This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its September 2014 decision in Lowndes County v. Deep South Sanitation, LLC., the Supreme Court of Georgia granted an injunction sought by the Lowndes County Board of Commissioners against a sanitation contractor that was operating without a franchise agreement or temporary permit required by a Board ordinance. While the trial court rejected the injunction request on the basis that the imposition of the ordinance denied the contractor’s due process right to continue carrying on business, the Georgia Supreme Court reversed the trial decision and ruled that “regulation by a local government of the collection and disposal of solid waste serves an important and legitimate public purpose” and that the specific ordinance in question “serves the legitimate public purpose of protecting the public health, safety, and welfare.” Furthermore, the Georgia Supreme Court found that granting an exclusive franchise to another supplier for waste collection was a valid exercise of the Board’s statutory power:
The Board elected to enter into an exclusive franchise agreement because it offered the best opportunity to provide curbside collection of solid waste, yard waste, and recycling in a cost-effective and uniform manner to all of its residents in the unincorporated areas, thereby discouraging illegal dumping in the county…
[T]he Ordinance’s authorization of an exclusive franchise is thus reasonably related to its goal of providing complete, uniform, and affordable solid waste collection services to Lowndes County residents living in the unincorporated areas of the county.
The Georgia Supreme Court therefore granted the injunction ordering the contractor to stop operating in contravention of the ordinance. As this case illustrates, a government body’s ability to grant suppliers exclusive contracts for specific services can be subject to complex legal challenges launched by other contractors who are denied commercial opportunities as a result of those exclusive arrangements. Public bodies would therefore be well-served to ensure that they are operating within their powers prior to engaging in exclusive contract awards.
