The Austin Chronicle

Muffing the MRF

TDS & Greenstar cited for lobbying

By Richard Whittaker, February 5, 2010, News

An already brutal argument over how the city of Austin handles its recycling may now become a testing ground for its lobbying ordinances.

On Jan. 27, Mayor Lee Leffingwell, the City Council, and City Manager Marc Ott were informed by chief purchasing officer Byron Johnson that both Texas Disposal Sys­tems and Greenstar North America were in violation of the city's anti-lobbying rules and would therefore be excluded from submitting a bid in response to the city's request for proposal for the long-awaited materials recovery facility, or MRF. That's a major reversal: Not only were Greenstar and TDS widely considered to be among the top contenders for the MRF project, but council is considering extending its current recycling contract with Greenstar for an extra year, to September 2011 (see "Solid Waste Services," Dec. 4, 2009).

The two firms have fallen afoul of a city ordinance, adopted in 2008, allowing the purchasing officer to enforce the city's anti-lobbying and procurement rules. On Dec. 8, 2009, TDS CEO Bob Gregory e-mailed several people, including Assistant City Manager Robert Goode and members of the Solid Waste Advisory Commission, requesting that the city reject any contract extension with Green­star and instead wait for the results of the request for proposal to see what options were available. Green­star attorney Neal Rackleff responded Dec. 15, 2009, sending a letter to the purchasing office and City Attorney David Smith in which he argued that the TDS letter was a potential violation of the lobbying ordinance. After consulting with city Integrity Officer John Steiner, Johnson ruled that both firms were actually in violation of the rules and so disqualified both. Steiner said: "The ordinance prohibits people who are competing for city contracts from contacting anyone other than the authorized contact person identified in the solicitation. In this particular case, it was ruled that they had [done so]."

Gregory argued that the ruling depends on such a broad interpretation of the statute that it effectively bars him from discussing any recycling issues with the city. He said that, before writing the e-mail, "I checked with my lawyers, and they said this was a separate issue" from the MRF. Gregory has long been critical of both the existing underperforming contract – a contract that was only necessary because the city did not have its own MRF in October 2008 when it shifted to single-stream recycling – and the proposed amendments. He said, "The staff's strict interpretation of the lobbying law would not allow us to talk about any of the recycling projects or proposals or ordinances that the council and [Solid Waste Advisory Commission] will be dealing with throughout the spring."

If adopted, the new contract would cut the handling fees the city pays by $3.50 a ton (roughly 4%). However, the city is currently obligated only to provide Greenstar with about 64% of its recyclables through October 2010. The new deal would make that 100% through March 2011 – the expected date for the new MRF to begin operation – and then 50% until October 2011. Gregory said his concern was making sure that the contract extension received the kind of oversight that he felt was lacking when it was initially signed. He said: "Those things would have been apparent in 2008 had the staff made the contract public. Here we are in 2010, and they're doing the same thing again."

Both firms have filed protests against the ruling with the procurement office; those will be heard Feb. 5. Greenstar's attorneys argue that the ruling is contrary to the Texas Disciplinary Rules of Professional Conduct, a state code which may preempt any city ordinance, while TDS' attorneys wade into the controversial territory of the First Amendment rights of business and called it "a restriction of free speech and the right of TDS to address its government on matters that could affect its business opportunities."

According to the Jan. 27 memo, both firms have also been informed that their appeals will not affect the scheduling for discussion of the MRF. However, council has pushed back the vote on the contract extension from Jan. 28 to Feb. 4, and it's now on the draft agenda for the Feb. 11 meeting. Solid Waste Advisory Commission Vice Chair Rick Cofer said, "Basically, people are still waiting to see the contract before deciding what to do."

So with two leading contenders out of the hunt, who else might apply to run the MRF? The final date for submissions for the request for proposal is Feb. 9, at which point the proposals will be handed over to a selection committee for presentation to council in June. The city deliberately left the request for proposal open-ended so that it could have a broad array of options, from a simple sorting plant to a more elaborate recycling facility, and has also not ruled out building its own publicly owned and run facility. However, Gregory still hopes that council will consider his bid. He said: "They said we're disqualified. We say we're not."

Download copies of the TDS and Greenstar letters.

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