Competition almost always benefits the consumer.

That staple of economic theory proved itself true last year when, despite legal challenges, ethical questions and even a failed proposal process, fierce competition for the city’s garbage contract provided Fort Wayne residents with no increase in rates and improved service.

A new committee of residents and city officials is working to ensure that competition continues this year when the city seeks bids for a new garbage and recycling contract. The nearly $8.4 million contract is one of the city’s largest and is financed by homeowners’ $11.24 monthly fee.

National Serv-All has held the contract for about a decade. For years, the local company missed its monthly service goals more often than it hit them. Several years ago, the city decided the company should miss only one pickup per 1,000 households each week, which last year amounted to about 80. From 2005 through 2007, the company missed its target 26 of the 36 months.

Service began to improve in mid-2008. The company missed its garbage goals in July and August 2008 but has hit them every month since. Last year marked the first full year in nearly a decade that National Serv-All met its goal every month, according to Fort Wayne records of Serv-All’s performance.

The improvement occurred about the same time the city started its search for other companies to provide garbage service.

A heightened sense of competition can often lead to improved performance, according to City Councilwoman Karen Goldner, D-2nd, who serves on the city’s garbage committee.

“Do companies perform better if there is a risk of losing the contract? Yes,” she said.

The competition also prompted Serv-All to back off requests for price increases for fuel and other costs and to offer the city a one-year extension with no rate hike.

Bob Young, Serv-All spokesman, said there was a perception that the company’s service was poor, so it worked especially hard to improve. The biggest factor, he said, was the company’s hiring of a new operations manager, Joe Suleyman.

“He takes it (misses) more seriously than some did,” Young said.

When service was poor, the company looked into the issue and even fired workers who were causing a problem, he said. Young added that Fort Wayne’s service standards are stricter than those of any other community in which the company operates.

Competition conflict

Ensuring that competition is high for this year’s bidding process will pose challenges for a task force created by the city to examine what the next garbage contract should include. The committee, which includes city officials, council members and neighborhood representatives, has met only a few times so far.

Of the five companies that submitted proposals last year for the garbage contract, all but Serv-All proposed taking waste to a transfer station at the old Fort Wayne Foundry on East Pontiac Street and then shipping it out of town.

The city’s process of seeking a contractor last year was scrapped after questions were raised about whether it was legal. Concerns were also raised about the mayor’s brother, Jerry Henry, having links to one of the bidders.

Since that time, residents from the area around the old foundry have vocally opposed having the city’s trash pass through their neighborhood.

Bill Crowley, chairman of the Southeast Area Neighborhood Partnership, said his neighbors are concerned about the foundry being used to store garbage, even though the station would be required to remove all debris daily.

“They initially sold this as being a recycle location,” said Crowley, who is a member of the task force but hasn’t attended the group’s first few meetings.

The Fort Wayne Board of Zoning appeals approved the transfer station in 2008 with no public opposition. The owner – Summit Recycling and Transfer – sent a letter to the city in 2008 listing residential garbage as one of its markets.

But a large group of residents appealed to the City Council to keep their area from becoming a dump. Councilman Glynn Hines, D-6th, who represents the area, said he would not support any plan that uses the transfer station for garbage. Hines also is on the task force but did not attend the first few meetings.

Bob Kennedy, director of public works who oversees the city’s garbage contract, said eliminating the possibility of using the transfer station could hurt competition for the contract. But he noted that the process has just begun and no decisions have been made.

Councilwoman Liz Brown, R-at large, said she thinks the committee should do all it can to increase the number of companies interested in the work.

“Everything is open,” she said.

Attendance has been mixed at the group’s first three meetings, she said.

Young, with Serv-All, said other contractors could submit a bid and use his company’s Allen County landfill. Regardless of what the city does, he said the struggling economy will almost certainly lead to fierce competition for such a large contract.

Discreet discussions

The work of the committee, however, has been kept fairly secret.

The meetings are not open to the public or media, because the city wants to ensure that one garbage firm does not get an unfair advantage, Kennedy said. The group has just begun its work.

“Pretty much everything is still being discussed,” Kennedy said.

The hiring last week of Gershman, Brickner & Bratton, a consulting firm, should provide the committee a way to review ideas for a successful garbage contract, Brown said. Hiring experts in municipal garbage service is required by the city’s contract extension with Serv-All.

The consultant will be paid up to $50,000 and has already made one change, prompting the city to conduct some of its meetings in public. The first one will be this month.

Kennedy said the only thing that seems certain is that unlimited garbage collection will continue, but even that was questioned by some.

City residents currently are allowed to pitch as much garbage as they want each week with no penalty. Some communities charge residents more if their garbage can’t fit into one large bin.

Brown stressed that everything should be examined, including whether to limit the amount of garbage that can be thrown away in a week.

Recycling participation has dropped over the past few years to about 31 percent of city households, according to the city. But Young, from Serv-All, said even those estimates are too high.

“We feel participation is really around 11 percent,” he said, adding the company plans to do a house-by-house count of who participates in recycling this year.

Last year, Serv-All collected 98,210 tons of garbage and 9,097 tons of recycling. Young said the city’s policy of unlimited garbage, unusual for any community, gives no incentive to recycle.

Switching to a single recycling bin – not forcing residents to separate paper from other materials into two bins – was suggested by the city last year and could double recycling participation, Young said.

Financial benefit

Increasing participation in recycling isn’t just for environmental reasons, Young added, it would also help the city financially.

The city pays Serv-All $109.79 for each ton of recycling collected and $74.35 for each ton of garbage. This might seem like an incentive to suppress recycling participation, but Young said it is the opposite.

The per-ton cost to recycle is so high because there is so little material being recycled, and the company still has to send crews across the city to collect it. If more people recycled, it would cost about the same to collect, and the company would get more cans, plastic and paper to sell, likely reducing the city’s costs.

The city hopes to release its bid specifications this summer and select a contractor to begin collecting waste in January.

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