UPDATE: Aug. 28, 2019: The Omaha City Council voted 4-3 on Tuesday to award FCC Environmental a 10-year collection contract for waste and recycling, as reported by the Omaha World-Herald. The contract, worth an estimated $22.7 million per year to start, includes the option for two five-year renewals.

The council also voted 6-1 to award FCC a five-year deal for seasonal yard waste pick-up, worth an estimated $1.5 million per year to start, with the option of one five-year renewal. 

The new contracts begin in 2021, following the expiration of Omaha's current collection contract with Waste Management at the end of next year. FCC Environmental plans to move quickly on buying land and vehicles, as well as potentially hiring current Waste Management employees.

Dive Brief:

• Omaha, Nebraska Mayor Jean Stothert is asking city council members to vote on a new 10-year collection contract on Aug. 13 following months of delay, as reported by the Omaha World-Herald and KETV. FCC Environmental's two-cart bid remains Stothert's preferred option.
• Stothert will also resubmit an FCC bid (including yard waste service, which could require a tax increase) plus two options from low bidder West Central Sanitation (WCS). Stothert made it clear that Council President Chris Jerram would have to approve those, writing, "I will sign only a contract with FCC Environmental and I will not support or sign a contract that requires a tax increase."
• According to the World-Herald, Omaha is still experiencing challenges with Waste Management under a current contract that runs through 2020. The city plans to withhold $90,000 in payments as a penalty for ongoing service issues.

Dive Insight:

The status of Omaha's contract debate has been unclear since the council voted down Stothert's original FCC proposal by 6-1 in early June. Bids were also submitted by incumbent Waste Management as well as Waste Connections, but Stothert appears to be narrowing the decision down to two in her latest effort to secure a deal.

Waste Management took over the contract when it acquired Deffenbaugh Disposal in 2014. The company has had ongoing service issues, including temporary suspension of yard waste collection, leading to multiple financial penalties. According to the city, Waste Management's response to the most recent spate of delays has involved bringing in outside personnel among other strategic changes.

Given this experience, yard waste collection and dependable service have been key factors in the 2021 contract debate. Collecting yard waste in a third cart, versus commingling it, brings an added cost. In a nod to council member requests, Stothert's administration released a new request for bids this week to provide separate yard waste service. Bids are due by July 31, and records indicate FCC has already registered as an interested party.

Even without yard waste service, FCC's bids are still well above the proposals from WCS across all categories. For example, Stothert's preferred two-cart plan with FCC would cost an estimated $7 million more per year than with WCS. The smaller Minnesota company says it would use automated collection trucks that only require one person, as compared to manual rear-loaders with multiple workers. Still, both the city and its hired consultants are skeptical WCS could handle a contract that would effectively double its current size in terms of logistics and financing.

A win could be transformative for FCC, albeit for different reasons. As part of the Spanish FCC Group, which has business in 35 countries, the U.S. entity will have no issues with financing. FCC Environmental CEO Inigo Sanz recently told Waste Dive he anticipates generating $100 million in revenue this year across multiple contracts in Texas and Florida. The company also plans to start making acquisitions this year in addition to pursuing other municipal contracts. Expanding into a third state would be a key step in that process.

A July 17 letter from Omaha's Public Works Department states the company is "committed to form FCC Environmental Nebraska which will be headquartered in Omaha to serve and develop future Midwest customers."