An associate in the Delaware office of Eckert Seamans prepared this overview.

A recent Chancery decision provides guidance for attorneys seeking injunctive relief in connection with a bid dispute for a state contract pursuant to 9 Del. C. § 4725.  Charlie’s Waste Services, LLC v. Kent County Levy Court, C.A. No. 2017-0283-JRS (Del. Ch. June 1, 2017).

Background:  After Kent County began soliciting bids for trash collection, Plaintiff Charlie’s Waste Services, LLC (“Charlie’s”) filed an action against the Kent County Levy Court (“County”), Waste Industries of Delaware LLC (“Waste Industries”), and BFI Industries, LLC d/b/a Republic Services of Delmarva (“Republic”) in which Charlie’s sought to enjoin the County from awarding those contracts to Waste Industries or to Republic.  (The Kent County Levy Court is not a real “court,” and is akin to the New Castle County Counsel as a governing body)  Charlie’s contended that it was the lowest bidder and the County was statutorily obligated to award the contract to it pursuant to 9 Del. C. § 4725.

In an attempt to improve trash collection, the County required those companies interested in bidding on contract to show: (1) a history of providing similar equipment and services; (2) a method for addressing customer service issues; (3) bid price and structure; and (4) a bid bond, references, and an insurance policy of $5 million.  After three evaluators who were designated by the County scored the bids and made their recommendations, the Levy Court made the final determination.  The Levy Court overwhelmingly agreed with the evaluators’ recommendations, and the contract was awarded to both Waste Industries and Republic.

Charlie’s filed this action for injunctive relief alleging that the County violated Section 4725 because its bid was lower than Republic’s and Waste Industries’ bids, and the statute requires contracts to be awarded to the “lowest responsible bidder.”

Analysis:  The court began its analysis by observing that “lowest responsible bidder” is not defined in Section 4725.  Therefore, the court stated that the term “lowest responsible bidder” means “lowest bidder unless that bidder is found not responsible, i.e., not qualified to perform the particular work.”  The court also reiterated the broad discretion that is afforded to agency decisions and that any decision made by that agency complies with the law unless it was made arbitrarily, capriciously, or in bad faith.

The court held that the County acted within the confines of Section 4725 because the bid that Charlie’s submitted contained incorrect insurance information; none of the required financial information except a listing of M&T Bank as a reference; and no letters of recommendation or bid bonds as was required.  The court noted in its analysis of the County’s actions that despite these deficiencies, the County decided to consider Charlie’s bid.

The court also observed that each of the County evaluators had concerns regarding the age of Charlie’s equipment as well as its ability to maintain that equipment with its current staff.  Furthermore, the size of this contract was greater than any previous contract that Charlie’s had undertaken and there was concern about its ability to handle such a large undertaking.

Court’s Holding:  The court found that Charlie’s failed to meet its burden of showing that the County acted arbitrarily, capriciously, or in bad faith; and therefore, Charlie’s request for a permanent injunction was denied and judgment was entered in favor of the defendants.