In late 1993, the city put out to bid its curbside refuse collection services. The scope of the services included the curbside manual collection of household waste and yard waste, with collection of recyclables on both a subscription and non-subscription basis.

The city already was divided into 11 districts, a result of previous contracting of commercial refuse-collection services. One district was reserved for the city Department of Public Works (DPW), in order to retain some of the service in-house. To allay union members' fears of layoffs, the DPW was permitted to bid on the remaining 10 districts, and preferential hiring by a winning private contractor was a feature of the bid requirements. Firms were to submit bids for contract terms of three and five years. No performance bond was required on the bids, as Indiana state statutes do not require a bond for contracts valued at under $300,000.

To allow for maximum competition, no firm, including the DPW, could be awarded more than three of the 10 districts. In all, five firms (including the DPW) were assigned to serve the 11 districts, at an average total monthly price for the three distinct services of $8.54 per household per month.

Contract features for contract monitoring included a schedule of liquidated damages for a breach of contract. For example: failure to collect refuse on time or accumulation in excess of a fixed number of legitimate complaints. If material breaches of the contract terms are not remedied within three days, the city is authorized to assume the responsibilities of the contractor. In addition, the city has the right to terminate the contract upon written notice at any time, should funding for the contract be insufficient as a result of fewer appropriations or any other reason.

Before and during the initial transition period, the city made every attempt to inform residents of the features of the new service by mass mailings detailing the new district hauler and the day of the week scheduled for pickup. In addition, the city set up a three-month temporary hotline for residents to call with any questions. Initially, the hotline received 2,000 calls per day, gradually tapering off.

Motivated by competition, the city's own Solid Waste Division beat its first-year bid target of $3 million in savings by a full $2.1 million. As part of the contractor's performance bonus provisions, each of the 117 trash haulers and 26 administrative staff members received $1,750 per employee as their share of the additional savings.

Manhattan Beach's contracting program for its 12,000 residential units serves to highlight the potential for unique facets within the bidding process and the potential for creativity in contract structure.

In early 1993, the city council re-bid its refuse collection services. It was not an ordinary request-for-bids, however. In developing the request, the city opted to issue a request-for-proposals (RFP) instead. In doing so, the city asked contractors to describe their process for waste disposal, resulting in a proposal that absolved the city of most of the liability for Superfund cleanup should an accident occur.

In addition to avoiding Superfund liability, the city was able to use the bid process to obtain an even better deal for itself. After all proposals were in, the city actually revealed the proposals publicly, for all bidding firms to review. At the same time the city said, "[H]ere is your chance to make your proposals better - go ahead and see what you can do." Firms were allowed to revise their proposals based on what other firms had offered, thus allowing for improvement in the city's ultimate deal.

Ultimately, the firm under the current contract won the bidding war. Savings from the previous contract are $1 million annually. Though the firm offered only the second-lowest total price for single-family residential service, it eliminated the cap on indemnification from CERCLA (Superfund) liability, offering access to its assets; offered collection of greenwaste with the regular refuse, with sorting at the firm's transfer station, thus reducing both the cost per household and the number of trucks on the streets. The firm also offered the lowest rate increase structure.

Traverse City put commercialization, perhaps the purest form of privatizing government services, to work to meet its solid waste needs. The program dates to 1987, when Traverse City found the city's commercial trash collection fees uncompetitive with the programs offered by local private contractors. The straightforward decision: The city should get out of commercial trash collection. "The city has always treated trash collection like a business," observes Steve Slater, district manager for area waste contractor West Michigan Disposal. "They decided to essentially sell their business."

Waste disposal programs for city residents, however, tend to be a more sensitive matter, and Traverse City maintained its own residential waste pickup system for several years more. By 1990, however, private competition had reduced the city's share of the waste pickup business to 50 percent. Equipment needed replacement soon, and two trucks alone would set the city back $125,000 apiece. This, combined with the high capital costs of citywide collection, left the Traverse City waste collection program with a deficit of more than $21,000.

In May 1990, a city commission voted to put Traverse City out of the waste business. West Michigan Disposal bid $224,000 for two city-owned "waste packer" machines and rights to the city's list of 2,200 residential trash customers. While West Michigan gained an edge in having first solicitation to the list, they gained no exclusive franchise; city residents are free to contract with any waste hauler they choose.

Today, Traverse City has an open market for trash pickup. Although West Michigan Disposal remains one of the major waste contractors in the city, six firms compete for the residents' rubbish.