McMaster Const., Inc. v. Board of Regents of Oklahoma Colleges
| Citation | 934 P.2d 335 |
| Decision Date | 04 March 1997 |
| Docket Number | No. 86856,86856 |
| Parties | 117 Ed. Law Rep. 343, 1997 OK 21, 1997 OK 23 McMASTER CONSTRUCTION, INC., a corp.; Lippert Bros., Inc., a corp.; Utility & Environmental Constructors, Inc., a corp.; L.F. Downey Construction, Inc., a corp.; Buckner & Moore, Inc., a corp.; Lambrecht Construction, Inc., a corp.; Terra Construction, Inc., a corp.; and Wynn Construction Co., Inc., a corp., Appellants, v. BOARD OF REGENTS OF OKLAHOMA COLLEGES, a Constitutional Board; Gene Nelson, Belva Howard, Wayne Sallsbury, Leonard Wilkins, Tracy Kelly, Paul Barby, Joe Paul Hemphill, Mike Brown and Sandy Garrett, all members of the Board of Regents of Oklahoma Colleges; University of Central Oklahoma, an Oklahoma institution of Higher Education; George Nigh, President and Chief Administrative Officer of the University of Central Oklahoma; Flintco, Inc., a corp.; and Sverdrup Facilities, Inc., a corp., Appellees. |
| Court | Oklahoma Supreme Court |
John B. Hayes, Looney Nichols Johnson & Hayes, Oklahoma City, for Appellants.
Drew Edmondson, Attorney General of Oklahoma, Ross Johnson, Guy L. Hurst, Oklahoma City, for Appellees Board of Regents, Members of the Board, University of Central Oklahoma, and George Nigh.
Sheridan A. McCaffree, Board of Regents of Oklahoma Colleges, Oklahoma City, C. Max Speegle, Edmond, for Appellees University of Central Oklahoma and George Nigh.
Drew Neville, Russell Cook, Deborah A. Wolfe, Linn & Neville, Oklahoma City, for Appellee, Sverdrup Facilities, Inc.
Clyde A. Muchmore, Robert G. McCampbell, Crowe & Dunlevy, P.C., Oklahoma City, for Appellee, Flintco Inc.
The threshold issue in this appeal is whether the management construction contracts entered into by the University of Central Oklahoma (UCO) and defendants Flintco and Sverdrup Facilities (construction management companies) are subject to the competitive bidding procedures as set forth in the Oklahoma Public Bidding Act (Act). 1
In 1992, the people of Oklahoma authorized a bond issue for capital improvements to UCO. The Board of Regents of Oklahoma Colleges (Regents) approved UCO's plan to utilize construction managers 2 for the improvements rather than utilizing a general contractor. 3 UCO, by newspaper advertisements, solicited proposals for construction management services.
UCO received seven proposals, including ones from plaintiffs Lippert Bros. and Wynn Construction Company and defendants Flintco and Sverdrup Facilities. After several companies made presentations, the Regents voted to contract with Flintco and Sverdrup to provide construction management services. On January 10, 1995, UCO entered into a contract with Sverdrup Facilities. Then on February 17, 1995, UCO entered into a contract with Flintco.
The construction management contracts of Sverdrup and Flintco are similar. 4 Summarily, Sverdrup and Flintco were required to develop detailed schedules and cost analysis, assist in soliciting and awarding bids, and supervise and coordinate the contractors and delivery of materials. Although some of the duties specified in the contracts have traditionally been performed by a general contractor, unlike a general contractor, neither Sverdrup or Flintco actually construct any part of the building, subcontract for the actual construction, or supply any of the material. Neither company guarantees maximum fixed costs of the projects, and neither company reaps the benefits of cost-cutting measures on the projects. The construction management companies act more as agents on behalf of UCO than would a general contractor. 5
The plaintiffs initiated this suit by filing a petition in the district court on May 19, 1995, asking for a declaration that the contacts are void, for an injunction prohibiting further performance and payment under the contracts, and a writ of mandamus requiring UCO to comply with the requirements of the Oklahoma Competitive Bidding Act (Act). 6 The district court, without discussion, granted summary judgment in favor of the defendants.
The plaintiffs filed this appeal arguing the contracts are void for the following reasons: (1) the construction management contracts are subject to Oklahoma Competitive Bidding Act because they are contracts for the purpose of making a public improvement or constructing a public building, and the Act was not followed; (2) the contracts require the companies to perform architectural and engineering services without being licensed; and (3) if the management contracts are not subject to Oklahoma's Public Bidding Act, then the management companies are consultants within the meaning of and subject to the State Consultants Act, 7 and UCO failed to follow the procedures set out therein. The Court of Civil Appeals affirmed the trial court's judgment finding that the plaintiffs had failed to bring the suit within the ten day period prescribed by the section 122 of the Act. 8 This Court granted certiorari.
Absent a constitutional, statutory, or regulatory restraint, Oklahoma's public entities are free to contract for construction services without soliciting bids. 9 The Oklahoma Competitive Bidding Act acts as a restraint on public agencies. The Act requires all public construction contracts as defined in the Act to be competitively bid. 10 A public construction contract is a contract which exceeds $7,500 and is awarded "for the purpose of making any public improvements or constructing any public building or making repairs to the same." 11 UCO argues the construction management contracts are not encompassed within this definition.
The purpose of the Act is to "obtain the best results at the lowest cost, the greatest value for the fewest dollars." 12 Competitive bidding statutes are to be construed to give effect to the apparent legislative policy. 13 The Act is intended to require a contract to be awarded to the lowest bidder when work or materials must conform to specifications so that accurate comparisons can be objectively made. 14 When a contract involves professional judgment or scientific knowledge, the legislature does not require the lowest price to be the determining factor. 15 A contract for personal services, such as services of architects, engineers, and surveyors, is not subject to competitive bidding statutes because the services are not subject to uniform specifications. 16 Because the Flintco and Sverdrup contracts are for a personal service and call for professional judgment, they are not subject to the Act.
In Carpet City, Inc. v. Stillwater Municipal Hospital Authority, 17 this Court defined construction to mean "to put together the materials and constituent parts used [in a building] in their proper place and order." 18 Under this definition, only those contracts where the contracting party is supplied with materials or labor are subject to the Oklahoma Competitive Bidding Act. Contracts for services for professional expertise are not subject to the Act. In the case of the construction management contracts, the management companies do not put together any of constituent parts or supply any of the materials. Rather, the companies act as personal representatives of UCO by providing services which require expertise in coordinating and managing the building process. When a construction management company acts solely in this capacity, it is not performing construction as defined by Oklahoma competitive bidding statutes. 19
The overwhelming majority of jurisdictions which have addressed the issue have concluded that construction management contracts which do not call for the furnishing of equipment, building labor or materials are not subject to competitive bidding statutes. 20 Plaintiffs argue that the competitive bidding statutes of these jurisdictions are sufficiently different from Oklahoma's competitive bidding act that these cases should not be followed. After reviewing the cases and the applicable statutes, we find any differences in the statutes are inconsequential. 21
Neither the Public Building Construction and Planning Act 22 (Planning Act) or the State Consultants Act 23 applies to the construction management contracts at issue in this case. Under sections 204(B)(2), 206.1, and 207.2(B)(8) of the Planning Act, the Board of Regents is exempt from the Planning Act's substantive provisions. Thus, the Planning Act does not impact UCO so far as the plaintiffs' arguments are concerned.
Initially, the plaintiffs conceded that the State Consultants Act does not apply. Plaintiffs have changed their position and now argue if the Oklahoma Public Competitive Bidding Act does not apply, then the State Consultant Act applies and has not been followed. Pursuant to sections 60 and 61 of the State Consultant Act, it applies only to licensed architectural, registered engineering, and registered land surveying services. Because the construction management contracts do not fall within any of these categories, they do not come within the purview of the State Consultant Act.
Plaintiffs argue that the contracts require the construction management companies to practice architecture and engineering without a license. For a service to constitute the practice of engineering, the service must require "engineering education, training and experience in the application of special knowledge of the mathematical, physical and engineering sciences...." 24 Similarly, for a service to constitute the practice of architecture, the service must require "architectural education, training and experience...." 25 Merely because a service could be performed by an architect or engineer does not mean that one must be licensed to perform the service. As pointed out by the plaintiffs, many of the services performed by the companies are generally performed by a general contractor. To...
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