Contracting-out has grown in the solid waste collection in Korea and will be expected to go on. It has, however, been accompanying with several criticisms, such as lack of competition, contract with same companies over years, low salaries and bad working condition, close relation with related groups, and so on. This study aims to define the contracting-out system which is beneficial to all stakeholder, harmonized with legislation and, of course, ensuring the purpose of privatization. It can concretely be subdivided into three goa1s, 1) specifying substantial terms of service delivery, 2) designing selection methodology of a private company and a payment option, and 3)recommending implementation base. Case study and performance analysis for waste collection privatization in Seoul were used as a methodology.
It is known that privatization of waste collection is pursuing higher efficiency, specialization of work forces and reduction of administrative work burden. The fact that 77 percent of 232 local governments have chosen the company through private contract shows what the main selection methodology is in Korea. Excluding Seoul and Kwangju, service fee is paid from local finance based on waste amount collected or service area. As for Seoul, both private contract and franchise are typical of waste collection privatization in Seoul. Empirical findings indicate that there are a few disappointing facts in Seoul"s system. The one is that private contract with same companies over years has resulted in prolonging the contract period up to 16 years or over practically. Private contract and franchise not having sound legal base is another. The other is that the system is not so much favorable to performance level or working conditions. Nevertheless, Seoul’s franchise system is expected to be sustainable due to cost saving and reduction of administrative work burden.
With consideration of the disappointing and encouraging facts and the purpose of privatization, this study would like to suggest three key projects to improve contracting-out system in Seoul. First key project is specifying substantial terms of service delivery. For example, a company should be ensured at least three years as a contract period, cover the waste volume more than 2,400 tons/month for specific area regardless of waste items, and provide labor requirement, such as monthly pay more than 2,500,000 Won, break room, uniform, summer vacation, etc. The second project is selection process of service delivery companies that those companies should basically be done through bid, and as an exception just existing companies with higher performance might be granted private contract within additional 2 times. The last project is about payment options for service fee. Service fee should be paid with both user fee and local finance. Local finance would cover a part of service fee not done by user fee under franchise. Local finance will be quantified according to the amount of waste collected and unit price could not help being determined while bid.
To actualize new system proposed in this study, there are a lot of groundwork needed, such as legal base for contract period and franchise, draft request for proposal, cost analysis methodology, screening criterion, permission process to prevent being crowded with minor companies, etc.