Texas Company Sues Oakland over $1 Billion Trash Contract Given to Locals

Tuesday, August 26, 2014

Texas works hard to lure California businesses away from the state, and can be just as aggressive about pursuing business within the state.

Last week, Houston-based Waste Management Inc. sued Oakland over a 10-year, $1 billion contract, alleging the city unfairly and illegally awarded it to pick up its trash to the only other competitor, a local company called California Waste Solutions (CWS), which currently handles the city’s recycling. The Texans were the incumbent garbage collectors.

Waste Management claims in the lawsuit, filed in Alameda County Superior Court, that the city shared the details of its bid with the competition and ultimately rejected the recommendation of its staff in accepting a lousier deal. The lawsuit alleges, “The City Council’s actions appeared heavily swayed by long-term personal and political connections with” CWS.

In a “blatant denial of procedural fairness and to provide a clear advantage to CWS, the City Council forced City Staff to reveal WMAC’s confidential and proprietary information to CWS while negotiations were on-going,” the lawsuit claims.

The staff recommended going with Waste Management for all aspects of waste management but, failing that, preferred the current split of duties, according to the East Bay Express. Instead, the council voted 7-1 for the third option of just CWS, which the staff recommend it not do. The lawsuit says the staff considered CWS’s proposals “highly problematic and risky.”

The Texas company is the nation’s largest hauler of trash in the nation and CWS reportedly has never held a municipal garbage-hauling contract. CWS mostly does some food and green waste processing in the Bay Area, sorts recyclables and operates the Altamont Landfill in Livermore.

The city staff expressed concern that CWS would not be able to obtain all the necessary permits and construct a transfer facility in a timely fashion. The new contract starts in July 2015.

Both companies said in their bids that they would raise rates for consumers, but CWS promised a smaller increase. Concerns were also expressed about Waste Management increasing its outsourcing of jobs in billing, dispatch, call centers and customer service.

Waste Management also took a shot at Arizona-based Republic Service Group, which CWS belatedly introduced into the negotiations as a partner that could pick up the slack in areas in had not yet fully developed. It said the group was allowed to “participate through the back door” without participating in the structured bidding process and its strict requirements until the last minute.

The lawsuit asks the court to void the contract and force the parties back to the negotiating table.

–Ken Broder


To Learn More:

Oakland Garbage Lawsuit Could Lead to Higher Rates (by Matthew Artz, Oakland Tribune)

Waste Management Sues Oakland over $1 Billion Trash Contract (by Will Kane, San Francisco Chronicle)

Waste Management Sues Oakland over Garbage Contract Fight (by Sam Levin, East Bay Express)

Waste Management v. City of Oakland (Alameda County Superior Court)

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