Thomas P. Carney, Inc. v. School Dist. of Philadelphia

Citation633 F. Supp. 1273
Decision Date30 April 1986
Docket NumberCiv. A. No. 85-6516.
PartiesTHOMAS P. CARNEY, INC. and Anastasi Brothers Corporation and Peter F. Schenck v. The SCHOOL DISTRICT OF PHILADELPHIA, a School District of the First Class, Herman Mattleman, Ernestine J. Rouse, Rodney D. Johnson, Helen Oakes, Joseph H. Previty, Samuel H. Rubin, Arthur W. Thomas, Christine Torres Matrullo, Board of Education of the School District of Philadelphia, and J.J. White, Inc.
CourtUnited States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)

COPYRIGHT MATERIAL OMITTED

Thomas J. McGoldrick, John H. Widman, McAleese, McGoldrick & Susanin, King of Prussia, Pa., for plaintiffs.

Cornelius C. O'Brien, Jr., Cornelius C. O'Brien, III, O'Brien and Davis, Philadelphia, Pa., for J.J. White, Inc.

Kenneth M. Cushman, Kenneth I. Levin, Andrew R. Rogoff, Pepper, Hamilton & Scheetz, Philadelphia, Pa., for The School Dist. of Philadelphia, Herman Mattleman, Ernestine J. Rouse, Rodney D. Johnson, Helen Oakes, Joseph H. Previty, Samuel H. Rubin, Arthur W. Thomas, Christine Torres-Matrullo, Bd. of Educ. of the School Dist. of Philadelphia.

MEMORANDUM AND ORDER

HANNUM, Senior District Judge.

This action arises from the October 11, 1985 award of the general construction contract on the Thomas Alva Edison High School and Technical Center project (Edison project) by defendant Board of Education to defendant J.J. White, Inc. (White) instead of to plaintiff Thomas P. Carney, Inc. (Carney). The plaintiffs, Carney, Anastasi Brothers Corporation (Anastasi) and Peter F. Schenck, allege that the defendant Board of Education rejected Carney's bid because it failed to meet the affirmative action requirements set forth at Section 14, paragraph II of the contract specifications. Plaintiffs concede that Carney's bid was not in compliance with the affirmative action requirements, but challenge the Board of Education's general construction contract award on the ground that the Board of Education violated Section 751 of the School Code of 1949, 24 P.S. § 7-751, by not awarding the general construction contract on the Edison project in a reasonable, non-discriminatory fashion to the lowest responsible bidder.1 There is no dispute that Carney's bid was the lowest of the four bids submitted.

The plaintiffs seek injunctive relief from the Court which would prohibit White from continuing to work on the Edison project and would direct the defendant School District of Philadelphia to proceed with the Edison project as if Carney had been awarded the general construction contract. The defendants assert the equitable defenses of laches and unclean hands and contend that a preliminary injunction is not warranted because: (1) Carney's bid was materially non-responsive to the requirements of the bidding specifications; (2) the affirmative action requirements are not violative of Section 751 of the School Code of 1949; and (3) the harm that the public will suffer if the Court grants the plaintiffs the relief they seek outweighs any potential injury to the plaintiffs. The defendants also assert that the Court does not have the authority to award the general construction contract on the Edison project to Carney and that the plaintiffs have an adequate remedy at law.2

This Court held a preliminary injunction hearing on December 18, 19, 20 and 23, 1985. Subsequent to the hearing, the parties submitted proposed findings of fact and conclusions of law as well as additional reply briefs. Following oral argument on February 14, 1986, the parties filed additional briefs as required by the Court. For the reasons developed in this Memorandum, the Court will not grant the plaintiffs the relief they seek.

I. Factual Background

On December 19, 1983, the Board of Education passed a resolution requesting the Superintendent of Schools to present to it a final report in June of 1987 with "definite recommendations regarding awarding of contracts to minority and female owned business." The resolution further provided that:

pending receipt of the final report from the Superintendent, the Board of Education will implement an interim measure establishing goals similar to that of the City of Philadelphia for the participation of minority and female owned businesses in the awarding of School District contracts for construction.... and direct the Superintendent to establish practices and procedures necessary for implementation of the interim plan including, but not limited to, developing reasonable waiver provisions for contracts and classes of contracts in appropriate circumstances.

On July 1, 1984, the Superintendent promulgated Economic Affirmative Action Standard Operating Procedures in order to "establish policies, procedures, requirements and guidelines which ensure participation by minorities and women in all areas of contracting and procurement within the School District of Philadelphia." The Superintendent noted that the standard operating procedures were predicated upon the following premises: (1) that certain racial and ethnic groups, including women, have suffered from social and economic disadvantage in a way that all others have not; (2) that there is a positive correlation between that disadvantage and the failure of the members of such groups to become successful entrepreneurs; and (3) that the goal of awarding 15% of the dollar value of the School District's contracts to minority-owned businesses and 10% to female-owned businesses will be attainable. Of particular importance to the action before the Court is the establishment in the standard operating procedures of a guideline by which the Superintendent mandated that:

a substantive criterion of compliance of all bid submissions for construction, including architectural and engineering services, in excess of $200,000 shall be the inclusion of a MINORITY AND FEMALE BUSINESS SUBCONTRACTING PLAN, whereby minorities shall be guaranteed subcontracting opportunities equal to no less than fifteen per centum (15%) of the value of the award, and whereby females shall be guaranteed subcontracting opportunities equal to no less than ten per centum (10%) of the value of the award.

On August 2, 1985, the School District began advertising for bids on the five contracts to be awarded in connection with the construction of the Edison Project. The Invitation to Bid contained a section titled Affirmative Action which included the following pertinent contract specifications:

The following paragraph is hereby a requirement of this bid specification and your sic are cautioned THAT FAILURE TO COMPLY AT THE TIME OF BID SUBMISSION WILL LEAD TO REJECTION OF YOUR BID.
AFFIRMATIVE ACTION REQUIREMENT
I. It is the policy of the Board of Education, School District of Philadelphia, that business owned and controlled by minorities and women shall have the maximum practicable opportunity to participate in the performance of all types of contracts let by the School District of Philadelphia.
The Contractor hereby agrees to carry out this policy in the awarding of subcontracts to the fullest extent consistent with the efficient performance of this contract. The contractor further agrees (1) to comply with any and all affirmative action requirements imposed pursuant to this contract; and, (2) to cooperate in any studies or surveys as may be conducted by the Board of Education, School District of Philadelphia, as may be necessary to determine the extent of the contractor's compliance with this notice clause.
The Contractor understands and agrees that failure to comply with any and all affirmative action requirements may result in rejection of the contractor's bid for nonresponsiveness.
II. CONSTRUCTION CONTRACTS IN EXCESS OF $200,000.00 THAT A MATERIAL ELEMENT OF COMPLIANCE FOR BID SUBMISSION OF THIS REQUIREMENT IS THE INCLUSION OF A MINORITY AND FEMALE BUSINESS SUBCONTRACTING PLAN WHEREBY MINORITY AND FEMALE OWNED AND OPERATED BUSINESSES SHALL BE GUARANTEED SUBCONTRACTING OPPORTUNITIES EQUAL TO NO LESS THAN FIFTEEN PER CENTUM (15%) FOR MINORITY BUSINESS CONCERNS, AND TEN PER CENTUM (10%) FOR FEMALE BUSINESS CONCERNS OF THE VALUE OF THE BID SUBMISSION.

(emphasis in original). The Invitation to Bid also contained a provision by which a bidder could request a waiver of the inclusion of a minority and female business subcontracting plan if it was unable to identify applicable subcontractors. On September 6, 1985, however, the School District issued Addendum No. 5 in which it clarified the waiver provision by providing that "no waivers of the sub-contracting requirement will be granted."

On September 19, 1985, Carney, White and two other contractors submitted sealed, written bids for the general construction contract on the Edison project. All four bids were higher than the architect's estimate of $18,570,200 and the construction program manager's estimate of $19,924,096. The base proposal amounts for the four bids ranged from Carney's bid of $22,267,706 to Curtis T. Bedwell & Sons, Inc.'s bid of $25,000,000. White's bid was $23,400,000 and the other contractor, R.M. Shoemaker Company, submitted a bid of $22,525,000. Although Carney's bid was the lowest, its proposal did not contain a minority and female business subcontracting plan which guaranteed that female-owned and operated businesses would receive subcontracting opportunities equal to 10% of the value of the bid submission.3 White's proposal, however, did comply with the affirmative action requirement.

The Board of Education met at a special board conference on October 11, 1985 to discuss the Edison Project. Prior to the conference, the Board's members received a memorandum which described three options with respect to the general construction contract. At the conference, Sally Akan, Esquire, general counsel to the Board of Education and preparer of the memorandum, explained the three options. The first option was to reject all bids and invite new bids. Akan, Esquire, described this option as presenting no significant legal risk, but...

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