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Explore the Essential Elements of Good MRF Contracts

TAGS: Recycling
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Resource Recycling recently hosted “How to Build a Better MRF Contract” with a discussion featuring: Liz Bedard, senior director of industry collaboration, The Recycling Partnership; Scott Mouw, senior director of strategy and research, The Recycling Partnership; and Scott Pasternak, project manager, Burns & McDonnell.

The main focus of the session was The Recycling Partnership’s new “Guide to Community MRF Contracts.” Bedard offered background on the organization and how it aims to bring all recycling stakeholders together, and she also emphasized that healthy recycling programs requires a “systems approach.”

The main reason the Partnership created this new guide, said Bedard, is that, “We strongly believe that healthy, balanced, mutually beneficially contracts between municipalities, communities, and MRFs are a critical component of a healthy recycling system. And we believe that many contracts out there right now are missing essential components for good, strong contracts—and that’s not good for the MRF, that’s not good for the community, that’s not good for recycling.” She went on to note that “the new normal” is resulting in “new complexities that necessitate good definition of the relationship between the communities and the MRFs.” The Partnership sees this guide as “important in strengthening recycling in the United States.”

Bedard also reminded the audience that while communities and MRFs are interdependent, they are not always aligned. A community wants predictability, and a MRF wants profitability—but what they both want, or should want—include stability, long-term vision, clear communications, and material quality. Ideal MRF contracts allow both parties to live through a range of market conditions, create shared risk and reward, establish strong communication and collaboration, and include clear expectations around acceptable materials and contamination.

Next, Pasternak and Muow dove into the MRF contracting process and the details of the guide itself. Pasternak encouraged the audience to spend time thinking about community goals and priorities before getting into the details of contracting. He noted key aspects that should be addressed up front, including:

  • the types of instruments that can be used for information gathering
  • P3 vs. PSA options
  • calendar considerations
  • contract length

The essential elements in MRF contracts, as laid out in the guide, are:

  1. Processing fees
  2. Revenue sharing
  3. Material value determination
  4. Acceptable materials mix determination
  5. Material audits
  6. Material quality/contamination
  7. MRF performance
  8. Rejected loads and residue disposal
  9. Education and outreach support
  10.  Contingencies
  11.  Reporting and communications

Muow explained that, “You wouldn’t look at a MRF RFP or contract and consider it a well-done RFP or contract unless you found each of these elements represented in a section or a clause.” He went on to elaborate about the elements and offer sample basic contract language or pointers that pertains to each.

Muow closed by noting that the best kind of MRF contracting process starts with a “moment of reflection,” to make sure the contract meets a community’s goals. He encouraged “internal huddling with your budget folks, your management, even your elected officials, and think about what your program’s needs are—and use that as the platform to have the conversation about what the MRF contract and process looks like.”

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