Adopt Resolution 2026-128
The City provides solid waste, recycling, and organics collection services through an exclusive franchise agreement with Waste Management (WM). The current Collection Services Agreement became effective July 1, 2021, and includes provisions that allow the City to independently evaluate the Contractor’s compliance and performance.
The audit will independently evaluate the accuracy of customer billing and franchise fee payments, assess compliance with contractual and regulatory requirements, and identify opportunities to improve solid waste, recycling, and organics service delivery. The review will also strengthen the City’s ongoing oversight of the franchise agreement and help ensure that ratepayer and City resources are managed effectively.
Article 12 of the Franchise Agreement authorizes the City to conduct billing audits and performance reviews using a qualified, independent consultant. The review is intended to verify that customer rates and billings are accurate, franchise fees and other required payments have been properly calculated and remitted, required reports and supporting data are reliable, diversion percentages are accurate, and contractual performance standards and service obligations are being met. The first review covers the period beginning July 1, 2021 through approximately June 30, 2026.
To perform this review, the City released Request for Proposals No. 26-131 for Audit & Performance Review of Solid Waste, Recycling and Organics Services through the City’s ProcureNow/OpenGov procurement system. The City released the solicitation on June 22, 2026, with proposals due on July 22, 2026. The requested scope included Agreement compliance mapping; billing, rate, and revenue verification; franchise fee and financial review; reporting and data verification; diversion and program performance review; operational and service performance review; customer service and complaint review; interviews and field observations; records review; and preparation of an Audit Work Plan, Compliance Checklist, Draft and Final Audit Reports, and presentation of findings.
In response to the RFP, the City received eight proposals which were ranked in the following order:
1. R3 Consulting Group, Inc.
2. GPP Analytics
3. MSW Consultants
4. Raftelis Financial Consultants, Inc.
5. Weaver and Tidwell, L.L.P.
6. Macias Gini & O'Connell
7. Clark Nuber P.S.
8. Robert D. Niehaus, Inc.
A three-member evaluation committee reviewed the proposals using the criteria established in the RFP: Qualifications (25 points), Pricing (10 points), Experience (20 points), Professional References (10 points), Approach and Methodology (30 points), and Value Added Services (5 points). Following the committee’s review, R3 Consulting Group, Inc. received the highest overall score.
R3 specializes in solid waste and recycling consulting for public agencies and proposed a team with experience in franchise agreement compliance, billing and rate verification, financial and franchise fee review, diversion and regulatory reporting, customer service, and operational performance. R3’s proposed team is supported by Armanino LLP, whose CPA-level review will help verify financial records and franchise fee calculations.
R3 proposes a structured, evidence-based review that combines Agreement and records review, financial reconciliation and transaction testing, interviews with management and frontline personnel, on-site facility inspections and collection-route observations, and comparison of reported performance to contractual requirements and relevant benchmarks. The approach includes a dynamic Compliance Checklist, risk-based testing, exception-based financial analysis, and a corrective action roadmap intended to support future City oversight.
R3 proposes to complete Tasks 1 through 9 (see attached R3 Proposal) of the required scope for a total maximum cost of $75,000. The core engagement is anticipated to take approximately eight months following Notice to Proceed, subject to timely access to records and personnel. R3 also identified an optional Task 10 (on-call services) at $25,000; that optional work is not included in the recommended base award and would require separate City Council action and budget appropriation.
R3 Consulting Group, Inc. received the highest overall score from the evaluation committee and demonstrated directly relevant experience conducting solid waste franchise audits, billing and fee reviews, compliance evaluations, and operational performance reviews for California public agencies.
R3’s proposed methodology closely aligns with the City’s requested scope and provides both financial and operational review capabilities. The proposed work will provide the City with documented findings regarding WM’s compliance with the Franchise Agreement, identify financial or service-related discrepancies where applicable, and provide recommendations and tools to strengthen future contract administration and oversight.
Staff recommends awarding the Professional Services Agreement to R3 Consulting Group, Inc. in a not-to-exceed amount of $75,000 for Tasks 1 through 9 and rejecting all other proposals received in response to RFP No. 26-131.
The proposed Professional Services Agreement with R3 Consulting Group, Inc. shall not exceed $75,000 for the base audit and performance review. Article 12.01.1.3 of the Franchise Agreement requires the Contractor, WM, to contribute up to $75,000 toward the cost of each periodic audit and performance review. Because R3’s proposed base fee is $75,000, there is no impact on the General Fund, as the costs for these services will be paid through the payment obligation in accordance with the Franchise Agreement.
Optional follow-up review services included in R3 Consulting Group, Inc.'s proposal beyond the not-to-exceed amount of $75,000 shall only be performed if separately authorized in accordance with the Franchise Agreement, with subsequent approval from the City Council, and with available funding.