MIDDLEBURY — An Addison County waste management company says it has been thrown on hard times and may have to cut its workforce after the Vermont Agency of Natural Resources allegedly violated its own procurement practices in awarding a plum state recycling contract to a rival.
Robin Ingenthron, president of Good Point Recycling in Middlebury, believes the state agency did not follow its own procedures while awarding the contract last month to Casella Waste Management of Rutland.
The ANR is required by law to provide a recycling program for certain electronic wastes — popularly called an e-cycling program — for Vermont households and businesses with fewer than 11 employees. Since the program began, the state has hired a waste management program to collect e-waste — such as computer monitors, printers, hard drives and TVs — from scores of collection sites across the state.
The goal of the program is to keep landfills free of materials that are commonly found in electronics and are dangerous to the environment, such as lead, cadmium and beryllium.
In 2010, the state’s first contract for this program was awarded to the Northeast Resource Recovery Association (NRRA), a nonprofit that serves communities in New England. For its Vermont business, NRRA subcontracted the work to Good Point Recycling.
With that contract set to expire this past Sept. 30, the ANR in March drafted a Request For Proposal, soliciting bids for a new contract by May 1. Each of the five bids submitted to the ANR were vetted using a list of criteria in the Request For Proposal. Using that criteria,NRRA/Good Point received 101 points, one more than Casella, and thus was deemed “conditionally selected … pending contract negotiations” by the ANR, according to a letter ANR sent to Michael Durfor, president of NRRA.
During the summer of 2013, negotiations between the state and NRRA deteriorated. On July 3, the ANR emailed a “final offer” for the contract, and required a response by July 8. NRRA accepted this final offer by the due date, according to Ingenthron, who took part in the contract negotiations. NRRA requested a draft contract to review several times. NRRA records show that the ANR did not send a draft contract until July 23.
“ANR is calendar challenged,” said Ingenthron, who, before coming to Good Point, negotiated state contracts as an official with the Massachusetts Department of Environmental Protection.
David Mears, who is commissioner of the Vermont Department of Environmental Conservation (a division of the ANR), said he thought the ANR acted promptly when it sent NRRA/Good Point a draft contract two weeks after the “final offer” had been accepted.
“I think the staff acted in a timely manner,” he said.
For several weeks after July 23, representatives from the ANR and NRRA negotiated, but could not agree on the details of the contract. On Aug. 13, the ANR requested specific details about NRRA’s proposal. On Aug. 14, NRRA complied, but did not receive a response, Ingenthron recounted.
On Aug. 20, the ANR informed NRRA that it was suspending negotiations and entering talks with a different bidder.
The ANR sent a letter to Vermont recycling collectors Aug. 28 informing them that Casella had been “tentatively selected” for the state standard plan contract.
RAISING CONCERNS
Teresa Kuczynski, president of the Vermont Solid Waste District Managers’ Association, was one of the recipients of this letter.
Kuczynski sent a response Aug. 29 to Cathy Jamieson, the solid waste program manager for the Department of Environmental Conservation, expressing concern about the state’s negotiations for the e-cycles contract.
“We do not feel the RFP/negotiation process and the independent plan approval process has been fair or is in the best interest of the program or the collectors,” Kuczynski said in the letter. “We feel that the negotiating processes for both the state contract and the independent plan are on a trajectory for failure.”
Kuczynski, who is manager of the Addison County Solid Waste District, said the solid waste districts in the state were satisfied with the current contractor, which at that time was NRRA/Good Point. Furthermore, Kuczynski questioned whether a new vendor could be up and running with just a month before the start of the new contract.
“The VSWDMA respectfully requests that ANR declare a moratorium, extend the current contract and reissue the RFP with clarification to the bidders on what the state’s expectations are,” Kuczynski wrote.
Kuczynski said Jamieson told her she had received the letter, but Jamieson did not reply to it. When asked for comment, Jamieson would not acknowledge that she received the letter, and referred questions to DEC Commissioner Mears.
Kimberly Crosby of Casella sent an email Sept. 11 to scores of solid waste district representatives that said, “Casella is pleased to announce that we have been awarded the contract with the State of Vermont E-Cycles Program.”
When reached for comment Wednesday, Crosby said that at that time, Casella had been conditionally awarded the contract, but that negotiations were not yet complete.
The ANR signed an e-cycling contract with Casella on Sept. 24, six days before the NRRA contract expired. The ANR did not formally inform NRRA that it was denying the company the contract, Ingenthron said.
Instead, Ingenthron was informed by NRRA President Durfor, who had heard Casella had won the contract.
Typically, while the ANR awards a contract to one company, other recyclers can apply for ANR recognition under what is called an “independent manufacturers plan.” In this instance, a recycling company would be permitted to be contracted by electronics manufacturers such as Sony, Canon or Apple to recycle e-waste (computer and electronic manufacturers ultimately pay the cost of the e-cycling program).
The same day the ANR inked the deal with Casella for the state standard plan, the ANR denied NRRA/Good Point’s independent plan. NRRA/Good Point had filed the independent plan proposal May 31, before being conditionally selected for the state standard plan.
Ingenthron said the proposal was nearly identical to the one preliminarily approved by the ANR in June. In its rejection, the ANR said in an email to NRRA/Good Point that the proposal “failed to demonstrate that it met regulatory requirements.”
That statement contradicts the ANR’s appraisal of the NRRA/Good Point recycling program earlier this year, when, in a report to the Legislature, the agency said, “the first program year has been a huge success. The agency and the contractor work collaboratively on the implementation of the program.”
Kuczynski said she was surprised to hear that NRRA/Good Point’s application for an independent plan was denied.
“We didn’t understand what could have went wrong with the negotiations, because of how good the program was the last two years,” Kuczynski said. “The procurement process was not transparent and poorly communicated.”
AUTOMATIC PAYMENT
While reading the contract between the state and Casella, Ingenthron said he was surprised to see a clause that would guarantee Casella an automatic payment of $720,000 if an independent plan was approved by the state. During the negotiations between the ANR and NRRA/Good Point, such a fee was never on the table, according to Ingenthron, nor did the original Request For Proposal describe a fee to that effect. No such clause existed in NRRA/Good Point’s 2012-2013 contract with the ANR.
The $720,000 is a flat fee designed to protect the contractor of the state standard plan (Casella) against losing business to an independent plan contractor. Hypothetically, if the ANR approved an independent plan with a third-party hauler, then Casella would receive the same $720,000 whether the third-party hauler collected only one pound of waste or 1 million pounds of waste.
It is unclear when the $720,000 payment became a point of negotiation. Karen Knaebel and Kimberly Lutchko, ANR staffers who participated in the negotiations, did not respond to multiple requests for comment.
Mears, who was not a direct party to the negotiations, said he could not comment on how the $720,000 payment came to be included in the contract.
Casella attorney Shelley Field was not directly involved in negotiations so she couldn’t say exactly when that payment was inserted in the contract. But it was her understanding that Casella brought up such a payment.
Casella Vice President Joe Fusco said it is standard business practice for companies to do all that they can to get the best deal they can get.
“In negotiations, businesses want to protect their interests — from our standpoint, (the opt-out payment) is a fairly standard plan,” he said.
JUDGE ADMONISHES ANR
Believing the state negotiated in bad faith, Ingenthron and NRRA/Good Point filed suit Sept. 30.They sought and were granted a preliminary injunction in Washington County Superior Court, preventing the ANR/Casella e-cycling contract from taking effect as scheduled. In response, the ANR petitioned the court to remove the injunction.
In an opinion issued Oct. 10, Judge Helen Toor granted the ANR’s motion for dismissal on technical grounds, agreeing with the agency’s argument that the case belonged in the environmental rather than civil court.
However, Toor admonished the ANR for failing to respond to inquiries in a timely fashion, and for not formally rejecting the proposal of NRRA, which she refers to as “Northeast.”
“Despite repeated requests from Northeast, ANR did not send Northeast any drafts of a contract until two weeks later,” Toor stated in her opinion.
“ANR never notified Northeast that it was being denied the contract. Nor did ANR ever send Northeast anything in writing after the email suspending negotiations,” Toor said.
Ingenthron said he believed that the state’s successful attempt to move the case to a different court was a stalling tactic.
“I’m concerned ANR’s tactic is to bleed me dry,” he said. “I’m a small business here — it’s probably cost me $15,000-$20,000 in legal fees.”
PROCUREMENT LAW
Ingenthron says the issue is whether the state followed its own procurement rules in negotiating with both NRRA/Good Point and Casella. Procurement refers to the practice of buying goods or services for a government.
In his job with the state of Massachusetts, Ingenthron had plenty of experience in procurement negotiations.
“As a former state official that ran $8 million a year in contracts, it’s all about transparency,” Ingenthron said.
He sent a letter to Debbie Damore, the director of the Office of Purchasing and Contracting, requesting her office to conduct an independent investigation of the bid process for the state standard plan contract.
Damore is also Vermont’s representative to the National Organization of State Procurement Officials, and the president-elect of that organization.
Damore never responded to that letter, Ingenthron said. Calls to Damore by the Independent seeking comment were not returned.
the anr responds
Ingenthron sent a letter Oct. 9 to Sen. Claire Ayer, D-Addison County, and other county representatives, alleging the ANR had not followed its own rules.
In a letter sent to Ayer, Commissioner Mears disputed Ingenthron’s characterization of the ANR’s negotiations with NRRA. Mears described the bids by Casella and NRRA to be very close, with Casella a close second in the negotiations.
“Ultimately, negotiations with Casella resulted in terms more favorable than those proposed by NRRA,” Mears wrote. He argued that while administrative costs would be $30,000 higher with Casella than with NRRA, Casella agreed to provide more compensation and outreach to collection locations.
In its original bid, NRRA/Good Point set administrative costs at $44,000. Casella’s estimate was nearly double that, at $85,143. NRRA/Good Point’s estimates for cost of collection and cost of transportation were lower than Casella’s, while Casella’s total estimated cost to implement the state standard program was slightly less than NRRA/Good Point’s.
Mears also defended the ANR’s decision to reject NRRA/Good Point’s independent plan proposal.
“The (NRRA/Good Point)proposal was incomplete, failed to meet necessary regulatory requirements and did not accomplish the legislative purpose of the E-Cycles program to serve as a ‘functional equivalent’ of the state standard program,” Mears said.
Ingenthron maintains that NRRA/Good Point’s independent plan proposal was nearly identical to its original proposal, that was rated as the most qualified by the ANR, and the 2011-12 program that NRRA/Good Point ran that was called “a huge success” by ANR in a report to the Legislature.
Mears said that ANR attorney Matthew Chapman told him the reason a similar $720,000 payment was not discussed in negotiations with NRRA was because NRRA did not suggest it.
“In a complex contract, many things come up in negotiations that  the Request For Proposal could not have anticipated,” Mears said.
Ingenthron said he believes the ANR broke its own procurement procedures by not including the possibility of an opt-out payment in the original Request for Proposal or informing NRRA/Good Point of the opt-out payment it was negotiating with Casella.
As much of Good Point Recycling’s business involved the state recycling contract, the future of the business is in doubt.
“We have over 40 jobs, over 30 in Addison County that will be lost as a result,” Ingenthron said.