Associated Builders v. Department of Admin.

• Decision Date: 04 January 2002
• Docket Number: No. 2001-40-Appeal, 2000-514-M.P.,2001-40-Appeal, 2000-514-M.P.
• Citation: 787 A.2d 1179
• Court: Rhode Island Supreme Court
• Parties: ASSOCIATED BUILDERS & CONTRACTORS OF RHODE ISLAND, INC., et al. v. DEPARTMENT OF ADMINISTRATION, State of Rhode Island.

787 A.2d 1179

ASSOCIATED BUILDERS & CONTRACTORS OF RHODE ISLAND, INC., et al. v. DEPARTMENT OF ADMINISTRATION, State of Rhode Island.

No. 2001-40-Appeal, 2000-514-M.P.

Supreme Court of Rhode Island.

January 4, 2002.

BEFORE: WILLIAMS, C.J., LEDERBERG, BOURCIER, FLANDERS, and GOLDBERG, JJ.

Christopher C. Whitney, Providence, for plaintiff. John Breguet/Thomas Palombo, Richard B. Woolley, Providence, for defendant.

OPINION

LEDERBERG, J.

The contest over whether Rhode Island's competitive bidding statute barred project labor agreements (PLAs) in public construction contracts was engaged well before the convocation center and ice facility opened to official events at the University of Rhode Island. Generally speaking, a PLA is a prehire collective bargaining agreement between an owner and labor unions involving a specific construction project. As a condition for accepting work on the project, contractors are required to execute the agreement and abide by its terms.

In our opinion, the State Purchases Chapter, G.L. 1956 chapter 2 of title 37 (state purchases act or statute) does not specifically permit, nor does it prohibit PLAs. Under the state purchases act, decisions made by the awarding authority are entitled to a presumption of correctness and, accordingly, are given great deference by this Court. But given the presumptively anticompetitive nature of such agreements, the state, before adopting a PLA in a contract, must demonstrate that (1) the size and complexity of the project are such that a PLA supports the objectives of the state purchases act, and(2) the chief purchasing officer or purchasing agency has performed an objective, reasoned evaluation demonstrating that the adoption of a PLA furthers statutory goals. This requirement, however, does not affect the existing authority of the purchasing officer to make bidding process decisions otherwise held and authorized pursuant to the state purchases act. The case reached this Court following the consolidation of the state's petition for certiorari and its appeal of a Superior Court judgment granting declaratory and injunctive relief, thereby halting the state's use of a PLA.

Facts and Procedural History

This litigation arose in the course of construction of a 200,000-square-foot convocation center and a 65,877-square-foot ice facility (collectively, the project) on the Kingston campus of the University of Rhode Island (URI). The total cost of the project was estimated at $73,000,000, including $53,000,000 in construction costs, to be funded from revenue bonds, state appropriations, fundraising, and donations. The project is one of several currently underway or in the planning stages at URI, totaling approximately $80,000,000. Because the new facilities will become part of the URI campus, title to the project is held by the State of Rhode Island Board of Governors for Higher Education, thereby bringing the project under the purview of the state purchases act.

The state engaged a private company, Gilbane Building Company (Gilbane), to act as program manager for the project. Following Gilbane's recommendation, the state adopted a multiple bid package approach for the project, instead of using one or two general contracting packages. Although Gilbane conducted a study, entitled "The Benefits of a Multiple Bid Package Approach for the University of Rhode Island Convocation Center and Ice Arena," the study made no mention of PLAs. The trial justice found that the state's purposes in adopting multiple bid packages were "1) Saving the State a significant amount of money.

"2) Expediting the schedule completion date.

"3) Maximizing the State's opportunity to control costs.

"4) Maximizing the opportunity for local participation.

"And, finally:

"5) Providing the State better control over the selections of the most qualified subcontractors."

The project was divided into thirty-four bid packages, six of which were awarded before the round of bid solicitations at issue here.¹ These first six bid packages contained no PLA requirement.

In the spring of 1999, Lawrence Bacher, project manager for Gilbane, first suggested to Paul DePace, the associate director of capital projects at URI, that a PLA might be appropriate for the project. At that time, DePace did not pursue the idea further, in part because there were no state purchasing regulations on the subject. Robert Carl, Ph.D., Director of the Rhode Island Department of Administration (state or defendant), who serves as chief purchasing officer for the State of Rhode Island, testified that he presumed from his first knowledge of the project that it "would be appropriate for a PLA." By the fall of 1999, the state was considering amending the state purchasing regulations to include provisions for the use of PLAs in public contracts, an amendment that apparently was not made.

In his decision, the trial justice found that the initiative to use a PLA on the convocation center project was "on-again and off-again" until, "following a flurry of meetings" in the fall of 2000, a PLA for the project (URI PLA) was negotiated and signed. The trial justice further found that from the summer of 2000 onward, the Department of Administration, URI, and Gilbane all endorsed the concept of a PLA, their only hesitation stemming from a fear of legal challenges and possible consequent delays and from the fact that work was already underway without a PLA in place. The trial justice noted that "anumber of the collective bargaining agreements involved in connection with various crafts that will be working on this project by their terms expire during the anticipated construction schedule for the Project."

The dispute underlying the instant litigation arose in connection with a round of bid solicitations issued in November 2000, involving fourteen individual bid packages, each issued with the URI PLA attached.² Each bid solicitation stated:

"Bidders are advised that execution of this Project Labor Agreement, that is completion and signature by an authorized agent of the successful bidder, shall be a pre-requisite to contract award. Note carefully that the attached [PLA] is an integral part of the bid specifications and that the fully executed [PLA] should be included in the bid submission." (Bold in original.)

The solicitations also required that bidders submit "Bid security in the form of a Bid Bond * * * in the amount of a sum no less than 5 percent of the Bid Price" and required that sealed bids be submitted by December 12, 2000, the opening date. The solicitations warned that a successful bidder that failed to commence work or provide the required bonds would forfeit the security up to the amount of the difference between its bid and the bid upon which a contract was eventually signed.

The URI PLA itself was a product of negotiations among the state, Gilbane, and the Rhode Island Building and Construction Trades Council (building trades) "on behalf of its affiliated Local unions" (unions).³ Article I, section 2, of the URI PLA, setting forth the purpose of the agreement, provided in part:

"The timely and successful completion of the Project is of vital importance to the State. Therefore, it is essential that the construction work be done in an efficient and economical manner in order to secure optimum productivity and eliminate any delays in the work."

Accordingly, the URI PLA required that any successful bidders hire employees through union hiring halls and contribute to union benefit funds and industry funds. The mandatory contributions were estimated to increase the cost of labor for nonunion contractors by 37 percent. In exchange, the unions promised not to engage in any strikes or work stoppages during the life of the project, and contractors promised not to engage in any lockouts. In addition, the URI PLA established mandatory dispute resolution mechanisms, uniform hours for employees, and "base hourly wage rates for those classifications as specified in the Local Collective Bargaining Agreements." It was disclosed at oral argument that the bid packages apparently omitted any information on the wages that would be required to be paid under the PLA. The URI PLA prohibited any discrimination against nonunion employees by union hiring halls.

On November 29, 2000, Associated Builders & Contractors of Rhode Island, Inc., together with certain nonunion contractors and two supervisors, James Rezendes and Kenneth Stafford (collectively, contractors), filed a complaint for declaratory and injunctive relief, claiming that the state's imposition of the URI PLA violated the state purchases act, the Rhode Island Civil Rights Act of 1990, G.L. 1956 chapter 112 of title 42, and the Constitution of the State of Rhode Island. The contractors alleged, inter alia, that "[u]se of a PLA * * * will effectively exclude the [contractors] from the Project" and will "result in greatly inflated costs for the taxpayers of the State of Rhode Island by significantly reducing competition for work on the Project."

One such contractor, Robert F. Audet, Inc. (Audet), operates a nonunion or "open shop" that performs both public and private work. The vice president of Audet, Kenneth Freeborn (Freeborn), testified that Audet had performed electrical work for URI in the past and possessed the experience and capacity to perform the type and magnitude of work required for the project. Freeborn also testified that Audet had intended to bid on Bid Package 14, a bid solicitation for the project that was originally issued in October 2000 without a PLA requirement. Freeborn claimed that when he learned that the solicitation had been withdrawn and reissued with a PLA requirement, he decided not to bid on it because the PLA was "restrictive" and placed Audet on a "noncompetitive basis" with other (union) bidders.

The contractors moved for a preliminary injunction, and a hearing was commenced. On December 15, 2000, the Superior Court issued an...