Westinghouse Elec. Corp. v. Grand River Dam Authority

• Decision Date: 13 May 1986
• Docket Number: No. 60102,60102
• Citation: 1986 OK 20,720 P.2d 713
• Parties: WESTINGHOUSE ELECTRIC CORPORATION, a Pennsylvania Corporation, Appellant, v. GRAND RIVER DAM AUTHORITY, Brown Boveri Corporation, a New York Corporation, and Benham-Holway Power Group, Appellees.
• Court: Oklahoma Supreme Court

Page 713

720 P.2d 713

1986 OK 20

WESTINGHOUSE ELECTRIC CORPORATION, a Pennsylvania Corporation, Appellant, v. GRAND RIVER DAM AUTHORITY, Brown Boveri Corporation, a New York Corporation, and Benham-Holway Power Group, Appellees.

No. 60102.

Supreme Court of Oklahoma.

May 13, 1986.

As Corrected May 21, 1986.

Jon D. Douthitt, Trial Judge.

This is an appeal from an order denying injunctive relief to the appellant, Westinghouse Corporation, the unsuccessful bidder on a public contract. The trial court denied the permanent injunction because it found that the bidding proceedings employed were in total compliance with Oklahoma law, and that there was no conflict of interest on the part of the Grand River Dam Authority or its consulting engineers. Because the contract has been substantially performed, and because the appellant failed to seek a stay of the trial court's refusal to enter the injunction, the appeal is moot.

APPEAL DISMISSED.

Wm. L. Peterson & Associates, Oklahoma City, and Wallace and Owens, Inc., Miami, for appellant.

Jones, Givens, Gotcher, Boyle & Bogan, Inc. by Deryl L. Gotcher, Graydon Dean Luthey, Jr., Vicki J. Vaniman, Tulsa, for appellee, Grand River Dam Authority.

Huffman Arrington Kihle, Gaberino & Dunn by John A. Gaberino, Jr., Larry D. Henry, Tulsa, Rorschach, Pitcher, Castor, & Hartley by Jack L. Rorschach, Vinita, for appellee Brown Boveri Corp.

Howard LaSorsa & Widdows by P. Gae LaSorsa, William G. LaSorsa, Tulsa, for appellee Benham-Holway Power Group.

KAUGER, Justice.

The question presented is whether the trial court properly denied the permanent injunction sought by Westinghouse Electric Corporation (WEC-appellant) to prevent the Grand River Dam Authority (GRDA) from awarding a contract for a generator to the Brown Boveri Corp. (BBC). WEC's failure to seek a temporary injunction before judgment was entered by the trial court pursuant to 12 O.S.1981 § 1382, or to stay the enforcement of the agency decision or the judgment of the district court under 75 O.S.1981 § 319 and 12 O.S.1981 §§ 968, 974, has permitted BBC substantially to complete Contract 2-R and has rendered the appeal moot. Under these circumstances, we have no choice but to dismiss this appeal.

WEC challenges the propriety of GRDA's conduct in relation to the bidding and evaluation of proposals submitted on Contract 2-R, and in the granting of the contract to BBC. WEC alleges that there was a conflict of interest on the part of several members of the GRDA's board of directors and staff, as well as among the employees of the Benham-Holway Power Group (B-HPG), the engineering firm hired to evaluate the bids on the contract. WEC asserted at trial, and on appeal, that in the course of the bidding period, GRDA members behaved unethically and violated several state statutes, including the Oklahoma Public Competitive Bidding Act, ¹ The Code of Ethics for State Officials and Employees, ² the Oklahoma Open Meeting Act ³ and the Oklahoma Buy American Act. ⁴

A detailed explanation of the facts alleged would require a long and complicated narrative involving a variety of actions which took place over a period of more than five years; however, a slightly abbreviated version of the facts will suffice to supply an adequate background.

In 1976, GRDA determined that the increased power needs of the surrounding community required the construction of a new power station, and it decided to build a coal-fired electric power generating station at Chouteau, Oklahoma. Bids were called for, and pursuant to 61 O.S.1981 § 101 et seq., the Public Competitive Bidding Act, GRDA selected WEC to supply the turbine generator, and Foster-Wheeler Corp. to furnish the station's boiler on Unit 1. In the spring of 1979, GRDA contacted B-HPG requesting a feasibility study to determine if a second coal-fired generating station should be constructed. In accordance with its general consulting contract with GRDA, B-HPG performed the study, and in May 1980, B-HPG presented its report to the Board recommending construction of a second unit at the Chouteau site.

In December of 1979, WEC escorted various GRDA Board and staff members on a three to five day tour of its plant and facilities in Pittsburgh and Philadelphia, Pennsylvania, and Winston-Salem and Charlotte, North Carolina. GRDA's representatives were flown to the east coast on WEC's executive jet and transported from place to place in a mobile home leased by WEC with all expenses being paid by WEC. [The GRDA members were not accompanied by their spouses on this trip.]

The Board of Directors of GRDA authorized construction of the second unit in September 1980, and the GRDA staff began planning and drafting specifications for Unit 2. Later that month, the staff mailed letters to national engineering firms soliciting bids for Unit 2. Responses were received from sixteen firms, and a special committee of the Board reduced this number to six viable candidates. The committee then interviewed the six firms, recommending three to the Board. These companies submitted bids for performing the engineering on Unit 2. In February 1981, the Board voted to award a variable fee engineering contract to B-HPG. The bonding authority for construction was approved by the State of Oklahoma in May of that year.

In February of 1981, several GRDA staff members and their spouses were invited to tour BBC's plant and facilities in Baden, Switzerland. This trip was also attended by the Chairman of the Board of GRDA, the President of B-HPG, and their wives. These guests were flown from Tulsa to London on a commercial airline, where they spent the night and attended a performance of the play "Oklahoma". The GRDA and B-HPG personnel and wives were then flown to Germany where they spent a few days touring BBC generating stations and sightseeing. They were transported by train to Baden, Switzerland, where they toured BBC's manufacturing plant. The plant tour took at least three days, and the trip lasted eight or nine days. All expenses were paid by BBC.

In April, 1981, GRDA notified the equipment vendors, who had indicated an interest in Unit 2, of its intent to proceed with the project, requesting comments on the preliminary specifications proposed for the unit's turbine generator. These comments were received later that month and evaluated by the GRDA staff and B-HPG. In May 1981, GRDA hired a second engineering firm, R.W. Beck Associates (BECK), on a fixed rate contract to perform an additional evaluation of the expected bid proposals.

In May of 1981, the GRDA requested bids on delivery of a turbine generator for Unit 2. Shortly thereafter, WEC began sending GRDA Board and staff members, and B-HPG evaluating engineers letters, and pieces of a checkerboard set as part of their "Buy American" campaign. The checkerboards bearing the WEC logo were distributed a few parts at a time until about June 15, 1981. On June 2, 1981, the sealed bids on Contract 2 were received by the GRDA, which were opened and publicly read aloud in the presence of a GRDA administrative officer. On June 6, BECK submitted its evaluation of the bids on Contract 2 to GRDA's general manager. BECK announced BBC to be the low evaluated bidder, and on July 7, B-HPG submitted its findings reaching the same conclusion.

On July 13, a WEC representative contacted the GRDA vice-chairman requesting a re-bid of Contract 2. On July 15, 1981, the Board met and decided to award the Unit 2 boiler contract to Foster-Wheeler Corp. At this meeting, the Board also voted not to award Contract 2, but to re-bid the contract. On July 23, B-HPG met with each bidder, debriefed them on the bids, and advised them of evaluation criteria.

On July 29, the turbine contract, designated Contract 2-R, was readvertised. On August 22, 1981, sealed bids were received, opened, and publicly read in the presence of a GRDA administrative officer. In early September, B-HPG and BECK provided the GRDA with evaluations of the bids. Again, both firms evaluated BBC as the lowest bidder on Contract 2-R. WEC's actual bid was $26,120,945.00 a little less than $1,000,000.00 under BBC's offer but after the bids were evaluated, it was determined that WEC's bid was actually 21 to 24% higher than BBC's bid. On September 16, 1981, the Board voted to award the contract to BBC, and on October 2, a purchase contract was executed.

On October 12, 1981, WEC filed an action seeking permanently to enjoin the awarding of Contract 2-R to BBC. The case was tried from January 10 to January 18, 1983, and February 7 to February 16, 1983. The district court refused to grant a permanent injunction and WEC appealed. On May 13, 1983, the appellees responded to WEC's petition-in-error and moved for a dismissal of the appeal because of mootness. On June 20, 1983, this motion was denied without prejudice to reargument of the mootness issue. In February, 1984, BBC delivered the turbine generator to GRDA. It has been installed in Unit 2. On August 15, 1984, the appellees again filed a motion to dismiss because of mootness; WEC's response was filed October 29, 1984.

I

THE CONDUCT OF MEMBERS AND STAFFS OF GOVERNMENTAL AGENCIES

IS REGULATED BY STATUTE

The trial court found that the inspection trips sponsored and paid for by WEC and BBC were merely advertising and that they served a valuable purpose not only for the manufacturer but also for GRDA. Although we are required to find that the appeal is technically moot, we are not prevented from discussing the standards of conduct prescribed by law for those who are entrusted with the public pursestrings.

The GRDA is not a private industry--it is a governmental agency of the State of Oklahoma created by the legislature. ⁵ As such, the conduct of its Board and staff members must comply with 74 O.S.1981 § 1401 et seq., the Code of Ethics for State Officials and Employees, (now 74 O.S.Supp.1982 § 841.5, the Oklahoma Personnel Act). The public policy of the state is that no state...