Loudon County seeks fuel rebate from Santek Waste Services

Waste services firm overcharged

Hugh G. Willett knoxnews.com

LOUDON — Loudon County is requesting a rebate of almost $27,000 from Santek Waste Services following discovery that the waste hauler overcharged for fuel surcharges between 2011 and 2013.
The contract with Cleveland, Tenn.-based Santek was signed in July 2011 for waste pickup at 11 county schools and five county buildings.
“It wasn’t intentional. I think the ball was dropped at both ends,” said Bob Franke, a Loudon County commissioner and budget committee member.
Today, county commissioners will vote on whether to accept a structured payment plan that could include interest up to 6 percent. The budget committee has recommended accepting the plan.
A July 8, 2011, request for bid by the county describes the fuel surcharge agreement. A base rate of $4 per gallon was set in the bid.
“A fuel recovery surcharge shall only be applied when the price of fuel exceeds the base rate provided in this bid response. The surcharge percentage shall be based on (the Department of Energy’s) Midwest Regional Diesel Fuel Prices for the applicable month,” the bid reads.
Also stipulated in the bid is a requirement that the DOE report used to calculate recovery/surcharge percentage shall be included with the monthly billing.
Average diesel fuel prices are recorded by the U.S. Energy Information Administration. According to EIA records, the average price per gallon for diesel fuel in the Midwest was $3.88 per gallon in July 2011 when the contract was signed. The average price of diesel fuel barely hit $4 per gallon in March 2012 but was back down to $3.60 by September that year. During 2013 the highest cost per gallon reached was $3.90.
According to the EIA website, there are no specific guidelines for if, when or how to structure fuel surcharges. The organization does not calculate or assess such surcharges.
Email messages between the county purchasing office and Santek obtained through a public records request show that the county was aware of the overcharges by October 2013.
Franke said the county became aware of the overcharges after a county employee suggested that somebody check on the matter. Brian Brown in the county maintenance office said he was interested in the fuel charge situation and requested that the purchasing department look into the issue.
An Oct. 10 email from Joan Lovelace, county purchasing director, to Joan Mize, account sales manager at Santek, asks about the overcharges.
“It appears that you have been charging a fuel recovery charge on our account. I believe that this fee should not be charged unless fuel prices go over $4 per gallon, according to addendum 1 of the bid document,” Lovelace wrote. On the same day, Mize responded, “We will figure this out and we will certainly do the right thing.”
In subsequent communications with the county, Santek offered payment terms of $4,486.30 monthly starting in December 2013 and ending in May 2014 for a total reimbursement to the county of $26,917.80.
Mize declined to comment for this story.
Santek, which also operates Loudon County’s Matlock Bend landfill, did not respond to written questions asking if the company had discovered overcharges to other customers or if it had taken any steps to ensure such charges would not occur again.