November 19, 2020
By Scott Mouw and Liz Bedard
The contract between a community-run recycling program and privately owned materials recovery facility (MRF) is one of the most impactful legal documents in the U.S. public recycling system. These contracts serve a critical purpose, ensuring that recycling programs remain sustainable over the long haul. Yet too often these contracts result in unintended problems – or, in the worst case, canceled recycling programs – because of practices that fail to accommodate both sides’ needs.
This is why The Recycling Partnership created the Guide to Community Material Recovery Facility Contracts. The comprehensive guide features best-management practices, including an overview of the MRF contracting process, case studies from communities, essential contract elements, and sample contract language to implement during your next contract negotiation.
The best MRF contracts recognize the individual needs of each party while also grounding the agreement in their common goals, creating a true win-win outcome. Each party benefits from stability – the MRF to guarantee a return on expensive capital, and the community to keep services going. Each side also gains from a sense of trust, a shared vision, strong communication, and a coordinated commitment to material quality.
This guide is designed to help public recycling programs and MRFs develop transparent, balanced recycling processing contracts that allow each party to navigate volatile market conditions and the ever-changing landscape of consumer packaging. With four out of every five MRFs operating under private ownership, and most curbside recycling programs run by public agencies, the success of these public-private contracts is foundational to the success of U.S. recycling.
While local governments have many options for procuring MRF processing services, a Request for Proposals (RFP) process allows the most flexibility and transparency to both proposers and the community. Also known as a “best value” approach, an RFP is versatile in allowing a wide exploration of varying service parameters from different companies and is not just based on price alone.
RFPs also allow communities to take time to reflect on local goals and objectives, while involving critical internal stakeholders, including budget, purchasing, legal, and elected officials.
Among the critical decisions in the RFP process is determining what role the community should play – such as owning the land, building, and/or equipment related to a facility – and determining the length of the contract. Local purchasing offices often prefer shorter contracts (three years or less), in part to regularly test the market. But this approach runs counter to the realities of MRF companies, which will make large investments in expensive equipment that must show a return. Longer MRF contracts (seven to 10 years) better align with the amortization schedules that support best-in-class sorting capital. Renewal clauses also allow communities to sustain a good working relationship with their MRF in lieu of another RFP process.
These 11 essential elements of MRF contracts can help all communities address the most critical details of the business relationship:
While MRF processing-services contracts have been in play for years, market conditions since 2018 have created an apparent “new normal” in these partnerships, with implications for both the ability of MRFs to remain viable and for community programs to be sustained. This underscores the urgency of applying best practices in MRF contracts now, so that they may continue to operate in synergy and success for years to come.
To get started on creating a strong and resilient MRF contract, Download the full guide for more information.
Scott Mouw, Senior Director of Strategy and Research
Scott brings extensive experience in taking a systems approach to recycling. In his previous role as North Carolina’s State Recycling Director, Scott led efforts in fostering local collection programs, implementing recycling policy, and building a recycling economy. Scott joined The Recycling Partnership to deploy the same lessons of success to the national scale. Core to this work has been understanding the nuances of each material, the nature of recovery economics and markets, and the necessary role of metrics and data in creating a resilient and responsive recycling system. Whether it’s the fine points of curbside collection, the basic MRF business model, or understanding how the supply of available material reacts to market demand, Scott is ready to engage with all stakeholders across the recycling spectrum.
Liz Bedard, Senior Director of Industry Collaboration, The Recycling Partnership
Liz has worked in the recycling and solid waste management field for more than 45 years, bringing extensive experience in innovative problem-solving and expert facilitation to The Recycling Partnership. In her previous role as Director of the New Hampshire Governor’s Recycling Program, she successfully developed statewide municipal, business, and school recycling programs. She also founded and served twice as Executive Director of the Northeast Resource Recovery Association, the oldest and largest recycling cooperative in the U.S., and previously worked as Director of the Association of Plastic Recyclers Olefins Division. Through her professional roles, board memberships, and previous position as a Selectman for a town in New Hampshire, Liz has developed a keen understanding of dynamics at the local, state, and regional level that can help improve recycling efforts. She currently serves as Senior Director of Industry Collaboration at The Partnership, where she works closely with stakeholders from all industries related to recycling.