By: Alexander A. Miuccio Published: February 2011

Court Rules Bidder is Not Responsible

Public construction contracts are subject to New York’s competitive bidding statutes. They provide that the contract shall be awarded to the lowest responsible and responsive bidder.

A “responsible” bidder is a contractor who has the skill, integrity, experience, financial and technical resources to complete the work in a satisfactory manner. A “responsive” bidder is a contractor who has complied with the exact requirements of the bid invitation. In the recent case of Matter of E&A Restoration, Inc. v. Town of North Hempstead, the court determined whether there was a rational basis for the Town’s rejection of a bidder as non-responsible. 

Background 

In May 2010 the Town of North Hempstead solicited bids for the construction of the North Hempstead Community Center. The Town’s bid documents advised prospective bidders that the community center was to be a 60,000 square foot building, certified as platinum under the United States Green Building Council’s (USGBC) Leadership in Energy & Environmental Design (LEED) rating system. The bid documents further advised prospective bidders that the Town would not accept bids from, nor award a contract to, anyone who could not prove to the satisfaction of the Town Board that they had sufficient experience and financial stability to complete the project as designed on time and on budget.

The technical requirements outlined in the project bid documents required the responsive contractors to demonstrate the completion of five similar projects, experience and expertise with the LEED rating system, and that a LEED accredited professional would be engaged to coordinate the LEED requirements of the project. The bid documents also noted that substantial Federal, State and local government grant money was contingent upon the project obtaining LEED platinum certification. 

A number of bids were received in response to the Town’s solicitation, including bids from E&A Restoration, Inc., the second lowest bidder, and Racanelli Construction Co., Inc., the fifth lowest bidder. In reviewing the bids, the Town determined that the first four lowest bidders either had no, or very little, of the required experience. Accordingly, the Town awarded the contract to Racanelli. In response, E&A Restoration sued, looking to have the contract award annulled. 

Decision

The court ruled in favor of the Town. In upholding the contract award, the court relied upon well-established case law, noting that the requirement of awarding public work to the lowest responsible bidder involves considerations of skill, judgment and integrity. The court noted that a municipality may investigate the experience and background of the bidder, and where good reason exists, the low bid may be disapproved or, indeed, all the bids rejected. The court also noted that where a municipality exercises its discretion to reject one or more bids, that decision ought not to be disturbed by the courts unless it is irrational, dishonest or otherwise unlawful.

After E&A Restoration submitted its bid, its staff members were enrolled in a LEED certification class, but were not yet LEED accredited professionals. In addition, E&A had not yet completed a project of similar nature, scope, cost or complexity.

In contrast, Racanelli demonstrated that it had completed five similar projects, including serving as the single-prime general contractor on a $100 million three campus project. The company also employed LEED accredited professionals and worked on LEED certified projects. Since the court determined that the Town’s decision to award the contract to Racanelli, as the experienced contractor, was rational, and there was no evidence to suggest that the award was dishonest, the court denied and dismissed E&A Restoration’s lawsuit. 

Comment 

This case confirms the importance of contractors remaining familiar with industry trends so as to remain commercially competitive. Here, a number of bidders encountered difficulty demonstrating experience and familiarity with the LEED rating system, which has dramatically grown in popularity among owners in recent years. The Town’s bid documents made clear that it was seeking bids from contractors who were not only experienced with projects of this size, but also the LEED rating system. Since experience is a prime consideration when determining whether a bidder is responsible, the Town was entitled to award the contract to the lowest responsible contractor experienced with the type of project involved.

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