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88 Page 116 proposal. With their final proposal, however, the changes and additional operating costs amount to less than $10,000 per year. According to final calculations, HBC's proposed operating costs are $15.2257M annually. The cost of the MRF systern offered by HBC is $16.6M plus an estimated installation cost of $2.1M for a total of $1B.7M (which is roughly $1.5M higher than the installed system proposed by SBR). If HBC is selected as the facility operator, the final decision for HBC to operate the Shoreway facility should be predicated upon successful negotiation of a MRF sorting system equal to or less than the cost proposed by the company. South Bav Recvclina made significant cost increases to the company's original cost proposal presented in the July 24, 2008 Selection Committee Report (see discussion of the in the January 15th 2009 Selection Committee Report). This increase raised SBR's cost of operations from $11.5B8M to $12.890Mand narrowed the cost difference between SBR and HBC from $3.4 million to $2.3M (or $1.6 million when HBC's higher revenue guarantee is included). While SBR remains the low cost proposer, the Evaluation Committee was dismayed by the increase and the limited explanation and justification offered by the company. Additionally, the SBWMA was concerned that, at the same time that SBR proposed cost increases, the company withdrew its original cost proposal. After several rounds of questions between the SBWMA and SBR, the SBWMA has received sufficient detail from the company to understand the reasons for company's pr.oposed increase in costs. The evaluation and analysis of SBR's cost adjustment shows that the roughly $1.243M in increase is spread between the following categories: increase of $396K in transfer station operations; increase of $448K in MRF operations; and an increase of $399K in transportati on. Within these categories, the cost changes fall into one of three sub-categories: A) operating cost changes that were directed by the SBWMA, B) cost changes that were the results of bidder error or oversight, C) cost changes that were not discussed or approved by the S BWMA. o SBWMA Directed Chanae - Currently SBR operates roughly 60 transfer rigs in their California operations. These trucks are used by the company to move materials from the Sun Valley yard to landfills and composting and biomass facilities. To maximize hauling efficiency Community Recycling has customized these trailers and actually manufactures the trailers in-house. SBR proposed to use these custom trailers for the Shoreway operations and proposed to maintain these trailers back at their Southern California maintenance yard. The Teamsters raised a concern about SBR's intent of providing off-site maintenance and that this plan would result in a loss of two CBA positions at Shoreway. In response to the Union's concern, the SBWMA requested that the company perform trailer maintenance on-site and that the company make the necessary cost changes to shop and staffing to reflect the change. CHANGE TO REFLECT CURRENT SBR AGREEMENT o Bid Error - During review of the company's cost forms, it was discovered that SBR had forgotten to include the cost of MRF baling wire (estimated at $300K). This wire is used to strap the finished commodity bales and is essential to the MRF operations. Facility Operations Evaluation Committee Report: 3/18/2009 Page7