County’s No-Bid Trash Contracts Raise Hackles

In what some South Orange County residents see as a back-room deal that leaves them unprotected, the Board of Supervisors is prepared to vote next week on a set of garbage-collection contracts with firms that did not go through the competitive bid process.

Residents of El Toro and Laguna Hills--two communities that will vote in 10 days on cityhood referendums--are angered that the supervisors would consider awarding long-term franchise agreements and take away their right to negotiate their own service contracts once they incorporate.

Five of the seven contracts for residential trash collection are scheduled to be awarded to Waste Management Inc. and its subsidiaries, Great Western Reclamation Inc. and Dewey’s Rubbish Service. Most of the areas to be served are unincorporated areas in South County.

The five-year contracts contain “evergreen” clauses, meaning they are automatically renewed unless county officials give the companies cancellation notices five years in advance of the termination date.

Frank R. Bowerman, the county’s director of waste management, said competitive bids were not sought because the supervisors indicated five years ago, when they decided to change from the traditional permit process to franchise agreements, that they were satisfied with the level of service.

“If it ain’t broke, don’t fix it,” Bowerman said, interpreting what he thought was the board’s desire.

All seven contracts currently include permits to provide the service, but Bowerman said the county wanted to change over to franchise agreements because they are more legally binding.

“Why rush it through now?” asked Ellen Martin, chairwoman of Citizens to Save Laguna Hills. The existing garbage-collection agreements, she added, do not expire until July 1.

“Does this mean that the franchise fees (paid by the contractor to the county) will go to the county for the next five years?” Martin asked. “How can it be canceled? Will the new cities be able to go in and renegotiate?”

El Toro City Council candidate Marcia Rudolph said she also has questions, particularly since competitive bids were not solicited by the county.

“It’s one way we can ensure our residents that our city is looking out for our hard-earned tax dollars,” Rudolph said.

County officials could not provide estimates on how much the county will receive in franchise fees. They also offered mixed opinions as to whether the contracts would be legally binding with the new cities if voters approve cityhood referendums in the March 5 election.

“I am not sure whether that five-year protection (for the contractors) exists,” Bowerman said. “However, I don’t think that the five years is binding on the cities.”

Laguna Hills council candidate Craig Scott, an attorney, said he did not believe the city could be bound by the county’s contractual agreements.

“How can the city possibly be bound when it did not make the decision?” he asked. Council candidates in El Toro and Laguna Hills were alerted to the proposed contracts through letters from the head of Western Waste Industries, another trash hauler that was not allowed to bid on the contracts.

“If you are concerned about having your local control to make decisions about one of the largest franchises your new city will grant, please contact Supervisor Gaddi H. Vasquez, chairman of the Orange County supervisors,” the letter from the firm’s president, Kosti Shirvanian, stated.

Dave Ellis, a political consultant working for Western Waste Industries, said the proposed contract would allow monthly residential garbage collection fees to increase from $9.85 to $11.12. Another $2.58 per month would be added under a separate trash-recycling program charge.

But county officials said the fee increases are not automatic and would require approval by the Board of Supervisors.

Waste Management Inc. General Manager David Ross said, “It’s premature to say that the rates are going to be automatically increased.” He added that competitive bidding does not necessarily lower prices, and might actually reduce performance.

Western Waste’s past lobbying tactics in other cities have landed the firm in legal and political troubles. The firm also pleaded guilty to antitrust violations in Orange County in 1989 and, in a separate case, a high-ranking executive was fined $125,000 after pleading no contest to disposing of hazardous waste mixed with household garbage.

But Waste Management Inc., with more than 400 subsidiaries throughout the nation, has also been the target of investigations. In one case, the firm agreed to a $1-million fine in 1989 after entering a no-contest plea in Los Angeles Municipal Court on price-fixing charges.

Prompted by citizens’ concerns about Waste Management, the Mendocino County Board of Supervisors is set to vote next week on a “bad-boy” law which would bar trash haulers from doing business with the county three years from the date of conviction on criminal or civil charges, including bribery, bid rigging or price fixing.

“This is an industry that has problems,” Mendocino County Counsel Peter Klein said of the reasons for their proposed ordinance. “We focused in on one specific industry where we feel we need to protect the public interest.”

Garbage collection firms have been investigated by cities such as Seattle and San Diego, where officials sought more background information before deciding on new contracts.

Bowerman said that was not done in Orange County because the companies the county has been dealing with “seem to be quite reputable.”