Spiniello Const. Co. v. Town of Manchester

• Decision Date: 22 March 1983
• Citation: 456 A.2d 1199,189 Conn. 539
• Court: Connecticut Supreme Court
• Parties: SPINIELLO CONSTRUCTION COMPANY v. TOWN OF MANCHESTER et al.

Page 1199

456 A.2d 1199

189 Conn. 539

SPINIELLO CONSTRUCTION COMPANY v. TOWN OF MANCHESTER et al.

Supreme Court of Connecticut.

Argued Nov. 10, 1982.

Decided March 22, 1983.

Aaron Slitt, Hartford, with whom were Susan Kloct, Hartford, and, on the brief, William Gerace, Hartford, for appellant (defendant Raymond Intern. Builders, Inc.).

William J. Shea, West Hartford, for appellee (named defendant).

Emanuel N. Psarakis, Hartford, with whom, on the brief, was Charles B. Spadoni, Hartford, for appellee (plaintiff).

Before HEALEY, PARSKEY, SHEA, GRILLO and SPONZO, JJ. SPONZO, Associate Justice.

The plaintiff obtained a permanent injunction restraining the defendants, the town of Manchester (hereinafter Manchester) and Raymond International Builders, Inc. (hereinafter Raymond), from entering into or performing certain public works contracts. Raymond alone has appealed although Manchester has raised the issue of mootness.

Manchester was engaged in an extensive program of cleaning and lining water pipes to improve its water system. This program was divided into approximately twenty components. The town charter, § 5-22, ¹ mandated competitive bidding for construction contracts costing in excess of $2500. In May, 1980, Manchester publicly invited two separate bids on contracts known as # 2 and # 3. In its "Instructions to Bidders," Manchester reserved to itself the right to reject any or all bids. In addition, the instructions set forth certain requirements and guidelines such as (a) the prohibition of oral addenda to or interpretations of any bidding documents, ² (b) the necessity that all requests for such interpretations be in writing with the resultant interpretations issued as written addenda and mailed to prospective bidders, ³ and (c) the prohibition of conditional bids. ⁴

Three construction firms, including the plaintiff and Raymond, submitted separate bids on July 14, 1980. On contract # 3 the plaintiff's bid ($268,450) was the lowest and Raymond's bid ($272,200) was next lowest. On contract # 2 Raymond submitted the lowest bid ($397,860) and the plaintiff's bid ($399,160) was the next lowest. Unknown to the other bidders, a representative of Raymond contacted officials of Manchester on July 11, 1980, and inquired whether, in addition to the separate bids, it could file a reduced combined bid conditioned on both contracts being awarded to Raymond. The Manchester officials advised Raymond that it could submit such a proposal in addition to the separate bids. Despite the bid instructions which required written notice to all prospective bidders of interpretations of the bidding documents, no such notice was mailed to the plaintiff or to others.

On July 14, 1980, when the bids were opened publicly and in the presence of the plaintiff, the Raymond bid contained an additional provision that it would deduct the sum of $35,000 if both contracts were awarded to it. Since the plaintiff was not aware of this change in the bidding process, it had not submitted a discount proposal conditioned on the award of both contracts. The plaintiff filed a written protest which was denied. Also, the plaintiff requested permission to file a combined bid but this request was denied by Manchester on the ground that the bids had already been opened. On August 1, 1980, the plaintiff was notified that both contracts were awarded to Raymond.

The trial court found that the officials of Manchester acted out of the highest motives to do what was best for Manchester, namely, to save approximately $31,000 by awarding both contracts to the same bidder. The court also found that there was no corruption involved in the bidding process. The court did find, however, that the Raymond bid was conditional and prohibited by the bidding instructions and, under all the circumstances, the process amounted to favoritism toward Raymond. Finally, the court found that the plaintiff, a New Jersey corporation, was not a taxpayer in the defendant town.

In its appeal Raymond has raised the following two main issues: (1) the plaintiff, as an unsuccessful bidder and a nontaxpayer, has no standing to bring this action in the absence of fraud or corruption, and (2) if the plaintiff did have standing, the court erred in finding that the bidding was invalid.

It is a well established principle that "[m]unicipal competitive bidding laws are enacted to guard against such evils as favoritism, fraud or corruption in the award of contracts, to secure the best product at the lowest price, and to benefit the taxpayers, not the bidders; they should be construed to accomplish these purposes fairly and reasonably with sole reference to the public interest." John J. Brennan Construction Corporation, Inc. v. Shelton, 187 Conn. 695, 702, 448 A.2d 180 (1982); Austin v. Housing Authority, 143 Conn. 338, 345, 122 A.2d 399 (1956); 10 McQuillin, Municipal Corporations (3d Ed.Rev.) § 29.29. Where the municipality "reserves the right to reject any and all bids, no bidder can claim any contractual rights until he has been awarded the contract." 10 McQuillin, supra, § 29.77. An honest exercise of discretion by a municipality which has reserved such a right will not be disturbed by the courts so long as its officials observe good faith and accord all bidders just consideration in accordance with the purpose of competitive bidding. Courts will intervene to prevent the exercise of that discretion to deny a bid, therefore, only where fraud, corruption or favoritism has influenced the conduct of the bidding officials or when the very object and integrity of the competitive bidding process is defeated by the conduct of municipal officials. John J. Brennan Construction Corporation, Inc. v. Shelton, supra, 187 Conn. at 703, 448 A.2d 180; Joseph Rugo, Inc. v. Henson, 148 Conn. 430, 434, 171 A.2d 409 (1961); 10 McQuillin, ibid.

Although Manchester reserved the right to reject any or all bids, it violated its bidding instructions by accepting a conditional combined discount bid based on an oral addendum known only to Manchester and Raymond. No written notice of the interpretation of a bidding instruction was mailed to prospective bidders, including the plaintiff. By permitting Raymond to submit a conditional bid when other bidders were not afforded the same opportunity, Manchester precluded the other bidders from competing on equal terms. It defeated the object and integrity of the competitive bidding by unintentionally exhibiting favoritism to Raymond. While Manchester's actions were taken in good faith in an effort to obtain the best contract for its residents, judicial relief is warranted where municipal action amounts to an erosion on the integrity of the bidding statute. 10 McQuillin, supra, § 29.83. It is entirely possible that Manchester would have benefited financially if the other bidders had the same opportunity to submit a conditional or combined bid. Under the circumstances of this case the plaintiff had standing and there was ample support for the court's conclusion that the initial bidding was invalid. There is a growing trend for courts to permit one who has been aggrieved by a refusal to award a public contract pursuant to lowest responsible bidder provisions to also vindicate the public interest by challenging such arbitrary or capricious action by governmental officials. Merriam v. Kunzig, 476 F.2d 1233 (3d Cir.), cert. denied, 414 U.S. 911, 94 S.Ct. 233, 38 L.Ed.2d 149 (1973); Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859 (D.C.Cir.1970); see Data Processing Service v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970); ...