City of Inglewood-L.A. County Civic Center Auth. v. Superior Court

• Decision Date: 06 September 1972
• Docket Number: INGLEWOOD-LOS
• Citation: 500 P.2d 601,7 Cal.3d 861,103 Cal.Rptr. 689
• Parties: , 500 P.2d 601 CITY OFANGELES COUNTY CIVIC CENTER AUTHORITY et al., Petitioners, v. The SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent; ARGO CONSTRUCTION CO., Inc., et al., Real Parties in Interest. L.A. 29919. In Bank
• Court: California Supreme Court

Page 689

103 Cal.Rptr. 689

7 Cal.3d 861, 500 P.2d 601

CITY OF INGLEWOOD-LOS ANGELES COUNTY CIVIC CENTER AUTHORITY et al., Petitioners, v. The SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent ARGO CONSTRUCTION CO., Inc., et al., Real Parties in Interest.

L.A. 29919.

Supreme Court of California,

In Bank.

Sept. 6, 1972.

Donald E. Loson, City Atty., R. Wicks Stephens II, Stephens, Jones, La Fever & Smith, Los Angeles, and Hassard, Bonnington, Rogers & Huber, San Francisco, for petitioners.

Martin & Flandrick and Stephen H. Galton, San Marino, as amici curiae on behalf of petitioners.

No appearance for respondent.

Paul M. Hittelman, Everett W. Maguire and Shapiro & Maguire, Beverly Hills, for real parties in interest.

MOSK, Justice.

Petitioners seek mandate to compel respondent superior court to annul its judgment and a peremptory writ of mandate issued thereon, or, in the alternative, prohibition to prevent the enforcement of its judgment. The respondent court's judgment restrained petitioner City of Inglewood--Los Angeles County Civic Center Authority (Authority) from executing or performing a contract awarded to Swinerton & Walberg Co. (Swinerton) relating to the construction of a civic center project. The mandate proceeding in respondent court was instituted by real party in interest, Argo Construction Co., Inc. (Argo), to have the contract award annulled and set aside.

Section 25454 of the Government Code ¹ provides that a contract for a 'construction project' exceeding $6,500 must be awarded to the 'lowest responsible bidder.' Argo was the lowest bidder and it claims that the contract was improperly issued to Swinerton. The primary issues involved in this proceeding are (1) whether the section is applicable to the type of contract awarded here; (2) whether, if so, the Authority applied the appropriate standard in determining that Swinerton was the lowest responsible bidder, and (3) whether a contractor who has submitted the lowest monetary bid is entitled to a full judicial hearing to determine if he is responsible. The trial court found in Argo's favor, and it issued a writ of mandate ordering petitioners to refrain from executing or performing the contract awarded to Swinerton unless a hearing is held 'of the type described in the Administrative Procedure Act' to evaluate Argo's responsibility and a contract awarded in accordance with the result of such hearing or, in the alternative, to refrain from paying out any founds for the construction work until the project is again opened for competitive bidding.

Petitioner Authority was constituted pursuant to a 'joint exercise of powers agreement' entered into in February 1970 by the City of Inglewood and the County of Los Angeles, as authorized by section 6500 et seq. The Authority is a separate and distinct public entity (§ 6507). It was established to construct the City of Inglewood--Los Angeles County Civic Center, which was planned to include both city and county buildings. The governing board of the Authority is the five-member Civic Center Authority Commission. As directed by section 6503, the joint agreement creating the Authority provides 'for the method by which the purpose (of the Authority) will be accomplished or the manner in which (its) power will be exercised.' ²

Charles Luckman Associates (Luckman) was retained by the Authority as architects, and prepared preliminary plans for the civic center buildings, a $12,000,000 project. Luckman recommended that the Authority proceed with the construction of the project by means of a management contract. The operation of the management contracting method was summarized by Luckman as follows:

'Under the traditional lump sum method of bidding, contractors enter the project process upon the completion of working drawings. At this point in time they have little opportunity or incentive to contribute to cost reduction.

'The Management Contracting Method . . . differs from this traditional lump sum method in that the contractor is brought into the building project through competitive bidding at or shortly after, the completion of preliminary plans, rather than working drawings. He is then called upon to contribute his practical expertise during the development of the working drawings, and subsequently apply this expertise during construction, in order to achieve maximum economies. He is expected to provide cost estimates from time to time during development of working drawings to determine that the project is within budget so that some of the early phases of construction can proceed prior to completion of all of the drawings. This makes it possible to save a significant amount of time in the total building process.' The management contractor performs none of the construction itself unless he is awarded a separate contract therefor as the lowest responsible bidder in subsequent bidding under the traditional 'lump sum' bidding procedures. ³

The management contracting procedure was approved by the Inglewood City Council, and Swinerton was awarded the contract after various proceedings which will be described in detail Infra.

I

Petitioners urge that the management contract here at issue was basically a contract for services as a consultant and supervisor-manager rather than a contract for a 'construction project' and thus did not fall within the competitive bidding requirements upon which Argo relies. Those requirements are found in the Government Code and in the charter of the City of Inglewood ⁴ as well as in the joint exercise of powers agreement. They provide that public construction of the magnitude here involved shall be accomplished by contract let to the lowest responsible bidder.

It is true that the management contractor was to perform services and to lend his experience and expertise in the preparation of the final plans, and in that respect may be likened to an engineer or an architect whose services may be procured without strict compliance with competitive bidding requirements. (See Kennedy v. Ross (1946), 28 Cal.2d 569, 581--582, 170 P.2d 904; San Francisco v. Boyd (1941), 17 Cal.2d 606, 620, 110 P.2d 1036; Cobb v. Pasadena City Bd. of Education (1955), 134 Cal.App.2d 93, 95, 285 P.2d 41.) However, our review of the other duties and obligations which were required of the management contractor in this case, including his guarantee of the outside price based on the subcontract bids, persuades us that the management contracting procedure as proposed and followed here is too closely akin to traditional lump sum general construction contracting to be held exempt from the statutory competitive bidding requirements. To hold otherwise as a broad principle would open the door to possible favoritism, fraud or corruption in the letting of other public construction contracts.

II

The next issue is whether petitioners applied the proper standards in determining that Swinerton was the lowest responsible bidder, as that term is used in section 25454. It bears emphasis that the word 'responsible' in the context of the statute is not necessarily employed in the sense of a bidder who is trustworthy so that a finding of nonresponsibility connotes untrustworthiness. Rather, while that term includes the attribute of trustworthiness, it also has reference to the quality, fitness and capacity of the low bidder to satisfactorily perform the proposed work. (See West v. Oakland (1916), 30 Cal.App. 556, 560, 159 P. 202.) Thus, a contract must be awarded to the lowest bidder unless it is found that he is not responsible, i.e., not qualified to do the particular work under consideration. Whether or not an express finding of nonresponsibility is required (see Raymond v. Fresno City Unified Sch. Dist. (1954) 123 Cal.App.2d 626, 629--630, 267 P.2d 69), if a contract is awarded to one other than the lowest monetary bidder, the ineluctable implication is that the latter is not responsible.

The parties are in agreement that factors such as those set forth above may be considered in determining whether a bidder is responsible. Argo challenges the award of the management contract to Swinerton not because petitioners employed such criteria but because petitioners made no determination, either express or implied that Argo was not responsible. Instead, it is asserted, petitioners found Swinerton to be the relatively superior bidder and awarded the contract on this basis. Argo cogently argues: 'To permit a local public works contracting agency to expressly or impliedly reject the bid of a qualified and responsible lowest monetary bidder in favor of a higher bidder deemed to be more qualified frustrates the very purpose of competitive bidding laws and violates the interest of the public in having public works projects awarded without favoritism, without excessive cost, and constructed at the lowest price consistent with the reasonable quality and expectation of completion.'

We agree with these assertions, and we hold that the contract for a public construction project must be awarded to the lowest monetary bidder as commanded by section 25454 unless it is found that the lowest bidder is not responsible, in the sense defined above. There is no basis for the application of a relative superiority concept under that section, and if petitioners applied such standard in selecting Swinerton rather than Argo as the contractor the award cannot stand. ⁵

The trial court found that petitioners chose to award the contract to Swinerton because they viewed Swinerton as more qualified than Argo and that the qualifications of Argo to perform the contract were never questioned. An examination of the procedure followed in making the award lends credence to the trial court findings.

Petitioners proceeded as follows: The 'Notice Inviting Bids' for the fee to be charged the Authority as management contractor stated, inter alia, that final evaluation and award would be made on the basis of the proposal submitted by the lowest...