Right now, most cities use Waste Management (WM) for their residential pickup.

We also have other trash haulers who are now primarily used by local businesses (Great Lakes, Tringali).

The contract that you've described sounds pretty much like the boiler-plate language they use down here.

There are some advantages to this in that when residents do call to complain about their trash pickup, it's much easier to track down the offending truck (no pun intended).

I don't have a copy of the last contract, but I do remember a provision included where the municipality can terminate the contract if they are dissatisfied by the service the trash hauler is providing, so in the end it's really a no-lose scenario for the municipality.

In my neighborhood in Kentwood, yesterday was trash day.  At the various appointed times, the trucks of the assorted companies rumbled down the neighborhood roads and dutifully attended to their tasks in a fairly efficient manner.  So far as I can tell, no undue damage (aggregate or otherwise) has ever been done to our streets by these trucks in the year and a half that I've lived here.  Nor am I aware of any neighbors complaining about noise problems.

And before you ask, as the neighborhood Republican Precinct Delegate, I take my responsibility seriously and make it a point to stay in touch with my neighbors . . . and not just on political issues.

If this deal is designed to save the municipality money alone then I suppose it could work out for them as an individual customer--lowest bid gets the job.  Officials might also consider it a major win if they select a company that is head and shoulders above the others in providing a particular service that the city truly desires such as recycling, brush removal, or open top container availability.  The city should be able to choose its own provider because of the benefits it provides them as an individual customer.  

However, when officials jump head first into determining what services all their residents want and at what price they are flying blind.  I might want to recycle or I might not be able to afford it.  I might compost my own leaves and not need the city to deal with it.  I might never need an open top and prefer to throw my construction debris on the neighbor's lawn.  

If the city is promoting this as a boon to area residents beyond the very short term they are either ignorant or lying.

Competition between providers is the only way to assure that individual customers will get the best possible service for the dollar they are willing to spend.  

So, with the competition driven out of business, the lone hauler would be free to jack up their rates (basically hold the council and citizens hostage to pay whatever they demand).