Summary
In Altschul, the court reviewed Ohio's competitive bidding statutes and held that the statutory provisions confer upon the awarding authorities a certain amount of discretion in determining which bidder is the lowest and best for a particular project.
Summary of this case from Gaylor, Inc. v. Franklin County Bd. of CommissionersOpinion
Decided June 27, 1933.
Municipal corporations — Public contracts — Section 4328, General Code — Lowest dollar bidder may not be "lowest and best bidder" — Discretion in awarding contract not interfered with, when — Elements considered in proper exercise of discretion — Invalidity of bid bond will not vitiate contract, when.
1. Section 4328, General Code, providing that a public works contract shall be let to the "lowest and best bidder", does not require that the contract be let to the lowest dollar bidder, and courts cannot interfere with the exercise of the discretion of the public authorities in awarding such contract, except in cases of fraud or abuse of discretion.
2. The satisfactoriness of previous dealings with the successful bidder and the fact that local labor will be employed may be considered in the proper exercise of discretion, especially where one of the purposes of the public improvement is to afford relief to the unemployed.
3. Where bond for completion of the work has been furnished, the contract has been signed by the successful bidder and the city has delayed signing such contract only by reason of the instant litigation, an irregularity in the bid bond will not necessarily vitiate the contract since its purpose is only to guarantee the entering into such contract and the giving of the bond for the performance of such contract by the successful bidder.
APPEAL: Court of Appeals for Clark county.
Mr. Justin A. Altschul and Mr. George B. Smith, for plaintiff.
Mr. Frank L. Nevius and Messrs. Anderson McKee, for Caffrey, Griffin Bahin, Inc.
Mr. M.E. Spencer, city solicitor, for city of Springfield.
The above cases come into this court on appeal from the judgment of the Court of Common Pleas.
Plaintiff, Justin A. Altschul, as a taxpayer, seeks to enjoin the city of Springfield from entering into contracts with the defendant Caffrey, Griffin Bahin, Inc., for the construction of certain sewers.
The pleadings are somewhat lengthy, but, in brief, the plaintiff in his supplemental and amended petition, in case number 326 of this court, avers that he is a taxpayer of the city of Springfield, Ohio; that said city is a municipal corporation operating under a charter, pursuant to the Home Rule provisions of the Ohio Constitution; that the defendant Ralph E. Garvin is the city manager of said city; that the defendant Caffrey, Griffin Bahin, Inc., is a corporation organized under the laws of Ohio with its principal place of business in the city of Springfield; that plaintiff had made demand upon the solicitor of the city of Springfield to institute this action, which the City Solicitor failed and refused to do; that under the provisions of the General Code of Ohio the city of Springfield has prepared plans and advertised for bids or proposals for the construction of a portion of a sewer in the city of Springfield, Ohio, known as Mill Run Interceptor Sewer, Contract No. 11, Section B; that on April 21, 1933, the city through Ralph E. Garvin, its city manager, and I.N. Clover, director of public works and utilities, opened the bids on said Section B, which had been advertised for, which bids were five in number and submitted by contractors, four of whom were located in the city of Springfield; further, that the five bids based upon the approximate division of work to be done as set forth in the printed proposal and contract form furnished by the city of Springfield for the purpose of determining the lowest bidder and the unit prices for the respective items as set forth in the bids presented are as follows, to wit:
With Shear With Flap Gate Gate Regulator Regulator Engineer's Estimate ............................ $48,181.50 The Cogito Construction Co. .................... $38,662.05 38,712.05 Caffrey, Griffin Bahin, Inc. ................. 42,778.30 42,478.30 McHugh Brothers ................................ 42,931.90 42,931.90 James Doyle and Son ............................ 44,256.33 44,156.33 I.L. Tuttle and A.W. Smith ..................... 47,435.90 47,335.90 On the basis of open cut only for railroad crossings, the comparison of bids would be as follows with the flap gate regulator:Engineer's Estimate ................................. $48,181.50 The Cogito Construction Company ..................... 39,818.30 Caffrey, Griffin Bahin, Inc. ...................... 42,478.30 McHugh Brothers ..................................... 43,374.40 James Doyle and Son ................................. 44,333.33 I.L. Tuttle and A.W. Smith .......................... 47,601.40
Plaintiff in his amended and supplemental petition further claims that on the twenty-fourth day of April, 1933, the said City Manager reported by letter to the City Commission of the city of Springfield the tabulation of the bids so received, stating in such report that "in accordance with the tabulations received it appears that the proposal of Caffrey, Griffin Bahin, Inc., in the amount of $42,478.30 is the lowest and best bid", and recommending to the city commission the award of said contract to said Caffrey, Griffin Bahin, Inc., at its said bid, although said bid was the second lowest of those received on said Section B, as above indicated, and over the protest of The Cogito Construction Company, which company was the lowest dollar bidder. Said City Commission approved said recommendation on the twenty-fourth day of April, 1933, and ordered the defendant, the said City Manager, to enter into a contract with the defendant Caffrey, Griffin Bahin, Inc.; that said Caffrey, Griffin Bahin, Inc., was not the lowest and best bidder of those contractors who filed bids for the work; that one of the contractors, viz., The Cogito Construction Company of Cleveland, complied with all the terms and conditions, and, in accordance with the statutes and ordinances made and provided for such purpose, submitted a lower bid than that furnished by said Caffrey, Griffin Bahin, Inc., on Section B, together with a certified check in the sum of $5,000.
The plaintiff in such supplemental petition then sets forth in detail the qualification of The Cogito Construction Company to perform the work in question, and says its equipment, etc., is superior to that of Caffrey, Griffin Bahin, Inc., etc.
These facts are stated in detail in the amended and supplemental petition, and a comparison is made with the equipment and ability of Caffrey, Griffin Bahin, Inc.
Plaintiff, as such taxpayer, asks that the court enjoin the defendants from entering into or performing said proposed contract, and from doing any act in fulfillment of the terms of said contract, and that such injunction be made permanent.
A demurrer was filed to the petition, which was overruled, and thereupon the city of Springfield, Ralph E. Garvin, its City Manager, and the defendant Caffrey, Griffin Bahin, Inc., filed separate answers in which many of the averments of the petition were denied, and in the answer of the city of Springfield the reasons are detailed for accepting the bid of Caffrey, Griffin Bahin, Inc., and attempting to enter into a contract with said corporation for the construction of the work in question.
To such answers a reply was filed, an issue was thus joined, and the case was submitted to the lower court with the result that the trial court refused to grant the injunction and dismissed the petition of plaintiff.
Similar pleadings were filed in case No. 327 and the same relief sought. The contract involved in case No. 327 relates to Section E of the Mill Run Interceptor Sewer, Contract No. 11, whereas in case No. 326 the contract relates to Section B.
The case has been submitted to this court upon a transcript of the testimony taken in the lower court, plus some additional testimony taken in this court.
Counsel have favored the court with very complete briefs in which portions of the testimony are quoted and in which many pertinent authorities are cited and discussed.
We shall not attempt to quote the testimony in detail, as to do so would require a repetition of a very substantial portion of the testimony, which is impracticable.
The plaintiff is seeking an injunction against the city and its officers. This court has, upon various occasions, announced the well known rule that courts will not grant perpetual injunctions unless the party seeking them has shown a clear right thereto. This court is therefore without authority to grant a perpetual injunction against the city and its officers unless it is clearly shown that the city and its duly appointed officials have abused the discretion which the Legislature has reposed in such officials.
The action arises under Sections 4328, 4329 et seq., General Code. Section 4328 provides for advertisement for bids for work of this nature, and provides that the director of public service enter into a written contract with the lowest and best bidder after having made such advertisement.
The question for determination is whether Caffrey, Griffin Bahin, Inc., is or is not the lowest and best bidder. It is conceded that it is not the low dollar bidder upon the tabulation of bids as made by the city authorities, but it is contended by defendants that they are the lowest and best bidder.
The portion of the amended petition above quoted shows that The Cogito Construction Company tendered the low dollar bid for Section B in the sum of $38,712.05; that Caffrey, Griffin Bahin, Inc., tendered the next lowest dollar bid in the sum of $42,478.30 upon Section B, and that there were three other bidders who tendered higher bids for this contract, the highest of which was over $47,000, the City Engineer's estimate for this work being over $48,000.
The evidence shows that under Section E of the sewer involved in this litigation (Case No. 327), The Cogito Construction Company tendered the lowest dollar bid, in the sum of $17,137.60; that Caffrey, Griffin Bahin, Inc., tendered the next lowest bid in the sum of $17,488.75; that there were three other higher bidders for this work, the highest of which was over $20,000, and that the engineer's estimate was in excess of $22,000.
It must be conceded that when the statute provides for the acceptance of the lowest and best bid the city is not limited to an acceptance of merely the lowest dollar bid.
The statutes of this state as to most public work provided some years ago for the acceptance of only the lowest bid. That was subsequently amended so as to read "lowest and best bid". This amendment clearly indicates that the Legislature recognized that an element other than the mere low dollar bid often enters into the letting of a contract. Hence the amendment providing that the contract should be let to the lowest and best bidder followed.
This amendment, therefore, places in the hands of the city authorities the discretion of determining who under all the circumstances is the lowest and best bidder for the work in question.
This discretion is not vested in the courts and the courts cannot interfere in the exercise of this discretion unless it clearly appears that the city authorities in whom such discretion has been vested are abusing the discretion so vested in them.
There is a long line of decisions in this state to the above effect, but we shall not lengthen this opinion with any elaborate citation of authorities upon that subject.
In the case of Scott, a Taxpayer, v. City of Hamilton, 19 C.D., 652, 7 C.C. (N.S.), 493, the third paragraph of the syllabus, as reported in 19 C.D., reads:
"The provision of Lan. Rev. Stat. 3131 (B. 1536-679) that the public service board `shall make a contract with the lowest and best bidder,' does not require that the award be made to the lowest bidder, and where the action of the board in awarding the contract is free from fraud, its discretion cannot be controlled."
In the case of the State, ex rel. Walton, v. Hermann, et al., Commrs. of Water Works, 63 Ohio St. 440, 59 N.E. 104, our Supreme Court, in the syllabus, announces the rule as follows:
"A statute which confers upon a board of public officers authority to make a contract `with the lowest and best bidder,' confers upon the board a discretion with respect to awarding the contract which can not be controlled by mandamus."
Counsel for plaintiff do not claim that there was any actual fraud upon the part of the city authorities in awarding these contracts to Caffrey, Griffin Bahin, Inc. Even if such claim were made, no testimony has been submitted to us which would warrant a finding of fraud or bad faith upon the part of the city authorities in awarding the contract. It is seriously contended, however, that the city authorities have abused their discretion in awarding this contract to Caffrey, Griffin Bahin, Inc. If bad faith or fraud entered into this transaction then an entirely different proposition would be presented, and courts are always prompt to protect the public as against any contract wherein actual fraud or bad faith appears. We are pleased to state, however, that no such claim is made in this case, nor does the testimony disclose any facts which would justify such a claim.
It is apparent from a reading of the testimony that one of the purposes in constructing the sewers in question at this time was to afford some relief for the unemployed. The City Manager, Mr. Garvin, in his testimony frankly admits that in his opinion greater relief would be secured for local laborers under Caffrey, Griffin Bahin, Inc., than would be secured under The Cogito Company of Cleveland. He explained, however, that this was only one of many elements that entered into the determination of the question as to who was the lowest and best bidder.
Counsel for the defendants frankly admit in their brief that if the City Manager had considered only the local labor conditions and the local poor relief problem he would not have properly exercised the discretion which is vested in him. The City Manager explains in the record in detail the many elements which entered into his finding that Caffrey, Griffin Bahin, Inc., was the lowest and best bidder. Among other things he explains the failure of the lowest dollar bidder to make a satisfactory arrangement with the railroads for the completion of portions of this work, which we consider material under the evidence. He sets forth the fact that Caffrey, Griffin Bahin, Inc., or the different members of this organization, had, during the past, completed something over $200,000 worth of work for the city wherein no litigation or controversey was had other than the usual controversies between a contractor and the city; and he further sets forth that on the known features, that is, items of known quantities, The Cogito Construction Company is the high bidder, while on the indeterminate items it is the low bidder. The testimony of the city manager then describes in detail what are the known and what are the indeterminate items in all contracts, especially in these particular contracts. Applying this explanation to the particular contracts it cannot be determined definitely, until the work is completed, whether the Caffrey, Griffin Bahin, Inc., bid will be the second low dollar bid or the first low dollar bid upon the completed work. To give in detail the reasons that caused the city officials to decide that Caffrey, Griffin Bahin, Inc., was the lowest and best bidder would require a repetition of a large portion of the testimony of Mr. Garvin and others. This is impractical and unnecessary as counsel are familiar with the same.
From a careful study of the record we would not feel justified in finding that the city authorities in making the awards and attempting to enter into the contracts in question had abused the discretion which the Legislature has reposed in them.
Our consideration of the record satisfies us that either Caffrey, Griffin Bahin, Inc., or The Cogito Construction Company of Cleveland, is amply equipped and qualified to perform the work in question.
It is also claimed that the bid bond of Caffrey, Griffin Bahin, Inc., is invalid.
We think the bid of Caffrey, Griffin Bahin, Inc., could not be rejected upon this ground, under the circumstances disclosed by the record, even had the city desired to reject the same. However that may be, this would not be controlling in an injunction proceeding. The purpose of a bid bond is to guarantee the entering into of a contract and the giving of a bond for the performance of the work by the successful bidder. That is the purpose of the bid bond, and the record shows that the contracts in question have been signed by Caffrey, Griffin Bahin, Inc., and that bond for the completion of the work has been furnished by Caffrey, Griffin Bahin, Inc. It is only because of the plaintiff bringing this suit that the city has delayed signing the contracts in question.
From a consideration of the entire evidence we would not feel warranted in issuing an injunction against the city and its duly authorized officers to prevent the execution of these contracts.
The application for injunction in each of the above cases will be denied and the petitions dismissed.
Injunctions denied.
HORNBECK, P.J., and BARNES, J., concur.