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Comprehensive Review of S olid W aste Collection and Disposal Options v2.1 74 10/22/12  Rate Adjustments. Careful consideration of annual rate adjustments must be made along with the contract term. Typical adjustment structures are tied to national or industry-specific indices (e.g., Consumer Price Index), capped at an established maximum, or based on transparent cost analysis and agreed profit margins.  Non-Routine Collections. A contract structure must consider providing collection and disposal services for the Town’s special events: sporting events, tournaments, festivals, storms, and natural disasters.  Public Education and Outreach. Specific requirements to continue to engage and educate the Town’s customers in waste reduction strategies, recycling, and potential new service offerings.  Indemnification. The Town must be certain to indemnify itself from financial and physical liabilities resulting from contractor misconduct or performance; regulatory non-compliance; vehicle traffic and highway violations and fines; and environmental issues.  Insurance and Bonds. Insurance limits typically range from $3 to $20 million depending on the size of the contract. Performance and payment bonds are a common requirement.  Assignment and Transition. These contract terms promote a continuance of service and protect the Town from adjusting to new service providers throughout the term of the contract. 5.3 SOLID WASTE COLLECTI ONS C OST A NALYSIS The Pro Forma scenario model developed by SCS includes a module that allows the Town to project the cost impacts of outsourcing all or part of its current solid waste collection services compared to the annual budget. This outsourcing module allocates the budgeted and projected SWS Division personnel and operational costs and revenues between residential and commercial services in order to assess the cost of service by function. The commercial services are further subdivided between commercial-multi-family and commercial-business services. The pro forma model and allocation methodology are discussed in more detail in Section 14. A case study evaluating outsourcing the Town’s commercial collection services is provided in Appendix A. Exhibit 5-1 presents SCS’s estimate of the allocated residential and commercial solid waste collection and disposal costs for FY 2012-13. A separate calculation also is provided estimating the $/month/household costs of service for residential curbside collection (including bulky waste), yard waste collection, recycling, and disposal.