Best Practices: Writing & Negotiating a Labor RFP.

As seen in Waste Advantage Magazine, September 2019

Get the Best Workforce Solution

Every MRF needs people to keep it running. For municipal or public-sector MRFs, the process for choosing a labor solution is a formal one, typically driven by Request for Proposal or RFP. There is an established process for RFPs, and each municipality has its own system. In general, though, the RFP is written, vendors submit proposals, an evaluation is completed, and a contract is awarded.

The typical solution to the workforce challenge is hiring full-time labor or partnering with a temp staffing agency. Neither of these choices is bad. The problem is that many times, government entities write RFPs that replicate the current state or the way it has always been.

The best sites look at labor differently and ask what is possible instead of what has been done before. Many MRFs tend to repeat the past without knowing there are other labor options. Before you start writing an RFP, we recommend expanding your view. The key is knowing what services to ask for to achieve your desired results.

Start with a labor consultant. An outside expert can help you clarify the goals of your RFP, expand your thinking and suggest new approaches to move your operation forward. Equipment manufacturers send their consultants out to talk about what is possible, the state of engineering today and the site’s long-term plans before you buy. Take that same approach with labor.

Engage an Expert

Working with a labor consultant starts with building a relationship. You should expect this expert to listen and take a sincere interest in what you are trying to achieve. They should take time to get to know you, your system and collection stream, the demographics of your community and the needs of your stakeholders.

They will dig into what you have done in the past and help you honestly assess the current state of optimizing your system. They will probe on strategic questions about where you want to be in the future: do you want to improve throughput by 10 percent, lower headcount and hours, increase equipment lifecycles, reduce safety incidents or plan for the addition of a new line or shift?

These experts will also talk with you about tactical matters like budget, timeline and your existing labor arrangements—only then should they talk about what they have to offer.

The outcome of this work is a labor plan that is sustainable and productive, one that can grow and adapt as things change. Once you have that vision, you can transition to writing an RFP that aligns with that journey and gets you the results you are looking for.

4 Ways to Find a Consultant

1. Talk to your peers. Reach out to recycling operators you know personally or through reputation and use your networks to connect. Simply asking, “How did you do your last RFP?” can uncover consultants who have added value. Ask what was good and bad about the experience and how their operation is better today because of it.
2. Go to national conferences. Talk to equipment manufacturers about who they work with. Because they are heavily involved in equipment setup and operations, these reps know the workforce required to get the most out of their product and can lead you to the kind of experts you are seeking.
3. Do an online search for MRF system, safety or engineering consultants. It may lead you to commercial recycling companies who can operate your MRF for you, completely removing the need for an RFP. This is an option.
4. Read industry publications, especially case studies and best practice articles. You will find resources and identify operations that have found new ways to overcome the RFP challenge.

Regardless of how you find the right labor consultant for your plant, due diligence is required to find someone who has had real success at an MRF like yours. Be sure to ask who they have worked for and what results they achieved, and, remember, always check references.

Getting Started

Once you have a plan, it is time to start the labor RFP process. Its goal is to give you enough information to make a wise decision. Beyond that, the purpose is to ask the questions that will increase the chance of getting the result you are looking for.

With MRFs, start with a Request for Information, or RFI, before releasing an RFP. The RFI allows you to engage with a broad group of potential partners, see what is out there, and continue to expand your thinking. If your RFI states you need 30 people to sort garbage, you will hear from companies about their wage rates and markup. However, if your RFI says you are looking to optimize your system and the performance of each individual in the plant, you will get a very different perspective on how each respondent views labor.

RFI questions should be broad and experiential to solicit meaningful information. You want to learn if the organizations that respond have experience in recycling, are accomplished in delivering the kind of program you are building at your MRF, and if they are forward-thinking. Ask questions like, “When you work with an MRF, what do you do differently than working with other clients?” and “How do you manage employees and collect data on individual and team performance?”

The RFI will narrow the field to those organizations that fit your solution, inform the creation of your RFP and set-up a strategic vetting process.

Writing the RFP

Unlike the breadth of an RFI, the RFP is specific. Using what you learned in the RFI, ask questions that will elicit insightful responses and prepare you to negotiate.

1. Documented experience. Ask for details about the respondents’ experience in staffing a MRF or multi-shift production facility. You will want to know how many sites and workers they have supported and a list of facilities where they have provided labor. State your minimum qualifications in areas like HR administration, benefits and compliance.
2. Onsite management. If you require an onsite manager, ask for resumes with pertinent experience and references. Clarify who will pay this person’s wages. Confirm that the manager will be physically present throughout the shift and the plans for coverage when they are unavailable.
3. Hiring requirements. Outline your specific hiring requirements, like drug screens and background checks, experience or skill checks, resumes or review of applicants prior to assignment. Ask how the provider tracks time and handles billing, including the process for signing timecards or approving time.
4. You need to know more than the wage rate and markup. It is not your responsibility to tell the labor provider how much you are going to pay. Instead, ask for their process and supporting market research for setting wages. Look for a partner that offers insights into the wage rate that will get the workforce you require, not one that simply applies their bill rate to the wage you set.
5. Assess whether the respondent understands the unique safety concerns of a MRF, including OSHA and ANSI requirements. Ask for details of their proposed safety training and reporting program.
6. Other items. Ask about transition plans for the start of their service and details on the reporting they provide to assess their productivity and yours.

Evaluating RFP Responses

Once the submission period has closed, you should have a selection of partners that match your plan and your site. Your first round of reviews should identify those who have the experience and ability to support your MRF.

As you have the finalists, do not be afraid to add a second round of qualifying questions or ask for in-person presentations. This allows you to clarify key points or get examples of their success at sites like yours.

There is no reason not to take this step and dive deeper. You will make a better decision and get a clearer sense of each finalist’s commitment to partnering with you to achieve your long-term goals.

Negotiating

What can and should you negotiate upfront to protect your MRF and avoid leaving money on the table? In a word: price. You will uncover many details in the RFP and follow-up interview, but your best negotiating move is to understand every detail of the provider’s price and negotiate the specifics beyond wages and markup—from benefits to invoicing.

A big complaint we hear from MRFs is that they were unaware of certain details and performance penalties until it was too late. If the penalty on the labor partner is losing your business, that is not much of a deterrent and could leave you legally obligated for huge financial losses. My advice is to document the details in a Service Level Agreement or SLA. It protects both parties from financial loss and noncompliance and should include these things:

1. Negotiate not just who supplies required safety equipment and PPE but the quality of each item. For example, are they supplying Kevlar gloves, bump caps or higher-grade hardhats? A discounted price for low-cost PPE may look good until you get a needle stick because the workers were provided with gardening gloves. The larger investment upfront can save thousands of dollars in the long run.
2. Equipment damage. Who is responsible for damage to equipment or infrastructure? Know what is “on you” and negotiate to fit your culture and insurance program.
3. Invoice Errors. Negotiate how many days you have to reconcile invoice errors. Set expiration dates for correction and recourse and align with your accounting practices.
4. Noncompliance. What are the penalties and recourse for noncompliance with any part of the labor agreement? For example, if the labor partner commits to I-9 verification and you are fined by ICE for noncompliance, who pays that fine? 

Protect Your Organization

When accepting RFPs, protect your organization by stating that you may modify or withdraw the RFP at any time, reject all respondents, postpone the award of a labor contract or not accept the lowest cost provider. Include language about indemnification, terms and conditions, liability requirements and the like.

This article is not provided as legal advice. It is guidance and suggestions based on experience. You will want to protect your organization and work with your legal counsel to write RFIs and RFPs that cover all the bases.

Final Thoughts

If you are new at preparing and negotiating labor RFPs, consider the Certified Contingent Workforce Professional program offered by Staffing Industry Analysts or SIA. The program is built from the customer’s point of view and can add value when learning how to negotiate and operate under a workforce Scope of Work vs. a traditional labor contract. It covers how to manage contingent labor, labor contracts, co-employment, overtime rules and indemnification.

A final piece of advice: consider the change management process. With your expanded view and strategic plan, you are going to be asking people to think and behave a little differently about labor. You will want to be sure your workforce partner can support the change management process with you.

This mini case study is an example of what can happen without thinking through the details of your RFP process. A client we worked with had been running the municipal auditorium in his community—events, cleanup, maintenance—when he was put in charge of managing the local MRF and its 30 employees. The MRF had not been successful and the new manager had no experience in recycling. He knew he needed a workforce, so he installed the same solution he used at the auditorium for periodic setup, tear down and clean-up: temp staffing. He did what he thought was right, but he unwittingly set the MRF up for failure.

Unfortunately, municipalities often take trusted employees from other departments and put them into the MRF environment. They learn the hard way that MRFs are complex operations that require complex solutions and experts who know which lever to pull at what time to achieve results.

The Best Solution

Writing and negotiating a labor RFP can be as simple as repeating the process you used last time. But you will get a more strategic result by expanding your thinking to consider new approaches, working with a consultant to build a sustainable plan, and considering all the variables to getting the best workforce solution for your operation.

This article was first published in Waste Advantage Magazine, October 2019.