Opinion
No. HHD-CV-09-5025993-S
August 7, 2009
MEMORANDUM OF DECISION ON MOTIONS TO DISMISS
I. INTRODUCTION
This case involves a broad-based challenge under State and local competitive bidding laws, State antitrust laws, and the Connecticut Constitution to the awarding of contracts for electrical work on two State-financed municipal school construction projects in and for the City of Hartford — one for additions and renovations to the Annie Fisher Magnet School ("the AFMS Project"), and the other for building alterations and a new addition to the Capital Preparatory Magnet School ("the CPMS Project") — under bid specifications requiring successful bidders to perform all work on the projects with union labor under the terms of Project Labor Agreements ("PLAs"). A PLA is a prehire collective bargaining agreement which requires all contractors and subcontractors on a construction project to comply with the terms of all existing collective bargaining agreements with unions representing workers from the trades performing work on the project and requires all project workers to join the unions for their respective trades, to remain members in good standing of such unions, and not to strike while the project is under construction. The PLAs here at issue share these essential features, although they set aside fifteen percent of all work on each project for minority-owned (MBE) and/or women-owned (WBE) business enterprises, which are not bound by the PLAs.
The plaintiffs rely, in particular, upon relevant portions of General Statutes §§ 10-287, 4b-91, 4b-92 and 4a-100, as set forth in ¶¶ 21-24 of their Second Amended Complaint ("Complaint").
The plaintiffs rely, in particular, on relevant portions of General Statutes §§ 35-34 and 35-35.
The plaintiffs rely, in the Fourth and Ninth Counts of their Complaint, on Article I, Sections 4 and 5 of the Connecticut Constitution, insofar as those provisions guarantee their freedoms of speech and association. They rely, in their Fifth and Tenth Counts, on Article I, Sections 1 and 20 of the Connecticut Constitution, insofar as those provisions guarantee their right to equal protection of the law.
"A [PLA] is a `prehire collective bargaining agreement' used by a project owner to set the terms under which a contractor who successfully bids on the project proceeds in all labor relations connected to its subsequent work on the project." Master Builders of Iowa v. Polk County, 653 N.W.2d 382, 388-89 (Iowa 2002). "A PLA is considered a prehire agreement because `it can be negotiated before employees vote on union representation or before the contractor hires any workers' and typically `provides that only contractors and subcontractors who sign [the] prenegotiated agreement with the union can perform project work.'" Id. "PLAs operate under the `construction industry' exception to the N[ational Labor Relations Act, 29 U.S.C. § 158], which allows prehire agreements because of the `short-term nature of employment which makes posthire collective bargaining difficult, the contractor's need for predictable costs and a steady supply of skilled labor, and a long-standing tradition of prehire bargaining in the industry." Id.
The challenged PLAs are described in detail in ¶¶ 28-36 of the plaintiffs' Second Amended Complaint dated May 21, 2009. ("Complaint"). They required the successful bidder on each project "to draw all of its field labor through referrals from a designated trade union, or that its non-union employees must first join a designated trade union, as a prerequisite to executing a contract and performing the subject work." Id., ¶ 28. They also required the successful bidder, inter alia to comply with the following additional terms: to abide by the "Project Work Rules for the Greater Hartford-New Britain Building and Trade Council and its affiliated Unions and the City of Hartford, Hartford Public Schools Construction, Renovations and Additions Program" dated April 14, 2004 ("Project Work Rules"); id., ¶ 30; to ensure that all of its field employees working on each project remain members in good standing of the relevant union during the term of the applicable PLA; id., ¶ 31; to agree to participate in a Labor Management Cooperative Committee and submit to and comply with all rulings promulgated by that Committee and by the PLA's Joint Administrative Council ("JAC"); id., ¶ 32(a); to pay wages and fringe benefits to all workers on the project in accordance with the prevailing union scale; id., ¶ 32(d); to recognize the Building Trades Council and its affiliated local unions as the sole and exclusive bargaining representatives for building trades mechanics and laborers employed on the projects and covered by their respective PLAs; id., ¶ 32(e): to pay any person referred by the union whom it rejected for work on the project, as was its right, for "reporting time" even though the rejected person had performed no work on the project; id., ¶ 32(h); and to subtract union dues from each field employee's pay and send it to the union on a monthly basis.
The plaintiffs in this case are Electrical Contractors, Inc. ("ECI"), a non-union contractor from Hartford whose low bid on each project was rejected by the City due to its refusal to sign and be bound by a PLA, and six of ECI'S individual employees, all non-union electricians duly licensed by the State of Connecticut who do not wish to join, pay dues to or be required to support the political activities of the local electrical workers union, the International Brotherhood of Electrical Workers ("IBEW"), in order to work on either project. The defendants are the City of Hartford ("City"), which imposed the PLA requirements in the bid specifications for the two projects and enforced those requirements against ECI by rejecting its low bids for refusing to agree to them; Morganti Group, Inc. ("Morganti") and Downes Construction Company, LLC ("Downes"), the City's construction managers on the AFMS and CPMS Projects, respectively; Custom Electric Company. Inc. ("Custom Electric"), a union electrical contractor which was ultimately awarded separate contracts to perform the electrical work on the two projects after ECI's low bids were rejected; and the State of Connecticut Department of Education ("DOE") and its Commissioner, Mark K. McQuillin (collectively, "the State defendants"), which allegedly approved the challenged contracts on behalf of the State, which is providing 90% of the financing for the projects.
The individual plaintiffs are Jose L. Gonzalez, Jose G. Maldonado, Dan Czyzewski, Bradley Wheaton, Craig Busca and Sean Smith.
In their Complaint, the plaintiffs seek several types of declaratory, injunctive and other extraordinary relief in connection with the projects here at issue based upon the common underlying claim that the City's imposition of mandatory PLAs upon successful bidders on those and similar State-financed construction projects is illegal. In particular, they seek: (1) declaratory judgments that the imposition of mandatory PLAs, by or on behalf of the City, on projects approved and funded by the State defendants is illegal and improper insofar as PLAs restrict the performance of work on the projects, in whole or in part, to union member employees, union-referred employees, union contractors or PLA signatory contractors; (2) a declaratory judgment that the imposition of a mandatory PLA, by or on behalf of a public owner, that restricts the performance of work to union member employees, union-referred employees, union contractors or PLA signatory contractors for any municipal school construction project that is funded, in whole or in part, with State funds, per General Statutes § 10-287, is illegal; (3) declaratory judgments that ECI's bids on the two projects were the lowest qualified responsible bids, and thus that the City's rejection of those bids, based upon ECI's refusal to agree to PLAs, was illegal and improper; (4) writs of mandamus ordering the City to award and execute contracts for the electrical work on each of the two projects to ECI; (5) an injunction ordering the City and its construction managers not to execute any contract to perform electrical work on either of the two projects with any other contractor than ECI; (6) an injunction ordering the State defendants not to provide any funds in furtherance of the work on the two projects by any other electrical contractor than ECI; (7) a writ of mandamus ordering the State defendants to withhold funds in furtherance of the work on the two projects by any electrical contractor other than ECI; and (8) a writ of mandamus ordering the State defendants to withhold any funds in furtherance of work performed on any school construction project that is funded, in whole or in part, with State funds, per General Statutes § 10-287, for which a mandatory PLA of the type here at issue has been imposed. In addition to the foregoing, the plaintiffs seek the following types of monetary relief: (1) from the defendant City, damages under General Statutes § 35-34 for ECI's lost profits and bid preparation costs on the two projects and for the individual plaintiffs' lost wages and benefits, plus treble damages, reasonable attorneys fees and costs under General Statutes § 35-35; and (2) from all but the State defendants, such other monetary relief as is allowable by law, including but not limited to lost profits, bid preparation costs, reasonable attorneys fees and costs.
After this case was filed in this Court, the defendants successfully petitioned for its removal to the United States District Court so that the federal constitutional claims therein asserted by the plaintiffs could be adjudicated in a federal forum. Upon its removal, the case was assigned to the Honorable Stefan Underhill, before whom the parties presented oral arguments after submitting extensive briefs on comprehensive motions to dismiss all counts of the plaintiffs' then-operative First Amended Complaint. At the conclusion of oral argument, Judge Underhill dismissed all of the plaintiffs' federal claims, declined to exercise jurisdiction over their pendent State claims, and ordered that the case be remanded to this Court for further proceedings. Left undecided in this process, with the express intention that this Court should decide them on remand, were the defendants' jurisdictional challenges to the plaintiffs' State law claims.
After the case was remanded, the Court met with counsel to establish a procedure for identifying those jurisdictional challenges that remained to be adjudicated, claiming such challenges for a hearing, and filing supplemental briefs thereon. Upon receipt of the parties' claims for hearing and supplemental briefs, which incorporated by reference all relevant portions of the briefs they had previously filed in federal court, the Court heard oral argument on all challenges claimed for hearing on July 3, 2009. For the purpose of that hearing, the parties agreed that all documents and materials submitted by any party could be considered parts of the evidentiary record upon which to decide the contested issues presented on the pending motions.
The defendants, in their motions, have challenged this Court's subject-matter jurisdiction over the plaintiffs' State law claims on three separate grounds. First, they claim that the plaintiffs lack standing to bring a bid protest under settled principles of Connecticut common law, as most recently applied by our Supreme Court in Connecticut Association of Building Contractors v. Hartford, 251 Conn. 169 (1999) ("ABC"). There, note the defendants, the Court affirmed the dismissal for lack of standing of an essentially identical lawsuit against the City by the named plaintiff, a trade association representing non-union general contractors, and two nonunion subcontractors including ECI, challenging the legality of the City's decision to impose, as it has in this case, a bid specification requiring all successful bidders on a local public works project to agree to perform all work on the project with union labor under a PLA. Second, the State defendants argue that the plaintiffs' claims against them are barred by the doctrine of sovereign immunity because such claims do not rest upon allegations which, if proved, would establish that their conduct in this case was clearly in excess of their statutory authority. Third, all defendants join in claiming that the plaintiffs' general challenge to the use of PLAs in State-funded municipal school construction projects is pre-empted by federal labor law, which has long approved of their use on public construction projects.
For the following reasons, this Court agrees with the defendants that the plaintiffs lack standing to prosecute this action, and thus that the action must be dismissed for lack of subject-matter jurisdiction.
II ANALYSIS
A plaintiff has standing to file a lawsuit when it makes a colorable claim that it has suffered or is likely to suffer direct injury, in a personal or representative capacity, as a result of a defendant's alleged wrongdoing. Maloney v. Pac, 183 Conn. 313, 320-21 (1981). The standing requirement is not a technical bar to the assertion of legitimate claims, but a guaranty that no claim will be litigated except by parties who have genuinely adverse interests in its outcome. Parties with adverse interests in the outcome of a controversy can typically be counted on to represent their opposing interests with sufficient purpose, care and vigor to ensure that the court's ultimate resolution of the controversy will fairly take account of all relevant considerations that justly bear upon it. Id. (noting that a party's "personal stake in the outcome of the controversy . . . provides the requisite assurance of `concrete adverseness' and `diligent advocacy'" to give him standing to sue).
Lack of standing to file and prosecute a lawsuit implicates the court's subject-matter jurisdiction. St. George v. Gordon, 264 Conn. 538, 545 (2003). Hence, a plaintiff's standing may properly be challenged on a motion to dismiss for lack of subject-matter jurisdiction under Practice Book §§ 10-30 and 10-31. Id.
Practice Book § 10-30 provides, in relevant part, that "[a]ny defendant, wishing to contest the court's jurisdiction, may do so even after having entered a general appearance, but must do so by filing a motion to dismiss within thirty days of the filing of an appearance." Practice Book § 10-31(a), in turn, provides that "[t]he motion to dismiss shall be used to assert (1) lack of jurisdiction over the subject matter[.] . . . This motion shall always be filed with a supporting memorandum of law, and where appropriate, with supporting affidavits as to facts not apparent on the record."
In this case, the defendants have challenged the plaintiffs' standing to bring this action under the authority of several common-law cases which have long established as a general rule that unsuccessful bidders under municipal competitive bidding laws have no standing to challenge the operation or results of the competitive bidding process, including the rejection of their own bids or the awarding of contracts to other bidders. See, e.g., Austin v. Housing Authority, 143 Conn. 338, 345 (1956); Joseph Rugo, Inc. v. Henson, 148 Conn. 430, 435 (1961); John J. Brennan Construction Corporation v. Shelton, 187 Conn. 695, 702 (1982); Spiniello Const. Co. v. Manchester, 189 Conn. 539, 544 (1983); Ardinare Constr. Co., Inc. v. Freedman, 191 Conn. 497, 505 (1983). This general rule is based on the well established principle that municipal competitive bidding laws are enacted to protect the public interest in having public works projects completed in a timely, cost-effective manner, by competent contractors who are selected without favoritism, fraud or corruption, not the private interests of individual contractors who submit bids on those projects. Allowing unsuccessful bidders to challenge the competitive bidding process in their own interest would not only fail to promote the distinctly public purpose of competitive bidding laws, but would frustrate that purpose by miring public authorities in potentially costly, time-consuming litigation that risks both increasing the costs and delaying the completion of projects.
When our Supreme Court first recognized this principle in Austin v. Housing Authority, supra, 143 Conn. at 345, it stated that "the purpose of [competitive bidding laws is to] invit[e] competition, to guard against favoritism, improvidence, extravagance, fraud and corruption in the awarding of municipal contracts, and to secure the best work or supplies at the lowest price practicable . . . for the benefit of property holders and taxpayers, and not for the benefit or enrichment of bidders[.]") So stating, the Court declared that such laws "should be so construed and administered as to accomplish such purpose fairly and reasonably with sole reference to the public interest." (Quoting 10 McQuillin, Municipal Corporations (3d Ed.) § 29.29.) On that basis, it ruled that the unsuccessful bidder in the case before it had "no cause of action predicated on the invitation to bid. If it has any justiciable rights, they must arise by virtue of the statute. The better authority holds that lowest responsible bidder statutes are enacted solely for the benefit of the public and in no sense create any rights in those who submit bids." Id. at 349. Ever since Austin, our courts have consistently enforced the general rule that unsuccessful bidders have no standing to pursue legal challenges to the competitive bidding process in furtherance of their own interests.
Notwithstanding the logic of that rule, however, our courts have also recognized that judicial review of the competitive bidding process may sometimes be necessary, despite the inevitable cost and delay arising from it, to protect the public interest in rooting out the most pernicious evils that that process was designed to eliminate. Therefore, with the goal of balancing these competing public concerns — preserving the benefits of competitive bidding process through judicial review without incurring undue cost and delay in the litigation process itself — our courts have created a limited exception to the general rule under which unsuccessful bidders, as private attorneys general, may challenge specific aspects of the competitive bidding process which are claimed to undermine the object and integrity of that process.
When it first recognized this exception, our Supreme Court declared that its power of review over the conduct of local bidding officials would not extend to practices marked only by arbitrariness, capriciousness or similar conduct. Such conduct, it declared, was "immaterial" to concerns that prompted the adoption of the competitive bidding statutes, for under such statutes municipalities retain the authority to reject all bids. Joseph Rugo, Inc. v. Henson, supra, 148 Conn. at 434. Instead, it held that the general rule denying standing to unsuccessful bidders to challenge the bidding practices of local officials would only be
relaxed . . . [in cases] where fraud or corruption has influenced the conduct of the officials . . .
All that is required of officials is that they observe good faith and accord all bidders just consideration, thus avoiding favoritism and corruption. An honest exercise of discretion will generally not be disturbed. Courts will only intervene to prevent the rejection of a bid when the obvious purpose of the rejection is to defeat the object and integrity of competitive bidding.
Joseph Rugo, Inc. v. Henson, supra, 148 Conn. at 435. (Emphasis added.)
Although this initial formulation of the public-interest exception expressly limited the substantive scope of public-interest challenges to conduct engaged in for "the obvious purpose . . . [of] defeat[ing] the object and integrity of competitive bidding"; id.; the Court's establishment of a scienter requirement for such challengeable conduct was oddly inconsistent with its less-than-absolute preliminary declaration that "[a]n honest exercise of discretion will generally not be disturbed." Id. (Emphasis added.) Left open by this inconsistency was an obvious question: when, if at all, might an "honest exercise of discretion" be challenged even though it was made in good faith, without favoritism, fraud or corruption?
This question was later answered in the case of Spiniello Construction Co. v. Manchester, supra, 189 Conn. at 544, where the Supreme Court upheld the challenge of an unsuccessful bidder to the awarding of two municipal contracts to another bidder who, acting on inside information from town officials which had never been shared with other bidders, had submitted a combined, discounted, bid on the two contracts instead of a separate bid on each. Although the trial court found that town officials had acted honestly and in good faith in accepting the combined bid and awarding the challenged contracts to the contractor who had submitted it, it nonetheless concluded that the officials' actions were unlawful and properly subject to challenge by the plaintiff, an unsuccessful bidder on both projects, under the following reformulation of the public-interest exception to the general rule denying standing to unsuccessful bidders:
Where the municipality "reserves the right to reject any and all bids, no bidder can claim any contractual rights until he has been awarded the contract." 10 McQuillin, supra, 29.77. An honest exercise of discretion by a municipality which has reserved such a right will not be disturbed by the courts so long as its officials observe good faith and accord all bidders just consideration in accordance with the purpose of competitive bidding. Courts will intervene to prevent the exercise of that discretion to deny a bid, therefore, only where fraud, corruption or favoritism has influenced the conduct of the bidding officials or when the very object and integrity of the competitive bidding process is defeated by the conduct of municipal officials. John J. Brennan Construction Corporation, Inc. v. Shelton, supra, 703; Joseph Rugo, Inc. v. Henson, 148 Conn. 430, 434, 171 A.2d 409 (1961); 10 McQuillin, supra.
Spiniello Construction. Co. v. Manchester, supra, 189 Conn. at 544. (Emphasis added.)
So reformulated, the public-interest exception established two alternative bases upon which unsuccessful bidders may challenge the competitive bidding process. The first is that "fraud, corruption or favoritism has influenced the conduct of the bidding officials." Plainly, this alternative applies to situations of the sorts described in the Joseph Rugo, Inc. decision, to wit: those in which "the obvious purpose" of the officials' challenged conduct is "to defeat the object and integrity of competitive bidding." Id. at 434. The second is that "the very object and integrity of the competitive bidding process [has been] defeated by the conduct of municipal officials." Spiniello Construction Co. v. Manchester, supra, 189 Conn. at 544. Although conduct subject to challenge on this basis may involve a purpose to defeat the object and integrity of competitive bidding process, that is not necessarily the case, as the Spiniello Court proceeded to made clear.
Turning to the facts of the case before it, the Spiniello Court examined the town officials' challenged conduct under its reformulated test for standing as follows:
Although Manchester reserved the right to reject any or all bids, it violated its bidding instructions by accepting a conditional combined discount bid based on an oral addendum known only to Manchester and [the successful bidder]. No written notice of the interpretation of a bidding instruction was mailed to prospective bidders, including the plaintiff. By permitting [the successful bidder] to submit a conditional bid when other bidders were not afforded the same opportunity, Manchester precluded the other bidders from competing on equal terms. It defeated the object and integrity of the competitive bidding by unintentionally exhibiting favoritism to [the successful bidder]. While Manchester's actions were taken in good faith in an effort to obtain the best contract for its residents, judicial relief is warranted where municipal action amounts to an erosion on the integrity of the bidding statute. 10 McQuillin, supra, 29.83. It is entirely possible that Manchester would have benefitted financially if the other bidders had the same opportunity to submit a conditional or combined bid. Under the circumstances of this case the plaintiff had standing and there was ample support for the court's conclusion that the initial bidding was invalid.
Spiniello Construction Co. v. Manchester, supra, 189 Conn. at 544-45.
The lessons of Spiniello are twofold. First, an unsuccessful bidder has standing to bring a public-interest challenge to alleged conduct by bidding officials on the ground that it undermined the object and integrity of the competitive bidding process even if he does not plead and cannot prove that the officials engaged in such conduct for the purpose, obvious or otherwise, of causing that result. Such a challenge may obviously be directed against official conduct not resulting from or intended to promote either fraud, corruption or favoritism. The second is that official conduct may properly be found to undermine the object and integrity of the competitive bidding process when it subjects some bidders to different rules or procedures than others, and thus precludes all bidders from competing on equal terms. Examples of such conduct, as in Spiniello itself, include giving useful information to some bidders but not to others, or subjecting some bidders to different rules for the submission and consideration of their bids than others are subjected to.
An illuminating application of the Spiniello Court's analysis came later that year in the case of Ardmare Construction. Co. v. Freedman, supra, 191 Conn. 497. There, the Supreme Court, on its own motion, dismissed for lack of standing an unsuccessful bidder's appeal from the denial of its challenge to a bidding official's rejection of its low bid based on the failure of the bidder's president to submit the bid over his original signature, instead of a rubber-stamped facsimile thereof. The evidence before the Court made it clear that the bidding official's employment of this criterion for determining the responsiveness of bids was not divulged to any of the bidders before the bids were submitted under seal and opened, and thus that that criterion was evenhandedly applied to all bidders. Under those circumstances, the Court rejected as follows the plaintiff's substantive standing to bring a public-interest challenge to the use of that criterion as a basis for reviewing and rejecting bids:
We are unable to agree with the trial court that the commissioner's actions so undermined the competitive bidding process as to fall within the exception recognized in Spiniello. There was no allegation of fraud or favoritism, nor was either proven. The plaintiff attempted to establish only that the practice was so arbitrary as to undermine the bidding statute. This case, however, involves none of the factors we considered significant in Spiniello. There, the municipality had imparted information to one bidder that it had not provided other bidders. See Spiniello Construction Co. v. Manchester, supra, 542. Thus, parity of information no longer existed among the bidders as envisioned by the statute. In this case, however, the commissioner had not informed any bidder of its [original signature] requirement. The construction company which received the contract award was not given any special advantage over the plaintiff in submitting its bid, nor was it privy to any secret information. Noticeably absent in this case are elements traditionally thought to undermine the competitive bidding process. The commissioner did not apply its requirement inconsistently or in a discriminatory fashion. Nor was there any proof that the commissioner was acting in bad faith. In short, the commissioner made a good faith interpretation of the competitive bidding statute requirements, and applied it in a consistent fashion. The plaintiff was therefore without standing to challenge the award of the contract.
Ardmare Construction Co. v. Freedman, supra, 191 Conn. at 505-06. (Emphasis added.)
So written, the Ardmare decision confirms the lesson of Spiniello that unsuccessful bidders may bring public-interest challenges to conduct by officials claimed to undermine the competitive bidding process on either of two alternative bases: first, that they acted in a discriminatory fashion, or otherwise in bad faith in administering the bidding process or in accepting or awarding the bids, as by engaging in fraud or favoritism, or second, that they applied the bidding requirements so inconsistently to different bidders as not to give them fair and evenhanded consideration in the acceptance and/or evaluation of their bids. Without alleging either such preferential or differential treatment of bidders by bidding officials, an unsuccessful bidder has no standing to bring a public-interest challenge to their conduct.
A final important development in the evolution of the common law of standing to bring public-interest challenges to the competitive bidding process before the ABC came in the case of Unisys Corporation v. Department of Labor, 220 Conn. 689 (1991). There, our Supreme Court held that the plaintiff, a seller of non-IBM computer equipment and software which claimed that it had not bid in response to a State request for proposals ("RFP") because the RFP had arbitrarily required all bidders to supply only IBM-brand computer equipment and software, could establish its standing to challenge the RFP's single-source specification if it could prove, at an evidentiary hearing on the motion to dismiss, that it would have bid but for the challenged specification and that its equipment and software was equivalent to that specified in the RFP.
In so ruling, the Court determined at the outset that the plaintiff's interest in bringing this challenge, as a non-bidder who claimed to have been precluded from submitting a responsive bid by the challenged specification, was "equivalent to that of one who had submitted a bid." Id. at 695. The Court observed, moreover, that the substantive basis for the plaintiff's claim of standing — if it proved at the hearing that, but for the single-source specification, it would have submitted a responsive bid to supply equivalent equipment and software — would be either "that the restrictions of the single source specification undermined the object and integrity of the competitive bidding process, or that there was proof of favoritism." Id. The factual basis for those claims was that the specifications had been drawn in such a way as to insure that the contract was awarded to one manufacturer, IBM, not for any reason in the public interest. Id. at 696. If such actions were intentional, as the plaintiff claimed that they were, they would constitute illegal acts of favoritism. Even if they were not intentional, however, they could still be found to constitute acts undermining the object and integrity of the collective bidding process, particularly if, as alleged, IBM had consulted with the State in drafting the bid specifications, and had thereby learned relevant information about the RFPs that was not provided to other vendors. Id. at 691.
Under the foregoing authorities, the test for determining a party's standing to bring a public-interest challenge to the competitive bidding process is as follows: (1) whether the party bid on the challenged project or, if he did not, whether the challenged conduct by bidding officials is the only reason why he failed to submit a responsive bid when he otherwise would and could have done so, and (2) whether the party has a colorable claim that the challenged conduct constituted fraud, corruption, favoritism or an act undermining the object and integrity of the public bidding process. The burden of establishing a party's standing to sue, in this private attorney general capacity as in all others, is on the party claiming standing.
In this case, ECI rightly claims that it was either a disappointed bidder for the electrical work on the projects here at issue or, if its bids were properly disqualified because they were conditional, that it would have submitted a proper, unconditional bid on each project were it not for the assertedly unlawful bid specification requiring it to agree to sign and be bound by a PLA. The essential question here presented on the issue of its standing to bring the present challenge is thus whether or not it has presented a colorable claim of fraud, corruption, favoritism or other acts undermining the object and integrity of the public bidding process. The six individual plaintiffs, by contrast, neither bid on either project nor could have done so, for they are not prequalified electrical contractors. They thus lack procedural standing to bring and prosecute the instant challenge.
ECI claims that it has made two viable substantive claims of standing to mount a public-interest challenge the defendant City's inclusion of a mandatory PLA requirement in the bid specifications for work on the projects here at issue. First, it claims that since the inevitable effect of imposing the mandatory PLA requirement was known and intended to be the practical exclusion of fully qualified non-union electrical contractors from competing successfully in the competitive bidding process, the actual and intended result of its imposition was to introduce blatant favoritism for union contractors and their employees. Second, they insist that the imposition of the mandatory PLA requirement in the bid specifications undermined the object and integrity of the competitive bidding process by conditioning the awarding of municipal school construction contracts on an improper basis not permitted in the public interest by the competitive bidding statutes, to wit: the bidder's status as a union contractor. The competitive bidding statutes, it insists, have occupied the field with respect to a bidders' qualifications to perform work on large public works projects, establishing definitively, at least since 2003, that all bidders must be "prequalified" to perform such work under the provisions of General Statutes § 4a-100. Because neither that statute nor any other statute governing the competitive bidding process in Connecticut mentions a bidder's status as a union contractor as a proper basis for determining its eligibility for public works contracts, the City's use of that factor to determine eligibility for contracts to perform work on these projects, allegedly by requiring successful bidders on the projects to sign and be bound by PLAs, assertedly undermines the object and integrity of the competitive bidding process.
The defendants, as previously noted, contest the plaintiffs' claims under the authority of the ABC decision, which our Supreme Court issued in 1999. There, they argue, in a case to which both ECI and the City were parties, the Court determined that municipal bidding officials may properly require successful bidders on public works projects to be bound by a PLA whenever they determine in good faith, in the sound exercise of their discretion, that such a contract requirement is in the public interest as embodied in the competitive bidding statutes. Here, they claim, the City demonstrably acted in good faith when it decided to impose the challenged requirements because, in so doing, it was following the recommendation of Fluor NE, Inc. ("Fluor"), the Labor Relations Coordinator on its billion-dollar Public School Construction, Renovation and Additions Project ("School Construction Program").
Fluor made its original recommendation to the City that it proceed with its School Construction Program under PLAs on the basis of a detailed Area Labor Market Analysis ("ALMA") which it prepared at the outset of that Program in 2003. In the ALMA, Fluor determined that several upcoming and ongoing construction projects in the State that could affect labor staffing for the Program, which itself would involve twenty-seven separate projects, including those here at issue, over its projected ten-to twelve-year life. Among the other projects that would strain the supply of labor were Adriaen's Landing, further development of the New Haven Public Schools, Rentschler Field, Northland Development, construction of a local pharmaceutical company, the Millstone Nuclear Plant, two expansions at Foxwoods Casino, the Middletown Powerhouse, Cigna World Headquarters and the Hartford Civic Center. Construction staffing was thus a significant basis for proposing adoption of a PLA requirement for the Program.
Additional factors also favored proceeding under PLAs. Prominent among them were the political nature of the work and the likelihood of labor unrest, issues or work quality and safety, and the positive impact PLAs would have upon construction scheduling. (ALMA at 26-27). With those factors in mind, the Hartford School Building Committee ("HSBC") agreed with Fluor's initial recommendation to adopt a PLA for the first five projects in the School Construction Program in order to avoid labor disruption and maintain a steady supply of skilled workers, which would help reduce overall costs of the Program. Left open by that decision was the possibility of later amending the PLA to include other projects in the Program as they came on line.
In 2008, as a result of its proven success in facilitating the completion of work on the first five projects under the Program, the HSBC decided to require its use as well on the projects here at issue.
The plaintiffs reject the defendants' analysis of ABC for several reasons. First, they insist that the dispositive issue in that case was whether any of the plaintiffs before it or any party represented by them — the named plaintiff, a trade association of general contractors, any of its general contractor members, or either of two subcontractor plaintiffs, including ECI — either had submitted or could have submitted a bid on the project there at issue. Because none of the general contractors had submitted such a bid and neither ECI nor the other plaintiff subcontractor had the right to do so, the plaintiffs were found to lack procedural standing to challenge the PLA requirement regardless of the merits of their substantive claim of standing. Second, they argue that even if the ABC Court can be found to have addressed the merits of the plaintiffs' substantive claim of standing, the Court's conclusion that the PLA at issue neither fostered favoritism for union contractors and their employees nor resulted in undermining the object or integrity of the competitive bidding process should be disregarded because its legal analysis was not based upon a detailed analysis of our State's controlling competitive bidding statutes. Third, the plaintiffs argue that even if the ABC Court can be found to have analyzed the controlling statutes, the State's competitive bidding laws have since been clarified on this subject by the passage of the State's bidder prequalification statute, now codified at General Statutes § 4a-100. That statute, they claim, leaves no room for public officials to condition the awarding of contracts on large public construction projects upon the successful bidder's willingness to enter into and perform work on the projects under PLAs. Fourth and finally, the plaintiffs argue that even if PLAs may sometimes be used on State-financed municipal school construction projects, they cannot be so used where, as assertedly here, officials have no good-faith basis to believe that their use will serve the public interest in a manner consistent with the purposes of the competitive bidding laws. The plaintiffs concede that if their analysis of the ABC case is mistaken, they have no standing to prosecute their pending claims.
The plaintiffs are plainly correct that in ABC, our Supreme Court ruled initially that none of the plaintiffs, all non-bidders on the challenged project, had procedural standing to challenge the City's PLA requirement. ECI and the other plaintiff subcontractor could not have bid on the project because they were not general contractors. None of the trade association's general contractor members, moreover, had made a showing under Unisys that it would have submitted a responsive bid were it not for the PLA requirement. ABC, supra, 251 Conn. at 186. The plaintiffs are just as plainly incorrect, however, in asserting that the Supreme Court did not reach the merits of their substantive claim of standing, for that is exactly what the Court did by proceeding to determine if the challenge before it presented a colorable claim that inclusion of the PLA requirement in the bid specifications "effectuated fraud, corruption, favoritism or other acts undermining the objective and integrity of the bidding process." Id.
The ABC Court framed its analysis of the second, substantive element of the plaintiffs' claim of standing to bring a public-interest challenge to the PLA requirement as follows:
Even if the foundational element [of standing] had been met by testimony of the association's general contractor members that they would have bid, but for the project labor agreement specification, the association still cannot prevail under the second part of the standing test. The crux of the association's claim is that its general contractor members were precluded from participation in the bid process because the [PLA] requirement imposed costs upon non-union general contractors that made it economically unfeasible for them to bid. As a result, the association argues, general contractors and the association have standing to challenge the project labor agreement as a specification that, as in Unisys Corp. [v. Dept. of Labor, supra, 220 Conn. 690-91], arbitrarily and anticompetitively limits access to the bidding process. The association contends that limiting the number of potential bidders violates not only the integrity of competitive bidding but also injures the general public by driving up the cost of government funded projects. Like the trial court, we conclude that the association has failed to make even a colorable factual showing to support this argument.
Even assuming that the [PLA] requirement might increase the project's cost, we know of no requirement in the competitive bidding statutes that propels cost considerations to the top of the list of appropriate considerations for public contract specifications. If cost alone were the determinative factor of appropriate bid criteria, disappointed bidders or nonbidders would have virtually unlimited opportunities to litigate project specifications on the ground of alternate designs, materials, safety requirements and so on. Such litigation would involve courts in comparative cost assessments that would severely impair the discretion of governmental bodies entrusted with the responsibility for governmental construction projects. It is neither unusual nor unfair for project specifications to give some potential bidders an economic advantage over others because of factors such as the bidder's expertise, specialization and reliability.
The claim made by the association in this case is much more sweeping than the one we recognized in Unisys Corp. v. Dept. of Labor, supra, 220 Conn. 690-91. The objection to the specification in Unisys Corp. was not that IBM equipment would be more expensive, but that vendors of functionally equivalent hardware or software had been excluded from the bidding process. Id., 691, 695. Our focus was not on the possibility that a particular specification might limit the number of eligible bidders, but on whether the specification necessarily had an adverse impact on the integrity of the bidding process. See id., 695.
As the trial court observed, the record in the present case demonstrates a nondiscriminatory decision by the city to use a [PLA]. in the public interest, to avoid delays in the project and to recruit and maintain the necessary workforce. The court reasonably determined that the city's legitimate business decisions fell within the bounds of the discretion afforded to the city by our competitive bidding statutes.
ABC, supra, 251 Conn. at 186-88 (Emphasis added).
In light of the foregoing analysis, several conclusions must be reached about the viability of the plaintiffs' present challenge, which is virtually identical to the challenge raised by ECI and its co-plaintiffs in ABC. First, although a PLA, like many other types of bid specifications, may have a differential cost impact on union and nonunion contractors, that fact alone affords the latter no basis for challenging the requirement. Instead, as long as the requirement is imposed for a legitimate public purpose and enforced in a nondiscriminatory manner, the public agency may impose it. Among the legitimate public purposes for which such a requirement may be imposed are to avoid delays in the project and to recruit and maintain the necessary workforce.
Even, moreover, if the effect of imposing such a requirement is to increase overall project cost, an unsuccessful bidder or a non-bidder who would have bid but for the challenged requirement lacks standing to complain of it for that reason in a court of law. The reason for this limitation is that a contrary rule would open the floodgates to litigation by disappointed bidders based on a virtually unlimited list of differential cost impacts claimed to flow from legitimate discretionary determinations by public authorities.
Another conclusion to be drawn from the ABC Court's analysis is that the ultimate issue to be decided on any proper bid challenge is whether the public authority gave fair and evenhanded consideration to each bidder instead of treating different bidders differently. Where the same set of rules is applied fairly and evenhandedly to all bidders, no unsuccessful bidder has standing to challenge the bidding process merely because they had a differential impact upon him. Where, by contrast, the party challenging the procedure presents a colorable claim of differential treatment that is, treatment undermining the rights of all bidders to bid with the same information and in the same manner as other bidders, and to have all bids reviewed and evaluated under a single set of rules and procedures then he has substantive standing to pursue a public-interest challenge to such treatment on the ground that it undermined the object and integrity of the competitive bidding process.
In the end, the upshot of ABC is that a disappointed bidder lacks standing to challenge the imposition of a mandatory PLA in the bid specifications for a public works contract unless he can make out a colorable claim that the imposition of that specification effectuated fraud, corruption or favoritism or undermined the object or integrity of the competitive bidding process. Absent proof that the challenged procedure was adopted for the purpose of undermining the object and integrity of competitive bidding, such a claim must rest upon proof that it resulted in differential treatment of bidders that denied them fair and evenhanded consideration in the bidding process. Although the ABC decision does not hold that PLAs are invariably lawful, it surely undermines any claim that they are intrinsically unlawful. As long as the adoption of such a requirement was based upon the public authority's good-faith desire to promote the public interest, instead of a desire to discriminate in favor of or against particular bidders, it cannot be challenged by a disappointed bidder.
Turning to the plaintiff's second argument for distinguishing ABC — that the Court there failed to base its conclusions concerning the lawfulness of PLAs upon a careful analysis of the State's competitive bidding statutes — this Court finds that that claim lacks merit for several reasons. First, the ABC Court correctly noted that the common-law rule denying standing to disappointed bidders was based upon the principle that the purpose of competitive bidding statutes is to protect the public interest rather than to promote the private interests of individual bidders. Id. at 178-79. Unless a statute has somehow abrogated that common-law principle by expressly conferring standing upon disappointed bidders to challenge the competitive bidding process, the presumption against according them such a right remains intact, except as recognized in our case law. The ABC Court thus properly noted that ever since the common-law rule was first articulated, no contrary statute, in derogation of common law, has been enacted. Id. at 179.
Second, the Court examined the competitive bidding statutes to determine if they identified particular factors, such as overall project cost, for special protection in the competitive bidding process. If they do, as the plaintiffs claimed in ABC, then a public-interest challenge to the PLA requirement might reasonably have been brought on the ground that its imposition undermined the public interest, as protected by those statutes. The ABC Court, however, determined that no such indication appears on the face of any relevant statute, and thus that the discretion of bidding officials to impose a PLA requirement cannot be challenged on the ground that it had a negative impact on overall project cost. Id. at 187 (observing, to reiterate, that "we know of no requirement in the competitive bidding statutes that propels cost considerations to the top of the list of appropriate considerations for public contract specifications.") The Court cautioned, moreover, that a contrary conclusion would so expand the scope of the public-interest exception as to swallow the general rule itself thus upsetting balance between the benefits of judicial intervention to preserve the integrity of competitive bidding and burdens of cost and delay arising from litigation permitted to accomplish that objective. In sum, the ABC Court fairly examined the competitive bidding statutes for all purposes made necessary by the challenge brought before it.
The plaintiffs' final claim with respect to the ABC decision itself is that even if the Supreme Court can be found to have fairly examined and taken account of Connecticut's then-existing competitive bidding statutes, those statutes were substantially modified by the subsequent enactment of the bidder prequalification statute, now codified as General Statutes § 4a-100. The plaintiffs insist that by enacting that statute, the legislature established mandatory minimum qualifications for all bidders on large public works projects, thereby "occupying the field" with respect to the basis for their selection to perform work on public works projects and preempting all efforts by local authorities to impose other or different bid specifications upon them. Because the prequalification statute makes no mention of a contractor's willingness to employ union labor as a basis for prequalifying him to bid on contracts, the plaintiffs insist that public officials have no discretion to impose such requirements on them as a precondition to the awarding them such contracts.
To test this hypothesis, it is important at the outset to examine the text of the prequalification statute to determine if it accords disappointed bidders the right to enforce the contended-for limitation against public authorities which attempt to establish bid requirements other than those established for prequalification itself. The short answer to this inquiry is that the prequalification statute accords them no such right.
Subsection (a) of the Section 4a-100 sets forth definitions that apply throughout the statute. First among them is the definition of "prequalification," which "means prequalification issued by the Department of Administrative Services to bid on a contract or to perform work pursuant to a contract for the construction, reconstruction, alteration, remodeling, repair or demolition of any public building or any other public work by the state or a municipality[.]" So written, this definition demonstrates that a person's "prequalification" is not a certification of readiness to perform any particular work on any particular project, but rather a general certification that he meets the statutory requirements for a prequalification certificate.
Subsections (b), (c) and (d) of the statute, in turn, set forth the process by which a person must apply for prequalification. Subsection (b) requires that the application be made on a prescribed form submitted together with a fee that varies in amount according to the applicant's "aggregate work capacity rating," a term which is defined in subsection (a) to "mean [] the maximum amount of work an applicant is capable of undertaking for any and all projects." This criterion confirms the general nature of a contractor's prequalification under the statute, which is tied to his general capacity to perform work rather than his suitability for performing particular work on any given project.
Subsection (c) next requires the applicant to provide detailed information concerning several matters that may affect his trustworthiness in handling his contractual responsibilities. The list includes such matters as: his form of organization; the names of his principals, his key personnel, and the names of all businesses under which he or they have conducted business within the past five years; any legal or administrative proceedings which are pending against him or have been concluded adversely to him, his principals or his key personnel within the past five years; the nature of any financial, personal or familial relationship between himself and any public or private construction project owner listed on his application as constituting construction experience; and a statement as to whether he has ever been disqualified from bidding on or being awarded contracts under State or federal law or had his registration suspended by the Department of Consumer Protection, together with a list of all matters giving rise to such disqualifications and suspensions; plus any other information the Commissioner of Administrative Services deems relevant to the determination of his qualifications and responsibilities. Manifestly, these requirements are designed to ensure that before a contractor is prequalified, he is ascertainably free from debilitating legal entanglements that may cast doubt upon his reliability or compromise his ability to follow through on any job he takes on. Finally, subsection (d) requires the applicant to submit a statement of his financial condition prepared by a certified public accountant which includes information about his assets and liabilities, plant and equipment, bank and credit references, bonding company and maximum bonding capacity, and other information deemed relevant to an evaluation of his financial capacity and responsibility. The purpose of this requirement — to ensure the financial soundness and fiscal integrity of the applicant before he is prequalified — is also self-evident.
Subsection (f) of the statute goes on to provide that the Commissioner of Administrative Services "shall determine whether to prequalify an applicant on the basis of the application and on relevant past performance according to procedures and criteria set forth in regulations [to be adopted by him, . . . which] criteria shall include, at a minimum, the record of the applicant's performance, including, but not limited to, written evaluations of the applicant's performance on public and private projects, the applicant's past experience on projects of various size and type, the skill, ability and integrity of the applicant and any subcontractors used by the applicant, the experience and qualifications of supervisory personnel employed by the applicant, the maximum amount of work the applicant is capable of undertaking as demonstrated by the applicant's financial condition, bonding capacity, size of past projects and present and anticipated work commitments, and any other relevant criteria that the Commissioner prescribes.
Finally, subsection (g) of the statute indicates that the Commissioner may issue a certificate of prequalification for a period of one year to any applicant who meets the criteria of the statute, indicating specifically in the certificate, for the applicant and each of his subcontractors, his approved prequalification classification, aggregate work capacity rating and "single project limit," a term defined in subsection (a) to "mean [] the highest estimated cost of a single project that the applicant is capable of undertaking."
There is nothing in the language of this statute to suggest that a prequalified contractor, upon receiving his certificate of prequalification, becomes instantly entitled to be awarded any public works contract on which he submits the lowest bid. Nor does anything in the statute give him any right to sue, either in his own interest or in the public interest, to prevent local bidding officials from enforcing bid specifications imposing requirements above and beyond those required for prequalification when soliciting bids for and awarding contracts on public works projects. Finally, there is nothing in the language of any other statute in which Section 4a-100 is now referenced to suggest that the legislature, by enacting Section 4a-100, sought to afford prequalified contractors any such rights.
The plaintiffs start the analysis by directing this Court's attention to General Statutes § 10-287, which provides in relevant part that
All orders and contracts for school building construction receiving state assistance under this chapter . . . shall be awarded to the lowest responsible qualified bidder only after a public invitation to bid . . .
This reference, however, adds little to this Court's inquiry, for Section 10-287 is one of the statutes specifically referenced by the ABC Court when finding that our competitive bidding laws grant discretion to local authorities to impose bid specifications such as PLAs when they determine in good faith that their imposition would serve the public interest.
Next, the plaintiffs invoke General Statutes § 4b-91(c), which provides as follows:
No person may bid on a contract or perform work pursuant to a contract for the construction, reconstruction, alteration, remodeling, repair or demolition of any public building for work by the state or a municipality, which is estimated to cost more than five hundred thousand dollars and is paid for, in whole or in part, with state funds, unless the person is prequalified in accordance with section 4a-100.
Although this statute plainly applies to the contracts here at issue, both of which are for more than five hundred thousand dollars and paid for in part with State funds, it merely adds prequalification of the bidder as a mandatory bid specification for any contract to which it applies without stating that no other specifications can be imposed on a prequalified bidder or affording such a bidder the right to challenge the rejection of his low bid on a project for failure to meet such other specifications. In fact, construing this statute and the prequalification statute to afford a prequalified bidder such a right would be completely nonsensical in light of the fact that the prequalification requirements are not identical for all contractors. Though each, to be sure, must meet minimum requirements of honesty, integrity, financial capacity and responsibility and freedom from debilitating legal entanglements, each is only prequalified to perform work up to the limits of his aggregate work capacity rating and his single project limit. Those are quite different for different contractors based upon a wide variety of factors, not the least of which are their different forms of organization, the quality of their key personnel, their access to equipment and sources of qualified labor, their financial resources and their relevant construction experience. In any given time frame, moreover, despite a prequalified contractor's aggregate work capacity rating, he may become incapable, or at least less capable, of undertaking new projects of particular sizes, descriptions and durations due to the strain of other projects he has taken on in that same time frame or other consideration. For these reasons, it would be foolish to suggest that prequalification alone actually qualifies any contractor to perform work on any particular project in any particular time frame.
The other statutes referenced by the plaintiffs in support of their claim that the prequalification statute has deprived municipal officials of the power to impose additional bid requirements upon prequalified bidders if they find in good faith that such requirements are in the public interest are General Statutes §§ 4b-91(d) and 4b-92. Section 4b-91(d) requires that all bids for contracts requiring the prequalification of bidders be accompanied by an "update bid statement" in which the bidder lists significant changes in its capacity to perform work of the kind called for under the contract. This section strongly suggests that a bidder's prequalification alone cannot be determinative of his eligibility for the awarding of any particular contract at any particular time for the reasons set forth above. That conclusion is confirmed by Section 4b-92, which defines the term "lowest responsible and qualified bidder" to mean:
the bidder who is prequalified pursuant to section 4a-100, and whose bid is the lowest of those bidders possessing the skill, ability and integrity necessary to faithful performance of the work based on objective criteria considering past performance and information contained in the update bid statement submitted pursuant to section 4b-91 . . . In considering past performance the awarding authority shall evaluate the skill, ability and integrity of bidders in terms of the bidders' fulfillment of contract obligations and of the bidders' experience or lack of experience with projects of the nature and scope of the project for which bids are submitted.
What this section makes clear is that a bidder's prequalification under Section 4a-100 is merely the starting point, not the ending point, of any inquiry as to whether he should be awarded a public works contract for which he has submitted the lowest bid. By the statute's own terms, it remains essential for the bidding authority, even as to a prequalified bidder, to determine if he possesses the skill, ability and integrity necessary to faithful performance of the work, none of which is established by the fact of prequalification alone. In making that determination, moreover, the bidding authority must consider the bidder's past performance in fulfilling contract obligations as well as his experience or lack of same with projects of the sort for which the bid was submitted. Plainly, none of this would be necessary if the fact of prequalification somehow signified that every prequalified bidder had the requisite construction experience, demonstrated reliability in fulfilling contractual obligations, and other credentials to warrant awarding him the contract.
For all of the foregoing reasons, nothing in the competitive bidding statutes relied on by the plaintiffs supports their claim that public authorities are now prevented from imposing additional bid requirements on bidders who are prequalified under Section 4a-100. The statutes say nothing of the sort, and cannot logically be read to so imply. Even so, as a final step in its analysis, the Court will examine the legislative history of the prequalification statute to determine if, notwithstanding its lack of facial ambiguity, its history somehow supports the plaintiffs' position. In this regard, it would be especially helpful to the plaintiffs if the legislative history showed that the legislators' purpose for enacting the statute was to abrogate the rule of the ABC case or to abolish the use of PLAs on projects where bidders are subject to the prequalification requirement.
What one finds upon examining the legislative history of the statute, however, is that it not only fails to mention the ABC case or to disclose any intention to disallow mandatory PLAs or other additional bid specifications on contracts requiring prequalification to bid, but it affirmatively discloses an intention to leave all decisions to establish such additional bid specifications and award contracts thereunder to local bidding officials themselves. On this score, in fact, the following colloquy took place between the bill's sponsor, Rep. James O'Roarke, and his colleague from Hartford, Rep. Marie Kirkley-Bey, when the new law was introduced in the House:
REP. KIRKLEY-BEY: (5TH)
Madam Speaker, through you to Representative O'Roarke. I'd like to ask a couple of questions. I believe the answers to these are okay, but I just want to make sure for intent.
With regard to the subcontractors for WBE and MBE there are no changes with regard to how they are chosen with regard to this and the percentages that they get on projects. Is that true?
Madam Speaker, through you.
SPEAKER LYONS:
Representative O'Roarke.
REP. O'ROARKE: (32ND)
Through you, Madam Speaker. We seek to make no changes in this bill to those statutes.
SPEAKER LYONS:
Representative Kirkley-Bey.
REP. KIRKLEY-BEY: (5TH)
Yes, Madam Speaker, through you. For those projects such as Adriaen's Landing, which you said was exempt from this, but there are other projects that I know that minority contractors are bidding on and you did talk about school construction where there might be project labor agreements that provide the opportunity for them, the non-union contractors to do a specific set aside, I guess I'll call it on those projects. This doesn't, in any way, effect [sic] that. To the best of your ability. I believe it does not, but if you're not sure, Madam Speaker, through you, to Representative O'Roarke.
SPEAKER LYONS:
Representative O'Roarke.
REP. O'ROARKE: (32ND)
Through you, Madam Speaker. It is not our intent to make any changes there, Madam Speaker.
SPEAKER LYONS:
Representative Kirkley-Bey.
REP. KIRKLEY-BEY: (5TH)
Then I'd like to thank the Chairman of the GAE for bringing it out and not making those changes. Many of us have fought, and probably he included, to make sure that set aside programs and the projects that are there for women owned and minority owned contractors stay in place and I'd like to thank him for keeping that in mind when he did this legislation.
Legislative History of H.B. 6417 at 5328-30. By his above-quoted assurances to Rep. Kirkley-Bey, the House sponsor of the prequalification statute plainly voiced the view that the new law would not displace or outlaw PLAs if municipalities chose to use them.
In later discussion of the new law with Rep. Stripp, moreover, Rep. O'Roarke clarified as follows that public authorities charged with establishing bid specifications for public works projects would act completely separately from the Department of Administrative Services, the prequalification authority, when soliciting and reviewing bids from prequalified contractors:
REP. STRIPP: (135TH)
Yes, Madam Speaker, through you, if there were forty contractors who were all approved for a certain type of school building, in terms of the size and so forth, would the municipality have to send out requests for proposals or bids to all forty on the list or they could select those, for whatever reason, they would think would be more appropriate and perhaps send out a dozen or a half-dozen?
Through you, Madam Speaker.
SPEAKER LYONS:
Representative O'Roarke.
REP. O'ROARKE: (32ND)
Through you, Madam Speaker. We haven't sought to change their bidding process at all, only to require that the contractors that they do choose must be prequalified through this new state process and I think their bidding process will continue to follow the one that is strictly regulated currently by our State Department of Education in the case of school building projects.
Through you, Madam Speaker.
SPEAKER LYONS:
Representative Stripp.
REP. STRIPP: (135th)
Through you, Madam Speaker. Once the bids are open and it's determined who the low bidder is, what involvement would the Department of Administrative Services or the Department of Public Works have in that particular project to build a school for a municipality?
Through you, Madam Speaker.
SPEAKER LYONS:
Representative O'Roarke.
REP. O'ROARKE: (32nd)
Through you, Madam Speaker. Little or none. DAS would pre-qualify the contractors. The ones selected would have to be pre-qualified, but after that, the school building project would continue to be an issue that is handled by the town and the State Department of Education.
Through you, Madam Speaker.
SPEAKER LYONS:
Representative Stripp.
REP. STRIPP: (q35TH)
Through you, Madam Speaker. Could the proponent expound on the word "little"? He also used the word "none." I understand that, but what is the "little" involvement that they might have?
Through you, Madam Speaker.
SPEAKER LYONS:
Representative O'Roarke.
REP. O'ROARKE: (32nd)
None, Madam Speaker. We have not changed that at all.
Legislative History of H.B. 6417 at 5337-40.
In light of these further comments by Rep. O'Roarke, the legislative history of the prequalification law must be read to support the conclusion that that law was not intended to affect the preexisting discretion of local bidding officials to administer the competitive bidding process just as they had done before its enactment, viz: by establishing such bid specifications for the project as they determined in good faith to be in the public interest. The only change in prior practice which the new law brought was to require that all bidders on large publicly funded construction be prequalified to bid. Even, then, if a prequalified contractor submitted the lowest responsible and qualified bid for work on a public works project, bidding officials retained the statutory authority to award the contract to another bidder if they determined, in the good-faith exercise of their discretion, that the public interest so required. For all of these reasons, the Court concludes that the discretion of public authorities to use PLAs on large public works projects if the public interest so required was unaffected by the adoption of General Statutes § 4a-100.
The final thrust of the plaintiffs' substantive claim of standing in this case is that, even if our competitive bidding laws must be read, in light of the ABC case, to permit the nondiscriminatory use of PLAs on State-financed municipal school construction projects where municipal building officials determine, in good faith, that their use is in the public interest, the use of PLAs on the projects here at issue cannot be so justified because City officials had no rational basis for concluding that their use would serve any of the legitimate public purposes promoted by those laws. To the contrary, because the only practical effect of adopting mandatory PLA requirements for these projects was assertedly to discourage prequalified non-union contractors from bidding on those projects in light of the substantial additional costs they would have to bear to work on the projects under union wage, benefits and work rules while honoring pre-existing contractual commitments to their non-union employees, the imposition of such requirements allegedly effectuated favoritism for union contractors and union workers and undermined the object and integrity of the competitive bidding process by restricting the labor pool and ultimately raising overall project costs.
In support of this argument, the plaintiffs first find fault with the HSBC's reliance upon the ALMA prepared by Fluor, the City's Labor Relations Consultant, at the outset of its twelve-year, twenty-seven-project School Construction Program in 2003. That Analysis, they claim, was incomplete, anecdotal and unpersuasive as to the desirability of using PLAs to ensure a steady supply of labor for completion of the first five projects in the Program, particularly since the great majority of Connecticut electricians were not members of the union. Furthermore, the ALMA's suggestion that a PLA would enhance the efficiency of project scheduling by fostering cooperation among the trades and the avoidance of disruption due to strikes or other labor unrest was simply speculative, there being no showing that any such conflicts were likely to occur. Finally, the ALMA was five years out of date by the time it was relied to justify the imposition of PLA requirements in the bid specifications for the projects here at issue in 2008.
The plaintiffs also support this claim by arguing, based upon a recent study by Beacon Hill Institute concerning the recent use of PLAs on school construction projects in Massachusetts, Connecticut and New York, that the presence of PLAs increases the average cost of building schools by 15-18%, primarily as a result of shrinking the pool of bidders. The pool of bidders tends to shrink when PLAs are used because of the cost pressures exerted on non-union contractors by their obligation to pay all wages, dues and benefits required under the PLA in addition to all parallel payments of wages and benefits for which they will continue to be responsible under prior contractual arrangements with them, whether or not they choose to join the union. Such costs may be substantial, especially if the contractor must continue to pay its employees to keep them on the payroll when there is no guaranty that, even if they decide to join the union, they will be referred from the union hall to the contractor to meet his labor needs.
Against this background, there assertedly being no good-faith basis for concluding that the use of PLAs on these projects would serve the public interest, the plaintiffs assert that their use in these circumstances must be traced to a desire by City officials to effectuate favoritism for union contractors and their employees, and, in addition, must be found to have produced the unlawful consequence of restricting competition, raising costs, and thereby undermining the object and integrity of the competitive bidding process. Since a colorable claim to either effect is sufficient to meet the substantive prong of the standing test to bring a public-interest challenge to the competitive bidding process, the plaintiffs assert that the defendants' attack on their standing to bring this challenge must be rejected.
The defendants reject the plaintiffs' foregoing argument for several reasons which this Court finds persuasive. To begin with, on the plaintiffs' claim that City officials decided to use PLAs on these projects to effectuate favoritism for union contractors and union employees, there is no evidence at all that the decision to use PLAs was the result of fraud, a corrupt bargain or favoritism. There is no claim of any meeting between pro-union partisans and the City officials to discuss the possible use of PLAs, and no claim of promises, threats or other inducements by such partisans to officials to encourage them to agree to their use.
Presenting no such evidence, the plaintiffs' claim that favoritism was evidenced by the adoption of PLA requirements under circumstances when City officials knew of the differential cost impacts of such requirements upon non-union contractors in light of their pre-existing contractual obligations. Even, however, if officials had such an awareness, which seems likely in view of the plaintiffs' presentation of identical arguments in the ABC case, it must be remembered that such arguments were rejected in ABC because they were irrelevant to the furtherance of the public interest as opposed to the private economic interest of individual bidders. Hence the Court there determined that all City officials were required to do if they chose to use a PLA on a public construction project was to impose that requirement in a nondiscriminatory manner and apply it evenhandedly to everyone. That is exactly what happened in this case, just as in ABC.
With respect to the plaintiffs' claim that the effect of the adoption of the requirement was to undermine the object and integrity of the competitive bidding process by effectively excluding non-union contractors from the competitive bidding process and increasing overall project costs, two important observations must be made. The first, of course, is that that question was also answered by the Supreme Court in ABC, where the Court declared that reducing overall project costs was not the only goal, or even the primary goal of the competitive bidding statutes. Instead, more holistically, the goal of that process is to ensure that the public gains optimal benefit from any public works project it decides to build, which is both function of cost and of the value of the benefit to be achieved by incurring that cost. With public school construction projects in particular, getting them built on time for use by students is essential to preserving community peace and well-being, as well as saving the City other untold collateral costs arising from delay. If higher costs are sometimes necessitated to ensure that a project will be completed on schedule, as for the start of a new school year, it lies within the sound discretion of local officials to determine what steps must be taken, in the public interest, to guarantee that result. One such step may well be to use a mandatory PLA, which is generally understood to foster worksite cooperation by minimizing jurisdictional disputes among the trades, eliminating disruptions from strikes or other job actions by the members of any trade, which if unchecked could have a domino effect upon the work of other trades, and, as a result, enhancing the efficiency and predictability of project scheduling.
The latter reasons for adopting a PLA were cited specifically by Fluor in recommending the original PLAs on the first five projects completed under the Hartford School Construction Program. Having adopted them, moreover, within three years of the Supreme Court's ABC decision, City officials had good reason to believe that their use for that purpose was legally justifiable for that purpose, as well as for the purpose of ensuring a steady supply of qualified labor to complete the work. Later, moreover, when the PLA was extended to the two projects here at issue, the City not only has the example of the successful use of a PLA on the New Haven School Construction Project, as described in Fluor's ALMA, but its own five-year experience under its own PLAs to draw on in deciding if their use would be in the public interest. In short, the officials' decision to require PLAs on these projects was a proper exercise of their discretion, made in good faith based upon significant experience with and reliable input from experts which persuaded them, appropriately, that the use of PLAs would be in the public interest. The plaintiffs' claim to the contrary, here as in ABC, falls well short of giving them substantive standing to prosecute the instant challenge to their use.
CONCLUSION
For all of the foregoing reasons, the defendants' Motions to Dismiss must be GRANTED on the ground that the plaintiffs lack standing to prosecute their pending claims, and thus that this Court lacks subject-matter jurisdiction to adjudicate them. The Court will not reach and decide the alternative grounds advanced in support of the defendants' Motions to Dismiss because in its judgment, as aforesaid, the plaintiffs lack sufficient interest in the outcome of this controversy to justify deciding the issues thereby presented on the basis of their advocacy.
IT IS SO ORDERED this 7th day of August 2009.