Gerard Const. Co., Inc. v. City of Manchester

• Decision Date: 11 June 1980
• Docket Number: No. 80-224,80-224
• Parties: GERARD CONSTRUCTION COMPANY, INC. et al. v. CITY OF MANCHESTER et al.
• Court: New Hampshire Supreme Court

Page 1137

415 A.2d 1137

120 N.H. 391

GERARD CONSTRUCTION COMPANY, INC. et al. v. CITY OF MANCHESTER et al.

No. 80-224.

Supreme Court of New Hampshire.

June 11, 1980.

McLane, Graf, Raulerson & Middleton, Manchester (James R. Muirhead, Manchester, orally), for plaintiffs.

Elmer T. Bourque, City Sol., by brief and orally, for defendants.

Sheehan, Phinney, Bass & Green, Manchester (Henry B. Stebbins, Manchester, orally), for intervenor, Charles Const. Co., Inc.

PER CURIAM.

The issue before us is whether a municipality may lawfully consider differences in proposed completion times in determining the lowest responsible bidder when the project specifications fail to clearly indicate either a completion date or that the length of construction time would be a determining factor in awarding the contract. We hold that under the circumstances of this case, a difference in proposed construction time is not an appropriate factor for consideration in determining the lowest responsible bidder.

This case arises from the following circumstances. On February 14, 1980, the City of Manchester (defendant), through its Joint School Building Committee established under RSA 199:3, invited bids for the construction of Area 15 Regional Vocational Education Center. See RSA ch. 188-E. The plaintiff, Gerard Construction Company, Inc. (Gerard), and the intervenor, Charles Construction Company, Inc. (Charles), both bid on the project. The notice to bidders and bid specifications contained no project completion date; rather, the bid proposal form contained blank spaces in which bidders were to indicate the number of calendar days and months in which they would complete the project. It appears that although certain of the defendant's school officials understood that the expected date for occupancy of the school was to be in September 1981, this information was neither included in the specifications nor communicated to potential bidders. The bid form did require a lump sum price and required a schedule of certain price reductions for specified site alternatives that is not pertinent here.

In all, the defendant received eight bids. The lump sum bid prices ranged from a low of $6,693,900 to a high of $7,378,000, while completion times ranged from a low of 500 days to a high of 730 days. Gerard's proposal contained the lowest lump sum price but involved the longest completion time, 730 days. Charles' proposal, though containing a lump sum price one hundred dollars higher than Gerard's, indicated a construction time of 540 days, or six months less than Gerard's bid.

On March 17, 1980, the Joint School Building Committee (committee) met to consider the bids. The minutes of this meeting reveal, among other things, the committee's concern with the time of completion of the project. At the close of the meeting, the committee voted to recommend acceptance of Charles as the project contractor. Shortly thereafter, Charles was notified of the committee's recommendation and forthwith commenced project planning.

Meanwhile, upon learning that in spite of its lower bid price, the project was to be awarded to another firm, representatives of Gerard sought and obtained a hearing before the committee on March 27, 1980. No representative of Charles was at the hearing. At the hearing, two vice-presidents of Gerard appeared and explained to the committee that their firm possessed the capability and intention of completing the project in 540 days; that the longer period specified in the Gerard bid was a very conservative estimate that was only offered because there was no indication in the specifications that an earlier time for completion was required. Counsel for Gerard indicated his view that the earlier completion date proposed by Charles afforded no ground for denying the contract to the low bidder when time was not made an essential element of the contract. Following the hearing, and after seeking legal advice from the city solicitor's office, the committee voted on April 15, 1980, to award the contract to Gerard.

The appropriation of funds for the center was scheduled to be considered by the board of mayor and aldermen of the city of Manchester (board) on May 6, 1980. Upon learning of the committee's reversal, however, Charles successfully persuaded the board to table the issue and to direct the committee to reconsider its decision designating Gerard the contractor. The board directed the committee, upon reconsideration, to consider certain other factors beyond price in determining the lowest responsible bidder.

In response to the board's order, the committee met on May 9, 1980, to reconsider the issue. The Manchester City Charter contains the following provision:

II. In determining the lowest responsible bidder, in addition to price, the following shall be considered:

(a) The ability, capacity and skill of the bidder to perform the contract or provide the service required;

(b) Whether the bidder can perform the contract or provide the service promptly, or within the time specified, without delay or interference;

(c) The character, integrity, reputation, judgment, experience and efficiency of the bidder;

(d) The quality of performance of previous contracts or services.

Part E, Article V, Sec. 5.4, II of the Special Acts of the City of Manchester.

At the hearing, the committee proceeded to hear evidence to the effect that the city would incur substantial additional costs should the project extend to the twenty-four months specified in the Gerard bid. Among these costs were $12,000 to $15,000 salary expense to retain a clerk of the works for an additional half year, $37,500 storage expense to warehouse equipment purchased for the project and the unspecified inflationary expense of delaying certain material purchases. Beyond these pecuniary considerations, evidence was presented by school officials that a September 1981 occupancy of the facility would benefit the children of Manchester.

Following the hearing and after several hours of deliberations, the committee voted to award the contract to Charles. The committee based its award in part on the fact that while Gerard's lump sum price was only one hundred dollars less than Charles', the latter proposed to complete the project 190 days sooner. The substantial savings to the city emanating from an earlier completion date, in the committee's view, rendered Charles' the lowest responsible bid.

On the following Monday, May 12, 1980, Gerard petitioned the Hillsborough County Superior Court for an order, ex parte, temporarily restraining the defendants from contracting with Charles on the grounds that such an award was illegal in respect to the Manchester Charter provisions relative to competitive bidding. The order was granted by Pappagianis, J., who subsequently granted Gerard's motion for an expedited final hearing. On May 13, 1980, Charles was allowed to intervene by the court. The final hearing was held on May 15, 1980, over Charles' objection, at which the records of the various proceedings, as well as other evidence, were presented. By an order dated May 19, 1980, the court found that though all the parties had acted in good faith, the times of completion of the project were not lawful considerations under the charter provisions for competitive bidding. Accordingly, it entered a declaratory judgment that as between Gerard and Charles, Gerard submitted the lowest bid on the skills center and "is entitled to the contract in the current bid circumstances if the appropriate municipal authorities find that Gerard Construction Company, Inc., is a responsible contractor." Thereafter, Charles filed a notice of appeal in this court.

All parties to this appeal acknowledge that the case turns upon an interpretation of the city's competitive bidding provisions. Absent such an ordinance, municipalities like private parties generally, are free to contract without the requirement of advertisement and competitive bidding. 72 C.J.S. Supp. Public Contracts § 8 (1975); 64 Am.Jur.2d Public Works and Contracts § 36 (1972); See 10 E. McQuillin, Municipal Corporations § 29.05 (3d ed. 1966). Where such provisions are in force, however, strict compliance with the municipal scheme is required; otherwise the contract award is void. See State v. Cote, 95 N.H. 428, 65 A.2d 280 (1949); Platt Elec. Sup., Inc. v. City of Seattle, 16 Wash.App. 265, 555 P.2d 421 (1976); 10 E. McQuillin, supra at § 29.28.

The defendant's competitive bidding procedures are contained in part E, article V, section 5.4 of the Special Acts of the City of Manchester, or, more commonly its charter. It provides that "(a)ll purchases . . . for materials, equipment, supplies, services, ...