TAMPA — Waste Management will refund $1.2 million to the city of Tampa for overpayments the city made from 2008 to 2012, officials said Tuesday.
City officials say a preliminary audit revealed that Waste Management overcharged the city $1.4 million. The company has acknowledged the city paid too much, but said the problem began when Tampa officials provided inaccurate information at the start of the billing process.
After negotiations, the city accepted Waste Management's offer to settle the matter for $1.2 million.
"The documentation that we had proved that the vast majority of what was owed was indeed owed, and Waste Management correctly came to that same conclusion," Mayor Bob Buckhorn said.
For its part, the company is pleased to have reached a mutually agreeable resolution with the city, Waste Management community affairs manager Dawn McCormick said in an email.
From 2008 to the end of last year, Waste Management had a $1.76 million-per-year contract with the city to pick up waste at businesses in the central and northwest parts of the city. City trucks pick up 60 percent of Tampa's commercial solid waste, and Waste Management picks up 40 percent.
Tampa officials say the problems took place as some businesses closed and others opened at locations served by Waste Management.
In such cases, city officials say they submitted work orders to Waste Management reflecting the change in companies. But Waste Management would continue to bill the city for service to both the old and new businesses at the same location, Tampa officials said. Over time, the charges for businesses not receiving service were repeated each month, driving up billings to the city.
A management analyst in the solid waste department first spotted the potential overbilling, and in December 2011 the city launched an internal audit of solid waste contractural services. That audit is under way now.
Individual commercial customers were not overcharged, city spokeswoman Ali Glisson said.
Waste Management has said the billing process starts with the city giving it information each month based on cubic yardage picked up. The company said it then adds and subtracts city-generated work orders from that base amount and sends the city an invoice for its charges. City officials review the invoice, make further changes and pay the bill.
The overpayments, the company has said, resulted from inaccurate base billing information provided by the city.
Waste Management's five-year contract with the city expired Dec. 31. Rather than renew it for a year, city officials extended it for 90 days at a cost of $424,115.
Buckhorn's administration plans to ask the City Council to extend the contract through June while the city puts the contract out for bids.
The invitation to bid was released Tuesday, with a new contract expected to go into effect July 1. Once Waste Management pays the city the $1.2 million refund, it will be eligible to bid.
The company plans to do just that.
"We look forward to participating in the bid process and the opportunity to continue servicing our commercial customers in the city," McCormick said.
To prevent the problem from happening again, Buckhorn said the new contract will spell out the city's billing requirements in greater detail.
"No more of this on-the-back-of-a-napkin kind of billing," he said. "We expect the level of detail on our bills to be significantly higher, no matter who has it."
Richard Danielson can be reached at Danielson@tampabay.com or (813) 226-3403.