Opinion
No. 101446/2013.
07-10-2014
SKANKSKA USA CIVIL NORTHEAST INC., Petitioner, For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules v. The CITY OF NEW YORK OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS, Contract Dispute Resolution Board and The New York City Department of Environmental Protection, Respondents.
Gallet Dreyer & Berkey, LLP, by Randy J. Heller, Esq. Of Counsel, Franklin E. Tretter, Esq., Skanska USA Civil Northeast, Inc., New York, for petitioner Skanska USA Civil Northeast, Inc. Peggy Kuo, Esq. General Counsel, Office of Administrative Trials & Hearings, New York, for respondent New York City Contract Dispute Resolution Board. Michael A. Cardozo, Corporation Counsel of the City of New York, Of Counsel: Leslie Spitalnick, Esq., for respondent New York City Department of Environmental Protection.
Gallet Dreyer & Berkey, LLP, by Randy J. Heller, Esq. Of Counsel, Franklin E. Tretter, Esq., Skanska USA Civil Northeast, Inc., New York, for petitioner Skanska USA Civil Northeast, Inc.
Peggy Kuo, Esq. General Counsel, Office of Administrative Trials & Hearings, New York, for respondent New York City Contract Dispute Resolution Board.
Michael A. Cardozo, Corporation Counsel of the City of New York, Of Counsel: Leslie Spitalnick, Esq., for respondent New York City Department of Environmental Protection.
Opinion
MICHAEL D. STALLMAN, J.
Petitioner challenges a memorandum decision dated July 8, 2013 of the Contract Dispute Resolution Board (CDRB), which upheld a determination by respondent New York City Departmental of Environmental Protection (DEP) to reject petitioner's request to substitute an “approved equal” for material called for in a contract.
BACKGROUND
According to the CDRB decision, DEP awarded petitioner a contract to improve piping systems that move sludge from wastewater treatment plants. (Kirsch Aff., Ex 1 [CDRB Decision].) Contract specifications called for petitioner to furnish and install “12–inch manual hand-wheel type couplings as manufactured by M.I.B. International Limited, Coventry, England or approved equal where indicated on the drawings.” (CDRB Decision, at 2.)
Petitioner requested that DEP approve a coupling manufactured by MMC International which has a “ratchet” lock (ratchet coupling) as a substitute for the coupling manufactured by M.I.B. International Limited, which has a “hand-wheel” lock (hand-wheel coupling). (CDRB Decision, at 2.) DEP's engineer rejected the substitution, stating “Submittal did not meet specification since coupling proposed does not have a handwheel as specified.” (CDRB Decision, at 2; Verified Petition, Ex 4.)
CDRB upheld DEP's rejection of Skanska's proposed coupling, reasoning,
“The Contract requires a hand-wheel type Coupling' or approved equal.' See Contract specification D–2.5.B.25. The express wording of the specification makes the hand-wheel' mechanism a required feature of the coupling. Thus, any proposed equal must include the hand-wheel' mechanism. Since the proposed equal has a ratchet' mechanism it does not conform to the specification.”
(Id. at 3.) According to petitioner, the difference in price between the coupling specified in the contract and the proposed substitute is $750,945.
DISCUSSION
“Judicial review of a CDRB determination is limited to the question of whether it was made in violation of lawful procedure, was affected by an error of law, or was arbitrary or capricious or an abuse of discretion' (9 RCNY 4–09[g] [6] ).” (Matter of Start El., Inc. v. City of New York, 104 AD3d 488 [1st Dept 2013].)
Here, petitioner has not demonstrated that CDRB's decision was arbitrary, capricious, or lacking a rational basis. As the CDRB indicated in its decision, Contract Specification D–1.8 states, in pertinent part:
“The Engineer will be the sole judge as to the type, function, and quality of any such substitute material or manufacturer and his decision shall be final. The Engineer is not required to justify to the Contractor the basis of his/her decision. ”
(Id. at 2 [emphasis supplied].) It is undisputed that the Engineer rejected the ratchet coupling as a contract substitute. Although petitioner characterizes the Engineer's explanation as a “two line ex-officio/ultra-legal interpretation of Specification D2 .5.B25a” (Verified Petition ¶ 15), the express terms of the contract do not require the Engineer to justify the basis of the rejection of the proposed substitute.
Petitioner argues that Contract Specification D–1.8 empowers DEP's Engineer to render an “expert opinion,” and that DEP's Engineer did not render an “expert opinion” because “The Engineer made absolutely no investigation, analysis or judgment as to the type, function and quality of the proposed MMC Coupling as it related to the specified MIB Coupling.” (Verified Petition ¶ 14.)
Petitioner's interpretation of Contract Specification D–1.8 is contradicted by its express terms. Petitioner does not point to any provisions of Contract Specification D–1.8 that imposes an affirmative duty upon the Engineer to “investigate” whether a proposed substitute material is acceptable under the contract. Under the contract, the burden of demonstrating that the proposed substituted material is equal to a specification falls on the contractor. Contract Specification D–1.8 states, in pertinent part, “If the Contractor proposes a substitution of the manufacturer or to furnish a substitute item, material or equipment ... the Contractor shall make a written application to the Engineer for acceptance by providing sufficient information ...” (Verified Petition, Ex 2.)
Because the contract does not require the Engineer to justify the basis of the rejection, petitioner's argument that the Engineer should have given a more extensive written analysis as to the substitution is without merit.
Petitioner also argues that whether the proposed substituted was an “approved equal” may be determined by the Court. Petitioner reasons that because the terms of Contract Specification D–1.8 are unambiguous, the interpretation of its terms involve a question of law, i.e., contract interpretation, for the Court.
However, the question of whether the proposed ratchet coupling is equivalent in type, function, and quality to the hand-wheel coupling manufactured by someone else is not a matter of contract interpretation. Deciding the question might call for specialized knowledge, and the contract clearly placed that question solely within the purview of the Engineer. Thus, petitioner's reliance on Matter of Daily Star v. Board of Trustees of Village of Cooperstown (164 A.D.2d 531 [2d Dept 1991], which involved the interpretation of a village bylaw, is misplaced.
Even if the Engineer erred, the contract unambiguously designates the Engineer as the sole judge of whether a proposed substitute is an “approved equal”, and the Engineer's determination is final. Thus, the Court may neither rewrite nor distort the terms of Contract Specification D–1.8, by substituting its judgment for that of the Engineer under the guise of contract interpretation. (Consedine v. Portville Cent. School Dist., 12 NY3d 286, 293 [2009].)
Next, petitioner contends that this case is extraordinarily similar to Appeal of Ocean Electric Corporation (73–2 BCA P 10335, available in Westlaw at 1973 WL 120), which involved an appeal to the NASA Board of Contract Appeals. The CDRB stated, “As Skanska acknowledged, Ocean Electric is not binding on the CDRB.” (CDRB Decision, at 4.) Because the decision of the NASA Board of Contract Appeals was not binding upon CDRB, its decision not to follow the decision, however similar it might arguably be, is not arbitrary and capricious and not an abuse of its discretion.
Finally, petitioner alleges that DEP itself was unable to identify an alternative manufacturer of the hand-wheel coupling. Petitioner therefore concludes that DEP should have treated the MIB Coupling as a sole source item. On this point, CDRB stated,
“To the extent Skanska claims that DEP secretly' made the hand-wheel coupling a sole source item[,] that argument concerns how the coupling was described during the bidding process under PPB Rule 3–05. 9 RCNY § 3–05 (Lexis 2012). Such a question is beyond the Board's jurisdiction which is limited to resolving disputes that arise from the terms of the Contract.”
(CDRB Decision, at 5.)
Insofar as petitioner is alleging that the contract procurement was in violation of Procurement Policy Board Rules, any challenge to the contract procurement amounts to an impermissible collateral attack. “Prior administrative actions as to which no challenge has been brought for judicial review may not be collaterally challenged in such proceedings brought for direct review of other administrative actions based on the prior actions.” (24 Carmody–Wait 2d § 145:22, at 331 ; see e.g. Matter of Lewis Tree Serv. v. Fire Dept. of City of NY, 66 N.Y.2d 667 [1985] [an unsuccessful bidder, who did not bring an Article 78 proceeding to challenge the Comptroller's determination that the unsuccessful bidder violated the Labor Law, may not collaterally attack the determination later by bringing an Article 78 proceeding to annul a FDNY contract awarded to another bidder because of the Comptroller's prior determination].)
Petitioner had an opportunity to review the bid specifications and to research sources of the hand-wheel coupling before submitting a bid. Having been awarded the contract, it may not now seek to modify it unilaterally.
CONCLUSION
Accordingly, it is hereby ADJUDGED that this Article 78 petition seeking to vacate a decision dated July 8, 2013 of the Contract Dispute Resolution Board is denied, and the proceeding is dismissed.