Diamond Asphalt Corp. v. Carter, 1998 N.Y. Int. 0099 (July 9, 1998).

MUNICIPAL LAW - PUBLIC WORKS CONSTRUCTION CONTRACTS

ISSUE & DISPOSITION

Issues

1. Whether private utility maintenance work constitutes "public work" under General Municipal Law Section 103(1) when municipalities determine the "lowest responsible bidder" by combined assessment of amounts bid for utility interference and public street reconstruction projects.

2. Whether the bypass contractor selection authority under New York City Charter Section 313(b)(2) was transferred from the defunct New York City Board of Estimate to the mayor alone, and thus, qualifies as an exception under General Municipal Law Section 103(1).

Disposition

1. No. When considering the competitive bidding process' underlying purpose of safeguarding the public interest and the total character of the arrangement, the nature of the utility work is for the benefit of a private entity and thus does not constitute a "public work."

2. No. The bypass authority of the mayor under New York City Charter Section 313(b)(2) to award a contract to a bidder other than the "lowest responsible bidder" was not transferred from the defunct New York City Board of Estimate to the mayor and thus cannot qualify under the local law exemption set forth in General Municipal Law Section 103(b)(2).

SUMMARY

In 1992, the City entered into a joint bidding agreement covering construction projects which included public street work and utility interference work portions. Under the joint bidding technique, the City awarded the contract to the lowest aggregate bid for both the public work and utility interference work. Petitioner submitted an aggregate bid that was not the lowest of all the aggregate bids, but its bid with respect to the public street work portion was the lowest submitted. After its bid was rejected, Petitioner sued to annul the award of certain public works contracts to competitors. Affected utility companies moved to intervene in the lawsuit and the trial court granted the intervention. Finding that the utility interference work was not "public work" within the meaning of General Municipal Law Section 103(1), the trial court held that the City could not consider the amount bid by each contractor for utility interference work in the aggregate as a method to determine the "lowest responsible bidder." Nonetheless, the trial court determined that because the mayor had a "bypass" authority to award contracts to a bid other than the "lowest responsible bidder" pursuant to New York City Charter Section 313(b)(2), it denied annulment of the contracts and dismissed. The Appellate Division affirmed. However, contrary to the trial court's holding, the Appellate Division held that the utility interference work did constitute "public work" when examining the "total character of the arrangement." The Court of Appeals concluded that private utility work did not constitute "public work." It noted that the purpose of General Municipal Law Section 103(1)'s awarding all contracts for "public work" to the "lowest responsible bidder" was to safeguard the public interest by inviting competition and discouraging fraud, and that courts should not extend coverage of the statute into areas unintended by the Legislature. Finding that the Legislature had not intended utility interference work to qualify as "public work," the Court held that the City could not accept a bid from a contractor that is not the lowest bid for "public work," by combining "public work" with undisputed private work to create an enlarged "public work"project. In reversing and converting the proceeding to a declaratory judgment action, the Court of Appeals additionally held that the mayor lacked the "bypass" authority to award a contract to a bid other than the "lowest responsible bidder" for public work projects, and thus declared the bid selection process unlawful.

Prepared by the liibulletin-ny Editorial Board.