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Council may delay action again on recycling facility contract

Tuesday, June 8, 2010 by Michael Kanin

After nearly five contentious months, Texas Disposal Systems has finally been officially disqualified from the soon-to-be completed process associated with the City of Austin’s new recycling facility. That hasn’t stopped TDS CEO Bob Gregory from making the case that an amended contract proposal he sent to the city “in lieu” of a response to the city’s call for bids is the best possible deal for the city.


This all comes as the City Council gets set to rule on staff’s recommendation that Allied Waste Services build the facility. With just two days to go before that item appears on the agenda, Allied’s position is taking hits from Gregory as the process by which it was selected continues to cause problems.


With so much going on, and the Solid Waste Advisory Commission set to consider on Wednesday whether the process should again be pushed back, all signs point to further delay at the Council on Thursday.


Gregory’s assault is a multi-pronged effort. Gregory, attorney David Armbrust and former Council Member Betty Dunkerley were at City Hall Monday sharing TDS’ point-of-view. Gregory also provided to In Fact Daily a comparison of financial data with figures provided by the top three bidders—Allied, Waste Management Recycle America and Balcones Recycling. Gregory claims his company can beat Allied’s projected revenues for the city over the life of the proposed deal by between roughly $200,000 and $10 million.


According to a memo from Solid Waste Services Director Bob Gedert, the city’s return on the Allied deal would be just over $10.5 million. The other two finalists, Waste Management and Balcones Resources, would cost the city between roughly $18.9 and $24.9 million, and $13.4 million, respectively over 10 years. Gedert said he couldn’t comment on those figures because of the city’s recent ruling.


Gregory and Armbrust are also concerned with the phrasing of Thursday’s Council agenda item. As currently worded, the city would approve not just the award but the negotiation of the contract. Armbrust argues that such language “would create an interesting dynamic.”


“Say the contract was awarded this Thursday…and let’s say two months from now they came back and they couldn’t agree on various…sections or parts,” Armbrust said. “Allied could say, ’Well the city hasn’t negotiated in good faith. You awarded us the contract but they’re being unreasonable on this piece or that piece. Therefore Council, you either need to direct them to do this, or we’re going to go to court.’ ”


Gedert’s letter also notes the following: “As a point of reference, the review team could not explore externalities that were not identified within the RFP request.”  For his part, Gedert says that the word externalities could refer to “the community’s displeasure in the operating of a landfill in the area.”


Gregory believes that this sentence appears to refer to the long negative history that Allied subsidiary Browning-Ferris Industries has with Austinites. That history could not be considered in the context of the company’s proposal, thanks to the way that the bid solicitation was constructed.


“I believe that is a statement that says, ‘If I could do it again, I would deal with other issues,’” says Gregory.


Council members have a variety of options when they take up the issue at this Thursday’s meeting. They could elect to follow the staff’s recommendation, and approve Allied’s bid. They could restart the process, though TDS, because of the staff ruling, could not take part in that effort.


They could also decide to entirely ignore what’s already been done, and instruct City Manager Marc Ott to negotiate with one or more parties of their own choosing.


At the very least, TDS and its now-phantom bid appear set to make another appearance: At the May 13 Council hearing, Mayor Lee Leffingwell briefly haggled with legal staff over whether and how the Council might consider the TDS proposal (see In Fact Daily, May 14). Eventually, Assistant City Attorney Cary Grace told him that, “I think (the TDS proposal) could certainly be discussed.” 


Leffingwell has since reaffirmed this position. “I really would like to be in a position to consider (the TDS bid) because it may well be that we get a lot better deal out of TDS and a lot more comprehensive plan going forward, one that includes all of the elements of zero waste, composting, and so forth,” he said.


He added that he was in favor of the potential SWAC delay.


“I really don’t want to rush into this…of course when you take two years you can hardly say that you are rushing… (But) what’s two weeks more?”


As for the disqualification, TDS attorney James Hemphill of Graves, Dougherty, Hearon & Moody sent Acting City Attorney Karen Kennard a letter in which he asks her to reconsider the city’s finding. This would appear to be the last step before the courthouse.

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