Waste Management sues Oakland over $1 billion trash contract

Steve Cunningham empties residential trash bins for Waste Management in the Adams Point neighborhood of Oakland, Calif. on Tuesday, Aug. 12, 2014. The city of Oakland is negotiating a new refuse collection deal with Waste Management, which currently holds the contract, and a competing firm. less Steve Cunningham empties residential trash bins for Waste Management in the Adams Point neighborhood of Oakland, Calif. on Tuesday, Aug. 12, 2014. The city of Oakland is negotiating a new refuse collection deal ... more Photo: Paul Chinn, The Chronicle Buy photo Photo: Paul Chinn, The Chronicle Image 1 of / 35 Caption Close Waste Management sues Oakland over $1 billion trash contract 1 / 35 Back to Gallery

The nation's biggest trash hauler sued the city of Oakland on Monday claiming that the City Council illegally steered a $1 billion contract to a local garbage company with which it has "personal and political connections."

The suit, filed in Alameda County Superior Court by Waste Management, claims that Oakland's City Council at the last minute steered the 10-year contract to collect garbage, recycling and compost in Oakland to an ill-prepared local company over the objections of city staffers, who argued the big Texas firm was in the best position to win the deal.

The council awarded the contract to California Waste Solutions, a West Oakland recycling company that, the suit said, had not held a garbage-hauling contract in the United States, submitted proposals that were late and did not comply with the city's contracting rules. In addition, the city gave that company confidential information about Waste Management's pricing and proposal, the suit said.

The suit asks the court to overturn that decision and effectively award the contract to Waste Management.

'Violated public trust'

"The council violated the public trust and put the citizens of Oakland at risk by not following the procurement process," said John Lynn Smith, an attorney for Waste Management.

Waste Management's suit comes five days after the City Council voted 7-1 to give California Waste Solutions the contract in July 2015. Members of the council celebrated with high fives and posed for photos with California Waste Solutions leaders after the vote, hailed as a historic decision that gave a small, local company the task of collecting refuse in Oakland.

The City Council said it decided to support California Waste Solutions in part because the local company promised to charge residents $36.82 per month, more than residents pay now but almost $7 less than Waste Management proposed in its original offer.

Waste Management, the suit said, had spent $1 million over two years to create an innovative proposal to meet the city's goal to more efficiently recycle and compost trash, only to see the City Council members change their minds at the last minute.

"The City Council," the suit said, "was dedicated to subverting the process to ensure (California Waste Solution's) success."

City Councilwoman Rebecca Kaplan, however, disputed the idea the she and her colleagues had unfairly favored California Waste Solutions.

"It was absolutely not any sort of connections," Kaplan said. "I voted for the best deal for the people of Oakland. I am fully committed to always putting the people of Oakland first."

Went with lowest cost

In particular, Kaplan said, California Waste Solutions offered the best service for the cheapest price.

"It is completely normal to pick the one with the lowest price," Kaplan said. "We picked the one with the lowest price for the public. We saved the public $200 million."

Alex Katz, a spokesman for City Attorney Barbara Parker, said he could not comment on the suit because the city had not yet received a copy.

Waste Management of Alameda County, along with its predecessor Oakland Scavenger, has collected refuse in Oakland for more than 100 years, said Barry Skolnick, president of the company.

The trouble started in May, Waste Management claimed in the suit, when Oakland's City Council voted to reconsider the three-part trash deal to collect, sort and haul recycling, compost and garbage.

Oakland had given companies six months - from August 2012 to January 2013 - to submit proposals to collect the city's garbage. Only Waste Management offered to collect garbage, recycling and compost.

Original partial bid

California Waste Solutions wanted only part of the deal, but the City Council didn't like Waste Management's proposal and voted in late May to reopen the bidding process, allowing California Waste Solutions to look at Waste Management's proposal, the suit said, and submit a new bid for the entire contract in June.

"We had a process," Skolnick said. "We followed the process, but Oakland derailed the process."

California Waste Solutions currently provides recycling services for about 75,000 Oakland homes and 170,000 San Jose homes and must buy 150 garbage trucks, 300,000 trash bins, and build new garbage facilities by July to haul trash in Oakland.

Had Oakland played by the rules, the suit says, Waste Management would have won the contract.

Kaplan, however, disputed that chain of events. The City Council, she said, pushed hard to keep costs low and give California Waste Solutions a fair chance.

"We were told in May that we have no hope of doing any better for the public than a 50 percent rate hike," Kaplan said. "We pushed back and we said Oakland can do better than that. ... The (City Council) allowed for both bidders to submit new options."

Joel Corona, chief operating officer of California Waste Solutions, said he had not yet read the lawsuit but "there is a near unanimous decision from the City Council as to what they wanted. Waste Management has realized they simply didn't provide the City Council with what they wanted."