Can a Mississippi waste authority raise its contracted disposal rate above the original CPI cap without rebidding?

Plain-English summary

Three Rivers Solid Waste Management Authority entered a 2018 contract with Waste Connections for landfill operations and construction, after issuing an RFP that allowed annual CPI-based rate adjustments capped at 3%. Post-pandemic inflation pushed the actual CPI well above 3%. Waste Connections asked for an adjustment exceeding the cap. The Authority asked: can we approve without rebidding?

The AG: no.

Section 31-7-13(r) requires governing authorities and agencies to issue an RFP for solid waste collection/disposal services costing more than $75,000. The RFP must contain "terms and conditions relating to price, financial responsibility, technology, legal responsibilities and other relevant factors as are determined by the governing authority or agency to be appropriate for inclusion."

The 2007 Nowak opinion says CPI-based fuel-price adjustment clauses are allowable if contemplated and included in the RFP. So the original 3%-capped CPI clause was fine.

But the 2012 Cardin opinion (same requestor) holds that "in instances in which solid waste collection and disposal services were neither contemplated nor included in the present contract, such services are new or additional and must be advertised pursuant to Section 31-7-13(r)."

An adjustment exceeding the contracted cap is not "contemplated or included in the request for proposals or the contract." It's effectively new procurement. So Section 31-7-13(r) requires a new RFP.

Section 7-5-25 limits AG opinions to questions of state law; the AG won't interpret specific contract provisions, but the legal framework above applies.

What this means for you

For waste authority and county or municipal attorneys

Under the opinion, an annual rate adjustment that exceeds the cap the original RFP set "was not contemplated or included in the request for proposals or the contract," so it cannot be granted by amendment; the Authority "must advertise for a new request for proposals." The opinion reaches that by reading Section 31-7-13(r), which requires that price and "all other relevant factors" be "duly included in the advertisement to elicit proposals," and by treating the above-cap increase as new or additional service, the same way a 2012 opinion to this requestor treated services "neither contemplated nor included in the present contract." A CPI-based adjustment clause itself is allowable, but only if it was determined appropriate and included in the RFP up front (the 2007 Nowak opinion). The opinion does not interpret the specific contract; under Section 7-5-25 the office opines on questions of state law only.

For waste disposal contractors

The opinion means a contractor cannot get an adjustment above the contracted cap by amending the existing agreement. Any increase beyond what the RFP contemplated has to go through a new RFP under Section 31-7-13(r). The opinion does not address force majeure, termination, emergency procurement, or any specific contract clause; it answers only whether the above-cap adjustment can be made without a new RFP.

Common questions

Q: Can a waste authority raise the disposal rate above the contracted cap without rebidding?
A: No. The opinion holds an above-cap adjustment "was not contemplated or included in the request for proposals or the contract," so the Authority "must advertise for a new request for proposals."

Q: Are CPI-based price adjustment clauses allowed at all?
A: Yes, if they are included in the RFP up front. The opinion cites a 2007 opinion (Nowak) that a price adjustment clause based on established consumer price indexes is allowable if the governing authority determines it appropriate and includes it in the request for proposals. The problem here is the requested increase exceeds the cap the RFP set.

Q: What statute requires the new RFP?
A: Section 31-7-13(r), which requires a public request for proposals for solid waste collection and disposal services involving an expenditure of more than $75,000, with price and other relevant factors stated in the advertisement.

Q: Why can't the parties just agree to amend the contract?
A: Because the above-cap price was never advertised for proposals. The opinion treats an increase beyond the contracted cap as new or additional service that "must be advertised pursuant to Section 31-7-13(r)," the same rule a 2012 opinion applied to services not contemplated in the original contract.

Q: Did the AG interpret the Authority's actual contract?
A: No. The opinion says that under Section 7-5-25 the office issues opinions on questions of state law only and "cannot by official opinion interpret the terms or provisions of an agreement or contract."

Background and statutory framework

Mississippi's framework for solid waste authority procurement:

Authority structure:

• Mississippi Regional Solid Waste Management Authority Act (Section 17-17-301 et seq.)
• Regional waste authorities are political subdivisions

Procurement:

• Section 31-7-13(r): RFP required for solid waste collection/disposal services over $75,000
• RFP must contain price, financial responsibility, technology, legal responsibilities, other relevant factors
• Annual price adjustment clauses (CPI-based) allowable if included in original RFP
• Adjustments outside contemplated terms require new procurement

AG limits:

• Section 7-5-25: AG opinions are on state-law questions
• AG does not interpret specific contract provisions

Prior AG opinions:

• MS AG Op., Nowak (Jan. 19, 2007): CPI-based fuel adjustment clauses allowable if in RFP
• MS AG Op., Cardin (Mar. 30, 2012): services not contemplated in original contract require new advertisement under Section 31-7-13(r)

Citations and references

Statutes:

• Miss. Code Ann. § 7-5-25, AG opinion authority
• Miss. Code Ann. § 17-17-301 et seq., Mississippi Regional Solid Waste Management Authority Act
• Miss. Code Ann. § 31-7-13, public purchasing
• Miss. Code Ann. § 31-7-13(r), solid waste RFP requirement

Prior AG opinions cited:

• MS AG Op., Nowak (Jan. 19, 2007), CPI-based fuel adjustment clauses
• MS AG Op., Cardin (Mar. 30, 2012), services not contemplated require new RFP

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2022/08/T.Cardin-August-11-2022-Amendment-of-Waste-Disposal-Contract.pdf

Original opinion text

August 11, 2022

Tommie S. Cardin, Esq.
Attorney, Three Rivers Solid Waste Management Authority
Post Office Box 6010
Ridgeland, Mississippi 39158-6010

Re: Amendment of Waste Disposal Contract

Dear Mr. Cardin:

The Office of the Attorney General has received your request for an official opinion.

Background

According to your request, you represent the Three Rivers Solid Waste Management Authority (the "Authority"), a political subdivision organized and existing under the Mississippi Regional Solid Waste Management Authority Act. Miss. Code Ann. § 17-17-301, et seq. On September 28, 2018, the Authority entered into an agreement with Waste Connections of Mississippi Disposal Services, LLC ("Waste Connections") to provide operations and construction services at the Three Rivers Regional Landfill. Prior to entering into the agreement, the Authority issued a request for proposals in accordance with Section 31-7-13(r). The specifications in the request for proposals for the requested landfill operations and construction services included a provision allowing the contractor to request an annual adjustment to the contracted waste disposal rate based on the Consumer Price Index for Urban Wage Earners (Southeastern), subject to a three percent cap.

Since entering into the agreement with Waste Connections, the Consumer Price Index has experienced significant and unprecedented increases not seen prior to September 28, 2018. As a result, Waste Connections has requested an annual adjustment to the contracted waste disposal rate in excess of the three percent cap contained in its agreement with the Authority.

Question Presented

May the Authority approve Waste Connections' request for an annual adjustment to the contracted waste disposal rate that exceeds the three percent cap in the agreement without advertising for a new request for proposals?

Brief Response

No. The proposed annual adjustment that exceeds the three percent cap was not contemplated by the parties when the original request for proposals was issued or when the parties agreed to the contract. Therefore, the Authority must enter into a new contract after going through the proper procurement procedure.

Applicable Law and Discussion

As an initial matter, pursuant to Section 7-5-25, the Office of the Attorney General is authorized to issue official opinions upon questions of state law only. Thus, we cannot by official opinion interpret the terms or provisions of an agreement or contract.

Section 31-7-13(r) requires the governing authority or agency to issue a public request for proposals for solid waste collection and disposal services that involve an expenditure of more than seventy-five thousand dollars ($75,000.00). Section 31-7-13(r) does not expressly provide for annual adjustment clauses, but it does state: "Any request for proposals when issued shall contain terms and conditions relating to price, financial responsibility, technology, legal responsibilities and other relevant factors as are determined by the governing authority or agency to be appropriate for inclusion; all factors determined relevant by the governing authority or agency or required by this paragraph (r) shall be duly included in the advertisement to elicit proposals." Based on this language in Section 31-7-13, this office opined that a fuel price adjustment clause based on established consumer price indexes is allowable if determined to be appropriate and in the county's best interest. MS AG Op., Nowak at *1 (Jan. 19, 2007). The price adjustment, like all other relevant factors, must be contemplated beforehand and included in the request for proposals. Miss. Code Ann. § 31-7-13(r).

The Nowak opinion, while acknowledging a statutory basis for the type of annual adjustment in the agreement between the Authority and Waste Connections, does not speak to renegotiation, amendment, or modification of an annual adjustment that exceeds the contracted-for cap on a waste disposal rate. Section 31-7-13(r), however, is clear that price and all other relevant factors "shall be duly included in the advertisement to elicit proposals." This office has previously opined that "in instances in which solid waste collection and disposal services were neither contemplated nor included in the present contract, such services are new or additional and must be advertised pursuant to Section 31-7-13(r)." MS AG Op., Cardin at *2 (Mar. 30, 2012). Likewise, the increase in the annual adjustment sought by Waste Connections exceeds the contracted-for cap on fuel adjustment, and thus was not contemplated or included in the request for proposals or the contract. For these reasons, the Authority must advertise for a new request for proposals.

If this office may be of any further assistance to you, please do not hesitate to contact us.

Sincerely,

LYNN FITCH, ATTORNEY GENERAL

By: /s/ Misty Monroe
Misty Monroe
Assistant Attorney General