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.