Oakland City Council gives controversial garbage contract to Waste Management

At a heated special meeting on September 22, the Oakland City Council awarded Waste Management a hefty garbage contract, reversing a decision to give the same contract to a local company a month earlier.

Waste Management, the country’s largest garbage hauler, had originally lost the $1 billion, 10-year contract to a local firm – California Waste Solutions (CWS) – last month. Afterward, Waste Management sued the city and CWS. Waste Management also collected signatures for a proposed ballot measure to undo the council’s decision. Ultimately, Oakland Mayor Jean Quan negotiated a deal with Waste Management, CWS, and Oakland City Council.

“This is a win, win, win situation,” said David Duong, CEO of CWS. “A win for Waste Management, a win for CWS, and a win for Oakland residents.”

This is not Waste Management’s first time at the rodeo. The Texas-based company has won every garbage contract in Oakland since it began doing business in the city over 100 years ago. Its immense size – with about 600 employees in Alameda County and 43,000 employees countrywide – made it the only company in the most recent bidding cycle to offer a full service trash contract, including the handling of mixed materials and compostable organics, recyclables, and landfill waste.

CWS, by contrast, submitted a proposal for only mixed materials and recycling. CWS has split the responsibility with Waste Management to haul Oakland’s recyclables since 1992.

At the close of the six-month bidding window, Waste Management had an overwhelming advantage. But council members had a problem with the bid: price.

Waste Management proposed to increase garbage fees for single-family, 32-gallon cart homeowners by 50 percent, from $29.30 per household to $43.93, making Oakland the city with the second highest garbage rate in the East Bay. The city council reopened the bidding and asked CWS to submit a new proposal for handling all garbage, not just recycling.

While many were excited a local company was now bidding for the contract, city staffers were wary of the company’s ability to build the infrastructure in time to service Oakland residents by July 1, 2015, when the new contract begins. Despite the objections, the city council voted 7-1 to grant CWS the multi-million dollar garbage contract on August 13.

The company was able to offer a substantially lower bid at $36.82, competing with Waste Management’s second offer at $37.53.

For the first time, Waste Management had lost a major contract to a company a fraction of its size.

Within five days, Waste Management sued the city of Oakland and CWS, claiming CWS was given a job it couldn’t handle, submitted proposals after deadlines, and received inside information from city council members about Waste Management’s proposals. “The Oakland City Council has violated the public trust,” said John Lynn Smith, an attorney for Waste Management. “This is a council that has forgotten that it serves the public and has forgotten that it cannot choose to ignore fairness, due process, and city residents in its public bid processes.”

Additionally, Waste Management began collecting signatures to try to overturn the council’s decision through a voter referendum. Soon after, officials and city residents were accusing Waste Management’s hired signature gatherers of lying to get votes. Councilmember Pat Kernighan told KPIX 5 that signature gatherers had signs claiming garbage rates would rise with CWS. “I just think it’s sad that a corporation that wants to serve Oakland citizens would lie to them,” Kernighan said.

Karen Stern, media spokesperson for Waste Management, said the company was “shocked” by the signature gatherers’ wrongful behavior. The company instructed the coalition it hired to gather signatures – Oakland Residents for a Clean City – to find those individuals and “deal with them appropriately.”

Meanwhile, Mayor Quan met with both companies to try to resolve the dispute. On September 18, Quan, Waste Management, and CWS said in a joint statement that they were negotiating a deal to “maintain low rates for Oakland residents and ensure consistent pick-up service.”

The tentative agreement would make Waste Management Oakland’s principal garbage collector, responsible for hauling and disposing of all mixed materials and organics. Additionally, the company would no longer handle half the city’s recycling, leaving it all to CWS.

Within a few days, Quan called a special meeting with city council to vote on the proposal.

The meeting, held last Monday evening, was packed with city residents, garbage workers, and representatives from Waste Management and CWS. City officials, including Quan, opened the session by praising the deal, saying that it offered great service at a lower rate. Council member Lynette McElhaney said the resolution was “everything we wanted.” Quan agreed, saying, “The citizens of Oakland have won tonight.”

While council members celebrated the agreement, tension arose as many residents expressed their displeasure with the decision. Some accused the council of succumbing to Waste Management’s demands. “You were bullied again,” said one resident. As another resident told the council Waste Management’s century-long contract is one that “will never end,” someone in the audience yelled, “Monopoly!”

In the end, the council voted 6-0 to award the contract back to Waste Management. Council member Desley Brooks, who accused Waste Management of being dishonest and self-interested, abstained from voting. Councilmember Larry Reid was absent.

Waste Management has agreed to pay all legal fees accrued by the city and CWS as a result of its lawsuit. Additionally, the company is required to drop its lawsuit and voter referendum.

Zachary Wald, chief of staff for McElhaney, was pleased with the agreement. “I think the process was a little bruising and the way Waste Management acted was disappointing,” Wald said. “But the result is a good result.”

Waste Management was also satisfied with the deal. “We’re grateful that the parties came together for a resolution,” said Stern. “It was going to be quite challenging for a company that only handled recycling to take on everything at once.”

Duong says he is moving forward. “We’re ready,” he said. CWS will build an $80 million recycling facility at the North Gateway area of the Oakland Army Base in West Oakland. “I always dreamed of this,” Duong said. “To be able to grow a company in Oakland, in our own town.”