Supreme Court of Ohio Rules That Award of Lucrative Right to be Sole Provider of Solid Waste Management Services Not Subject to Competitive Bidding Law

Danis Clarkco Landfill Co. v. Clark County Solid Waste Mgmt. Dist.,
653 N.E.2d 646, 73 Ohio St.3d 590, 1995 Ohio LEXIS 1869 (Ohio, September 6, 1995).

County solid waste management district was not subject to provisions of public bidding law in making “designation” of exclusive provider of solid waste management services, but was required only to adhere to bidding procedures it set for itself in its RFP. 

Danis Clarkco Landfill Company (“Danis”), a landfill operator, filed an action seeking declaratory and injunctive relief to prevent a county solid waste management district (the “District”) from designating a rival bidder as the sole provider of waste management services for the District. The District had prepared a Request for Proposal (“RFP”) seeking “proposals from qualified bidders to design, construct and operate solid waste management facilities” for the District.

The District intended to select the proposal it found most satisfactory and beneficial to the District, and then negotiate a contract with the successful bidder. The RFP indicated the basic procedures and criteria which would govern the selection process.

The successful bidder was to build the waste management facility at its own cost. The District would then designate the facility the sole provider of waste management services for all solid waste and recyclable materials generated in the District. The successful bidder would agree to accept waste at a pre-specified price per ton, or “tip fee,” set by its contract with the District.

Ten proposals were submitted. Plaintiff Danis proposed construction of new landfill, and submitted a suggested “tip fee” of $34.13. However, the District selected the bid of Ogden Martin Systems (“OM”) which proposed to build a mass-burn incineration facility which would produce electricity from the burning of refuse. The “tip fee” under OM’s bid was $43.60.

Danis sought to invoke the provisions of Ohio’s competitive bidding statutes to enjoin the District from designating OM as the sole provider of waste management services. The bidding statute applied to contracts “at a cost in excess of ten thousand dollars.” Danis argued that the award to OM violated the statute’s competitive bidding provisions because OM’s bid was nonresponsive and because the procedure selected by the District allowed for negotiation of the contract after submission of proposals. In addition, Danis’ proposed tip fee was lower than OM’s.

The court rejected these arguments, finding that the competitive bidding statute did not apply. The court stated that:

[A] bidder responding to the District’s RFP sought to enter into a contract by which it would receive a “designation” in exchange for its agreement to build and operate a waste disposal facility for the use of residents of the District. The anticipated contract simply did not involve any monetary cost to the public or expenditure of public funds by the District.

Accordingly, the District was not required to follow all the statutory bidding procedures, but was only required to follow the procedures it had set up for itself to govern the RFP.

Thus the District was permitted to award the designation via an RFP followed by contract negotiations. Also, since the District had reserved to itself in the RFP the right to waive irregularities in bids and to select the proposal it deemed “in the best interest” of the District, the court rejected plaintiff’s arguments that the District was precluded from accepting OM’s bid because it was non-responsive or was not the lowest bid. Thus, plaintiff was not entitled to declaratory or injunctive relief.

A dissenting justice opined that the “designation” decision should be subject to the competitive bidding laws, noting that “although the District did not directly convey any public funds, the District arranged for OM to receive the benefit of millions of dollars of the public’s funds.”

This entry was posted in Design/Build and tagged , , . Bookmark the permalink.