Opinion
No. CV-09-5013864
July 8, 2010
MEMORANDUM OF DECISION
I. Statement of the Case
By their verified complaint dated December 1, 2009, Ferguson Mechanical, Inc. and Ferguson Electrical Co., Inc. (hereinafter the plaintiffs) sought temporary and/or permanent injunctions enjoining the City of Norwich Board of Education (hereinafter the City) and/or The Pike Company, Inc. (hereinafter Pike) from entering into any contract to have mechanical/plumbing and electrical work in connection with a project known as "Kelly Middle School — Addition and Renovation, Norwich, CT" performed by any entity other than plaintiffs. Plaintiffs also sought temporary or permanent injunctions compelling the City to award such contracts to plaintiffs.
Defendants filed motions to dismiss addressed to the subject matter of the court. Such motions were denied at the time of trial.
Both defendants filed answers to the verified complaint. The City filed a special defense alleging that plaintiffs lacked standing to prosecute the action. Defendant Pike has filed a special defense alleging that the court lacked subject matter jurisdiction because there was no fraud, corruption, favoritism or acts undermining the object and integrity of the bidding process and plaintiffs have failed to adequately allege the same. Plaintiffs have replied denying the allegations of the special defenses.
The parties have agreed that the court should decide the issue as a request for a permanent injunction.
II.
CT Page 14067
Facts of the Case
The facts underlying this action are not greatly in dispute and may be stated as follows:The City of Norwich was desirous of renovating and construction of an addition to Kelly Middle School. To facilitate the project, the City established a building committee in February 2007. The Committee consisted of seven voting members together with ex-officio members. The chairman of the Commission was Charles Jaskiewicz. William Block, the city purchasing agent, was an ex-officio member of the Committee. (Both Mr. Jaskiewicz and Mr. Block testified in this case.) The Committee was also assisted by a professional architect, its attorney and Mr. Gary Schnip of G. Schnip Contractors as "owner's representative."
The voting members of the Committee were volunteer lay persons with no specific expertise in the type of construction contemplated at the Kelly Middle School. On recommendation of the Committee, in September 2008, the City entered into a contract with Pike to be the construction manager for the project. Melvin Strauss was Pike's project manager assigned to the Kelly Middle School project. Mr. Strauss worked closely with the Committee. Ed Oloff was Pike's project superintendent.
Construction of the Kelly Middle School project was time sensitive and complicated by the fact that it would be performed while school was in session. The work would have to be scheduled so as not to interfere with classroom activity and coordinated so as to maximize the use of time that school was not in session.
The project was partially funded by the State of Connecticut and was, therefore, subject to the mandatory bid process required by Connecticut General Statutes § 10-287(b).
Under its contract with the City, Pike was responsible for the bid process including preparation of the invitations to bid and the instruction to bidders. In October, the project went out to bid.
Mr. Block, the City's purchasing agent, and an ex-officio member of the Committee provided input for the advertisements.
The bid advertisement stated that:
The project will be awarded to the lowest responsible bidder in accordance with Conn. Gen. Stat. 10-287(b)(sic); However, Construction Manager and the City of Norwich School Building Committee reserve the right to reject any and all bids or to waive any informalities, irregularities, omissions, or technical defects in the bids."
The instructions to bidders also included the following, in relevant part:
11.1 The Owner will have the right to award the Contract to any Bidder, and not necessarily the low bidder, and to waive informalities and irregularities in any Bid received if it is determined to be the best interest of the City of Norwich.
The bids were publicly opened on October 28, 2009. Plaintiff Ferguson Mechanical submitted a base bid of $5,737,000. Ferguson's Mechanical's bid with alternate mechanical was $5,960,950. This was the low bid. The next lowest bid was Action Air with a base bid of $5,831,791. Action Air bid with alternate mechanical was $6,073,091. The difference between the two bids was $112,141. Ferguson Electrical submitted a base bid of $3,437,000. Ferguson's bid with alternate electric was $3,602,900. The next lowest bidder was Electrical Contractor, Inc. base bid of $3,496,000. Electrical Contractor, Inc. bid with alternate selected was $3,637,445. The difference between the bids was $34,545.
The parties have stipulated to these figures.
Under the contract with the City, Pike was required to evaluate all bids received to determine if the bidder was responsive and responsible. The lowest two or three responsive bidders were provided with post-bid questionnaires. Pike reviewed the bidders' responses together with references and met with each bidder to determine if the bidder understood the scope of the work. On November 5, 2009, Pike conducted a scope conference with Lee Ferguson, plaintiffs' president.
At the regular meeting of the Committee held November 18, 2009, the Committee received Pike's recommendations concerning the lowest responsible bidders. Acting upon such recommendation, three of the lowest bidders were determined not to be the lowest responsible bidders and were not awarded contracts. Both plaintiff corporations were so determined and were not awarded contracts. By letter dated November 19, 2009, plaintiffs were informed that they had not been selected.
This action was commenced by verified complaint dated December 1, 2009, with service of process on December 2, 2009.
Contracts were awarded to the next lowest bidders, Action Air and Electrical Contractors, Inc., on December 11, 2009.
Additional facts will be stated in connection with specific issues raised.
III. Legal Principles Involved
"Municipal competitive bidding laws are enacted to guard against such evils as favoritism, fraud or corruption in the award of contracts, to secure the best product at the lowest price, and to benefit the taxpayers, not the bidders; they should be construed to accomplish these purposes fairly and reasonably with sole reference to the public interest. 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.
"A bid is a binding offer to make a contract. A bid, even the lowest responsible one, submitted in response to an invitation for bids is only an offer which, until accepted by the municipality, does not give rise to a contract between the parties. Furthermore, 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." (Citations omitted; internal quotation marks omitted.) John J. Brennan Construction Corporation, Inc. v. Shelton, 187 Conn. 695, 702 (1982).
"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." Spiniello Construction Co. v. Manchester, 189 Conn. 539, 544 (1983).
"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." John J. Brennan Construction Corporation, Inc. v. Shelton, supra, 187 Conn. 703.
CT Page 14070
IV. The Issue of Standing
Both defendants have filed pleadings which challenge the court's subject matter jurisdiction over plaintiffs' claim for injunctive relief. By such pleadings, defendants claim that plaintiffs lack standing to pursue the relief sought under settled principles of Connecticut law concerning the ability of an unsuccessful bidder to challenge the bidding process. "Standing is the legal right to set judicial machinery in motion. One cannot rightfully invoke the jurisdiction of the court unless he has, in an individual or representative capacity, some real interest in the cause of action or a legal or equitable right, title or interest in the subject matter of the controversy." Ardmare Construction Co. v. Freedman, 191 Conn. 497, 501 (1983).Courts will intervene to prevent the exercise of the discretion vested in a municipality to deny a bid "only where fraud, corruption or favoritism has influenced the conduct of the bidding officials or where the very object and integrity of the competitive bidding process is defeated by the conduct of municipal officials." Spiniello Construction Co. v. Manchester, supra, 189 Conn. 539, 544 (1983).
In their complaint, plaintiffs have alleged that they submitted the lowest responsible bids on the Kelly Middle School project and that the bids were not selected with the contracts being awarded to other entities. Plaintiffs further allege that in allowing bids to others than the lowest bidder, defendants violated the requirements of Connecticut General Statutes § 10-287(b)(1) in that:
(a) they conducted the bidding process arbitrarily, applying the bidding standards and criteria to the bids received in an inconsistent and/or in a discriminatory fashion;
(b) allowed favoritism to influence the conduct of the bidding officials; and/or
(b)(sic) they conducted the bid process in such a fashion as to defeat the very object and integrity of the competitive bidding process.
The allegations of the complaint adequately set forth a claim that in its failure to award the contracts to plaintiffs, the City allowed favoritism to influence the selection of a successful bidder and that the object and integrity of the bidding process was defeated by the conduct of defendants.
It is therefore found that the court has subject matter jurisdiction over this case and that plaintiffs have standing to prosecute the action.
V. Analysis
Although in their complaint, plaintiffs have alleged that the City allowed favoritism to influence the conduct of the bidding, no evidence was submitted in support of this claim and plaintiffs have not pursued it in their briefs. The claim then must be considered abandoned. Shaw v. Planning Commission, 5 Conn.App. 520, 525 (1998).
There was no proof that the conduct of the Committee was influenced by fraud or corruption. Plaintiffs' only claim is that defendants conducted the bid process in such a fashion so as to defeat the very object and integrity of the competitive bidding process. It is claimed that this occurred because:
(1) The Committee delegated its duty to select contractors to its construction manager Pike and that the Committee made its decision to select bidders other than the low bidders without knowledge of the facts; and
(2) The Committee was not aware of a conflict of interest between Pike and plaintiffs as a result of ongoing litigation between the companies.
Defendants have also raised an additional issue. Plaintiffs are seeking equitable relief, therefore, the court may review: Whether the granting of the injunctions sought by plaintiffs would result in extreme delay in the completion of the project to the detriment of the public.
1.
As previously noted, it was Pike's responsibility under the contract with the City to evaluate the bids and determine if the bidders were qualified and responsible to perform the work on the Kelly Middle School project. Post-bid questionnaires were provided to selected responsive low bidders and scope conferences were conducted. In performing these services, Pike looked into the financial qualifications and the ability of the bidders, references and prior work history. Mr. Strauss testified that it was necessary to look into the bidders' ability to perform well on the Kelly Middle School project which involved work in an occupied and functioning school.
During the review process, certain matters, unfavorable to plaintiffs, came to light. Ed Oloff, Pike's project superintendent, checked plaintiffs' references. His notes state that the party contacted concerning plaintiffs' work at the Prince Technical High School stated that Ferguson Mechanical was a nightmare and that everything to do with it was a "choir" (sic). On the Simsbury High School project, the party contacted stated that they would have nothing good to say about Ferguson with more specific unfavorable details. The reference on the East Haddam 4-8 School project stated that Ferguson overall was capable although not the best to work with and that "they were very aggressive on change orders" and they worked at their own pace.
Mr. Strauss conducted the scope review conference with Lee Ferguson on November 5, 2009. His impression was that Ferguson was being evasive and had a different view of the scope of the project. He also felt that Ferguson would contest certain ambiguities in the contract.
In its conduct of the review process, all bidders were treated alike by Pike. From its evaluation of the bidders, Pike concluded that plaintiffs and one other bidder were not the lowest responsible bidders. Pike also concluded that the next lowest bidders to plaintiffs, Action Air and Electrical Contractors, Inc. were responsible and that the contracts should be awarded to them and not to plaintiffs.
Pike presented its determination and recommendations to the Committee on November 18, 2009. At this meeting, two letters from Pike, dated the same date, were presented to the Committee. The first letter recommended that the bid of Electrical Contractors, Inc. for the electrical work at the Kelly Middle School project be accepted. The second letter recommended that the bid of Action Air Systems, Inc. be accepted for the mechanical/plumbing work at the school. Both letters contain a space for the Committee to indicate that it concurred with the recommendation. The letters also stated that if the Committee had any questions they should contact Mr. Strauss.
The November 18 meeting of the Committee was lengthy with a number of matters requiring attention. The Committee discussed Pike's recommendations concerning the electrical and mechanical/plumbing work. The Committee was aware of Pike's procedure in evaluating the bidders. The Committee was also aware and discussed the difference in the bid prices between plaintiffs and the next low bidders. In their discussion, the opinions of Mr. Schnip, the owner's representative, and the architect were also solicited.
The Committee then voted unanimously to award the contracts to the second lowest bidders. Plaintiffs were notified that they had not been selected by letter from Pike on November 19, 2009.
It is plaintiffs' claim that in rejecting their bids, the Building Committee exercised no discretion but abdicated its responsibility and merely rubber stamped Pike's recommendation. Plaintiffs claim that the Committee had none of the information which Pike developed as a result of its investigation into plaintiffs' qualification for the work or plaintiffs' past performance in other projects of the same size and scope. The evidence shows that while the Committee was aware of how Pike conducted its evaluation of the bidders there is nothing to indicate that Pike shared with the Committee the specific facts it uncovered, such as the unfavorable references reported by Mr. Oloff.
It is plaintiffs' position that in rejecting their bids and selecting the next lowest bidders, the Committee placed the public trust in the hands of a third party, Pike, and therefore defeated the object and integrity of the bidding process in violation of the requirements of Connecticut General Statutes § 10-287(b)(1).
Plaintiffs have cited no cases involving § 10-287(b)(1) directly on point. Plaintiffs rely on zoning cases such as Olson v. Avon, 143 Conn. 448 (1956), in which it was held that where a special act of the legislature granted the zoning commission authority to effect zone changes, that authority could not be delegated to another municipal agency. Plaintiffs also rely on such cases as Spero v. Zoning Board of Appeals, 217 Conn. 435, 441 (1991), in which it was held that a zoning board of appeals in carrying out its statutory functions was entitled to technical and professional assistance regarding matters beyond its expertise, but could not delegate its decision making authority to the party providing the technical and professional assistance. These cases involving agencies carrying out legislative mandatory functions are not on point. Section 10-287(b)(1) does not mention school building committees. Presumably, the bidding process could have been carried out by the City without the creation of a Committee. There is a well-established principal "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 interest of individual contractors who submit bids on those projects. Electrical Contractors, Inc. v. State Department of Education, Docket Number HHD-CV-09-5025993S, judicial district of Hartford, 2009 WL 5945554 (Conn.Super.), Sheldon, J.
In this case involving a time sensitive contract requiring close coordination between the successful bidder and the school, it cannot be found that the procedure used by the Committee defeated the very object and integrity of the competitive bidding process as alleged. The process used was fair with no claim, or evidence of favoritism, fraud or corruption. The Committee of laymen with no particular expertise in the construction field was at its meeting of November 18, 2009, faced with a number of items requiring decision. Under the circumstances, it was not improper for the Committee to rely, as it did, on the recommendations of its construction manager. The Committee was aware that Pike had conducted a review of certain low bidders to determine if they were responsible and understood the scope of the work. It was known that Pike had found plaintiffs and one other bidder not to be the lowest responsible bidders and had recommended that contracts be awarded to other bidders. These matters were discussed by the Committee and Pike's recommendations were followed. The Committee made this decision without all of the underlying facts upon which Pike's recommendations were based.
The Committee did not delegate the selection of the selected bidders to Pike as claimed. The Committee relied upon the recommendations of its construction manager, Pike, knowing the general situation but not the specific reasons for Pike's recommendations. In so doing, it cannot be found that the Committee defeated the integrity of the competitive bidding process. This is particularly true where the bid advertisement and the instructions to bidders stated that the City reserved "the right to award the contract to any bidder and not necessarily the low bidder."
2.
It is also claimed by plaintiffs that the object and integrity of the bidding process was defeated by Pike's failure to disclose that it was engaged in ongoing litigation with plaintiffs.
There was evidence that Pike and plaintiffs were involved in some sort of litigation. The court was never invited to take judicial notice of this case. There was no indication as to what court, state or federal, it might be pending in. There was testimony that the case involved insurance subrogation.
The dispute which gave rise to the litigation arose out of the Buley Library project at Eastern Connecticut State University. Pike and both plaintiff companies were involved in the project in which a water main burst resulting in a flood. Pike and plaintiffs were subsequently terminated and the litigation followed.
It is plaintiffs' claim that this litigation involving Pike and plaintiffs caused a conflict of interest on the part of Pike. Plaintiff cites Josephson v. Stamford Planning Board, 151 Conn. 489, 493 (1964), which reaffirmed the "principle that public policy requires that members of such public boards cannot be permitted to place themselves in a position in which personal interest may conflict with public duty." Although Pike could not be considered a "public board," the general principle applies. There was, however, no evidence that Pike would benefit financially or in any other way by recommending against accepting plaintiffs' bid. There is nothing to show that Pike favored or would benefit from the City awarding contracts to Action Air and Electrical Contractors, Inc. Pike's action with respect to plaintiffs in the present case would have no effect on the other litigation. The only claim could be that Pike had developed such animosity against plaintiffs as a result of the Buley Library case and subsequent litigation that it could not be objective and fair in evaluating plaintiffs' bids.
Melvin Strauss, Pike's project manager, assigned to the Kelly Middle School project, testified as to why the litigation with plaintiffs was not disclosed. Mr. Strauss testified as to the problems with plaintiffs in the Buley Library construction. These problems included manpower, plaintiffs' meeting schedules and completing tasks, also change order problems. In short, Pike's experience with plaintiffs in the Buley Library project was not such as to produce a favorable recommendation in connection with the Kelly Middle School project. Pike's experience with plaintiffs on the Buley Library project was supported by the Contractor Performance Evaluation provided by the State Department of Administrative Services, which found plaintiffs' performance in that project to be "unacceptable."
Mr. Strauss testified that it was not known if the experiences with plaintiffs in the Buley Library project was an isolated instance and that it would be best not to consider such experiences in evaluating the Kelly Middle School bids. Plaintiffs' bids were, therefore, considered in the same manner as all other responsive bidders.
If the litigation had been disclosed to the Committee, it would necessarily have resulted in an unfavorable recommendation by Pike and the result would have been the same.
Under the circumstances, if any conflict of interest existed between Pike and plaintiffs, it cannot be found that such conflict defeated the object and integrity of the competitive bidding process as alleged.
3.
Plaintiffs here seek equitable relief by way of injunctions enjoining further mechanical and electrical work at the Kelly Middle School project and mandatory injunctions compelling defendants to terminate existing contracts and award such contracts to plaintiffs. Defendants argue that in deciding whether to issue such injunctive relief the court would be required to balance the relative hardships, inconvenience and injuries to the respective parties. Sisters of St. Joseph Corp. v. Atlas Sand G.S. Co., 120 Conn. 168, 175 (1935). Defendants argue that the court cannot issue the injunctions requested unless plaintiffs can demonstrate that their actual and substantial damages would be greatly disproportionate to the injury caused to the City. Hartford Electric Light Co. v. Levitz, 173 Conn. 15, 21-22 (1977). It is further argued that when considering whether to enjoin a public bid, the court must consider whether the injunction will result in extensive delay in the commencement and completion of the project to the detriment of the public. Ardmar Construction Company, Inc. v. Freedman, 191 Conn. 497, 505 (1983).
Since the decisions on the above-considered issues are dispositive of this case, defendants' claims with respect to the relief sought will not be considered.
IV. Conclusion
Plaintiffs have failed to prove that in rejecting their bids and accepting the bids of other bidders, defendants have defeated the object and integrity of the competitive bidding process as alleged.
Accordingly, judgment is rendered for the defendants against plaintiffs.