In 1993, the City of Indianapolis received bids from solid waste haulers seeking the opportunity to service ten of the eleven newly created solid waste districts. The sample contract included in the bid packet listed various quality breaches under which liquidated damages would be assessed. For example, if a resident's solid waste remains uncollected twenty-four hours after the solid waste hauler is notified of the problem by a city representative, the hauler is assessed a charge of $100 per unit affected against the hauler's monthly payment.

On the basis of cost and quality, service agreements were reached with five separate haulers, including the city's Department of Public Works/Solid Waste (DPW/SW). Formal contracts, including the provisions for liquidated damages featured in the sample contract, were negotiated with the private haulers. In awarding the right to service three of the competed districts to DPW/SW, an understanding was reached with labor and management that the service specifications included in the new contracts superseded the prior solid waste regulations under which DPW/SW solid waste collection crews operated. In effect, both private haulers and DPW/SW were to adhere to the same service specifications.

In practice, the city has taken to investigating and notifying DPW/SW of quality breaches in the same manner as is done with private haulers. Liquidated damages, when warranted, are subtracted from the monthly amount paid to the private haulers for the services provided. Similarly, since August 1995, liquidated damages for quality breaches on the part of DPW/SW are documented and identified in a monthly report sent to a range of administrators with oversight of the contract and DPW operations. The report lists comparative hauler performance measurements across all solid waste districts and identifies the number of quality breaches for which DPW/SW is responsible by district number and day.

Yet in order to make the impact of quality breaches on DPW/SW as similar as possible to the effect such breaches have on private-sector haulers, more need to be done. DPW/SW employees are eligible for incentive pay each year if various cost and productivity goals are met. The money distributed to individual employees is a percentage of the savings directly attributable to their efforts. This year, the city's contract compliance division successfully sought to have an amount equal to the total amount of liquidated damages assessed against DPW/SW over the course of the last four months of 1995 subtracted from the pool of money originally earmarked for distribution to employees as incentive pay. Thus, the impact of quality breaches on the part of DPW/SW crews was felt by individual members of the division by way of incentive bonuses reduced by about 10 percent from the amount members would have otherwise received.

by Mike Brink, City of Indianapolis