Dive Brief:

• Omaha, Nebraska Mayor Jean Stothert is standing by her recommendation that the city approve a 10-year collection contract with FCC Environmental after a newly released financial review of low bidder West Central Sanitation (WCS) raised multiple concerns.
• The review, conducted by HDR, found that WCS underestimated the cost of facilities and may have overestimated collection efficiencies. If collection efficiencies end up being in line with other bidders, HDR found that this might result in higher equipment quantities and personnel numbers required to serve the contract and would have an impact on WCS' profitability."
• Omaha's finance department also conducted a review that found the new contract would double WCS' size from $20 million in annual revenue to $40 million. Omaha Finance Director Steve Curtiss deemed this "a huge risk to the city" due to the size of the growth in a short amount of time. In a comment to the Omaha World-Herald, WCS stood by its ability to service the city.

Dive Insight:

The largest municipal collection client WCS has today is Mankato, Minnesota — which includes an estimated 19,000 customers, as compared to Omaha's 150,000 — making this deal a potential game changer. While the company's overall rollout plans are said to be sound, the city's finance department also found that "securing cash flow financing by WCS for this contract may be challenging." According to the city, the most recent information the company provided was 16 months old, making its current financial status unclear.

The news comes more than a month after Stohert asked the council to hold off on voting to award the collection contract. In mid-April, members of the public and elected officials started to balk at the contract proposal from FCC, especially due to the potential loss of a popular no-cost-to-consumer yard waste collection practice. The council is expected to vote on the contract at its June 4 meeting.

The bid from FCC would cost $226.91 million over 10 years and is about 52% higher than the city's current contract with Waste Management. In addition to WCS, Waste Management and Waste Connections also bid on the deal, as announced in February. Stothert's pick is expected to be serviced by a CNG fleet with automated collection and switch residents to two 96-gallon carts — one for recycling and one for waste and yard waste.

A key point of contention rose from discussion about ending the city's practice of collecting unlimited yard waste. Under the proposed contract, residents would have to commingle their waste and yard waste in one cart or pay up to $2 each for any additional bags put on the curbside.

While nothing is final until the council votes next week, the mayor's recommendation, along with this latest review, appears to put FCC in a strong position to secure the contract. Still, nothing is final until the council votes next week. If the Spain-based company secures a contract in Nebraska's largest city, it would represent another significant addition to its growing U.S. footprint, which currently includes Texas and Florida.