Court Street Steak House, Inc. v. County of Tazewell

• Decision Date: 22 September 1994
• Docket Number: No. 76166,76166
• Citation: 163 Ill.2d 159,643 N.E.2d 781,205 Ill.Dec. 490
• Parties: , 205 Ill.Dec. 490 ., Appellee, v. The COUNTY OF TAZEWELL, Appellant. Supreme Court of Illinois
• Court: Illinois Supreme Court

Page 781

643 N.E.2d 781

163 Ill.2d 159, 205 Ill.Dec. 490

COURT STREET STEAK HOUSE, INC., Appellee, v. The COUNTY OF TAZEWELL, Appellant.

No. 76166.

Supreme Court of Illinois.

Sept. 22, 1994.

Rehearing Denied Dec. 5, 1994.

Erik I. Blanc, State's Atty., and Stewart J. Umholtz, Asst. State's Atty., Pekin, for appellant.

Gerald L. Hall, Pekin, for appellee.

James E. Ryan, State's Atty., and Barbara A. Preiner, Asst. State's Atty., Wheaton, for amicus curiae DuPage County.

Justice NICKELS delivered the opinion of the court:

In 1991, defendant, Tazewell County (the County), solicited bids for the award of a food service contract. The successful bidder would supply food to the inmates of the Tazewell County jail. The County received two bids for the contract, one from plaintiff, Court Street Steak House, Inc., and one from the Tazewell County Resource Center (the Resource Center). Although plaintiff submitted the lower bid, the County awarded the contract to the Resource Center. Plaintiff then filed an action in the circuit court seeking a writ of mandamus to compel the County to award it the contract. The County moved to dismiss, and the circuit court dismissed the action. The appellate court reversed the circuit court and reinstated the action for mandamus. (249 Ill.App.3d 918, 189 Ill.Dec. 58, 619 N.E.2d 759.) We granted the County's petition for leave to appeal (134 Ill.2d R. 315) and now reverse the appellate court.

FACTS

On December 12, 1991, Tazewell County received two bids for its prisoner food service contract. Plaintiff submitted a bid of $6.22 per day/per inmate, and the Resource Center submitted a bid of $6.29 per day/per inmate. Plaintiff's principal business is the operation of a restaurant, and its principal place of business is located in Tazewell County. The Resource Center is a not-for-profit organization which provides food service training for the mentally handicapped. At the time the County solicited bids for the contract, the Resource Center had provided food service to the county jail for approximately seven years.

In its invitation to bid, the County explicitly reserved the right to reject any and all bids. On December 23, 1991, the county board rejected the bid submitted by plaintiff and awarded the food service contract to the Resource Center. The board awarded the contract to the Resource Center, instead of to plaintiff, for two reasons. First, the board stated that it was pleased with the Resource Center's past performance. Second, approximately 60% of the Resource Center's food service training program for the mentally handicapped was based on the county jail food service contract.

On January 9, 1992, plaintiff filed a complaint for an injunction, which was denied by the circuit court. The circuit court denied injunctive relief after finding that plaintiff should seek mandamus relief instead. Plaintiff did not pursue injunctive relief further and the Resource Center began providing food service for the county jail on January 18, 1992. The contractual period started on January 18, 1992, and terminated on December 1, 1992, with the County retaining the option to renew the contract for one year. On April 14, 1992, plaintiff filed a petition in the circuit court for writ of mandamus.

In the petition for mandamus, plaintiff alleged that the County had failed to award the contract to the "lowest responsible bidder" in violation of section 5--1022 of the Counties Code (Ill.Rev.Stat.1991, ch. 34, par. 5-1022). The circuit court ruled that it could not review the County's determination of the lowest responsible bidder absent an allegation of fraud. It therefore dismissed the petition. The appellate court reversed, holding that mandamus will also issue where manifest injustice or a palpable abuse of discretion is shown. It then held that, if the County had violated the statute, plaintiff would be entitled to damages. On review, we address the following issues: (1) whether the County's determination of the lowest responsible bidder is subject to mandamus, and (2) whether lost profits are available to an unsuccessful bidder as a remedy for violation of the statute.

I. Competitive Bidding Statute

Section 5-1022 is commonly known as the competitive bidding statute. The pertinent portion of section 5--1022 that was in effect at the time of the bidding provided:

"Competitive bids: Any purchase by a county with fewer than 2,000,000 inhabitants of services, materials, equipment or supplies in excess of $10,000, other than professional services, shall be contracted for in one of the following ways:

(1) by a contract let to the lowest responsible bidder after advertising for bids in a newspaper published within the county or, if no newspaper is published within the county, then a newspaper having general circulation within the county; or

(2) by a contract let without advertising for bids in the case of an emergency if authorized by the county board.

In determining the lowest responsible bidder, the county board shall take into consideration the qualities of the articles supplied, their conformity with the specifications, their suitability to the requirements of the county and delivery terms." (Emphasis added.) (Ill.Rev.Stat.1991, ch. 34, par. 5-1022.)

This statute has since been amended, but these amendments are not relevant here. See 55 ILCS 5/5-1022 (West Supp.1993).

The County initially argues that section 5--1022 does not apply in this instance and that the County was not required to solicit competitive bids at all. The County argues that the Illinois Purchasing Act (30 ILCS 505/1 et seq. (West 1992)) applies to these facts. The Illinois Purchasing Act provides that "[a]ny State agency may buy products and services, without advertising or using competitive procedures, from any qualified not-for-profit agency for the severely handicapped * * *." (30 ILCS 505/7-1 (West 1992).) We note that the County did not raise the Illinois Purchasing Act in the circuit or appellate court and therefore that argument is waived.

In any event, the Illinois Purchasing Act would not apply to the instant case. The Act applies only to State agencies, and as defined by the Act, the phrase "State agency" specifically excludes "units of local government." (30 ILCS 505/3 (West 1992).) Counties are recognized as units of local government. (Ill. Const.1970, art. VII, § 1.) Accordingly, the Illinois Purchasing Act does not apply to the instant case and section 5-1022 does.

The County also suggests that its reservation of the right to reject any and all bids justifies its failure to award the contract to plaintiff. Because section 5-1022 applies to this contract, the County must comply with it. The statute does not give a county the authority to arbitrarily reject any bidder it chooses. Indeed, such a reservation of right would give counties absolute discretion in awarding a contract and make the lowest responsible bidder requirement meaningless. We note that this is not a situation where the County determined that all bids submitted were too high and therefore sought to reopen the bidding.

Accordingly, we find that the County was required to solicit competitive bids and award the contract to the lowest responsible bidder, pursuant to section 5--1022. The phrase "lowest responsible bidder" appears in several statutes and has been previously interpreted by Illinois courts. It does not require a public body to award a contract to the lowest bidder (S.N. Nielsen Co. v. Public Building Comm'n (1980), 81 Ill.2d 290, 299, 43 Ill.Dec. 40, 410 N.E.2d 40), and a public body exercises a great deal of discretion in determining the lowest responsible bidder (see, e.g., Hallett v. City of Elgin (1912), 254 Ill. 343, 98 N.E. 530). The County argues that this discretion is so broad that a court will not interfere unless the board's determination is fraudulent or beyond the board's authority. (McGovern v. City of Chicago (1917), 281 Ill. 264, 118 N.E. 3; Kelly v. City of Chicago (1871), 62 Ill. 279.) According to the County, neither was alleged in the petition for mandamus and therefore the trial court properly dismissed the petition.

We find that the discretion to award a public contract is not so broad as the County suggests. Competitive bidding statutes are enacted "for the purpose of inviting competition, to guard against favoritism, improvidence, extravagance, fraud and corruption and to secure the best work or supplies at the lowest price practicable." (10 E. McQuillin, Municipal Corporations § 29.29, at 375 (3d ed. 1966); see also Compass Health Care Plans v. Board of Education (1992), 246 Ill.App.3d 746, 751, 186 Ill.Dec. 767, 617 N.E.2d 6; O'Hare Express, Inc. v. City of Chicago (1992), 235 Ill.App.3d 202, 208, 176 Ill.Dec. 148, 601 N.E.2d 846.) Given this purpose, mandamus will issue if a plaintiff alleges and proves fraud, lack of authority, unfair dealing, favoritism, or similar arbitrary conduct by a county. Nielsen, 81 Ill.2d at 299, 43 Ill.Dec. 40, 410 N.E.2d 40; Hallett, 254 Ill. at 348-50, 98 N.E. 530.

We therefore examine the well-pleaded facts and allegations contained in the petition for mandamus. For the purpose of this review, we accept all well-pleaded facts and allegations in the petition as true. (Ziemba v. Mierzwa (1991), 142 Ill.2d 42, 46-47, 153 Ill.Dec. 259, 566 N.E.2d 1365.) In the petition, plaintiff alleged that it was the low bidder for the contract, that nothing in the board record indicated that it was not the lowest responsible bidder, and that the board had no discretion to award the contract to any other bidder. Plaintiff incorporated a record of the relevant board and committee minutes into the petition for mandamus. This record shows that the board awarded the contract to the Resource Center because of past performance and because of the Resource Center's food service training program for the mentally handicapped. Plaintiff suggests that these are not proper factors for...