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88 Page 111 BACKGROUND On July 17, 2008 the Facility Operations RFP Selection Committee issued ,a report to the SBWMA Board of Directors that recommended short listing Hudson Baylor Corporation (HBC) and South Bay Recycling (SBR). On July 24, 2008 the SBWMA Board approved the Selection Committee's recommendation to short list the two firms and directed the Selection Committee to continue the selection process. In the short list recommendation, it was clear to the Committee members that both companies were well qualified and capable of operating the facility to the SBWMA's expectations. On January 15, 2009, the Selection Committee released a report that provided an update on the selection process and identified several "critical items" under consideration as well as several "Open Items" that needed additional research before a final recommendation could be reached. Since the January 15th report, the Evaluation Committee has exchanged multiple rounds of questions and cost form revisions with the proposers and this report contains a discussion of the modified proposals based on the updated information. As presented in the January 15, 2009 Selection Committee Report, it was concluded that, given the relatively equal abilities of both short listed companies, the SBWMA should select the lower cost proposal. This draft selection recommendation was primarily based on the proposed operating cost difference between the two firms. The original cost difference between SBR and HBC was $3.4 million dollars, however, SaR has provided a revised cost proposal to the SBWMA which narrowed the price difference to approximately $2.3 million per year ($1.6 million when HaC's higher revenue guarantee is used to offset operating costs). As stated in the report, the Selection Committee's January 15, 2009 recommendation of SaR was conditional and that the final selection recommendation would be determined after the resolution of "Open Items" to be further researched by the Evaluation Committee. This Evaluation Committee report contains the results of the additional research into the Open Items and includes additional information and documentation obtained from the proposers and other sources. In reviewing the information contained in this report and the January 15th Selection Committee Report, the Selection Committee and SBWMA Board members are presented with a complete view of the strengths and weaknesses of the short listed companies. Detailed information regarding operating costs, facility revenues, and service offerings have been reviewed, evaluated, compiled, and presented by the Evaluation and Selection Committees. The combined completeness and depth of the analysis provided in the Evaluation and Selection Committee reports should be sufficient to allow Board Members to make a fully informed final selection of the Facility Operations contractor. The following items (numbered 1-9) include a discussion of all Open Items raised in the January 15, 2009 Selection Com mittee Report: 1. Exceotions to the Draft Aareement Hudson Baylor Corporation has sought clarification regarding terms and conditions contained in the Draft Agreement, but they have stated that they take no exceptions to the Draft Agreement. South Bav RecvclinQ has taken specific exceptions to provisions in the Draft Agreement regarding moisture content and material contamination. The Evaluation Committee requested that SBR provide specific language and procedures for how the company would Facility Operations Evaluation Committee Report: 3/18/2009 Page2