SEABURY CONSTRUCTION CORP V DEPARTMENT OF ENVIRONMENTAL PROTECTION

SEABURY CONSTRUCTION CORP. V. DEPARTMENT OF ENVIRONMENTAL PROTECTION

COMMENT

The price preference program for minority-owned and woman-owned business enterprises and qualified joint ventures in public works procurement projects with the City of New York was declared invalid by the New York State Supreme Court of New York County.1 The City had implemented a price preference procurement program under the authority of the New York City Charter (“NYC Charter”), which generally requires that all competitive procurements using sealed bids be awarded to the lowest responsible bidder. Section 313(b)(2) of the NYC Charter has an exception to the general rule:
The agency letting the contract … shall … award the contract to the lowest responsible bidder, unless the mayor shall determine … that it is in the best interest of the city that a bid other than that of the lowest responsible bidder shall be accepted.
In 1991, a new NYC Charter section was added which required the Department of Business Services to promulgate rules to ensure meaningful participation of minority-owned and woman-owned businesses in the City’s procurement procedures. The rules which were promulgated established a 10 percent “target percentage” for minority-owned and woman-owned businesses, and qualified joint ventures. If a bid from a minority-owned or woman-owned business, or a qualified joint venture was not the lowest bid, but was within the target percentage of the lowest bid, then the purchasing agency would forward that bid and the lowest bid to the Mayor for a determination as to whether it was in the best interest of the City to award the contract to other than the lowest responsible bidder.
In early 1993, the Department of Environmental Protection awarded three projects to two companies that were qualified joint ventures. The lowest responsible bidder for these contracts had been submitted by Seabury Construction Corporation (“Seabury”). The two companies awarded the contracts submitted bids which were higher than Seabury’s bids, but were within the 10 percent “target percentage.” The City’s Chief Procurement Officer, acting for the Mayor, had determined that it was in the City’s best interest to accept the higher bid from the qualified joint ventures.
Seabury then sued the City, claiming that NYC Charter § 313(b)(2) violated section 103(1) of the General Municipal Law (“GML”). The relevant part of GML § 103(1) reads as follows:
Except as otherwise expressly provided by an act of the legislature or by a local law adopted prior to September first, nineteen hundred fifty-three, all contracts for public work involving an expenditure of more than twenty thousand dollars … shall be awarded by the appropriate officer, board, or agency of a political subdivision … to the lowest responsible bidder….
The court turned its attention to NYC Charter § 313(b)(2) in an effort to determine whether that section of the NYC Charter was adopted prior to September 1, 1953. However, both counsel and the court appear to have overlooked a key statutory construction analysis which could have provided a colorable, though likely unsuccessful, argument contrary to the court’s conclusion.
GML § 103 was enacted in 1953.2 The relevant part of the original statute read as follows:
Except as otherwise expressly provided by an act of the legislature, or except in an emergency, all contracts for public work involving an expenditure of more than twenty-five hundred dollars … shall be awarded by the appropriate officer, board, or agency of a political subdivision … to the lowest responsible bidder….
The phrase, “or by a local law adopted prior to September first, nineteen hundred fifty-three” is conspicuously absent from the original legislation. The department memorandum relating to the bill includes the following remarks:
The primary objective of this bill is to harmonize and to extend the application of laws relating to public bidding on contracts let by counties, cities, towns, villages, school districts and district corporations….
Section 103 will apply “except as otherwise expressly provided by an act of the legislature”. The quoted phrase was inserted in view of provisions in city charters and other laws of limited application which may prescribe different requirements with respect to public bidding.”
The law was then amended in 1955.3 The amended law read as follows:
Except as otherwise expressly provided by an act of the legislature or by a local law adopted prior to September first, nineteen hundred fifty-three, or except in an emergency, all contracts for public work involving an expenditure of more than twenty-five hundred dollars … shall be awarded by the appropriate officer, board, or agency of a political subdivision … to the lowest responsible bidder….
Through this examination of the chronology in which GML § 301 was enacted, it is evident that the legislature intended that the pre-September 1, 1953 date restriction apply only to local laws which were adopted by municipalities, and that acts of the legislature supersede GML § 103, regardless as to the date enacted. The legislative intent, documented in the department memorandum, shows that city charters may be considered to be an act of the legislature: they are specifically mentioned as an example of an act which is to be excluded from the coverage of GML § 103.
The definition of a city charter in the Municipal Home Rule Law (“MHRL”) § 2 states that a charter may be either a state statute or a local law. Thus, the question to be resolved is whether the NYC Charter is an act of the legislature (and therefore exempt from GML § 103), or if it is a local law (and therefore possibly subject to GML § 103).
MHRL § 36 provides for new and revised charters in four ways, three of which involve the establishment of a charter revision commission. Subdivision 1 allows a local law to provide for a new or revised charter. Subdivision 2 allows the municipal legislature to adopt a local law to either create a charter revision commission, or to submit to the electorate a question as to whether to create a charter revision commission. Subdivision 3 contains the requirements for the establishment of a charter revision commission by petition. Subdivision 4 allows the Mayor of a city to establish a charter revision commission.
The scope of authority for a charter revision commission to propose changes to a charter is contained in MHRL § 36(5). The new or revised city charter proposed by a charter revision committee “may contain such provisions or effect such results as may be effected by local law.”4 The New York City Corporation Counsel has interpreted this phrase as meaning that charter amendments made under MHRL § 36 “have the force and effect of local law.” In contrast, city charters which have been proposed by charter revision commissions appointed by the state legislature have force and effect of state law.5
Prior revisions to the NYC Charter have been enacted by the state legislature. The 1988 and 1989 amendments to the NYC Charter, however, were proposed by a charter revision commission appointed by the Mayor using the authority of MHRL § 36(4). Therefore, since there was no state legislative action, the Corporation Counsel has held that these amendments are local laws, and not acts of the legislature.
Although the court did properly reach the question of whether the challenged section of the NYC Charter was enacted after September 1, 1953, the court did not make a full and complete analysis of the underlying GML § 103 provisions, and could have reached an incorrect decision had the charter revision commission been appointed by the state legislature.
The next question considered by the court was whether NYC Charter § 313(b)(2) was enacted before September 1, 1953. The State Comptroller has opined that the state legislature did not “intend[] to preclude a charter law adopted after September 1, 1953 which is essentially a mere revision, simplification, consolidation, codification or restatement of a pre-September 1, 1953 special law or local law.”6
Prior to the 1988 and 1989 amendments, the exception to the lowest bidder rule was contained in NYC Charter § 343(b), which read as follows:
The agency letting the contract … shall … award the contract to the lowest responsible bidder, unless the board of estimate by a two-thirds vote shall determine that it is for the public interest that a bid other than that of the lowest responsible bidder shall be accepted.
The court noted that the difference between former NYC Charter § 343(b) and current NYC Charter § 313(b)(2) rests on the alteration of the balance of power. The old provision required a super majority vote of the Board of Estimate in order to bypass the lowest bidder requirement, while the new provision vests that power in a single person—the Mayor.
Obviously, the power to bypass the low bid could not have remained with the Board of Estimate, since the Board of Estimate was abolished by the new NYC Charter. The reallocation of this power from the Board of Estimate to the Mayor could have been the least drastic NYC Charter revision possible. Nevertheless, the alteration in the balance of power is a significant departure from the original structure of NYC Charter § 343(b). Hence, the court properly found that NYC Charter § 313(b)(2) is more than a mere revision of former NYC Charter § 343(b).
Thus, since NYC Charter § 313(b)(2) is a new provision adopted after September 1, 1953, it must comply with GML § 103. Since it does not comply with GML § 103, NYC Charter § 313(b)(2) is invalid to the extent that it is inconsistent with GLM § 103.

ENDNOTES

1 Seabury Const. v. Dept. of Env. Protection, 607 N.Y.S.2d 1017 (Sup. 1994).
2 1953 N.Y. Laws ch. 861 § 18.
3 1955 N.Y. Laws ch. 434 § 1.
4 Corp. Couns. Op. 11-90.
5 See Finegan v. Cohen, 275 N.Y. 432 (1937).
6 1981 N.Y. St. Comp. 111.

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