Merseyside Waste Disposal Authority has submitted documents to the High Court in defence of a legal challenge from Covanta relating to the appointment of a rival to a £1.2bn contract.
SITA UK's appointment will mean waste being transported to the North East and has led to calls for a rethink from a number of politicians, including Ellesmere Port and Neston MP Andrew Miller and Liverpool mayor Cllr Joe Anderson.
Covanta Energy submitted a legal challenge to the decision to appoint SITA UK as preferred bidder for the Merseyside Recycling & Waste Authority's contract in July.
MWDA says it selected SITA UK as preferred bidder for its waste resource and recovery contract in April following an "extensive procurement process dialogue between the authority and two bidders – SITA UK and Covanta".
Covanta had proposed an alternative plan in conjunction with Peel Energy which would have led to the construction of an energy from waste plant as part of the Ince Park development at Ellesmere Port, bringing investment and employment opportunities.
MWDA chief executive Carl Beer said: "Following a detailed and fair evaluation process, SITA was selected as the preferred bidder.
"Covanta's bid scored less than SITA UK's winning bid, and in two of five areas of evaluation scored zero and so was found to be fundamentally unacceptable.
"The Covanta bid was rejected having failed to reach minimum scores in those areas.
"In addition, during evaluation, parts of the Covanta bid were seen to present serious risks including financial risks, to which the authority, District Council and Merseyside council tax payers would be exposed.
"These risks were determined to be such that, in public law terms, it would be 'irrational, in breach of fiduciary duties and therefore unlawful' to enter into a contract with Covanta.
"The authority regrets that Covanta has decided to pursue litigation following that decision. MWDA will be vigorously defending the claim brought against it, and today has filed a detailed Defence to the claim brought by Covanta.
"This defence strongly rejects the various allegations which have been made by Covanta, and sets out the significant risks to which Covanta's solution could have given rise for MWDA if it had been taken forward.
"The defence also details the serious concerns which were raised by MWDA prior to Covanta choosing to submit its bid.
"MRWA will continue to defend the action until the case is resolved and intends in due course to recover its legal costs of defending the claim from Covanta.
"The authority continues to work with SITA UK to conclude the Merseyside and Halton Waste Resource and Recovery contract which will provide a sustainable waste resource solution for Merseyside and Halton taxpayers."
Covanta now has the option to respond formally to MRDA's defence papers.