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Managing and Transforming Waste Streams – A Tool for Communities
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Contracting Best Practices: Separate Compensation from Rates

  • All Contracting Best Practices
  • All Procurement Process Best Practices

Contractor compensation can be based on cost of service and/or number of customers rather than the rates charged to customers. This approach compensates the contractor for their work and allows them to “right-size” customer service levels without losing compensation.

Advantages

  • Flexibility: Allows contractors to work with their customers to reduce disposal services and disposal container sizes.
  • Cost buffer for contractor: Avoids rate-based windfalls and shields contractors from cost impacts of pay-as-you-throw rates.

Disadvantages 

  • Local government risk: Local government rate setting that is not tied to contractor compensation rates may result in revenue surpluses and shortfalls. Government agencies can set up a balancing account to manage this risk.
  • Local government workload: Careful oversight of contractor costs through reviews and/or more frequent competitive procurements is needed.
  • Managing Waste Streams
  • About the Tool
    • How to Use the Tool
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  • The Planning Tool
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    • Examples and Resources (#1-50)
    • Examples and Resources (#51-100)
  • Contract Language
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    • Contracting Best Practices
      • Align Costs to Rates
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      • Innovations Clause
      • Market Organic Materials
      • Multi-Family Customers
      • Purchasing Preferences
      • Separate Compensation from Rates
      • Source Separation
    • Procurement Process Best Practices
    • Local Government Clauses
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Last updated on July 14, 2021