MOORE — The city of Moore is paying local contractor Silver Star Construction Co. $80.78 a ton for tornado debris removal — a rate two to three times as high as the $25.70 to $33.95 a ton Oklahoma City is paying two out-of-state contractors to remove debris from the same storms.
“I was shocked about how low those prices were,” Silver Star President Steve Shawn said of the debris removal prices Oklahoma City is paying its contractors. “I just don't understand it, honestly. ... My company doesn't operate in a deal to rip anybody off. We just don't.”
Shawn said he believes Oklahoma City benefited by opening bids at a time when companies were desperate for work. Silver Star's contract with Moore had been in place for several years and requires it to do a lot more besides debris removal.
The difference in rates is expected to translate into millions of dollars in payouts from taxpayers' funds. Shawn estimates Moore started out with about 112,000 tons of debris from the May 19 and 20 tornadoes. An Oklahoma City official estimates the storms left about 60,000 tons of debris in south Oklahoma City.
About a third of the huge rate differential can be readily explained. Moore requires its contractor to pay the $17.54 a ton tipping fee charged by the city's designated landfill, said Steve Eddy, Moore city manager. Oklahoma City pays tipping fees for its contractors, so they don't need to include them in their bid prices.
Officials say another contributing factor to the rate disparity is the way the two cities bid out their contracts.
Moore solicited bids for debris removal seven years ago as part of a broader effort to contract with a company willing to perform public works projects such as street repairs and reconstructions. Oklahoma City obtained emergency bids specifically for debris collection after the tornadoes hit.
Jim Lewellyn, program manager for Oklahoma City's public works department, said he believes Oklahoma City got a much better price because contractors were able to see the large quantities of dense debris concentrated in residential areas. They knew their transportation costs would be low, he said.
Contractors' bids are typically much higher for picking up debris after ice storms and some other types of disasters that leave debris scattered over wide geographical areas, which drives up transportation and labor costs, Lewellyn said.
When contractors are required to bid in advance, they must include worst-case cost scenarios into their bids to financially protect their companies, he said.
Shawn agreed that was a factor, saying his company lost money in picking up debris in Moore following earlier ice storms.
Another possible factor was the level of competition.
Moore sent out bid forms to 12 companies in 2006 for its public works maintenance/debris removal contract, but Silver Star Construction was the only company that attended a mandatory pre-bid conference, and it was awarded the contract. The contract has been annually renewed, with some negotiated rate increases.
The Oklahoma City debris removal bidding was intensely competitive, with 11 different companies submitting bids. Oklahoma City awarded contracts to the two lowest bidders, Young's General Contracting Inc., of Poplar Bluff, Mo., and DRC Emergency Services LLC, of Mobile, Ala. The third lowest bidder, Asplundh Environmental Services Inc., later was given a $41.10 per ton contract to pick up debris from a May 31 storm.
The big advantage to bidding debris removal contracts in advance is that work can begin immediately.
The Federal Emergency Management Agency favors such an approach, Lewellyn said. It even provides incentives for rapid debris removal, including a current pilot program in which the federal government reimburses cities for 85 percent of the cost of removing debris within 30 days of the disaster, dropping to 80 percent for debris removed within the next 60 days and 75 percent for debris removed later.
Despite that program, Lewellyn said he believes Oklahoma City greatly benefited financially by waiting until after the tornado to bid the emergency contract. He noted Oklahoma City's contracts were awarded less than two weeks after the tornado and said residents needed about that much time to search through rubble for valuables, get insurance appraisals and take care of other necessary business.
“We feel like we get a lot better price when each disaster is competitively bid,” he said.
Not just emergencies
Shawn said his contract with Moore requires him to perform lot of management duties that many cities do internally through their public works departments.
Much of the high-volume debris collection work is subcontracted out to other companies at varying rates. He declined to provide a range of rates, but confirmed some subcontractors have been paid $37 a ton.
A lot of work is required to clean up storm debris properly, Shawn said.
“We've done four of these,” he said. “We're practiced at it. …. After it hits, we have guys walk out, and we pick up propane bottles, gasoline cans …. We have a place to store all that stuff. We look for things like pool chlorine. Pool chlorine and brake fluid is instant fire. ... We're picking out white goods. We're doing recycling. We're draining the Freon out of air conditioners. We're draining the Freon out of ice boxes. We're doing everything FEMA correct.”
Oklahoma City also is following FEMA rules, Lewellyn said.
Shawn said Silver Star also is giving the city of Moore back $12 a ton for certain types of recycled materials. He estimated the city could save between $1 million and $1.5 million on recycled materials alone.
Shawn said because he lives and works in the community, city officials know they can count on him to do a good job.
“I go to church with these people, and I'm going to be there,” he said. “Some of these storm chasers just come in and go. I'm not that way. ... We really take pride in managing and doing a good job, and when we're done, we think it will show.”