenance of the Toll Road was a logical approach to reducing cost while maintaining quality," he says, "the public and private partnerships created today in maintenance services, are setting the standard for the future."

The development of street sweeping has mushroomed in the past 5 years. A handful of contractor blazed the trail for what is now a large group of successful business to large international waste and refuse companies such as BFI and Waste Management. Because these companies are very large it is hard to know how these companies are faring under the new management. One contractor that has been around for a long time, and who started as a parking lot sweeper is Chuck Kelley of Kelley and Sons from Keyport, New Jersey.

Chuck gave me some tips and advise that he has found helpful over the years to share with you. Here are some answers to questions I asked him about his sweeping business.

Q. Chuck what are the general pros of municipal contract sweeping?
A. Wining a municipal contract usually gives you the advantage of keeping your machines on the job on a regular daily schedule. You can keep your machines in a central location, which provides you with added advantages. Because you are not driving to and from jobs far away you save on fuel, labor hours and maintenance on the sweepers is lower and easier to schedule. If you are doing a job out of your area you can leave your equipment in a city or county yard. Your equipment will be secure when it is not feasible to transport your equipment back to your terminal. A major advantage with a municipal contract is that you know you are getting paid without any hassle. You can budget your operation better with a more even cash flow.

Q. What are the cons of municipal contracting?
A. Municipal contracts usually require more than one machine. This puts a strain on your planning and scheduling your regular private customers. You may need to won more machines then you had planned. Age requirements of your sweepers is becoming a major factor. Purchasing new sweepers or finding late model sweepers may be difficult and financially a bigger burden then what the contract is worth.
Contracts may have a time limits under which you must complete a job. This usually applies when the contract calls for a single sweeping of the designated area with no follow-up sweeping. Be aware of penalties for exceeding time limits.

Q. What kind of insurance do you need to have?
A. It is very important to know exactly what the requirements are and know how much the coverage is going to cost you from your insurance carrier before you bid, it could be the difference between profit and loss.

Q. Do you need a bond or special permits to do municipal sweeping?
A. Bid and performance bonds are usually required. The municipal bid will spell out the type and amount of the bond and your responsibility to the bond. Obtaining a bond is not easy. If you have not already been approved for a bond and what will be expected of you don't assume that if you are awarded a bid you can run to your agent and just sing up. You may find yourself laying out 100% of the bid with your own money to cover the bid or performance bond. This could jeopardize yourself and your business.

Q. How do you bid sweeping and how much do you charge?
A. Well like any other sweeping contract that is the hardest question. The going rate for sweeping on the East Coast using mechanical broom machines range from $75.00 to $100.00 per hour. Bidding streets like any kind of sweeping depends on what is in the street and how often it will be swept. When you bid street sweeping it's a whole new ball game. You will normally be bidding curb miles. The curb mile rate ranges from $25.00 to $45.00 per mile. In bidding curb miles you must be aware of some of the pitfalls that can confront you.

In the bid, you are usually provided with a street map of the given area to be swept and bid on. In most cases the bid package or map will indicate total street mileage to be bid on. Remember, streets have two curbs! They both have to be swept so you have to double the street mileage. Make sure that if curb miles are used in the sweeping description of work to be done that they are curbs on both sides.

Q. How does an hourly rate correspond to a curb mile rate?
A. As you can see by the mile rate is somewhat lower in relation other hourly rate sweeping. Our experience in this type of service usually shows an average of twelve (12) curb miles per eight (8) hours of sweeping per machine. If the sweeping is extremely heavy you may creep to as low as eight (8) curb miles per eight (8) hour shift. This sweeping again is heavy spring clean-up type work. Sweeping trash in residential areas in nice weather you may be able to sweep up to twenty-five (25) curb miles a day and even more.

Q. What else should a new company think about before starting in the street sweeping business?
A. Your equipment has to be in good shape and you have to have a solid maintenance program. There is many more people watching you with this type of bid. If you blow-it, you may be pegged and not be considered on other bids. Professionalism is import to get and maintain contracts. Because the contracting of services is still relatively new, the controversy between private and public agencies are a constantly a problem. If you misrepresent the private contractor by not being responsible this becomes a judgment to all contractors. Once you get a contract, it is essential that you monitor the performance of your crew to make sure that no problems start, and if they do, they are quickly resolved.

The National Contract Sweeper Institute also has information on starting a street sweeping business as well as an association of sweepers that you might find helpful. They can be contacted by calling (202) 659-4613.

MASCO SWEEPERS has also compiled information about the sweeping industry. Please call our Toll Free phone number (800) 345-1246 and we will be glade to help you any way we can.

Chuck Kelley can also be reached at (201) 264-1568 for any other questions you might have concerning parking lot sweeping or street sweeping.

Masco Sweepers