National Waste Recycling, Inc. v. Middlesex County Imp. Authority

• Decision Date: 17 July 1997
• Citation: 695 A.2d 1381,150 N.J. 209
• Parties: NATIONAL WASTE RECYCLING, INC. and John Grywalski, Plaintiffs, and Department of Environmental Protection and Division of Local Government Services, Intervenors-Appellants, v. The MIDDLESEX COUNTY IMPROVEMENT AUTHORITY and Waste Management of North Jersey, Inc., Defendants-Respondents.
• Court: New Jersey Supreme Court

Page 209

150 N.J. 209

695 A.2d 1381

NATIONAL WASTE RECYCLING, INC. and John Grywalski, Plaintiffs,

and

Department of Environmental Protection and Division of Local

Government Services, Intervenors-Appellants, v. The MIDDLESEX COUNTY IMPROVEMENT AUTHORITY and Waste

Management of North Jersey, Inc., Defendants-Respondents.

Supreme Court of New Jersey.

Argued Feb. 18, 1997.

Decided July 17, 1997.

Regina H. Nugent, Deputy Attorney General, for intervenors-appellants (Peter Verniero, Attorney General of New Jersey, attorney; Andrea M. Silkowitz, Assistant Attorney General, of counsel).

Jonathan L. Williams, Teaneck, for respondent Middlesex County Improvement Authority (DeCotiis, Fitzpatrick & Gluck, attorneys; Benjamin Clarke, on the brief).

Robert S. Moraff, for respondent Waste Management of North Jersey, Inc. (Schwartz, Tobia, Stanziale, Becker, Rosensweig & Sedita and Ambrosio, Kyreakakis, DiLorenzo, Moraff & McKenna, attorneys).

The opinion of the Court was delivered by

STEIN, J.

Under the Local Public Contracts Law (LPCL), N.J.S.A. 40A:11-1 to -49, local public entities must submit any proposed purchase of goods or services in excess of $7500 to public advertisement and bidding. See N.J.S.A. 40A:11-3, -4. The LPCL provides a number of exemptions from the bidding requirement. See N.J.S.A. 40A:11-5. N.J.S.A. 40A:11-5(1)(s) provides an exemption from the public bidding requirement for "[t]he marketing of recyclable materials recovered through a recycling program...." In a reported decision, the Appellate Division reversed a trial court's ruling that invalidated a five-year contract, which included the curbside collection and marketing of recyclable materials in Middlesex County, between defendants Middlesex County Improvement Authority (MCIA) and Waste Management of North Jersey, Inc. (WMNJ), on the ground that the curbside collection aspect of the contract had not been publicly bid contrary to the LPCL. See 291 N.J.Super. 283, 287, 289-95, 677 A.2d 268 (1996). The Department of Environmental Protection (DEP) and the Division of Local Government Services (DLGS) (collectively intervenors) petitioned the Court for certification on the issue whether the Appellate Division panel had erroneously concluded that the MCIA/WMNJ integrated recycling contract fell within the scope of the exemption from public bidding provided by N.J.S.A. 40A:11-5(1)(s). We granted the intervenors' petition for certification, 146 N.J. 565, 683 A.2d 1161 (1996).

I

The essential facts are undisputed. Pursuant to the Solid Waste Management Act (Act), N.J.S.A. 13:1E-1 to -207, each county in New Jersey and the Hackensack Meadowlands District is required to implement a solid waste management plan regulating the disposal of all solid waste generated within its borders. See N.J.S.A. 13:1E-19 to -23. A 1987 amendment to the Act, known as the New Jersey Statewide Mandatory Source Separation and Recycling Act (Recycling Act), L. 1987, c. 102 (codified at N.J.S.A. 13:1E-99.11 to -.32), requires that every county's solid waste management plan must include a recycling component. See N.J.S.A. 13:1E-99.13. Initially, the Legislature set the mandatory recycling goal at twenty-five percent of the total waste stream generated. L. 1987, c. 102, § 3. In 1992, it increased that goal to require by December 31, 1995, at least sixty percent recycling. L. 1992, c. 167, § 1 (codified at N.J.S.A. 13:1E-99.13).

Pursuant to that legislative requirement, the Middlesex County Board of Chosen Freeholders amended the recycling plan of Middlesex County (County) on June 2, 1994, to achieve the sixty percent goal within the specified time period. The amended plan, approved by the DEP on October 3, 1994, required that a private contractor be chosen to implement the recycling program on behalf of all municipalities electing to participate, and designated MCIA as the local agency responsible for the program's implementation.

On October 14, 1994, MCIA publicly issued a Request for Qualifications (RFQ) for the "Collection and Marketing of Source-Separated Recyclable Materials, Including the Processing and Transfer Services Necessary for such Marketing." Critical to the issue requiring resolution in this appeal, the RFQ specified that the successful respondent would be responsible both for the curbside collection of all recyclable materials and for their ultimate sale or other disposition. The RFQ specified the schedule for collection and the materials to be collected; provided that the successful respondent would be responsible for negotiating and entering into contracts for the sale or disposition of the recyclables collected; and, finally, required that the successful respondent would be responsible for supplying sufficient equipment to provide recycling and marketing services.

Additionally, the RFQ stated MCIA's preference to select two contractors to service the participating municipalities in the County: one contractor for the northern and one contractor for the southern sections of the County. However, it provided that one contractor could be selected for the entire County if the contractor could demonstrate that it was capable of servicing the entire County efficiently and at a lower cost.

MCIA received responses from ten companies, six of which met its qualifications. Plaintiff National Waste Recycling, Inc. (National) and Defendant WMNJ were among those found to be qualified. On November 30, 1994, MCIA issued a Request for Proposals (RFP) to the six qualified companies. Five of those companies, including National and WMNJ, submitted proposals. National submitted a proposal to service the southern portion of the County; WMNJ submitted a proposal to provide services for the entire County or any portion thereof.

Pursuant to the RFP, MCIA conducted a preliminary review and evaluation of the proposals, ranking National and WMNJ highest after considering the cost proposals, technical proposals, contractual proposals and the financial condition of each company. MCIA then entered into negotiations with both companies. MCIA representatives met separately with National and WMNJ to negotiate terms, exploring each candidate's willingness to make price concessions. During the negotiation process, each candidate was apprised of the price terms proposed by the other. One major concession that MCIA obtained from both National and WMNJ was a guaranteed "floor price" to be paid to the County for the recyclable materials.

On February 8, 1995, MCIA awarded the five-year $22,000,000 contract to WMNJ based on the recommendation contained in a written evaluation of the two proposals. The evaluation was prepared by a Project Team that included a consulting engineer, special legal counsel and a financial advisor. MCIA's executive director certified that its decision was premised on the fact that WMNJ's final proposal for the entire County represented the lowest five-year cost to MCIA. WMNJ's contract price for the entire County was lower by $259,520 than the aggregate cost the County would incur if the MCIA awarded National the contract for the southern section of the County and WMNJ had been selected to provide services for the northern section of the County. Another factor that tipped the balance in favor of WMNJ was that, despite repeated requests by MCIA, National had failed to furnish an audited financial statement, which was one of the conditions under which MCIA had agreed to qualify National. The negotiation process itself resulted in a total savings to the County of approximately $5,500,000.

On February 21, 1995, plaintiff National filed suit against defendants MCIA and WMNJ, seeking a temporary injunction and invalidation of the contract. John Grywalski, a Middlesex County resident, joined National as a plaintiff. Plaintiffs' amended complaint asserted three separate challenges to the validity of the contract. This appeal focuses on the claim that the contract was invalid because it had been awarded without public bidding of the curbside collection portion of the contract, in violation of the LPCL. See N.J.S.A. 40A:11-3, -4.

Defendants moved for summary judgment, arguing that plaintiffs lacked standing and that their claims lacked merit as a matter of law. Concerning the standing issue, defendants asserted that New Jersey law estops a party from challenging the validity of the process used to award a contract when that party had participated without complaint in that very process until a decision contrary to its interests was reached. Defendants argued that this rule applied to both National and Grywalski, because discovery had revealed that Grywalski was a personal friend of one of the principals of National and that he was not spending any personal funds to prosecute the lawsuit. Concerning the merits of the bidding issue, defendants asserted that the contract was exempt from public-bidding requirements pursuant to N.J.S.A. 40A:11-5, which provided:

Any purchase, contract or agreement of the character described in [section 4 of the LPCL] of the act may be made, negotiated or awarded by the governing body without public advertising for bids and bidding therefor if:

(1) The subject matter thereof consists of:

....

(s) The marketing of recyclable materials recovered through a recycling program or the marketing of any product intentionally produced or derived from solid waste received at a resource recovery facility or recovered through a resource recovery program, including, but not limited to, refuse-derived fuel, compost materials, methane gas, and other similar products.

[emphasis added.]

The trial court held that National was barred from contending that the contract required public bidding because it had actively participated in the procurement process. However, the trial court found that, although it was troubled by the facts and circumstances surrounding Grywalski's participation in the lawsuit, Grywalski had standing based on his status as a...