No Garbage Hauling Bids—Capitalism, Monopoly or Overregulation?

New Jersey municipalities have seen a recent trend in the bid processes for garbage hauling. Municipal managers have had to face the fact they receive very few bids for their garbage hauling proposal requests — and they all run more expensive than they have in the past.

West Milford Township, Mahwah Township and Middle Township all had the same issue – one, maybe two, bids per proposal request to take on the towns’ garbage hauling, but all resulting in an exorbitant rate, sometimes double the previous contract. This issue stretches back a number of years and the cause of the price increase is unknown.

One of the managers approached Suburban Disposal, the garbage hauling company that services many of these municipalities asking about the reasoning behind the increase. John Roselle, owner of Suburban Disposal, mentioned things like insurance, fuel and other less significant, but still rising costs as a factor. He also emphasized the effect of New Jersey’s new minimum wage regulations will have on his business. Roselle maintains he will need to pay his employees substantially more than he is now, in order to compete with other companies where work comes without the harsh conditions associated with garbage hauling. As a result, he has had to pass on these increased costs in his bids for services.

The new minimum wage law in New Jersey, signed in March 2019 by Governor Murphy, will raise the minimum wage over the next five years until it hits $15 per hour. As a direct result of the bid price increases, many municipalities, such as Mahwah, are now considering moving garbage hauling to an “in-house” operation.

“We visited Paramus, who has been doing this for five years now,” said Quentin Wiest, Business Administrator for the Township of Mahwah. “They are very happy with their current situation and we were quite impressed. This is something we are seriously considering after our last proposal request resulted in one bidder and a 22% increase in cost.”

Many other townships saw even larger percentage increases from their previous contracts and it’s beginning to become a problem for their already tight budgets.

Gregory Franz of the Township of Edgewater believes that there is something more going on here. All municipalities have seen fuel and processing increases across all types of bids, but not at such drastic percentages. “What is even more troubling is the lack of competition and why are the other haulers not bidding?” said Franz. “Our last bid reached out to half a half dozen residential haulers, they are there in your neighborhood as well, but they are simply not bidding.”

Franz questioned whether New Jersey has overregulated itself to a point where companies like Suburban Disposal have effectively eliminated their competition for state and local contracts. “I just feel strongly something is happening to minimize the competition and I am not convinced municipalities should be in the business,” he said.

Do you have some thoughts on this issue? Email us with your thoughts, and we will continue to discuss this topic in future issues.