Opinion
Index CV21-0487
03-17-2022
Cutting Edge Group, LLC, Petitioner v. Olympic Regional Development Authority and BAST HATFIELD CONSSTRUCTION, LLC, Respondents.
Reeve Brown, PLLC (Charles A. Reeve, Esq., of counsel), Rochester, New York for Petitioner. Letitia James, Esq., Attorney General of the State of New York (Susan E. Griskonis, Esq., Assistant Attorney General, of counsel), Plattsburgh, New York, and Edward Kowalewski, Esq., Lake Placid, New York for the Respondent Olympic Regional Development Authority. Mastropietro Law Group, PLLC (John P. Mastropietro, Esq., of counsel), Saratoga Springs, New York for Respondent Bast Hatfield Construction, LLC.
Reeve Brown, PLLC (Charles A. Reeve, Esq., of counsel), Rochester, New York for Petitioner.
Letitia James, Esq., Attorney General of the State of New York (Susan E. Griskonis, Esq., Assistant Attorney General, of counsel), Plattsburgh, New York, and Edward Kowalewski, Esq., Lake Placid, New York for the Respondent Olympic Regional Development Authority.
Mastropietro Law Group, PLLC (John P. Mastropietro, Esq., of counsel), Saratoga Springs, New York for Respondent Bast Hatfield Construction, LLC.
RICHARD B. MEYER, J.
Proceeding by petitioner, the Cutting Edge Group, LLC (CEG), pursuant to CPLR article 78 to annul and vacate the award by the respondent Olympic Regional Development Authority (ORDA) of a contract for public work to the respondent Bast Hatfield Construction, LLC (BHC) for the construction of a new 26, 550 square foot administration building.
The Court has considered the pleadings, affirmations, exhibits, and other documents set forth in the NYSCEF document list appended hereto.
In June 2021, ORDA solicited competitive bids for the construction of "a new administrative building of approximately 26, 660 square feet and related site development". As required by Public Authorities Law §2620(2) and State Finance Law §135, the work was subdivided into separate contracts for plumbing (and fire protection), heating, air conditioning and ventilation, and electrical wiring , so as to permit separate bidding and the award of independent contracts to the lowest responsible bidders for each classification of work. In addition, a fourth contract for "general trades" was to be awarded for the building structure and all other work not included in the other three contracts. The bid specifications also included alternates for both the general trades and electrical contracts involving the construction of a covered parking structure . An "alternate" was defined as "[a]n amount proposed by bidders and stated on the Bid Form for certain work defined in the bidding requirements that may be added to or deducted from the base bid amount if Owner decides to accept a corresponding change." The general trades alternate consisted of the parking structure itself, including all foundations, steel framing, metal decking, wall paneling, roofing, trim and bird control netting, while the electrical contract alternate covered lighting fixtures and convenience outlets for that structure. The work under all four contracts was to be administered by a construction manager retained by ORDA, namely, Gilbane Building Company
The electrical contract is referred to as the "E contract" in the bid and contract documents.
The general trades contract is referred to as the "G contract" in the bid and contract documents.
Project Manual, Alternates, Section 01 23 00.
Id., paragraph 1.02, subparagraph A.
Project Manual, Summary of Work - Multiple Prime Contract, Section 0110 02, paragraph 1.02, subparagraph E.
As relevant here, the bid contract documents included provisions establishing qualifications for bidders and the methodology to be used by ORDA in determining the lowest responsible bidder. To be considered "responsible", a bidder was required to show "established experience in performing the Work required by the contract documents" by submitting three references for three "different projects (ORDA, public, or private sector) of similar scope and size to the one identified in this contract" . In determining which bid was the lowest, the instructions to bidders provided that the bid price for the alternate work" shall not be used in combination with the Base Bid to determine low bidder."
Project Manual, Supplementary Instructions to Bidders - Qualifications of Bidders and Mandatory Pre-Award Submittal Requirements, Section 00 22 19, paragraph 25.3.
Id., paragraph 26.1, subparagraph 1 b.
Project Manual, Instructions to Bidders, Document 00 2113, paragraph 15.2.
CEG and BHC each submitted bids for the general trades contract including the covered parking structure alternate. CEG submitted the lowest bid price for the base contract, $7,093,000, and the second lowest bid for the alternate, $375,000, for a total bid price of $7,468,000. BHC submitted the second lowest bid for the base contract, $7,118,500, and the lowest bid for the parking structure alternate, $323,000, for a total bid price of $7,441,500. When the bid prices for the base and alternate work were combined, BHC submitted the lowest bid for the general trades contract, beating CEG by $26,500. ORDA elected to include the parking structure work as part of the general trades contract but proceeded to determine the lowest responsible bid based solely upon the amount of the base bid price without regard to the bid price for the alternate work. According to ORDA's methodology, CEG's bid thus appeared to be the low bid despite the fact that it's bid for the base and alternate work was higher than that of BHC.
Four days following the bid opening on July 16, 2021, CEG submitted a 26-page pre-award submittal package which included, among other information, three references for three projects to prove its qualification as the responsible low bidder, a detailed cost estimate, and resumes of CEG supervisory personnel. The first project consisted of the construction by CEG in 2019 of improvements to the United States Luge sliding facility on ORDA property consisting of erection of two pre-engineered steel additions totaling 6500ñ square feet (increasing the building space to 15, 000ñ square feet), removal of a sliding ramp and construction of two new ramps 230ñ feet in length, relocation of a stormwater retention pond, construction of a retaining wall and a driveway extension, and related site work, at a total cost of $3,585,250. The second project submitted was an $11,069,849 alternate care facility for the United States Army Corps of Engineers in which CEG converted the East Orange Hospital into a 250-bed non-acute COVID-19 patient care facility in 2020. The third project involved the complete structural rehabilitation in 2021 of a 200 year-old wood-framed grain mill building of approximately 9600 square feet at a cost of $2,500,000.
In a letter dated July 23, 2021, ORDA informed CEG that "it is our opinion that all three projects are not of similar scope and size to the Admin Building Project" , questioned the qualifications of CEG's supervisory staff, and requested more detail than was contained in the already submitted detailed cost estimate. CEG responded on July 26, 2021 with an additional 27-page submission which identified two other projects, expansion of ORDA's Gore Mountain existing ski lodge at a cost of $3,340,500 and a $933,000 project in the town of Bolton Landing in 2016 for demolition of an existing building and the construction of a 3000ñ square foot timber-framed building on a concrete foundation with attendant site work. In a letter dated July 28, 2021, ORDA informed CEG that "we have concluded that your firm has not met the mandatory Pre-Award Submittal Requirements... in that you failed to provide a sufficient references for projects of similar scope and size and qualified staff/supervision." ORDA awarded the general trades contract to BHC, and this proceeding was commenced.
Exhibit 8, page 2, of Respondent ORDA's verified answer.
Exhibit 11, pages 1-2, of Respondent ORDA's verified answer.
Public Authorities Law §2620(2) prohibits ORDA from "award[ing] any construction contract except to the lowest bidder who, in its opinion, is qualified to perform the work required and who is responsible and reliable."
The primary goal of statutory interpretation is "to 'ascertain and give effect to the intention of the Legislature'" (Matter of Emigrant Bancorp, Inc. v. Commissioner of Taxation & Fin., 59 A.D.3d 30, 33, 869 N.Y.S.2d 689 [2008], quoting Riley v. County of Broome, 95 N.Y.2d 455, 463, 719 N.Y.S.2d 623, 742 N.E.2d 98 [2000]; accord Matter of DaimlerChrysler Corp. v. Spitzer, 7 N.Y.3d 653, 660, 827 N.Y.S.2d 88, 860 N.E.2d 705 [2006]). "To that end, '[t]he statutory text is the clearest indicator of legislative intent and courts should construe unambiguous language to give effect to its plain meaning'" (Matter of Emigrant Bancorp, Inc. v. Commissioner of Taxation & Fin., 59 A.D.3d at 33, 869 N.Y.S.2d 689, quoting Matter of DaimlerChrysler Corp. v. Spitzer, 7 N.Y.3d at 660, 827 N.Y.S.2d 88, 860 N.E.2d 705). "A court must consider a statute as a whole, reading and construing all parts of an act together to determine legislative intent and, where possible, should harmonize [ ] [all parts of a statute] with each other... and [give] effect and meaning... to the entire statute and every part and word thereof" (Friedman v. Connecticut Gen. Life Ins. Co., 9 N.Y.3d 105, 115, 846 N.Y.S.2d 64, 877 N.E.2d 281 [2007] [internal quotation marks and citations omitted]). (Lewis Family Farm, Inc. v New York State Adirondack Park Agency, 64 A.D.3d 1009, 1013-14, 882 N.Y.S.2d 762, 766-67 [3d Dept., 2009])
The provision in ORDA's notice to bidders stating that the lowest responsible bidder would be determined only by the base bid and without consideration of the price for the alternate work violates the clear language of Public Authorities Law §2620(2). An administrative agency "can only promulgate rules to further the implementation of the law as it exists; they have no authority to create a rule out of harmony with the statute." (Matter of Jones v. Berman, 37 N.Y.2d 42, 53, 371 N.Y.S.2d 422, 332 N.E.2d 303, emphasis added; see also Matter of Trump-Equitable Fifth Avenue Company v. Gliedman, 57 N.Y.2d 588, 457 N.Y.S.2d 466, 443 N.E.2d 940). The general trades contract here was a single contract which included the option for ORDA to include the parking structure alternate work. The parking structure alternate was not a separate contract. The clear and unambiguous language of §2620(2) does not afford any discretion to ORDA to only consider the base bid price in determining the lowest bidder for a construction contract when ORDA has elected to include in that contract not only the base bid work, but the parking structure alternate as well. By electing to award the general trades contract with the parking structure work included, ORDA had no choice but to determine who was the lowest bidder by combining the base bid price and the alternate bid price submitted by each bidder and comparing the total sums so calculated.
There are "two central purposes of New York's competitive bidding statutes, both falling under the rubric of promoting the public interest: (1) protection of the public fisc by obtaining the best work at the lowest possible price; and (2) prevention of favoritism, improvidence, fraud and corruption in the awarding of public contracts." (Matter of New York State Ch., Inc. v New York State Thruway Auth., 88 N.Y.2d 56, 68, 643 N.Y.S.2d 480, 485, 666 N.E.2d 185, 190 [1996]). The fallacy and danger of implementing the contract language employed by ORDA is shown by the bid prices alone. Had ORDA not found CEG to be unqualified, which CEG disputes but need not be decided here, ORDA would have expended $26,500 more money on the general trades contract than would have been spent by awarding the contract to BHC.
Moreover, determining the low bid solely on the base bid without consideration of the alternate bid price in situations where the alternate work will be authorized by the owner creates an opening for possible fraud or collusion. A bidder can submit a substantially low base bid price, even one by which it will incur a loss, in order to assure itself of an award of the contract and make up the loss or generate a substantial profit with a high bid for the alternate work. For instance, in the bid specifications here ORDA revealed that the project estimate for the general trades contract was between $7,400,000 and $7,800,000. A bidder meeting ORDA's requirements of responsibility could have submitted a dishonestly-low base bid less than that of CEG and with an alternate bid price sufficient to bring the total cost of general trades contract above that of any other bidders but less than $7,800,000. ORDA's bid specifications would have permitted the award of that contract.
[T]he laws in this State requiring competitive bidding in the letting of public contracts * * * should... be construed and administered "with sole reference to the public interest". (10 McQuillin, Municipal Corporations §29.29, at 302 [3d rev ed]; see also, Matter of Signacon Controls v. Mulroy, 32 N.Y.2d 410, 413, 345 N.Y.S.2d 527, 298 N.E.2d 670.) This public interest, we have noted, is sought to be promoted by fostering honest competition in the belief that the best work and supplies might thereby be obtained at the lowest possible prices. (Jered Contr. Corp. v. New York City Tr. Auth., supra, 22 N.Y.2d at pp. 192-193, 292 N.Y.S.2d 98, 239 N.E.2d 197; see also, Le Cesse Bros. Contr. v. Town Bd., 62 A.D.2d 28, 31, 403 N.Y.S.2d 950 [Simons, J.], affd. 46 N.Y.2d 960, 415 N.Y.S.2d 413, 388 N.E.2d 737; Matter of Sweet Assoc. v. Gallman, 36 A.D.2d 95, 99, 318 N.Y.S.2d 528, affd. 29 N.Y.2d 902, 328 N.Y.S.2d 857, 279 N.E.2d 602.) (Matter of Conduit and Found. Corp. v Metro. Transp. Auth., 66 N.Y.2d 144, 148, 495 N.Y.S.2d 340, 342-43, 485 N.E.2d 1005, 1007-08 [1985]).
By law ( Public Authorities Law §2620[2]), BHC was the low bidder and ORDA properly awarded the contract to BHC, though for the wrong reason. BHC was the lowest responsible bidder by virtue of the fact that its bid for the general trades contract including the parking structure alternate was less than that submitted by CEG. Although CEG contends that it was wrongly disqualified from being awarded the general trades contract, since BHC was the lawful lowest bidder that issue need not be reached under "the cardinal principle of judicial restraint - if it is not necessary to decide more, it is necessary not to decide more" (PDK Laboratories Inc. v. U.S. DEA, 362 F.3d 786, 799 [ Roberts, J, concurring ]; see, also, People v. Carvajal, 6 N.Y.3d 305, 316, 812 N.Y.S.2d 395, 402, 845 N.E.2d 1225, 1232 ["We are bound, of course, by principles of judicial restraint not to decide questions unnecessary to the disposition of the appeal"]).
For the foregoing reasons the petition is dismissed without costs.
It is so ordered and adjudged.