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UNITED STATES v. JOINT MEETING OF ESSEX & UNION CO

March 9, 1998

UNITED STATES OF AMERICA and STATE OF NEW JERSEY, Plaintiff,
v.
JOINT MEETING OF ESSEX AND UNION COUNTIES, et al., Defendants, R.J LONGO CONSTRUCTION CO., INC. d/b/a EPIC and ANDREW CAPPON, Plaintiffs, v. PASSAIC VALLEY SEWERAGE COMMISSIONERS, et al., Defendants.



The opinion of the court was delivered by: ACKERMAN

 Ackerman, D.J.

 This matter comes before the court on motions for summary judgment on behalf of both the plaintiffs, R.J. Longo d/b/a/ EPIC ("EPIC") and Andrew Cappon, and the defendants, Passaic Valley Sewerage Commissioners ("PVSC") and the Wheelabrator Defendants. *fn1" For the reasons detailed below, plaintiffs' motion is DENIED and defendants' motion is GRANTED. After its failure in securing a wastewater treatment contract from PVSC, EPIC filed this action against PVSC and the vendor which was awarded the contract, Wheelabrator. The other plaintiff, Andrew Cappon is a resident taxpayer of the City of Newark and a PVSC ratepayer.

 I. Terms Guide In their papers, the parties have used a number of abbreviated terms and acronyms to refer to significant parties, events, and contract language. To remedy any potential confusion, I think it best to provide the reader with a guide to the terms used in this opinion. The parties involved are: Name Role Abbreviation or Acronym R.J. Longo Construction d/b/a EPIC Plaintiff EPIC Passaic Valley Sewerage Defendant PVSC Commissioners Waste Management of North Jersey, Defendant WMNJ Inc. Wheelabrator Clean Water New Defendant WCWNJ Jersey, Inc. Wheelabrator Technologies, Inc. Defendant WTI Wheelabrator Clean Water Systems, Defendant WCWS Inc. WMX Technologies, Inc. Defendant WMX Malcolm Pirnie, Inc. Consultant to PVSC MPI New Jersey Department of State Administrative NJDEP or DEP Environmental Protection Agency DIVISION of Local Government State Administrative DLGS Services Agency In addition there are other terms of which the reader should be aware. These terms are: Term Abbreviation Request for Proposals RFP Request for Qualifications RFQ Statement of Qualifications SOQ

 II. Background

 PVSC initiated the procurement process in which it eventually awarded the contract to the defendant, Wheelabrator. Subsequently, EPIC filed a complaint against PVSC and the Wheelabrator companies alleging violations of the Water Treatment Privatization Act, breach of contract, tortious interference, and legal impossibility. See PVSC Appendix at Ex. 1 (copy of Complaint, Counts One through Four. The case was removed to federal court.

 Because the Wastewater Treatment Privatization controlled this situation, it is important to understand the process established by the Act. The Act creates a "comprehensive procedure designed to authorize local government units to contract with private firms for the provision of wastewater treatment services." N.J.S.A. § 58:27-5. Under the Act, the PVSC must follow the following procedural steps:

 
1. Publish notice of its intent to contract, (N.J.S.A. § 58:27-5);
 
2. Issue a Request for Qualifications ("RFQ") of vendors interested in providing their services (Id. at 58:27-6);
 
3. After reviewing the qualifications submitted by vendors, establish a list of responding vendors and designate those vendors which are qualified to provide the wastewater treatment service, (Id. at 58:27-7);
 
4. Transmit a Request for Proposals ("RFP") to the qualified vendors, which shall include a detailed description of the wastewater treatment system and services required, the format and procedure to be followed . . ., the specific information which the vendor must provide in the proposals, a statement setting forth the relative importance of factors, including cost, which the contracting unit will consider in evaluating a proposal submitted by a qualified vendor, and any other information which the contracting unit deems appropriate . . . (Id. at 58:27-8);
 
5. Review proposals submitted by vendors and if provided for in the RFP, conduct discussions with qualified vendors to clarify any information submitted in the proposal, (Id. at 58:27-9);
 
6. Designate the selected vendor and include a list of qualified vendors, the basis on which the selected vendor was chosen, and a finding that the selected vendor's proposal is the most advantageous, (Id. at 58:27-10);
 
7. Negotiate with the selected vendor and publish proposed contract, (Id. at 58:27-11);
 
8. Conduct public hearing and comment, (Id. at 58:27-12);
 
9. Approval of the proposal contract by certain state agencies: the New Jersey Department of Environmental Protection for environmental and water quality standards and Division of Local Government Services for the fiscal and financial capabilities of the contracting unit, (Id. at 58:27-13); and
 
10. Award of the negotiated contract after approval.

 In 1993, PVSC published its RFQ pursuant to the Privatization Act. The RFQ "solicited Statements of Qualifications ("SOQ's") from companies who have the financial and technical resources to provide comprehensive sludge management services for a Sludge Management System," the "primary goal" being to "develop a cost-effective and environmentally responsible land-based alternative for the sludge produced by PVSC." Coles Decl., Ex. 6 (copy of RFQ § 1.0). The RFQ further stated that:

 
The Vendor may propose a system with a capacity from one dtø increment to the entire sludge production of PVSC. A single vendor may propose a system which consists of multiple increments with different technologies [as] long as each technology is sized to accept a minimum increment of 50 dtø.
 
Id.

 On October 4, 1993, the defendant Waste Management of North Jersey, Inc. ("WMNJ") submitted its Statement of Qualifications ("SOQ"). The SOQ identifies WMNJ as the "Primary Respondent" and Bio-Gro Systems, Inc. as the "Primary Vendor." Subsequently, Bio-Gro changed its name to Wheelabrator Clean Water Systems. Inc. ("WCWS"). *fn2" WMNJ's SOQ indicated that it intended to make proposals based upon "multiple alternatives for beneficial use and recycling of sludge." Wheelabrator Br. at 12. These technologies included:

 
1. BIO*FIX Alkaline Stabilization
 
2. Swiss Combi Thermal Pelletization
 
3. Land Application Reclamation, and
 
4. Reclamation and IPS Composting.
 
Id.

 To assist in the procurement process, PVSC hired Malcolm Pirnie, Inc. ("MPI") for engineering consulting services. See PVSC Rule 56.1 Statement at PP 18-19. MPI played a significant role in evaluating the proposals. On July 13, 1994, based upon MPI's recommendation, PVSC designated twenty vendors as qualified to submit proposals. PVSC required that each proposal be submitted on a stand-alone basis, i.e. a separate proposal for each technology. Of the twenty vendors, only EPIC and WMNJ requested and obtained permission to submit proposals for more than one technology. PVSC authorized EPIC for two technologies, Composting/Mine Reclamation and Land Application, and WMNJ for IPS Composting, Land Application, BIO*FIX Alkaline Stabilization and Swiss Combi Drying/Pelletization. Wheelabrator Br. at 14. On July 14, 1994, the Wheelabrator companies "notified PVSC of the recent formation of WCWNJ, a wholly owned subsidiary of WCWS (the former Bio-Gro . . .) to handle water and wastewater businesses within . . . New Jersey." Id. Essentially, WCWNJ was now responsible for the project.

 On September 30, 1994, PVSC commenced the next stage of the procurement process by issuing Requests for Proposals to the twenty-five qualified vendors. There were four separate RFP's issued which differed only to the extent that they each covered a different technology. Id. at 15; Plaintiff's Rule 56.1 Statement. Otherwise, they contained identical introductory and general language. Id. PVSC qualified WMNJ(WCWS) for four technologies and sent it four different RFP's. On January 6, 1995, WCWNJ submitted separate proposals for each of the four technologies. WCWNJ's proposals identified itself as a "wholly-owned subsidiary created as the operating arm in New Jersey" which would act "the Project's company" with WTI as guarantor. Id. at 16-17. Attached to each proposal, WCWNJ made a separate proposal offering a "mix of technologies with a unified price for the beneficial use of all PVSC biosolids without the burden of a put or pay commitment." Additionally, apart from the four proposals, it submitted a fifth one offering to "accept all bio solids generated by the PVSC for a period of 20 years for service for 1995 fees . . . . without a put or pay." Id. Essentially, it offered PVSC an "opportunity to 'benefit from access to each of [the technologies] through a single contractor." Id.

 Subsequently, PVSC, on April 20, 1995, PVSC "short listed" six stand-alone proposals for their designated technology "to attempt to negotiate a Contract or Contracts." Coles Decl. Ex. O. (copy of PVSC Resolution 20). Specifically, PVSC selected WCWNJ for its Land Application and Chemical Stabilization (BIO*FIX) technologies, EPIC for its Land Application technology, ECDC Environmental, L.C. for its landfill cover, Hydropress Environmental Services, Inc. for Chemical Stabilization technology, and Sludge Management, Inc. for composting. Id. Next, it informed the vendors that it intended to negotiate with all of them.

 Regarding WCWNJ, PVSC requested additional information related to two of the proposals, those dealing with Land Application and BIO*FIX. In two separate responses for each technology on June 8, 1995, WCWNJ indicated that "'the ability to utilize land application or BIO*FIX processing at Wheelabrator's discretion may lower program costs." Id. at Ex. U, V (copies of responses). After a second negotiating session on September 15, 1995, MPI asked WCWNJ to "complete forms for their previously proposed combined BIO*FIX and land application proposal for the 50% and 100% base sludge commitments." Id. at Ex. Z (copy of draft meeting minutes). Wheelabrator returned these forms to PVSC on September 25, 1995. In its cover letter, Wheelabrator explained that "under the combined proposal options both the . . . BIO*FIX Facility and the land application program will be available for utilization of PVSC's biosolids." Id. at Ex. DD (copy of letter). Subsequently, when PVSC requested that all vendors submit revised price proposals, WCWNJ submitted three different ones -- a separate proposal for the Land Application, BIO*FIX, and the "Combined" technologies. Id. at Ex. FF. PVSC never informed the other vendors of its discussions with WCWNJ regarding the proposed technology.

 After the third negotiating session, based upon MPI's recommendation, PVSC decided to continue its discussions with ECDC, Sludge Management, Inc. and WCWNJ and to suspend talks with other vendors. Regarding WCWNJ, MPI recommended that PVSC streamline its negotiations with WCWNJ because:

 
WCWNJ has been participating in the negotiation with two separate proposals with BIO*FIX and Land Application, along with a combined proposal that provides both of these technology options via a single contractual arrangement. During the course of the negotiations, it has become apparent that the WCWNJ's combined proposal is the ...

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