Pallette Stone Corp. v. State Office of General Services

• Decision Date: 07 June 1996
• Citation: 645 N.Y.S.2d 389,168 Misc.2d 869
• Parties: PALLETTE STONE CORPORATION, Petitioner, v. STATE of New York OFFICE OF GENERAL SERVICES et al., Respondents.
• Court: New York Supreme Court

Page 389

645 N.Y.S.2d 389

168 Misc.2d 869

PALLETTE STONE CORPORATION, Petitioner, v. STATE of New York OFFICE OF GENERAL SERVICES et al., Respondents.

Supreme Court, Albany County.

June 7, 1996.

Gleason, Dunn, Walsh & O'Shea, Albany (Thomas F. Gleason, of counsel), for petitioner.

Dennis C. Vacco, Attorney-General, Albany (Mary Ellen Clerkin, of counsel), for State of New York Office of General Services and another, respondent.

Paul B. Dusek, Lake George, for Warren County, respondent.

Devorsetz, Stinziano, Gilberti, Heintz & Smith, P.C., Syracuse (Frank A. Bersani, Jr., of Counsel), for Peckham Materials Corp., respondent.

HAROLD J. HUGHES, Justice:

The issue presented for determination is whether the Office of General Services can permit one of the contractors receiving a multiple award contract to voluntarily reduce the price of the commodity it is making available to the State after the bids are opened. During 1995, the procurement provisions of the State Finance Law were changed so as to allow the use of multiple award contracts whereby an award could be made to a number of contractors without any particular purchase order being issued (L.1995, c. 83, § 33). Subdivision 10 of section 163 of the State Finance Law provides, in pertinent part, as follows:

"10. Letting of contracts. Contracts for commodities shall be awarded on the basis of lowest price to a responsive and responsible offerer. Contracts for services shall be awarded on the basis of best value from a responsive and responsible offerer. Multiple awards for services and commodities shall be conducted in accordance with paragraph c of this subdivision.

....

c. The commissioner or state agency may elect to award a contract to one or more responsive and responsible offerers provided, however, that the basis for the selection among multiple contracts at the time of purchase shall be the most practical and economical alternative and shall be in the best interests of the state".

On September 26, 1995, the Office of General Services issued a Group Specification and Invitation for Bids for bituminous concrete to meet road repair requirements of state agencies and other municipal corporations for the period of January 1, 1996 to December 31, 1996. The specification called for a multiple awards contract as authorized by State Finance Law section 163(10). The contract is not awarded to a single low bidder, but rather is let to multiple contractors with the State or other eligible municipal corporation able to contract for a specific project with any contractor on the awards list after considering such factors as availability of the product at the specific time needed, delivery costs, proximity of the plant to the project site, and basic cost of the material. Over seventy bids were submitted and opened on November 13, 1995. The contract was awarded on March 8, 1996 to a total of sixty-four contractors, including Pallette and Peckham. Paragraph 54 of the general specifications provides:

"54. If substantially the same or a smaller quantity of a commodity is sold by the contractor under the same or similar terms and conditions as that of any State contract for such commodity then held by the contractor, at a price lower than the State contract price, the price to the State shall be immediately reduced to the lower price".

At page five of the group specifications under the title of General Information bidders are advised as follows:

"Any price reduction granted will not impact any purchases in progress where orders have already been placed with a contractor. Price reductions will be effective 10 calendar days after the date shown on the purchasing memorandum giving such notice".

On February 9, 1996, Peckham advised the Office of General Services that since it had submitted a bid to Washington County for concrete at prices lower than those offered to the State in November of 1995, it was offering to extend this same price reduction to the State and all municipalities. On March 14, 1996, the Office of General Services issued a memorandum approving the price reductions submitted by Peckham. This combined article 78 and breach of contract action ensued. The first cause of action is against the State respondents and argues that the March 14 purchasing memorandum does not comply with section 163 of the State Finance Law and was issued without any statutory authority. The second cause of action is against Warren County asserting that any purchase by the County made on the basis of the prices set forth in the purchasing memorandum would be illegal in violation of sections 103 and 104 of the General Municipal Law. The third cause of action is against Peckham, alleging that Peckham is inducing a breach of Pallette's contract with the State of New York. The fourth cause of action asserts that Peckham is wrongfully alleging that the purchasing memorandum is a valid...