By: Alexander A. Miuccio Published: January 2017

Court Rules on Low Bidder's Rejection for Lack of Work Experience

Public construction contracts in New York are subject to the state’s competitive bidding statutes, which provide that the contract shall be awarded to the “lowest responsible bidder”. Although the law does not define “responsible”, it has been interpreted as meaning that the low bidder has sufficient skill, experience, financial resources, and integrity to perform the contract.

In the recent case of Matter of Metro Paving, LLC v Incorporated Village of Hempstead et. al., the court held that the low bidder was not entitled to a preliminary injunction staying the Village from awarding the contract to the second low bidder. The low bidder failed to show a probability of succeeding on its argument that Village lacked a rational basis for requiring that bidders have at least five years of work experience.  

Background

The Village solicited bids for certain road and drainage work to be performed at various locations.  Although Metro Paving submitted the lowest bid, the Village Board awarded the contract to Roadwork Ahead, Inc., the second lowest bidder, because the Board determined that Metro Paving was not a responsible bidder.  The Village rejected this bid because Metro Paving did not meet the bid requirement that it have at least five years of  work experience with the type of work specified for the project.  Upon notification of the bid rejection, Metro Paving requested an opportunity to be heard on the determination.  The Village denied this request.

Metro Paving commenced an Article 78 proceeding and sought a preliminary injunction preventing the Village from awarding the contract to Roadwork. In support of its request for a preliminary injunction, Metro Paving argued that it had been deprived of due process as a result of the Village’s failure to provide it with an opportunity to be heard as to whether Metro Paving was a responsible bidder. Metro Paving also argued that the five year experience bid requirement in the solicitation to bid was arbitrary and capricious.  It further argued that the Village violated the bidding procedures required under the competitive bidding statue, pointing out that the award of the bid was not on the  published agenda for the Village Board’s meeting, but was rather an “add-on”.  The Court granted the preliminary injunction.   The Village, thereafter, provided Metro Paving with the opportunity  to present proof at a public hearing that it satisfied the five year bid qualifying requirement.  Following the presentation, the Board again determined that Metro Paving did not meet the five year requirement.   

After the Board’s determination, the Village moved to vacate the injunction and Metro Paving cross-moved for its continuance. In support of its cross motion, Metro Paving once again argued that the five year experience requirement was arbitrary, and it added that the Village’s failure to consider documents submitted by Metro Paving at the Village hearing held by the Village subsequent to the preliminary injunction was  arbitrary and capricious.

Decision

The court’s decision was a mixed bag.  It held that the five year requirement had a rational basis because. the “Project includes road work at a variety of different sites, requiring the contractor to implement traffic coordination and to address drainage issues.  Drainage work which requires special expertise is a critical part of the Project.”

The court applied well settled case law related to injunctions, which required that Metro Paving show a probability of success on the merits of its claims, rather than a possibility of success of the merits.  Because the court held that the five year requirement had a rational basis, it found that Metro Paving had no probability of success on the merits sufficient to support an injunction.  The court stated that given the complexity of the project and the narrow timetable for its completion, “the requirement that eligible bidders must have at least five years of relevant experience was rational.”  Accordingly the court vacated the preliminary injunction and permitted the Village to award the contract to Roadwork.

Nevertheless, the court conceded that Metro Paving had a possibility of success on its claims that the Village generally violated bidding requirements under the General Municipal Law, that the five-year work experience is arbitrary per se, and that the award of the bid and the results of the public hearing were arbitrary and capricious, and therefore, “are worthy of consideration and will be fully reviewed by the court in determining these ultimate issues.”

Comment

The equivocal language of the Metro Paving court may give the low bidder some solace with the continuation of the lawsuit challenging the award of the contract to Roadwork, even though it vacated the injunction.  Metro Paving, however, bears a heavy burden in contesting the Village Board’s quasi-judicial determination that a bidder is not “responsible” within the meaning of the competitive bidding statute.  Public agencies have broad discretion in conducting the bidding process and awarding contracts.  Case law establishes that the determination of a public agency responsible for awarding contracts may not be disturbed by the courts unless it can be proven that the decision is irrational, or arrived at through actual impropriety or unfair dealing.  

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