Western Elec. Corp. v. New York City Transit Auth.
| Decision Date | 13 April 1990 |
| Docket Number | No. 87 Civ. 7021 (RWS).,87 Civ. 7021 (RWS). |
| Parties | WESTINGHOUSE ELECTRIC CORPORATION, Plaintiff, v. NEW YORK CITY TRANSIT AUTHORITY and Metropolitan Transportation Authority, Defendants. |
| Court | U.S. District Court — Southern District of New York |
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Smith, Pachter, McWhorter & D'Ambrosio, Vienna, Va., for plaintiff; Peter M. D'Ambrosio and John V. Snyder, of counsel.
Albert C. Cosenza, Vice President and Gen. Counsel, Brooklyn, N.Y., for defendant New York City Transit Authority; M. Margaret Terry, Scott H. Klein and Theresa R. Joyner, of counsel.
Defendants New York City Transit Authority ("TA") and Metropolitan Transportation Authority ("MTA") move for summary judgment dismissing the action of plaintiff Westinghouse Electric Corporation ("Westinghouse"). For the reasons stated below, the motion is granted and the complaint is dismissed.
MTA and the TA are public benefit corporations created by the New York State Legislature pursuant to Public Authorities Law §§ 1201, 1263 to develop and improve commuter transportation in New York City and the greater metropolitan area. Westinghouse is a corporation that engages in diversified manufacturing and construction activities, which embrace government contracting.
On October 4, 1988, Westinghouse commenced this action to obtain payment from defendants TA and MTA for certain work Westinghouse performed for defendants. Westinghouse contends the disputed work was beyond the scope of performance required by the parties' contract and beyond the scope of the competitive bid it submitted to obtain the contract award. Following extensive discovery conducted by both parties, the TA and MTA moved for summary judgment on October 18, 1989. After adjournments occasioned by requests of the parties to permit additional time to brief the issues, oral argument on the motion was heard on December 15, 1989 at which time it was fully submitted.
This lawsuit concerns a public works contract, Contract P-36221 (the "Contract"), bid out by MTA (by its agent, TA) and awarded to Westinghouse, as part of the MTA's multi-million dollar capital program to develop and improve the transportation system of New York City. The Contract was for the purchase and installation of power rectifier equipment at several subway substations, including the Flatbush-Willoughby substations. At issue is whether Westinghouse is entitled to compensation in addition to that provided for under the Contract for certain disputed remote telephone communications work that Westinghouse performed in connection with the Contract.
The work performed was the laying of new cable in subway tunnels to remote destinations of the Flatbush-Willoughby emergency alarm circuit that controls the DeKalb Avenue subway hub (the "Flatbush-Willoughby remote communications work" or the "disputed work"). Westinghouse contends that its accepted bid did not contemplate the performance of the disputed work nor was such work clearly called for under the Contract.
On August 5, 1982, TA advertised the Contract and issued a Contract Book setting forth the Contract terms and conditions, the project drawings and specifications, and requirements for bidders' proposal. Although the Book originally called for bid submission by September 29, 1982, several addenda to the Contract were issued over the next three months, resulting in the adjustment of the bid deadline to November 16, 1982.
The specifications issued for the project contained no reference to a requirement that extensive lengths of new telephone cable be installed to run from the Flatbush-Willoughby substations to remote locations. The project drawings, and in particular, Telephone Drawing TE-7, indicated that some cable work would be required, and Drawing TE-1 stated that cable indicated on the drawings was to be new, unless otherwise indicated. Neither drawing specified the quantity of cable in question or the remote destination of most of the cable runs. Drawing TE-7 did schematically indicate that it was incomplete and that additional details as to the scope of the cable runs would be provided by a further drawing to be issued as an Addendum.
The Contract Book recommended site inspection to the bidders, who were urged to visit project sites to inform themselves of the nature and conditions of the work and were presumed by the bidding instructions to have acquired full knowledge of conditions at the sites relating to the work. Bidding Instruction ¶ 7. In addition, the TA conducted a pre-bid tour of inspection for bidders on October 19-20, 1982, which representatives from Westinghouse attended. The pre-bid tour did not go to the site of the disputed Flatbush-Willoughby communications installation, nor did Westinghouse request, at that time or otherwise, an inspection of that location.
On November 4, 1982, the TA issued by mail an Addendum No. 4 to the Contract. In addition to describing the major addition of a circuit breaker house at another site, the Addendum contained three telephone drawings, P-8A, P-9A, and P-10, which provided additional information about the communications work. Westinghouse received the drawings and passed them on to its electrical installation subcontractor, Mass Transportation Electrical Construction Corp ("MTEC") on November 10, 1982, six days before the bidders' proposals were due.
Upon reviewing the drawings, MTEC's estimator for the bid contemplated that the drawings called for "new remote cable to be installed" and further recognized that the drawings represented "a change, a big change here in scope of the telephone work, so-called communications work." However, MTEC personnel preparing the bid also understood that it was TA's customary practice to procure this remote cable type of work through its Signals and Communications Department, not the Power Department that had oversight of the Contract in question, and MTEC had not previously performed such remote cable work. Its cable work had been limited in the past to the laying of short lengths of cable within the local area of the substations, and splicing into, rather than replacing, existing cables that ran to remote locations.2
MTEC believed it did not have time to survey the site to properly estimate the cost of the remote work, and was under considerable time pressures to prepare its portion of the Westinghouse bid. MTEC and Westinghouse did not seek a formal clarification of the drawings prior to preparing the bid for this work, nor seek the opportunity to inspect the Flatbush-Willoughby site.3 MTEC proceeded to prepare a bid estimate of $438,415 for Job Item 21A (the item number designating the work that included the disputed portion of the communications project), omitting the remote work (the long cable runs) its estimator had been concerned was called for by the Addendum 4 drawings and including in its item price only the cost of doing the local (as opposed to local and remote) cable connections. Westinghouse incorporated MTEC's price without revision in its total bid and submitted the bid to the TA.
On November 16, 1982, TA opened the sealed bids for the Contract submitted by Westinghouse, English Electric Company, and General Electric Company. Westinghouse was the low bidder, with a bid of $21,121,481. The other bids were $325,000 to $800,000 higher. All the bids were considerably below (19% to 22% lower than) the TA's engineer's overall project estimate of $25.9 million. None of the bidders sought to rescind their bids due to mistake during the 24-hour rescission window provided by the Contract.
The bid analysis by the TA showed significant percentage and ranges of deviation on several particular component bid items, including deviations ranging from 2% (General Electric) to 50% (English Electric) less than engineer's estimate on Item 22U, 44% (General Electric) to 57% (English Electric) less on Item 22V, and 46% (English Electric) to 76% (Westinghouse) less on the disputed communications item in question, Item 21 A. Westinghouse's bid for this pay item was 76% below the TA's engineer's estimate, making it Westinghouse's and also G.E.'s (but not English Electric's) most deviant item bid.4 The TA engineer's bid analysis concluded from the across-the-board level of lower-than-forecasted bidding that all of the bidders had been successful in obtaining much reduced prices for major items than the prices that had been paid in the previous TA contracts upon which the TA engineer had based his estimates, and that the inflation factor (15%) that TA had employed had seriously deviated from the then-current economic climate of 5% inflation.
The engineer recommended the Contract be awarded to the apparent low bidder, Westinghouse, and on December 28, 1982, the TA, acting as agent for the MTA, awarded the Contract to Westinghouse.
Westinghouse was required to submit a Detailed Estimate Breakdown ("DEB") within 30 days from the notice of award pursuant to Article 3.01 of the Contract. Westinghouse submitted a DEB 77 days after the Contract was awarded, on March 16, 1983. The Item 21A communications work portion of the DEB, prepared by Frank Caristia of MTEC, was consistent with the original Westinghouse bid in that it did not include cost estimates for installation of the remote cable connections and, for the same reason, the DEB was inconsistent with the scope of the work that TA intended to require through the telephone drawings.5 Mr. Caristia states in preparing the DEB that he found the drawings governing this work to be illegible, unclear and inconsistent, but he did not request full-size drawings, seek clarification of the drawings, conduct a site survey, or report any inconsistencies to the TA.
The DEB for the disputed Item was received and reviewed by the TA and approved...
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