The recent case of CTS Contracting, Inc. v Town of Cheektowaga, raises the issue of whether a town could engage a second contractor to perform emergency snow removal work without competitive bidding where the town already completed the competitive bidding process and awarded a contract to the first contractor.
The Town of Cheektowaga undertook a competitive bidding process to retain an emergency snow removal contractor, and awarded a contract to CTS Contracting, Inc. CTS used seven subcontractors in the course of carrying out a portion of the work under the contract. In addition to CTS, the Town thereafter engaged another contractor to perform snow removal work.
CTS commenced a lawsuit against the Town, claiming that the Town, by retaining another snow removal contractor, had breached CTS’s contract. The Town moved for summary judgment dismissing the complaint, arguing that: (1) section 103(4) of the General Municipal Law permits municipalities to let contracts without public bidding where there is a public emergency arising out of unforeseen circumstances; (2) CTS’s subcontracting of its contract work to other subcontractors violated the anti-subletting provisions of section 138 of the State Finance Law and section 109 of the General Municipal Law; and (3) CTS’s contract was non-exclusive, and therefore, the Town had the right to engage other contractors to perform the snow removal work.
The lower court denied the Town’s motion for summary judgment and the Town appealed the decision.
The appellate court affirmed the lower court’s decision to deny the Town's motion for summary judgement dismissing the complaint. First, as to the “public emergency” argument, the court held that the public emergency had to be unforeseeable such that the municipality did not have time to advertise for bids for emergency snow removal. The fact that the Town had already solicited competitive bids and awarded a contract to CTS covering the same “emergency” snow removal work demonstrates that the “emergency” work performed by the second contractor was reasonably foreseeable by the Town and, therefore, did not qualify as an exception to the competitive bidding requirement for public work.
As to the Town’s “anti-subletting” argument, the court found that the Town’s knowledge of CTS’s use of subcontractors and its failure to object to the subcontracting indicated that there were questions of fact to be determined at trial as to whether the Town had waived the protection afforded by the anti-subletting statutes. The court pointed out that “a party may not, with full knowledge of all the facts, have the benefit of work done… by a subcontractor without objection, and then urge as an excuse for not paying for the same that the sub-contractor was not consented to by him.” The court also found that notwithstanding the waiver issue, there were factual questions as to whether the use of subcontractors violated the anti-subletting statutes.
Finally, as to the “non-exclusivity” argument, the court followed well settled law that the contract must be interpreted to give effect to, and not nullify, it’s primary purpose. In doing so, the court found that the Town’s awarding a second contract to perform the same work would render CTS’s contract meaningless.
The CTS court applied established case law to hold that a Town could not award a second contract covering the same scope of work as an existing contract. While the Town had argued that CTS did not have the capacity to handle a major snowfall, the Town improperly retained the second contractor to perform all of CTS’s work, and not just the “excess” work that CTS could not handle.