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ATT ACHMENT K CONTRACTOR’S COMPENSATION AND RATE SETTING PROCESS REV: 03-16-18 MI ATTY/AGR/2018.054/RECOLOGY OF SAN MATEO ATTACHMENT K Page 6 of 24 3. CONTRACTOR ACCOUNTABILITY FOR PROPOSAL ASSUMPTIONS The method of adjusting Contractor’s Compensation holds Contractor accountable for several projections and assumptions on which its projected 2021 costs were based, and which are incorporated into the baseline costs shown on Attachment N, including: proposed technology, route productivity, Single-Family Container placement assumptions, and Customer recycling/organics participation rates, as follows: • Proposed Technology – No additional adjustments shall be made to Contractor’s Compensation if the technology proposed by Contractor does not achieve the intended results or productivity. (If a Change in Law requires consideration of new or alternative technology or if the Parties mutually agree to consider a change in technology, cost impacts related to the change in technology will be addressed under the applicable provisions of the Agreement). • Route Productivity – The assumptions regarding route productivity directly impact costs related to labor, route hours, vehicles, fuel use, and vehicle maintenance. No adjustments to Contractor’s Compensation will be made for differences between route productivity levels assumed in Attachment N and actual route productivity. • Customer Recycling and Organic Program Participation Levels – Contractor’s estimate of the number of Single-Family Dwelling, Multi-Family, and Commercial Customers that will be provided Targeted Recyclable Materials and Organic Materials Collection Service is incorporated into the baseline costs shown on Attachment N. No adjustments to Contractor’s Compensation will be made for differences between estimated and actual participation levels with the exception of adjustments for changes in service level pursuant to Section 4 of this Attachment. 4. ADJUSTMENTS TO CONTRACTOR’S COMPENSATION The annual process for adjusting Contractor’s Compensation is summarized in Table 1. Column One of the table describes the adjustment of Contractor’s projected 2021 costs shown on Attachment N to establish Rate Year Eleven (2021) Contractor’s Compensation; Column Two describes annual adjustments to determine Contractor’s Compensation for Rate Year Twelve (2022) and each year thereafter. When determining the Contractor’s Compensation for the coming Rate Year, separate cost adjustment calculations shall be performed for the following Service Sectors and Lines of Business, which shall encompass all portions of Contractor’s Compensation: • Single-family Solid Waste • Single-family Targeted Recyclable Materials (including Household Batteries, Cell Phones, Used Motor Oil, and Used Motor Oil Filters) • Single-family Organic Materials including Holiday Trees • Single-family Bulky Item Materials (two On-Call Bulky Collection events) • Multi-Family and Commercial Cart and Bin Solid Waste • Multi-Family and Commercial Cart and Bin Targeted Recyclable Materials • Multi-Family and Commercial Cart and Bin Organic Materials including Holiday Trees • Multi-Family and Commercial Drop Box • Multi-Family Bulky Item Materials (two On-Call Bulky Collection events) 6.2.B. - Page 210