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Towing companies sue city over contracts

June 17, 2011

Two local towing companies are suing the city of Indianapolis for awarding contracts to competing services that they claim didn’t meet bid requirements.

Wheeler’s Towing Service Inc. and Indy Towing Service Inc. filed the lawsuit Tuesday in Marion Superior Court.

The contracts, awarded in late May, were for towing services in six city districts. Both Wheeler’s and Indy Towing say they lost two districts to a company that promised to pay the city more than the bid requirement and another district to a company accused of predatory towing.

A request for proposals capped the towing fee at $90 for police-ordered tows that might involve abandoned or impounded vehicles. The city, which receives a portion of the towing fee, typically awards bids to towing companies willing to pay the city the biggest share, according to the complaint.

The city advised bidders that “the minimum acceptable ... franchise fee is $45, however, bidders are strongly encouraged to bid higher,” the suit said.

In exchange for a winning bid, towing companies receive exclusive rights to private tows initiated by the city. Private tows are not subject to franchise fees, and the volume typically exceeds police-ordered tows, so towing companies can afford to pay higher franchise fees for police-ordered tows.

Wheeler’s bid was $89.76—or 24 cents lower than the $90 towing fee set by the city on police-ordered tows.

But localled based Zore’s Inc. agreed to pay $100.01 per tow, meaning the company would lose $10.01 on every police-ordered tow, the complaint alleged.

Of the eight companies that responded to the invitation to bid, only Zore’s bid more than the $90 towing fee, the suit said.

“In essence, Zore’s agreed to give the city a kickback of $10.01 over and above the towing fee that can be charged to the public pursuant to the [invitation to bid],” wrote Linda Pence, the attorney for Wheeler’s and Indy Towing.

But the city argues that the Zore’s bid is acceptable because the $90 limit only applies to what can be charged to the public and does not include the city franchise fee, as the plaintiffs charge.

“This bid process is nothing more than an attempt by the city to get the best possible deal for taxpayers,” said Marc Lotter, the city’s communications director.
 
In another district, Indy Towing’s bid of $80 was beat by Interstate Towing’s bid of $82.56. Indy Towing charges that the city awarded a contract to a “non-responsible bidder” because Interstate Towing has allegedly been involved in “predatory” towing practices.

A pending city proposal cracking down on “predatory” towing comes on the heels of numerous complaints from people who say they've been taken advantage of by opportunistic towtruck operators.

By law, Lotter said the city must accept the highest bid, which led it to choose Interstate Towing.

The contracts take effect July 1. Wheeler’s and Indy Towing are asking for an injunction to delay their execution.

 

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