Shaeffer v. City of Lancaster

• Citation: 754 A.2d 719
• Parties: David D. SHAEFFER, Appellant, v. The CITY OF LANCASTER.
• Decision Date: 19 May 2000
• Court: Pennsylvania Commonwealth Court

754 A.2d 719

David D. SHAEFFER, Appellant, v. The CITY OF LANCASTER.

Commonwealth Court of Pennsylvania.

Argued April 13, 2000.

Decided May 19, 2000.

Paul A. Logan, King of Prussia, for appellant.

Robert M. Frankhouser, Jr., Lancaster, for appellee.

Before SMITH, J., KELLEY, J., and McCLOSKEY, Senior Judge.

SMITH, Judge.

David D. Shaeffer appeals from an order of the Lancaster County Court of Common Pleas that denied his request for a preliminary injunction to enjoin the City of Lancaster (City) from awarding a publicly bidded construction contract to Johnston Construction Company (Johnston) for the removal and replacement of one water and one service pump and their respective valves (Project) at the Conestoga Water Treatment Plant (Plant). The question presented by Shaeffer is whether the trial court erred in failing to grant Shaeffer's request for a preliminary injunction to enjoin the City from awarding a public contract to a contractor who deviated from the bid documents and in failing to grant an injunction when there was no showing of irreparable harm as the difference between the lowest bidders was marginal.

I

In April 1999 the City solicited bids for the Project. Each bidder was required to submit a base bid for the Project (Base Bid) and an alternate bid for the removal and replacement of two additional pumps (Alternate Bid), a project that the City was considering if funding was available. Each bidder received contract specifications (Specifications) that delineated the types of products and construction methods to be used for the Project. The Specifications permitted a bidder to propose a substitution to the specified products and methods, so long as the substitution met certain conditions. The Specifications also gave the City the right to salvage the valves replaced under the Project. Section 02055 of the Specifications provided that the contractor must "[r]emove and store valves claimed as salvage by Owner at a location designated by Owner." The purpose of this provision was to give the City the option to use the valves subject to the Base Bid as spare parts for the second pair of pumps, if those pumps were not replaced.

B.K. Engineers and Constructors (BKEC) and Johnston submitted Base and Alternate Bids for the Project. BKEC submitted a Base Bid of $424,000 and a Base plus Alternate Bid (Total Bid) of $684,563. Johnston submitted a Base Bid of $448,609 and a Total Bid of $684,566. Johnston's bids contained a form entitled "Substituted Items" in which it differentiated its Base and Alternate Bids based upon whether the City exercised its right to salvage the replaced valves. If the City elected to waive its right to salvage the valves, Johnston's "contract credit" would reduce its Total Bid by $1,200, thus making it lower than BKEC's bid by $1,197. If the City elected to exercise its salvage right, BKEC's Total Bid would be $3 lower than Johnston's bid. Upon learning of the proposed substitution, BKEC protested to the City, but it nevertheless concluded that the substitution was permitted under the Specifications. With its credit, Johnston became the lowest bidder, and the City issued a notice of intent to award the contract to Johnston.¹

On August 19, 1999 BKEC and Shaeffer, a City taxpayer, filed a complaint in the Court of Common Pleas seeking a preliminary injunction to preclude the City from awarding the contract to Johnston. After a hearing, the trial court dismissed BKEC as a party for lack of standing and denied Shaeffer's request for the injunction. The court determined that Shaeffer did not demonstrate a clear right to relief because the court was unable to conclude that the proposed substitution was in clear violation of the Specifications. The court noted that, although the Specifications did not specifically require bidders to bid alternatively, they also did not expressly preclude such bidding. The court stated that BKEC could have provided a similar credit if it so desired and that there was arguable merit to the City's assertion that acceptance of the credit, even if irregular, was a "waivable informality."

The trial court also concluded that Shaeffer failed to prove irreparable harm. The court stated that, although violation of competitive bidding requirements may constitute irreparable harm and undermine the integrity of the bidding process, such was not the case here because there was no suggestion of collusion, favoritism, fraud or corruption. The court found that greater harm would result if the injunction were granted and that further legal proceedings or a rebid could delay the Project several months, during which time another pump failure could occur. Further, Shaeffer's actual harm would be a "de minimis" $3. The court also found that another pump failure would result in reduced availability of treated water for drinking and general use, reduced availability of water for fire protection and reduced revenue to the City from the sale of water to its customers.²

II

Shaeffer first argues that he demonstrated a clear right to relief because the use of a contract credit as a substituted construction method was an unlawful deviation from the bidding requirements and gave Johnston an improper competitive advantage. He relies on Conduit and Foundation Corp. v. City of Philadelphia, 41 Pa.Cmwlth. 641, 401 A.2d 376 (1979), in which the Court affirmed the grant of an injunction after determining that the lowest bidder was afforded a competitive advantage in submitting its bid which destroyed the competitive process. The City, on the other hand, argues that the contract credit was permitted as a substituted construction method and that, even if it was not, the City was entitled to accept it as a "waivable informality."

A contract award in a competitive bidding process must be overturned if mandatory requirements in bid instructions are not strictly followed. See Kimmel v. Lower Paxton Township, 159 Pa.Cmwlth. 475, 633 A.2d 1271 (1993)

; Karp v. Redevelopment Authority of City of Philadelphia, 129 Pa.Cmwlth. 619, 566 A.2d 649 (1989). Section 01630 of the Specifications provides, in relevant part: "Items of equipment and/or materials made by manufacturers other than those specified and which Bidder feels are `equal' to specified items may be offered as substitutes to specified items." Section 01630 also provides that a bidder proposing a substituted construction method must supply a detailed description of the proposed method; drawings illustrating the method; the name and address of similar projects on which the method was used; the date of use; and the name of the engineer.

Based upon a reasonable interpretation of Section 01630 of the Specifications, the Court concludes that Johnston's contract credit would not be permitted as a construction method. The information that must accompany a construction method substitution—drawings, use in past projects and the name of the engineer—suggests that the construction method is exactly that, a method or process of construction, and not a discount based on the waiver of a contractual right. The City cites no controlling case authority for its assertion that a contract credit represents a construction method, and none of the other bidders interpreted the Specifications as permitting the use of a contract credit in this manner. The City, nevertheless, argues that the contract credit was permitted because the City was entitled to accept it as a "waivable informality." The City asserts that it could waive the substitution because Section I of the Specifications provides that "[t]he unqualified right is reserved by the Owner to waive any informalities in, or reject any or all proposals, as may be deemed to be in the best interest of the Owner."

The case law is well settled that a public owner has no discretion to waive defects in the bidding...