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Texas Disposal Systems pulls out of RFP process for recycling plant

Monday, February 8, 2010 by Michael Kanin

As the disqualification of two solid waste service providers stretched into the appeals process Friday, one of the firms facing sanction surprised observers with the announcement that it would not be responding to the request for proposals (RFP) that was the subject of the controversy. In doing so, Texas Disposal Systems caused the City of Austin and the officer who presided at the hearing to agree that their case had been rendered moot—and that their disqualification ruling would be retracted.


The RFP in question is for a Materials Recycling Facility (MRF). Proposers have until Tuesday to submit proposals.


The case against Greenstar, the other company involved in the issue, remained on track, with a decision on its appeal expected by Feb. 18.


TDS’ position became clear rather quickly. James Hemphill, an attorney with Graves, Dougherty, Hearon, and Moody who presented TDS, opened his argument with the statement that “not only was TDS not a respondent for the purposes of this RFP…TDS has made the decision not to be a respondent and not to submit a response to this RFP at all.”


He continued on to reiterate TDS’ concern that provisions of the existing anti-lobbying ordinance could be construed as counter to basic, core First Amendment freedoms, and that the communication which had prompted the city’s disqualification of his client “did not violate the terms of the ordinance because it was not a ‘representation’ as defined by the ordinance.” But the issue that gained the most traction was clearly Hemphill’s announcement that TDS would not participate in the RFP process with which it had been accused of tampering.


TDS’ chairman and CEO, Bob Gregory, was careful to make sure that his firm’s withdrawal from the RFP process connected with the proposed MRF would leave him safe to comment on the wide array of other waste issues that will come before the city in the near future. “Our position is not just to have the disqualification removed because we didn’t submit a proposal next Tuesday, our position is to clarify whether we are and were a respondent,” he said.


“The sole reason that we’re not submitting a proposal, as Mr. Hemphill stated, is not because of…disqualification,” Gregory said. “It’s the issue of whether we would have multiple disqualifications moving forward as we speak to the issues regarding recycling and a MRF.”


TDS got in trouble when Gregory sent a presentation that detailed what he claims were millions of dollars in potential losses that the city of Austin would suffer if it extends Greenstar’s current contract.


Assured by city ethics officer John Steiner that, if TDS didn’t respond to the MRF RFP, that the parties had “nothing to talk about,” Gregory summed up what he saw as the situation at hand: “To the extent that the city wanted to silence me, they will not be successful.”


Though Greenstar’s Chief Operating Officer, Dennis Soriano, started his firm’s appeal with some drama when he told city officials that he found “this particular dismissal to be arbitrary and capricious in nature,” his hearing soon quieted down. After dropping no bombshells on the hearing room, Soriano and his attorney, Greg Hill of Houston firm Locke, Lord, Bissell, and Liddell, spent much of their time arguing finer points of Law.


Greenstar was disqualified from bidding on the MRF when one of their lawyers cc:’ed Austin City Attorney David Smith in an email that alerted other city officials to Gregory’s accusations about Greenstar’s deal with the city. Because Smith is not considered a designated contact person for the MRF bid, the city contends that they were forced to disqualify Soriano’s company.


Hill broke Greenstar’s case into four basic points. He argued that, according to the State Bar, Greenstar’s attorney had a legal obligation to contact Smith, the legal representative for the City of Austin, when he wrote the letter informing the city of TDS’ possible infraction. To that, he added that even if Austin’s anti-lobbying ordinance prohibits Greenstar from contacting Smith in his capacity as a non-approved contact person, state law supersedes that rule.


In addition to those arguments, Hill told the city that Greenstar felt that it hadn’t violated the spirit of the anti-lobbying rule, and that its public conduct with regard to the matter–the company has still not offered any official comment on the situation–illustrated the good faith in which the firm had acted during the events that stemmed from Gregory’s Dec. 9, 2009 communication.


Hill closed his salvo with a hint of a threat: Before he asked for what he called the “minimum” redress, that Greenstar be allowed back in the bidding process, he told the hearing that he didn’t “know how we completely remedy the situation.”


The city responded by reminding Greenstar that, if it truly believed the state bar rules superceded city regulations, then it could have responded only to Smith in his capacity as the City Attorney—an action which would have left other officials out of the loop, and Smith to proceed as he saw fit. It also argued that, because Austin is a home rule city, state law doesn’t trump municipal ordinances.


In response to Greenstar’s argument that their actions did not violate the spirit of the anti-lobbying ordinance, Assistant City Attorney Tamara Kurtz suggested that any slack given to those subject to the rule could result in its breakdown. “If you have exceptions (to the anti-lobbying rule)…you’ll have loophole after loophole after loophole,” she said. The city also pointed out that Greenstar could have taken advantage of a provision written into the ordinance that allows responding companies to make representations “in public at a meeting held under the Texas Open Meetings Act.”


This Thursday, the Austin City Council will decide whether or not to extend Greenstar’s current contract to handle city recyclables.

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