Waste collection firm Greyhound claims Dublin City Council accepted an "abnormally low" €6.4 million tender for the bin service to its senior citizen flat complexes, Traveller accommodation and certain other designated council residential properties.
Greyhound Household Unlimited Company, which currently provides the service, has brought a legal challenge the awarding of the contract to rival firm Starrus Eco Holdings Ltd, trading as Panda.
The proceedings were admitted to the High Court's fast track commercial division on Monday by Mr Justice Denis McDonald on the application of the council without opposition from Greyhound and with the consent of Panda which is a notice party.
Tender invitations for the new contract, which lasts four years, were invited early last year and put its value at between €10 million and €11 million. In February last, the council decided to award the contract to Panda.
Greyhound brought proceedings seeking orders and declarations quashing the decision and claiming it was invalid because it was reached on foot of manifest error.
It seeks a declaration, if necessary, that the scores awarded to Panda in assessing the tenders were in error and breached the principles of transparency, equal treatment and proportionality.
It says the council failed to assess Greyhound's tender adequately or at all and ought to have identified Panda's price as being an "abnormally low tender price".
It says Panda's price was more than 10pc lower than the next closest bid and was unsustainably low having regard to the anticipated disposal costs in the industry and other costs.
It also claims that 13 Greyhound workers will have to transfer to Panda under the new contract. However, the price submitted by Panda "might be sustainable if (Panda) intends to make the 13 employees redundant", it says.
The council opposes the challenge and says as a result of the Greyhound proceedings, it has been unable to conclude the contract with Panda.
As a result, it brought an application to have the proceedings admitted to the Commercial Court so that it can be dealt with expeditiously.
Mr Justice McDonald put the case back to next month for further directions on how it should proceed and provisionally reserved four days in October for the full hearing.