City Awards Garbage Contract Without Bids

Last night the City Council voted to award a five year contract to Allied Waste for garbage, recycling and yard waste collection.  Bids from other companies were not sought before this contract for in excess of $5,000,000 was awarded.  I have written previously regarding why bidding makes good fiscal sense and is the financially responsible thing to do (http://cresthill-illinois.blogspot.com/2008/12/trashing-principles-of-good-government.html).  I have also written about the Committee to Re-Elect the Mayor accepting a large donation from Allied Waste and the ethical issues that poses (http://cresthill-illinois.blogspot.com/2008/12/mayoral-ethics-part-ii.html).  

Not only did Alderpersons Vershay, Oberlin, Brandolino, Dyke, and Inman vote as if they believed that bidding had no sound purpose and that there was nothing wrong with those seeking city contracts giving political contributions; they actually voiced such opinions.  It was shocking to hear such statements expressed by those who have been entrusted by the public to act in the best interest of the city and its citizens.  

Alderwoman Oberlin stated that to go out to bid would be like gambling that we have no way of knowing that we would get a better price by doing so.  She also stated that it would be irresponsible to gamble like that.  In fact, we would not be gambling as we know the outcomes so long as we can assume that Allied Waste is run by rational people seeking to make a profit.  We would get a price at least as good if not better by going out to bid because the addition of competition would drive prices down.  My previous post goes into this in greater detail.  The truth though is that there is nothing irresponsible about going out to bid, there is in fact something very irresponsible about not seeking the lowest cost for the citizens of Crest Hill.

Alderman Inman commented that there was no connection between the Mayor, the contributions by Allied Waste to his campaign, and this contract.  Well, the connection between the Mayor and the contributions is clear and direct.  It is also apparent that the Mayor spoke in work sessions supporting awarding the contract without bidding.  He also worked to negotiate this contract.  Alderman Inman may think that because the fuel surcharge was negotiated out, the Mayor did a good job and the city got a great deal.  Well, the truth is that in any negotiation the terms are on the table and to have negotiated out of new language that few other cities have ever agreed to is not a huge victory.  And even if t had been an amazing negotiation, considering only one company to the exclusion of all others is irresponsible.

Two of the men running for Mayor spoke up in opposition to awarding this large contract without going out for bid and should be commended for their efforts.  Alderman Soliman spoke to the point that I believe is central which is that any price given in these negotiations should be able to have submitted as a bid, if not an even lower price.  Mr. Semplinski brought up the very insightful point that if Allied Waste can afford to hold the price for the next year the same as it was this year, they must have been able to make a pretty good profit this year and probably had more room to offer a lower price.  I wish the incumbent Mayor had the wisdom to put forth such good thoughts and to encourage those who follow his lead to have done the right thing.

Trashing the Principles of Good Government

Public bodies typically put contracts for goods and services out to bid for a number of reasons.  The primary reason is to obtain the best price possible through competition.  Additional reasons relate to fairness to all businesses, eliminating discrimination, and reducing corruption.

The best price for a good or service can be obtained through competition, which is the basis of the bidding process.  As an example lets pretend that I am going to buy your car.  In one case, I ask you to tell me how much you will sell your car to me for and tell you that I want your car and will not buy a car from anyone else or even find out the price of a similar car from anyone else.  In the second case, I ask you how much you will sell your car to be for ad tell you that I will be getting prices from 5 other people with nearly identical cars and will buy the one with the lowest price.  In which case will you give me the lowest price?  I think the clear answer is that the lowest price will be given in the second case where there is competition.  Of course, some people may ask for the same amount in both cases, but it would seem pretty illogical for anyone to offer a lower price in the first case.

Well, most of the City Council has decided that Allied Waste is illogical and will offer the city the best price on garbage service if they are allowed to propose a 5 year contract without having to bid against other companies.  Instead of finding out what other companies would charge to provide service they have decided to seek a proposal from one company only.  Ray Soliman was that only Council member to speak up against this plan.  The rest of the Council and the Mayor decided that financial responsibility and good government are not of importance.

It is possible that Allied Waste will provide the best service at the lowest price.  However, we will never know if that is the case unless we allow all companies interested in providing garbage service to bid for the contract.  What is the Council's reason to oppose bidding?  Their publicly stated reason is that they believe that Allied Waste will bid a higher price if faced with competition than they would offer if only their proposal in considered.  That seems to run counter to logic, but we all know that there are members of this Council who would never let logic stop them from violating every principle of good government that they can violate.  As for the members who normally support the principles of good government and fiscal responsibility, I can only hope that they will realize their error before approving a contract without bids.  Ray Soliman was the lone voice on the right side of the issue at the work session on November 21, but I will be looking for others to join him when the issue comes up in a Council meeting.

Another item to be aware of besides the decision not to put the contract out to bid, is that the Council is looking for Allied Waste to hold rates flat for the first two years and defer the increases until the third, fourth, and fifth year of the contract.  I can assure you that the increases in the last three years of the contract will be considerable in order to make up for the lower rates the first two years.  On top of this they are looking to allow Allied Waste to add a fuel surcharge if fuel prices go above a set price.  The residents will be forced to help Allied Waste cover their fuel costs if diesel prices go up again, but we will not have our garbage rates go down if diesel prices fall.  The City Council sees no problem with this one sided proposal. 

The only possible positive is that they are looking to provide wheeled containers with lids to all the homes for trash and recyclables.  There some definite benefits to this idea and I know a number of people have been asking for this.  Of course there is no reason why this could not have been included in a request for bids from other companies.