Legal Lode: Fight to the Bidder EndLegal Lode: Fight to the Bidder End

Ever fail to win a municipal contract because favoritism or other chicanery likely played a part? Thanks to a ruling by a Connecticut appeals court, a hauler now gets to expose some behind-the-scenes shenanigans.  

F.E. Crandall Disposal (FECD) serves governmental and business entities in Connecticut. Except for a two-year period, FECD capably hauled garbage and recyclables under contract with the town of Ledyard from 1990 to 2007. Things then got a bit sticky when FECD president Frank Crandall campaigned against Fred B. Allyn Jr. as a mayoral candidate. Allyn won. To make matters worse, Crandall didn’t get along with the public works director, Steven Masalin.

As a rule, the town awards a two-year contract for curbside collection of trash and recyclables with an option for a two-year extension, which is typically exercised. Thus, a successful bidder ends up winning a four-year contract. In 2007, Sterling Superior Services underbid FECD and secured the collection contract through 2011.

When the town asked for bids on 2011-2015 collection services, the invitation and instructions said the contract would go to lowest responsible bidder if it were in the town’s best interest to do so. FECD bid $1.9 million, but Sterling won the contract despite its $2.1 million bid.

Masalin had chaired the town’s review committee responsible for selecting the contractor. Mayor Allyn was a committee member. Masalin provided information to the committee, including how past contractors had performed, what the contracts had cost, and how much waste went to the regional waste-to-energy (WTE) plant where the town paid a per-ton fee. Masalin informed the committee that, despite FECD’s low bid, the city might save as much as $350,000 in WTE fees by contracting with Sterling. Masalin compared the amount of garbage delivered to the plant while FECD held the contract with the amount delivered by Sterling. But his analysis did not factor in the introduction of single-stream recycling in 2007 nor did it mention Allyn’s report to the town council that recycling was a key factor in WTE fee reductions realized by Sterling. Based on the supposed savings, the committee awarded the contract to Sterling.

As the lowest qualified bidder, FECD filed suit against the town, Sterling and Allyn. The complaint asked the court to invalidate the 2011 contract award and to order a stop to Sterling’s work. FECD alleged a pattern of favoritism toward Sterling under the 2007 contract that influenced the award of the 2011 contract – specifically, providing Sterling with nonpublic information that allowed it to bid lower and ignoring contract violations that had benefited Sterling financially. Essentially, FECD claimed that its bid was rejected not in good faith nor in the best interests of the town, but “for a purpose that contravened the . . . integrity of the competitive bidding . . . process.”

At trial, FECD attempted to introduce evidence regarding Sterling being a nonqualified bidder based on its violations of the 2007 contract and the town’s affording Sterling special treatment. But the judge refused to allow any testimony relating to events outside the 2011 contract and bidding process. With FECD’s presentation hobbled, no surprise that the judge threw out the case, finding no proof of “fraud, corruption or favoritism or . . . conduct [affecting] the integrity of the bidding process.”

On appeal, a three-judge panel found that the lower court blundered by excluding all testimony and other evidence about the 2007 contract, and sent the case back for a new trial.

“Although not conclusive, [FECD’s proffered evidence] if true, tended to support a finding that Sterling received favorable treatment from the town and thus . . . could support a reasonable inference of favoritism affecting the bidding process,” the opinion said. “The [lower] court’s erroneous evidentiary rulings . . . likely prevented the plaintiff from putting on sufficient evidence to survive . . . a motion to dismiss.”

[F.E. Crandall Disposal, Inc. v. Town of Ledyard, 141 Conn.App. 442 (2013)]

Barry Shanoff is a Rockville, Md., attorney and general counsel of the Solid Waste Association of North America.

The legal editor welcomes comments from readers. Contact Barry Shanoff via e-mail:[email protected].