Municipal Solid Waste Collection Services: Navigating and Conforming to Contract Specifications

A manufacturing society whose leadership included Alexander Hamilton founded, in 1792, a community about fifteen miles northwest of New York City that later became Paterson, New Jersey.  The Great Falls waterfall on the Passaic River is prominent there. It was seen in the HBO drama “The Sopranos,” in the pilot and in later episodes where at least one character suffered an untimely end. The series featured other locations throughout the city and elsewhere in North Jersey.  Speaking of the pilot, that’s where Tony tells his therapist he’s a waste management consultant.

In April 2022, the city issued bid specifications for a new solid waste collection services contract.  Bids were due in early June.  Suburban Disposal, which was the service provider at the time, submitted a bid.  The city rejected it because it "substantially exceeded the City's appropriations." State law forbids a municipality from awarding a contract where the cost would outstrip budgeted funds. The city ended up rejecting all bids.  (To ensure uninterrupted solid waste collection, the city would sign a series of extension agreements with Suburban.)

Following a second procurement outreach where all bids were again rejected, the city issued, in June 2023, a third set of bid specifications for a new contract. Bidders were required to complete a Bidder Questionnaire and provide a bid guarantee. The notice prescribed the amount, form and exceptions to the bid assurance, stating:

                  The City . . . requires that a bidder must submit with his bid a [b]id [g]uarantee in the

                  form of a bid bond, certified check, or cashier's check in the amount of ten percent

                  (10%) of the bid, along with Consent of Surety from a Bonding Company. In no case

                  shall the Bid Guarantee exceed $20,000.00.

On August 8, the city received bids from Suburban, Filco Carting, and E&B Hauling Services.  Filco's bid was the lowest. In fact, it was approximately $10 million lower than Suburban’s bid.  Filco's bid included a bid guarantee in the form of a bid bond with a "Bond Amount" of 10% of the total amount of the bid proposal not to exceed $20,000. The text of Filco's bond stated, in relevant part:

                  The Contractor and Surety are bound to the Owner in the amount set forth above, for

                  the payment of which the Contractor and Surety bind themselves, . . . as provided

                  herein.

and notably, it included a savings clause that read: 

                  When this Bond has been furnished to comply with a statutory or other legal

                   requirement in the location of the Project, any provision in this Bond conflicting with

                   said statutory or legal requirement shall be deemed deleted herefrom and provisions

                   conforming to such statutory or other legal requirement shall be deemed incorporated

                   herein.  [Emphasis added]

Filco's bid also included a completed Bidder Questionnaire. Question 2 read: “List any other names under which the bidder, its partners or officers have conducted business in the past five years.” Question 6 read: “List the government Solid Waste and Service contract that the bidder has completed within the last five years. Give detailed answers to questions below relating to this subject.”  Filco responded "None" to both questions.

On September 5, the City adopted a resolution awarding the contract to Filco as the lowest responsible bidder. Two days later, Suburban filed a complaint in Passaic County Superior Court and applied for an order seeking an injunction.  Suburban contended that the city had improperly awarded the contract to Filco, disregarding “fatal defects” in Filco’s bid.

The trial court, after hearing oral arguments a week later, granted Suburban’s application with an order stating:

                  The City, and all those acting in concert with it, are temporarily restrained and

                  enjoined from executing and/or implementing and Contract [sic] with Filco or any

                  other vendor pending a determination of [plaintiff's] claims . . . .   

The parties returned to court on October 11 and presented additional oral arguments.  On October 19, the trial judge declined to grant Suburban a preliminary injunction and dismissed the complaint, issuing a sixteen-page statement of reasons.  For good measure, the court also denied Suburban’s request to put a hold on its order pending appeal.

Suburban was persistent. It promptly sought from an appeals court and, on October 27, received, a stay of the trial court ruling.  Unsuccessful in convincing the state supreme court to undo the stay, the city found itself in a difficult situation. The city contacted both Filco and Suburban, asking if they would be interested in submitting proposals to perform emergency waste removal services.

The city ended up awarding a contract to Filco for a term beginning on January 1 and ending March 31, 2024.  The contract allowed the city to extend the engagement on a month-to-month basis to meet its needs.  The appeals court rejected Suburban’s argument that the city had violated the October 27 stay by awarding the contract to Filco.

Peripheral matters and procedural jockeying concluded, the case was argued, in March 2024, where the appellate panel addressed Suburban’s contentions on their merits.  Upon review, the court lifted its stay of the trial judge’s order dismissing Suburban’s complaint and affirmed his ruling.

Whether a bid on a local public contract conforms to specifications depends on whether the decision was arbitrary, unreasonable or capricious.  Courts generally do not interfere with the exercise of an agency's decision in awarding a contract or rejecting a bidder where there is no evidence of bad faith, corruption, fraud or abuse of discretion.

Under New Jersey law, a public contract must be awarded to the “lowest responsible bidder,” which is the bidder (a) whose response offers the lowest price and complies with the terms, conditions and substantive and procedural requirements in the bid advertisements and specifications and (b) who is able to complete the contract in accordance with its demands, including matters pertaining to experience, moral integrity, credit, workforce and financial capacity.

Suburban argued that Filco submitted a defective bid guarantee in the form of a bid bond that "did not provide for the statutory amount as required under . . . the Bid Specifications for 10% of the [c]ontract amount."  The appeals court disagreed.

 “We are satisfied the trial court correctly determined Filco's bid guarantee complied with the [public contracts law] and implementing regulations,” the panel wrote. “Filco's bid bond contains all the mandatory requirements and its savings clause effectively eliminated any language that might be construed to render the bond defective.”

The appeals court next addressed Suburban’s contentions regarding Filco's answers to the Bidder Questionnaire.  Suburban asserted that Filco failed to accurately respond to Question 2 pertaining to the names under which the bidder, its partners or officers have conducted business in the past five years. Specifically, Suburban argued that by answering "None" to Question 2, Filco omitted disclosing the name of the person who, it claimed, co-founded Filco and served as the company's Executive Vice President: Adam Pasquale.

 “The trial court noted that Filco's owner and sole officer, Dominic Monopoli, certified Pasquale is only an employee of Filco – not an owner, partner, or officer,” the appeals court observed.  “Finding Pasquale is not an officer of Filco, the trial court concluded ‘Filco's omission of Pasquale and his previous contracts from [q]uestion [two] does not constitute a deviation from the question.’ [W]e have no basis upon which to second-guess that finding and decline to do so.”

The appeals court likewise brushed aside Suburban’s contention that Filco’s response to Question 6 about other solid waste contracts (“None”) constitutes a material defect.  Filco, arguing that it interpreted Question 6 in tandem with Question 5, listed two New York State contracts in its answer to the latter. 

Under state law, a municipality cannot ignore or waive a defective response if to do so would diminish the likelihood that the awarded contract will be performed to meet the specifications or would undermine the competitive bidding process.  

The appeals noted that the trial judge had identified "many indicators" of Filco's ability to perform the contract, including a bid bond backed by a reputable surety, Filco’s experience in New York, the “totality of the bid, not just the questionnaire," as well as a report from the city’s solid waste consultant.

 “We are satisfied the trial court correctly concluded the City's waiver of Filco's response to question six would not deprive the municipality of the assurance that Filco was willing to enter the Contract and capable of the completion," the panel said.

With respect to a bidding advantage, the trial judge had concluded that omitting prior experience would more likely harm a bidder in the procurement process, adding: "[u]nless the undisclosed prior contracts revealed harmful elements such as fraud or breach of contract.”  Moreover, Filco provided its work history in response to other questions.  

 “[W]e conclude the trial court did not err in finding Filco's response to question six was an immaterial defect waivable by the City,” the panel wrote.  “In sum, we agree with the trial court that the City was not arbitrary, capricious or unreasonable in awarding the contract to Filco.”

Suburban Disposal, Inc. v. City of Paterson, et al., No. A-0519-23, N.J. Super. Ct. App. Div.,

April 1, 2024.