Crest Const. Corp. v. Shelby County Bd. of Educ.

Decision Date23 December 1992
Parties80 Ed. Law Rep. 1139 CREST CONSTRUCTION CORP. v. SHELBY COUNTY BOARD OF EDUCATION. 1910973.
CourtAlabama Supreme Court

Macbeth Wagnon, Jr., E. Mabry Rogers and John J. Park, Jr. of Bradley, Arant, Rose & White, Birmingham, for appellant.

Hewitt L. Conwill of Conwill, Justice & Johnson, Columbiana, for Shelby County Bd. of Educ.

Michael G. Kendrick and Graham L. Sisson, Jr. of Gorham & Waldrep, P.C., Birmingham, for McCrory Bldg. Co., Inc.

James H. Starnes of Starnes & Atchison, Birmingham, for amicus curiae Associated General Contractors of America, Alabama Branch, Inc.

A. Lee Miller III of Finance-Legal Division, Montgomery, for amicus curiae Alabama Bldg. Com'n.

MADDOX, Justice.

This case involves an interpretation of the Competitive Bid Law, specifically Ala.Code 1975, § 41-16-50 et seq. The basic question presented is whether a county board of education, having required a bidder on a school construction project to be prequalified, could award the contract to a contractor who submitted a higher bid, on the basis that the higher bidder was "the lowest responsible bidder." § 41-16-50(a) (emphasis added). In short, did the school board, by requiring prequalification and then allowing a bidder to bid, predetermine the question of the bidder's responsibility?

Two other questions are also presented:

(1) Did the trial court err in refusing to permit a witness to testify concerning the interpretation given to the term "lowest responsible bidder" by the Alabama Building Commission when a prequalification procedure was used and

(2) Was the lowest bidder, in any event, entitled to compensatory damages for the expenses it had incurred in preparing to bid?

The trial court, after conducting a hearing, held that the school board could award the contract to the company it determined to be the "lowest responsible bidder," even though it had required all bidders to show that they were qualified before the bids were submitted.

FACTS

The Shelby County Board of Education solicited bids for the construction of a new school building, to be known as the Oak Mountain Middle School. The Board delegated the task of preparing the bidding documents and getting the project ready to be presented for bidding to its facilities and maintenance coordinator, Allen Fulton, who acted as liaison between the Board and G. Alvon Dampier and Associates, which the Board had hired as the architect. G. Alvon Dampier prepared the specifications and all bidding documents, which included detailed criteria that prospective bidders had to meet to be prequalified to submit bids. Among other things, prospective bidders had to submit a qualification statement on an American Institute of Architects ("AIA") Form A305, financial statements, prior job listings, and resumes of those persons proposed as the project manager and the superintendent. The specifications stated that only bidders submitting the AIA forms and qualifications, and who met the prescribed provisions, would be considered for an award. The Board expressly reserved the right to reject any bid and to select the lowest responsible bidder who met the requirements. Dampier and Fulton approved Crest Construction Company ("Crest") as being qualified to bid. Crest prepared and submitted a bid, which was, in fact, the lowest bid, but the Board awarded the contract to the second lowest bidder, McCrory Building Company, with which the Board had had prior satisfactory dealings. In refusing to award the contract to Crest, the Board cited concerns that Crest, a one-man operation with hardly any equipment and with no work in progress or any income from work in 1991, might be unable to finish the project before the 1993-94 school year. The Board further noted that it had had problems with bonding companies finishing projects on time when contractors failed to perform.

Crest sued the Board, alleging in its amended complaint that the Board had breached its duty of good faith and fair dealing. Crest sought to enjoin the execution of the contract between the Board and McCrory, and also sought a declaration that the contract, if executed, would be void. Crest also requested that the court order the Board to award the contract to it. Crest also asked for compensatory damages as reimbursement of bid preparation expenses. Crest also included McCrory as a defendant. The trial court, sitting without a jury, found that both Crest and McCrory were qualified to submit bids, but held that the Board had legitimate reasons to award the contract to McCrory. The effect to that holding was that the Board, even though it had required Crest to be prequalified, nevertheless could award the contract to the "lowest responsible bidder." The trial court denied the injunction and dismissed the claims. Crest appeals. We affirm.

I.

Crest's main argument is that the trial court erred in holding that the Competitive Bid Law authorizes an agency "to get the best quality at the lowest possible price." R. 41 (emphasis by the trial court). Crest argues that public agencies cannot award the contract on the basis of a bidder's being the most responsible bidder, and that the inquiry regarding a bidder's responsibility should end once that bidder is prequalified, as Crest was. In short, Crest says that the prequalification procedure exhausted the Board's discretion to award the construction contract to any other than the lowest bidder.

Crest's argument obviously has appeal, because the trial court expressly found that Crest had qualified under the Board's qualification procedure. We hold, however, that the trial court did not err, for the reasons we will set forth in this opinion.

Of course, public agencies covered by the Competitive Bid Law must award contracts to "the lowest responsible bidder." § 41-16-50(a). Although the Competitive Bid Law does not provide for awards based on relative degrees of "responsibility," quality is a consideration when determining responsibility. Mitchell v. Walden Motor Co., 235 Ala. 34, 177 So. 151 (1937); see also Arrington v. Associated General Contractors of America, 403 So.2d 893 (Ala.1981), cert. denied, 455 U.S. 913, 102 S.Ct. 1265, 71 L.Ed.2d 453 (1982).

Most of the decisions of this Court involving the application of the term "lowest responsible bidder" have construed the provisions of § 41-16-57(a), that part of the Competitive Bid Law involving contracts for the purchase of "commodities." See, e.g., Mobile Dodge, Inc. v. Mobile County, 442 So.2d 56 (Ala.1983); International Telecommunications Systems v. State, 359 So.2d 364 (Ala.1978); White v. McDonald Ford Tractor Co., 287 Ala. 77, 248 So.2d 121 (1971). Insofar as we can ascertain, this Court has not previously considered the question in a setting involving a construction contract where the public agency has determined that the bidder is qualified, pursuant to its prequalification procedure, but then determines, after the bid is submitted, that the bidder, even though it is the low bidder, is not the lowest responsible bidder.

Although it appears that this Court has not previously addressed the specific question presented here, the United States Court of Appeals for the Eleventh Circuit, applying and interpreting Alabama's Competitive Bid Law, has considered a case involving a factual situation analogous to the one presented here. In Advance Tank & Construction Co. v. Arab Water Works, 910 F.2d 761 (11th Cir.1990), the Court of Appeals held that, in determining the "lowest responsible bidder" an awarding authority could consider some of the same factors this Court has set out in decisions involving commodities contracts. Crest argues that "[t]he Eleventh Circuit decision in Advance Tank has greatly weakened the Competitive Bid Law of Alabama and has caused considerable consternation within the building industry since it was published," and Crest argues that this present case provides this Court the opportunity to undo the damage caused by Advance Tank and, in the process, to put reasonable limits on the discretion which may be exercised by public authorities in selecting the lowest responsible bidder for construction contracts."

Crest seeks to distinguish between a commodities contract and a construction contract, arguing that the considerations governing an award of a construction contract are different from those governing an award of a commodities contract, because all bidders for construction contracts offer to build according to the same plans and specifications. We disagree. Most of the factors listed in § 41-16-57(a) (quality, conformity to specifications, purpose, etc.) are factors commonly considered in regard to construction contracts awarded pursuant to § 41-16-50(a). Furthermore, both statutes are part of the same Article and should be construed together. See, e.g., Ex parte Mutual Savings Life Insurance Co., 536 So.2d 1378, 1382 (Ala.1988); Florence v. Williams, 439 So.2d 83, 87 (Ala.1983); Advance Tank, 910 F.2d at 764.

Although the case did not involve a construction contract, and even though a prequalification procedure was not involved, this Court in Inge v. Board of Public Works of Mobile, 135 Ala. 187, 33 So. 678 (1903), construing the words "lowest responsible bidder," said:

"In the letting of public contracts to the lowest responsible bidder, the duty of the officer is not merely ministerial, but partakes of a judicial character, requiring the exercise of discretion. A discretion, however, which should always be exercised to the end of subserving the public interest, and never in the interest of the bidder. In deciding upon the responsibility of bidders it is the duty of the board or officers not only to take into consideration the pecuniary ability of bidders to perform the contract, but also to ascertain which ones, in point of skill, ability and integrity would be most likely to do faithful, conscientious work, and to fulfill the terms of the contract."

135 Ala. at...

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