Alca Indus. v. Office of General Services, 1999 N.Y. Int. 0016 (Feb. 18, 1999).

ADMINISTRATIVE LAW - RULES - DISCRETIONARY DETERMINATIONS ON BID WITHDRAWAL - BID SECURITY

ISSUE & DISPOSITION

Issue

Whether bid withdrawal criteria established by the Office of General Services ("OGS") constitute "rules" that must be promulgated in compliance with the State Administrative Procedure Act ("SAPA").

Disposition

No. Bid withdrawal criteria established by the OGS are specific to particular projects and constitute contractual provisions applicable only to each project bid. Therefore, the bid-specific withdrawal criteria at issue need not be promulgated in compliance with the SAPA.

SUMMARY

Alca Industries ("Alca") provided a $11,800 bid security to the OGS in conjunction with its bid on an oil separator project. The day after OGS opened the bids, however, Alca immediately sought to withdraw its bid because it had failed to include an allowance for certain necessary equipment. In connection with the attempted withdrawal, Alca requested that the OGS return the bid security. The OGS refused, citing the bid withdrawal criteria in the instructions included in the bid advertisement. The withdrawal instructions required that withdrawal and return of bid security would only be allowed if the bid entrant established that its mistake was not made as a result of negligent bid preparation. In the instant case, the OGS determined that Alca did not show that the bid was not negligently prepared.

In a petition to overturn the OGS determination, Alca argued that the bid withdrawal criteria were "rules" within the meaning of Article 2 of the State Administrative Procedure Act (SAPA) and could not be enforced absent promulgation in compliance with the statute. However, the OGS argued that they were not rules but contractual obligations specific to the bid. The trial court and Appellate Division found for Alca and the Court of Appeals reversed.

A government agency may operate in a quasi-legislative rule-making capacity in which it makes rules or procedures of general applicability. However, it may also act in a discretionary capacity in which it makes ad hoc decisions applicable to specific situations. The Court found that the OGS was not acting in a rule-making capacity when it drafted bid advertisements. Rather, bid advertisements such as the one at issue in the instant case were an example of the OGS acting in its discretionary capacity. The withdrawal procedures did not establish a general standard of conduct applicable to all of the OGS's bid advertisements and therefore were not rules under the SAPA. The force and authority of the bid withdrawal criteria derived solely from the bid conditions which had been selected for this particular project and to which Alca had assented by submitting its bid.

Prepared by the liibulletin-ny Editorial Board.