Interview guide for Private Sector about FSM-PSP structure and contracts

1. Interview guide for Private Sector about FSM-PSP structure and contracts

2. Integrated IFSM plan(1/2) Collection Access Conveyance Treatment A B C D Activities required • Refurbishment of septic tanks with access manhole covers • Periodic cleaning of septic tanks along a regulated schedule • Construction of fecal sludge drying beds (SDBs) • Operation and maintenance of SDBs As required 1-3 years City X ~1,700 septic tanks annually 11 unplanted SDBs 2,800 septic tanks annually 18 unplanted SDBs City Y Option 1 O&M of SDBs Refurbishment and cleaning of septic tanks Contract 1A Contract 1B Construction of SDBs Option 2 Contract 2A Refurbishment and cleaning of septic tanks Contract 2B Construction and O&M of SDBs Option 3 Contract 3A Refurbishment and cleaning of septic tanks, construction and O&M of SDBs

3. Integrated IFSM plan(2/2) Questions What activities do you currently undertake? How many years have you been undertaking these activities? How many employees do you currently have? What kind of truck do you currently use for cleaning? How expensive are the trucks? Where do you purchase them from?  What challenges do you currently face in undertaking your operations? Do you have a city preference ? Which contract among the following would you like to bid for? Why? Your Financial details: Annual turnover, Asset value, etc

4. Scope of work for refurbishment and cleaning of septic tanks (1/2) Scope of work • Map out the quarterly schedule of cleaning for the year of household septic tanks • Undertake cleaning of septic tanks along with fitting with an access manhole cover as required. Signatures to be collected from households after cleaning • Safely dispose the collected septage at the treatment site in the SDBs. Signature to be collected from the SDB operator after dumping Method • Private player will have to purchase a GPS mounted 5kL suction emptier truck • Each truck will need x employees who will clean the tank using safety equipment Mechanics • Visit to households as per schedule • Call each households at least two days before the scheduled visit • Visit each households as per the defined and agreed quarterly based schedule • Attempt to reach every households at least twice before marking them as ‘unavailable’ or ‘unwilling’ to clean their septic tanks • Adequate cleaning septic tanks • While cleaning septic tanks, only 1-2 inches of sludge should be left behind • No spillage during transportation • In case there is any spillage, the fecal matter must be cleaned as soon as it is brought to the notice of the private player • Dumping of fecal sludge at correct treatment site • The fecal sludge and only the fecal sludge must be dumped off at the allocated treatment site

5. Scope of work for refurbishment and cleaning of septic tanks (2/2) Questions Can you create a quarterly schedule  for cleaning HH? What help would you require from a) LG b) another body to enable you to do this? What data would you required to create quarterly schedule. E.g. city size, property details, maps, road length, distance of treatment site, etc How do you clean tanks with sealed covers right now? Can you install manhole covers on them? Where do you currently dump collected septage? How many trucks  and of what sizes do you think will be required to clean the HHs   ? Can you make that investment in trucks? If no, would you be willing to take a bank loan for this? How many cleaners are there in the trucks right now? Can you get x number of cleaners per truck? What ‘safety equipment’ do your cleaners use right now? Can you provide them with the required ‘equipment’ (globes masks) for cleaning? Are the mechanics for cleaning clear ? What changes would you like to see in them? (If any ) Are you aware of the Manual Scavenging act? And what steps will you take to comply the provision of Act? In how many days of award of contract, would they commence work ? Mention key steps as you envisage in the startup phase ?

6. Scope of work for construction and O&M of sludge drying beds (1/2) Scope of work • Construct unplanted SDBs as per specified local government drawings and given design • Undertake O&M of SDBs to ensure that they are effective in treatment of septage Method • SDBs need to be constructed as per the design given in the DPR • SDBs need to be cleaned by operators using safety gear Mechanics • Collect sludge for dumping into the SDBs • Operate the SDB site from 10 am to 5 pm daily and ensure that only septage is collected from the suction emptier trucks and dumped • Adequate drying of septage • Collected septage is dried adequately by letting it rest for a duration of 15 days • Cleaning of septage • Dried septage needs to be cleaned from SDBs after 15 days and dump it at a designated site or sell it as compost if so desired • Take a sample of dried septage after 15 days and effluents within the first week, once every quarter, for inspection by local government • Maintenance of SDBs • Replace top layer of sand when it gets thin (less than 250 mm) • Ensure that the discharge area is clean and the effluent drains are regularly flushed • Undertake repairs if they turn out to be faulty or break down

7. Scope of work for construction and O&M of sludge drying beds (2/2) Questions Have you undertaken construction and O&M of SDBs before? Can you undertake design and construction of SDBs based on specified drawings, design and the DPR? What technical help would you need from the LG to ensure that SDBs are constructed ? What are the mechanics involved in O&M of SDBs ? Have you undertaken O&M of SDBs before and were there any problems? How many days does the sludge need to be dried to ensure that it is safe? Can you depute an operator to undertake O&M of SDBs after construction? Are the mechanics for construction and O&M clear? What changes would you like to see in them? (If any )

8. Payment mechanism for contracts (1/2) Payment for refurbishment and cleaning • Payment to be paid quarterly by the local government subject to the following clauses: • Full payment will be made when all the household’s septic tanks are cleaned as per schedule • If households septic tanks are not cleaned as per schedule by the end of the quarter, payment will be deducted based on penalties • Penalties will be deducted from the quarterly payment based on service standards not being met • Payment for refurbishment will be made by the households and local government will not bear responsibility for ensuring payment of the same Payment for construction and O&M • Construction • The private player will be paid according to cost of construction ascertained by unit rates in schedule of quantities and percentage progress as ascertained by the DPR • Payment for construction will be released in 3 tranches based on the 3 milestones subject to local government certification of satisfactory construction or correction in case of non-satisfactory construction: • 10% advance immediately after signing the agreement and issue of work order • 50% payment for completion of 50% of work which involves construction of superstructure • 40% of the payment after 3 months of satisfactory operations of SDBs • O&M • Quarterly payments would be made based on local government monitoring and evaluation • Penalties will be deducted from the quarterly payments based on service standards not being met

9. Payment mechanism for contracts (2/2) Questions Refurbishment and cleaning How frequently do you want the payment for undertaking services? What kind of penalty clause should be there in contract as per your view.? It could be based on % of septic tanks not cleaned as per schedule ? Any comments on the proposed metrics and penalties  ? Can you collect the payment from HH for refurbishment? How much do you think should be the value of the annual contract? Construction and O&M How do you want the payment for a) construction and b) O&M structured? Any comments on the existing draft provisions? What kind of penalty clause should be there in contract as per your view.? It could be based on delay in construction ? How much do you think should be the value of the a) construction b) annual O&M contract ?

10. Critical performance standards which will be measured (1/2) Metric 1: Instances where safety regulations weren’t adhered to or manual scavenging took place Metric 2: Number of instances of fecal matter being dumped at non-designated sites Refurbishment and cleaning Self reporting Show signatures of SDB operator as proof of waste being disposed at treatment site Grievance redressal Complaints can be made for manual scavenging and dumping of septage at non-designated sites local government inspection Mukaddam will validate the complaint and submit report the Sanitation Inspector within 24 hours • Contract will be terminated with immediate effect if manual scavenging or non-compliance with safety regulation is observed • A fine of INR 5,000 will be levied if septage is dumped at places apart from SDBs • In case of more than 3 such verified instances of non-designated site dumping through the duration of the contract, the services will be terminated with immediate effect Metric 1: Instances of safety regulations not being adhered to, at treatment site O&M of SDBs local government random treatment site inspection local government undertakes random monthly inspections of treatment site to ensure that safety regulations are being followed by operator while dealing with septage • The contract will be terminated with immediate effect if this is observed Monitoring process Payment terms Monitoring process Payment terms

11. Critical performance standards which will be measured (2/2) Questions Refurbishment and cleaning Do you agree that these metrics are important to track? Comments on the overall monitoring and penalties structure? O&M Do you agree that this metric is important to be tracked? Comments on the overall monitoring and penalties structure?

12. Important metric which will be measured (1/2) Metric 1: Percentage of households cleaned as per schedule • Self reporting • Collect household signatures for every septic tank cleaned and inform local government about households who are ‘unavailable’ or ‘unwilling’ • Submit a monthly report to the local government to show the number of septic tanks cleaned • Household sample survey • local government employee inspects a random sample of ‘cleaned’ households at the end of every quarter and verifies the households who are listed as ‘unavailable’ or ‘unwilling’ • End of Quarter • Payment made depending on number of septic tanks cleaned: • Proportional payment for percentage of households cleaned E.g. 70% of payment if 70% of households cleaned (Unavailable and unwilling households not counted as a part of the target) • local government compares results of the sample survey and self reporting, and in case of: • 1-5 instances of wrong reporting, INR 2,000 penalty will be charged per instance • More than 5 instance of wrong reporting, the contract will be terminated • End of 2 quarters • If the proportion of households cleaned are less than 33% of the defined schedule, contract will be terminated for non-performance • Bonus of 5% of amount due for that quarter applicable, if more than 95% of the scheduled households are cleaned Refurbishment and cleaning Monitoring process Payment terms

13. Important metric which will be measured (2/2) Questions Refurbishment and cleaning Do you agree that this metric are important to track? How should the LG pay for this contract – monthly flat fee, performance based fee? Why? How should the LG verification system work to track these metrics? Comments on the overall monitoring and penalties structure?

14. Other metrics which will be measured (1/2) Metric 1: Number of instances of spillage during cleaning Metric 2: Number of septic tanks structurally damaged during refurbishment or cleaning Metric 3: Percentage septic tanks cleaned inadequately Metric 4: Number of instance of spillage during transportation Refurbishment and cleaning • Grievance redressal • Private player to address grievance within 24 hours of being notified by the local government of a complaint • Private player to collect household signatures after addressing the grievance • In case of dispute, the Mukaddam inspects the grievance, and takes the final decision • local government inspection for cleaning • local government employee randomly checks the level of cleaning using a measuring rod • For each grievance not addressed and inadequate septic tank cleaning, the private player will be charged INR 200 as penalty Metric 1: Delay in construction timeline of SDB Metric 2: Number of instances of contaminated waste dumping Metric 3: BOD and COD level of effluent and septage coming out of SDBs Construction and O&M of SDBs local government random treatment site inspection local government conducts quarterly tests of BOD and COD samples local government undertakes random inspections of treatment site to ensure that there are no contaminated dumping • A monthly delay in construction stages would lead to deduction of 5% of due payment • If BOD and COD levels are not optimal, fine of INR 5,000 to be imposed, if private player is found responsible • Contaminated dumping will invoke a fine of INR 500 per instance Monitoring process Payment terms Monitoring process Payment terms

15. Other metrics which will be measured (2/2) Questions Refurbishment and cleaning Do you agree that these metrics are important to track? Comments on the overall monitoring and penalties structure? O&M Do you agree that this metric is important to be tracked? Comments on the overall monitoring and penalties structure?

16. Clauses on obligations to be undertaken before signing the contract (1/2) Obligations before signing agreement Refurbishment and Cleaning • Private player • Give a bank guarantee worth 50% of total cost of trucks if the bidder does not have a truck at the time of bidding • Give a security deposit worth 33% of value of annual contract in lieu of satisfactory performance, subject to monitoring • Map the households in specified town limit and create a quarterly cleaning schedule for a year • local government • Specify the town limit which would be included by the private player in the cleaning schedule • Provide details and undertake filed visit with the private player to the site of septage disposal • Set up an escrow account with amount payable for 6 months to the private players, with a national bank • Notify households about within town limit about mandated cleaning of septic tanks and introduction of sanitation tax Construction of SDBs • Private player • Give a performance guarantee worth 33% of value of the construction contract in lieu of satisfactory performance subject to monitoring • Submit the technical and financial bid giving details of company's technical and financial capacity to undertake the project • local government • Provide specifications of the site for construction • Provide detail drawings for construction of SDBs O&M of SDBs • Private player • Give a performance guarantee worth 33% of value of the annual contract in lieu of satisfactory performance subject to monitoring • local government • Provide specifications of the SDBs and location

17. Clauses on obligations to be undertaken before signing the contract (2/2) Questions Refurbishment and cleaning In your experience, has bank guarantee and security deposit been given for such contracts? If yes, what percentage of contract value is it? What activities do you think would you undertake before signing the agreement? What can the LG do at their end to facilitate this? Comments on the existing overall obligations? Construction and O&M In your experience, has bank guarantee and security deposit been given for such contracts? If yes, what percentage of contract value is it? What activities do you think would you undertake before signing the agreement? What can the LG do at their end to facilitate this? Comments on the existing overall obligations?

18. Clauses on obligations to be undertaken after signing the contract (1/2) Obligations after signing agreement and commencing work Refurbishment and Cleaning • Private player • Purchase GPS mounted suction emptier truck and the required cleaning materials • Take the required permissions and furnish insurance, driving license for drivers, business registration license, PAN card, affidavit of character and xx   • Take and bear the cost of necessary utility connections as required such as telephone, electricity etc. for office space • Initiate operations within 30 days of signing the contract • local government • Approve documents and grant work order to the selected bidder • Notify HHs within town limits about the mandated cleaning of septic tanks Construction of SDBs • Private player • Arrange for construction and supporting materials listed in the DPR • Furnish insurance, business registration license, PAN card, affidavit of character and xx • Take and bear the cost of necessary utility connections as required such as telephone, electricity etc. for office space • Initiate operations within 30 days of signing the contract   • local government • Ensure that permissions for construction on the selected site are granted and work order is issued to the selected bidder O&M of SDBs • Private player • Arrange for cleaning materials as listed in the DPR • Take the required permissions and furnish insurance, business registration license, PAN card, affidavit of character, employee details and xx • Take and bear the cost of necessary utility connections as required such as telephone, electricity etc. for office  • local government • Ensure that work order is issued to the selected bidder

19. Clauses on obligations to be undertaken after signing the contract (2/2) Questions Refurbishment and cleaning How much time would you need to bring the truck after signing the agreement? In your experience, what documents need to be submitted to the LG? How long can you submit these documents in? What activities do you think would you undertake after signing the agreement? What can the LG do at their end to facilitate this? How long do you think it would take to commence operations after signing the agreement? Comments on the existing overall obligations? Construction and O&M How much time would you need to bring the materials truck after signing the agreement? In your experience, what documents need to be submitted to the LG? How long can you submit these documents in? What activities do you think would you undertake after signing the agreement? What can the LG do at their end to facilitate this? How long do you think it would take to commence operations after signing the agreement?

20. Other important clauses (1/2) Termination • Cause • LG does not fulfill contract conditions • Selected bidder would be compensated for investments and the cost of winding down • Private player is unable to meet service standards • LG will seize the performance bank guarantee given by the private player • Will • LG decides discontinue the contract for reasons unrelated to player performance • 3 month notice period required to be given by the LG. Private player compensated for investments and the cost of winding down and the performance bank guarantee returned to the private player • Private player wants to terminate the contract due to reasons unrelated to LG compliance with contract terms • 3 month notice period required to be given by the private player and performance bank guarantee is forfeited Payment delays local government to pay interest for the payment, delayed by 3 months or more, at a rate of interest of 5% p.a. calculated from the due date of payment Cost escalations The private player will have the opportunity to renegotiate the cost with the local government annually (except in case of construction contract). However, within the negotiated period, the escalated costs would be to be borne by the private player In case, of discontinuation of contract, it would be treated as a at will discontinuation by the selected bidder

21. Other important clauses (2/2) Questions Refurbishment and cleaning What are the standard termination clauses? What are the other standard clauses in such contracts? What redress do you expect for payment  delays? What redress to you expect for cost escalations? What is the dispute resolution mechanism which you would like to see? Comments on the existing clauses and conditions? Construction and O&M What are the standard termination clauses? What are the other standard clauses in such contracts? What redress do you expect for payment delays? What redress to you expect for cost escalations? What is the dispute resolution mechanism which you would like to see? Comments on the existing clauses and conditions?

22. Details on septic tank refurbishment Location of manhole of cover Septic tank access cover RCC access manhole cover Source: Presentation on septage management plan, CEPT University Details of proposal Based on a sample technical assessment done in 2013, it was noticed that many septic tanks in City X and City Y had sealed covers or farsis (tiles) placed over them This prevented regular cleaning, as the seal had to be broken each time to access the septic tanks RCC access manhole covers (60 cm X 45 cm) can be constructed to allow easy access during emptying, at a cost of INR 500-800 per tank The LGs will do a household level assessment to assess the number of septic tanks that can be refurbished for access and also create a data base of households/properties with septic tanks.

23. Details on septic tank cleaning Current septage management practice Recommended septage management practice ~33% of tanks cleaned per year (once in 3 years) ~2-4% of tanks cleaned per year (once in >8-10 years) Current barriers Proposed solution 1 1 Septic tanks will be cleaned on a pre-determined schedule Regulations and penalties will be set in place to ensure periodic cleaning Awareness generation activities will educate households about the need for regular cleaning Cleaning is done on-call by the household, who do not see the need for regular cleaning The cleaning services of the LG are currently treated as a complaint redressal system for overflowing septic tanks rather than a regular cleaning and maintenance service 2 2 Each town will get an additional 1- 3 trucks to meet service standards, which will beoperated by a private player Each town has only 1 truck, owned and operated by the LG 3 3 Local taxes levied by the LG as per municipal act1 will be used to recover the operating expenses for regular cleaning Households pay ~INR 400-1000 to get tanks cleaned, but only once in >8-10 years when the tanks overflow Source: Presentation on septage management plan, CEPT University 1) Maharashtra Municipal Councils, Nagar Panchayats and Industrial Townships Act, 1965, Chapter IX : Municipal taxation, Section 108

24. Details on sludge drying beds Description of proposal Technical illustration of a sludge drying bed • The cities have identified land near the current solid waste dumping site for the construction of sludge drying beds • Each sludge drying bed is ~12m X 10m and costs ~INR 200,000 – 250,000 Note: (1) Excluding the cost of land, which will be provided by the LG Source: Presentation on septage management plan, CEPT University Technical details of sludge drying bed The MoUD advisory recommends the use of unplanted sludge drying beds (SDB) for the treatment of collected septage The sludge will be allowed to dry for 15 days to form sludge cakes, which can be disposed safely in the open In India, SDBs are being used in 100 villages in Punjab the World Bank’s Punjab Rural Water supply & Sanitation scheme