KM Enters., Inc. v. McDonald
| Decision Date | 25 September 2012 |
| Docket Number | 11-cv-5098 (ADS)(ETB) |
| Parties | KM ENTERPRISES, INC., d/b/a EMTRAC SYSTEMS, Plaintiff, v. JOAN MCDONALD, in her capacity as Commissioner of the NEW YORK STATE DEPARTMENT OF TRANSPORTATION, Defendant. |
| Court | U.S. District Court — Eastern District of New York |
MEMORANDUM OF
DECISION AND ORDER
APPEARANCES:
Jana Yocom, P.C.
Attorneys for the Plaintiff
Mt. Vernon, IL 62864
By: Jana L. Yocom, Esq., of Counsel
New York State Attorney General, Nassau Regional Office
Attorneys for the Defendant
New York State Attorney General, Syracuse Regional Office
By: Assistant Attorney General Timothy P. Mulvey
The Plaintiff in this case, KM Enterprises, Inc. (the "Plaintiff" or "KME"), filed a complaint against the Defendant, Joan McDonald, in her capacity as Commissioner of the New York State Department of Transportation (the "Defendant" or "Commissioner"), along with amotion for a preliminary injunction in the Northern District of New York on October 5, 2011. The action was subsequently transferred to this district on October 20, 2011. In short, this is a case about a public procurement contract solicited by the Town of Brookhaven (the "Town") for a project to install traffic preemption equipment. The Plaintiff KME was one of two competing subcontractors (the other being Global Traffic Technologies ("GTT")), whose price quote was ultimately not accepted by the prime contractor, Hinck Electrical Contractor, Inc. ("Hinck"), although KME is of the belief that it submitted the lowest price quote.
Presently before the Court is the Defendant's motion to dismiss for lack of jurisdiction pursuant to Federal Rule of Civil Procedure ("Fed. R. Civ. P.") 12(b)(1) and for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6). For the reasons set forth below, the motion is granted on both grounds and the action is dismissed with prejudice.
This action arises out of a public procurement contract solicited by the Town, under the authority of the New York State Department of Transportation ("NYSDOT") for a traffic project known as "Town of Brookhaven, Traffic Preemption Control System Pin No. 1757.43, Invitation to Bid #11039" (the "Project"). (1st Am. Compl. ¶ 4.) The Project consists of installing traffic preemption equipment, which changes red lights to green, at more than four hundred intersections in the Town, in order to allow emergency vehicles to travel through the intersections. (1st Am. Compl. ¶ 27.) Four prime contractors bid on the job, including Hinck, which was ultimately awarded the contract. (1st Am. Compl. ¶ 28.)
Prior to bidding on the Project, Hinck solicited price quotes from traffic preemption equipment vendors to factor into its bid to the Town. Two competing manufacturers of trafficpreemption equipment — the Plaintiff KME, whose equipment is known as the Emtrac Systems, and GTT, whose product is called Opticom GPS — submitted price quotes. (1st Am. Compl. ¶¶ 27, 30.) The project bid date was June 2, 2011. (1st Am. Compl. ¶ 45.) On June 1, 2011, KME provided Hinck with a price quote of $1,526,250 for the traffic preemption equipment. KME submitted this same price quote to the three other vendors who were also bidding on the project but who were ultimately unsuccessful. (1st Am. Compl. ¶ 44.) According to the Plaintiff, GTT's price quote was higher, because it submitted a price quote of $2,688,242.50.
The Amended Complaint states that after the bid opening, the Plaintiff inquired whether the prime contractors had used KME's price quote in their bids to the Town. KME claims that all three contractors, except Hinck, notified KME that their bid was considerably lower than the competition. (1st Am. Compl. ¶ 46-47.) The Plaintiff also alleges that Kris Morgan, President of KME, spoke with Paul Stram of Hinck and was told that KME was the low bidder. (1st Am. Compl. ¶ 49.) Based upon those communications, KME was of the belief that it had submitted the lowest price quote for the equipment supply contract as to all four prime contractors.
However, KME asserts that Morgan was contacted by Stram by telephone on August 4, 2011, and was told that the Town had instructed Hinck to order the equipment for the Project from GTT. Thus, according to the allegations in the Amended Complaint, there was no competitive bidding with regard to the equipment vendors, because Hinck was directed to use the product associated with the higher bid.
After Hinck's bid for the Project was accepted, it awarded the equipment supply contract to GTT. Other than Stram's alleged statement to Morgan, there are no other factual allegations regarding the Town's involvement in Hinck's decision to award the equipment supply contract to GTT.
The Plaintiff's lawsuit is premised on an alleged lack of compliance with federal law and regulations. In particular, it alleges that the Federal Highway Administration, in compliance with 23 C.F.R 635.411, required competitive bidding for the Project, and thus federal funding of the Project was conditioned upon proper application of this process. However, according to the Plaintiff, when the Town directed Hinck to order the equipment from GTT although KME was the lowest bidder, it effectuated what was practically sole source procurement rather than competitive bidding, which is not permitted under federal law. A sole source procurement is "a noncompetitive procurement, i.e., a procurement under which the Government does not seek or consider bids or offers from other than the designated source." Labat-Anderson, Inc. v. U.S., 42 Fed. Cl. 806, 848 (Fed. Cl. 1999). The Plaintiff makes allegations of this nature throughout the Amended Complaint. (See 1st Am. Compl. ¶ 57 (); see also id. ¶ 4 (); id. ¶¶ 35-36 ( ).)
On November 30, 2011, the Plaintiff filed an Amended Complaint, asserting causes of action for a declaratory judgment, an injunction, as well as a cause of action pursuant to 42 U.S.C. § 1983. On December 30, 2011, the Defendant filed the present motion to dismiss for a lack of subject matter jurisdiction and for a failure to state a claim.
While this motion was pending, the Court addressed the Plaintiff's motion for a preliminary injunction. Specifically, the Plaintiff sought to enjoin the Defendant (1) from disbursing federal funds during the pendency of this action for the Project; and (2) from authorizing further performance of the contract for the Project during the pendency of this action. This Court referred the matter to United States Magistrate Judge E. Thomas Boyle for the purpose of holding a hearing and issuing a Report and Recommendation addressing the Plaintiff's order to show cause and motion for a preliminary injunction.
Following a hearing, Judge Boyle issued a Report and Recommendation on January 5, 2012, which made the following findings: (1) that the Plaintiff failed entirely to demonstrate any irreparable harm in this action because the alleged injury could be adequately compensated by money damages; and (2) that the Plaintiff failed to demonstrate a likelihood of success on the merits because nothing in the evidence or testimony supported the allegation that the Town interfered with the award of the equipment supply contract to GTT. After carefully reviewing the Plaintiff's objections, on February 16, 2012, this Court adopted the Report and Recommendation in its entirety and denied the Plaintiff's request for a preliminary injunction.
Upon an examination of the Amended Complaint, the Court finds it difficult to decipher the Plaintiff's allegations. Namely, it is not entirely clear what injury the Plaintiff is alleging it suffered and what relief the Plaintiff is seeking.
Therefore, a useful starting point for the Court's analysis is the federal statute that forms the core of the action. The Federal Aid Highway Act ("FAHA") establishes certain requirements when federal monies are used for state and local highway improvements. This statute provides, in part, that a contract for a federal-aid highway project undertaken by a state or local government generally shall be awarded as a result of competitive bidding to the lowest responsive bid. 23 U.S.C.A. § 112(b)(1). The FAHA further provides that the state or local government may not enter into a contract awarded as a result of competitive bidding "without the prior concurrence of the Secretary [of Transportation] in the award thereof." 23 U.S.C.A. § 112(d).
Corresponding federal regulations illuminate the requirement of competitive bidding contained in the Code. 23 C.F.R. § 635.411 provides that:
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