Matter of LVI Envtl. Servs. Inc. v New York State Urban Dev. Corp.

[*1] Matter of LVI Envtl. Servs. Inc. v New York State Urban Dev. Corp. 2009 NY Slip Op 52316(U) [25 Misc 3d 1227(A)] Decided on June 30, 2009 Supreme Court, Monroe County Polito, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on June 30, 2009
Supreme Court, Monroe County

In the Matter of the Application of LVI Environmental Services, Inc., Petitioner, And Gramercy Group, Inc., Intervenor-Petitioner,

against

New York State Urban Development Corporation, individually and doing business as the Empire State Development Corporation, and Cambria Contracting, Inc., Respondents.



09/8251



APPEARANCES:ERNSTROM & DRESTE, LLP

JOHN DRESTE, ESQ., of Counsel

Attorneys for Petitioner

LVI Environmental Services, Inc.

Office and P.O. Address

180 Canal View Boulevard, Suite 600

Rochester, NY 14623

GOLDBERG & CONNOLLY

ERIK A. ORTMANN, ESQ., of Counsel

Attorneys for Intervenor-Petitioner, Gramercy Group, Inc.

Office and P.O. Address

66 North Village Avenue

Rockville Centre, NY 11570

NEW YORK STATE ATTORNEY GENERAL

J. RICHARD BENITEZ, ESQ., Asst. Atty. General, of Counsel

Attorneys for Respondent New York State Urban Development

Corporation, ind. and d/b/a Empire State Development

Corporation

Office and P.O. Address

144 Exchange Boulevard, Suite 200

Rochester, NY 14614

GATES & ADAMS, PC

RICHARD BELL, ESQ., of Counsel

Attorneys for Respondent Cambria Contracting, Inc.

Office and P.O. Address

28 East Main Street, Suite 600

Rochester, NY 14614

William P. Polito, J.

Relief Requested:

Petitioner LVI Environmental Services, Inc. by Article 78 seeks an order 1. annulling and setting aside the award of the Midtown Project by New York State Urban Development Corporation d/b/a Empire State Development Corporation (ESDC) to Cambria as being in violation of the mandates within the Bid Documents and in violation of the bidding laws of the State of New York; 2. directing the award of the Midtown Project to LVI as the lowest responsive and responsible bidder; or 3. alternatively, remitting to ESDC for further, proper consideration of LVI's bid.

Gramercy Group, Inc. an Intervenor Petitioner, by stipulation joins in LVI's application to the extent of setting aside the award to Cambria on the basis that Cambria does not meet the qualification, but asserts that the award should be directed to it, not LVI, as the next lowest bidder. Gramercy also submits that, even without Cambria's disqualification, they are the lowest responsible bidder and should be awarded the contract.

Cambria and New York State Urban Development Corporation d/b/a Empire State [*2]Development Corporation (ESDC) oppose.

Decision:

Petitioners' applications are denied and petitions dismissed.

Facts:

Although the City of Rochester is the owner of the Midtown Site, Empire State Development Corporation is funding and acting as "Owner" for purposes of remediation and demolition of the Midtown site. The property contains a total of approximately 3,934,010 square feet of Asbestos Containing Materials (ACM) including ceiling systems of 1,240.010. The Midtown Project, which is alleged to be the second largest abatement project in New York State over the last five years and the largest in Western New York, must be completed within approximately 14 months of the notice to proceed with the approximate cost between $25,577,000 (low bid) to $46,974,000 (high bid).

The relevant bid qualification requirements are found in addendum numbers 1 and 2 as follows:

1. The contract bid documents require the Contractor to have a valid NYSDOL company license and demonstrate a 5 year history of performing asbestos abatement under that company license. This requirement shall be changed to the following: The Prime Contractor shall have a 5 year history as a licensed abatement contractor. The Prime Contractor shall also document that they hold a valid NYSDOL company license and demonstrate a 3 year history of performing asbestos abatement work under that NYSDOL company license.

2. The contract bid documents also require the Prime Contractor to

demonstrate that they have completed approximately 800,000 square feet of abatement work within a 12 month period, for consecutive 5 years, 3 years of which from NY State, by the completion of a single project or multiple projects with buildings similar to those of this

project in an urban setting.

On April 14, 2009 there was a pre bid question - answer meeting held with ESDC in which questions were answered regarding contractor qualifications as well as other [*3]topics. The following relevant question was asked and answered concerning qualifications.

44. Question: Qualifications—to show 5 years experience and the completion of 5 similar demolition/environmental projects of similar scope and value. Are you looking for similar scope and value to the entire Midtown Plaza Complex or would completed projects the size of Midtown Tower, McCurdy's or the Mall be considered similar in size and value with respect to the Contractor's experience? Answer: See Item No. 1 and 2 of the "Additions/Changes to the Contract Bid Documents" Sections of this Addendum. (No.1, 2 immediately above).

Petitioner's Contentions:

On April 21, 2009 the bids were opened with a range between $25,577,000 (low) to a high of $46,974,637. Petitioner LVI bid a base sum of $38,880,000 and contend that they were the lowest responsive and responsible bidder since Cambria Contracting, Inc. the selected lowest bidder at $33,785,000, although five million dollars below LVI, did not meet the required qualifications.

Petitioner Gramercy also asserts that Cambria does not meet the required qualifications, making it (Gramercy) the lowest responsible bidder. Gramercy submits that their base bid was $33,761,110, Cambria $33,785,000 and LVI $38,880,000. Gramercy further submits that under two of the three additional bid alternatives it (Gramercy) remained the lowest bidder, thus rendering it highly suspect that ESDC accepted the only alternative bid proposal which made Cambria the lowest bidder by only $26,110 over Gramercy.Cambria disputes that Gramercy was the lowest bidder on alternative #

3 which was not selected since all alternative #

3 bids were over the budgeted amount for that additional work.

Both petitioners contend that Cambria is not the lowest responsible bidder under State Finance Law Section 135 and/or New York General Municipal Law Section 103 and 9 NYCRR 4.170.1 since it failed to meet any of the experience criteria necessary for the award of the contract. Petitioners contend that based upon Cambria's own

submissions it shows that Cambria has not 1. completed 800,000 square feet of abatement work within a 12 month period for 5 consecutive years; 2. that 3 years of the 5 years are from New York; 3. that this level of experience is based on the completion of single projects; and/or 4. the level of experience is from multiple projects and 5. with buildings

similar to those of the Midtown Project in an urban setting. Petitioners contend that since [*4]Cambria has not met the requisite experience, ESDC can not award them the contract.

Both ESDC and Cambria have submitted responses advising that the lowest bidder Precision Environmental Co., Inc. did not meet the qualifications and withdrew its bid based thereon. ESDC explains that the bid alternative selected was the result of the City not acquiring certain properties in its acquisitions, and with the alternative selected based thereon, Cambria was the lowest responsible bidder.

Respondents' Responses:

ESDC and Cambria have extensively outlined the process of developing the bid criteria based on the anticipated scope of the work, and the past history and experience of the bidders for that type of work on past similar size buildings and/or projects. They also extensively outlined the process of selecting the lowest responsive and responsible bidder, including setting forth proof that Cambria meets the bid qualifications as required in the bid documents. Both parties assert and have submitted proof that Cambria has a 5 year history as a licensed abatement contractor with a valid NYSDOL company license and have demonstrated a 3 year history of performing asbestos abatement work under that NYSDOL company license as required under addendum one. Further, under addendum two, Cambria has submitted proof demonstrating that they have completed as prime contractor approximately 800,000 square feet of abatement work within a 12 month period, for consecutive 5 years, 3 years of which from NY State, by the completion of a single project or multiple projects with buildings similar to those of this project in an urban setting. More specifically, Cambria has submitted proof that in 2008 they completed 1,292,928 square feet of abatement with 835,928 in New York; 2007- 1,110,363 with 685,363 in New York; 2006-1,377,603 with 882,603 in New York; 2005-948,974 with 948,974 in New York; 2004-1,116,950 with 1,116,950 in New York.

Further, ESDC and Cambria submit that following submission of the bids, Cambria President Francis Barone, Michael Fitzner from ESDC, Robert Kruezer and another individual from LiRo, the construction manager on the project, formally met to discuss the qualifications, bid and the work plan of Cambria. Cambria thereafter submitted proof of its experience to the NY S Department of Labor (DOL ) for verification of the abatement work performed in New York State. ESDC further explains that the 800,000 square feet of abatement work under addendum two does not include only removal of asbestos. The scope of the bid work consisted of hazardous waste removal, including asbestos and lead, interior and associated demolition, and debris removal. (Ex. D pg iii and pgs 02051-02830-2 of Bid Documents attached to Fetzner affid.). Non asbestos waste removal, including significant amounts of interior demolition, [*5]compromises 40% of the work. (Id #

61). Under that criteria, ESDC asserts that Cambria clearly meets the qualification and exceeds it to the extent that they have performed approximately 800,000 square feet of abatement and removal in New York State during each of the last 5 years with 4 of the 5 years in New York State. ESDC also submits that the projects completed by Cambria meet the criteria of similarity with Midtown and its separate components in that many of the projects completed by Cambria were in buildings which were urban settings or populated areas and not in remote unpopulated factory settings.

Issues:

The petitioners' contentions fall into 3 categories:

(1)(a) That Cambria did not complete 800,000 square feet of abatement work within a 12 month period because it included the work of its subcontractors in arriving at the 800,000 figure, and absent such subcontractor's work the amount of abatement performed would be less than the "approximate" 800,000 square foot annual requirement, and

(b) After removal of Cambria's subcontractors' square footage, the computation of 800,000 square feet also improperly included prior abatement related "demolition" work. Therefore, absent such demolition work and the subcontractor's work, the amount of abatement work performed would be less than the annual "approximate" 800,000 square feet.

(2)(a)That the 5 year submissions do not show "completion of a single project or multiple projects" with buildings similar to those of this project in an urban setting in that it does not (a) show such single projects and/or multiple projects, and if it does (b) they are not in an urban setting, ie, similar to downtown Rochester.

(3)Gramercy alleges that 2 of its 3 bid alternatives were lower than that of Cambria, and the contract was improperly awarded on the 2nd alternative bid, which although $26,000 lower than its bid was selected merely to benefit Cambria.

Law and Rationale: [*6]

Standard of Review:

The parties agree in their respective memorandums that the standard of this court's review, of the ESDC's decision under CPLR 7803(3), is "whether a determination was made in violation of lawful procedure, was affected by an error of law, or was arbitrary and capricious or an abuse of discretion" (Defoe Corp v. NYC DOT, 87 NY2d 754, (1996)

citing to Pell v. Brd of Ed., 34 NY2d 222, (1974), and "is limited to ascertaining whether there is a rational basis to support the agency's determination".(E.W. Tompkins v. SUNY, 2009 NY Slip Op. 3080, 877 NYS2d 743, (3rd Dept., 2009). That burden is upon the party challenging the decision. (E.W. Tompkins, supra ).

Compliance with Bid Qualifications:

Public contract bidding statutes were designed to foster competition so the municipality could obtain the best work and supplies at the lowest price and safeguard against favoritism, improvidence, extravagance, fraud and corruption. A municipality may waive technical noncompliance with bid specifications if the defect is a mere irregularity and it is in the best interest of the municipality to do so. (Le Cesse Bros. v. Town of Williamson, 62 AD2d 28, (4th Dept., 1978)). Where the variance is material or substantial, the defect can not be waived and the municipality must reject the bid. (Id. At 32). The Courts have developed a two prong test to determine if the noncompliance constitutes a material nonwaivable irregularity. (Matter of Eldor Contracting v. Suffolk County WA, 270 AD2d 262, (2nd Dept., 2000)). The first prong is whether the effect of a waiver would be to deprive the municipality of its assurance that the contract will be entered into, performed and guaranteed according to its specified requirements and second, whether it is of such a nature that its waiver would adversely affect competitive bidding by placing a bidder in a position of advantage over other bidders or by otherwise undermining the necessary common standard of competition'. (Citations omitted, Id.).

Further, the Fourth Department has held that a municipality may impose a bid requirement that the contractor demonstrate that it is a responsible bidder by setting forth

its qualifications and experience, and where the bidder fails to submit those qualifications or does not meet the qualifications, the defect is material and nonwaivable and the bid must be rejected. (Ajay Glass v. County of Erie, 155 AD2d 988, (4th Dept., 1989); Cave of the Winds v. Niagara Frontier, 64 AD2d 818, (1978)).

Rationale:

Prior Square Footage of Abatement Experience:

[*7]SubContractors

2008

For the year 2008 the exclusion of the subcontractor's footage of 191,750, and an assumed 140,000 square footage duplication as proposed by petitioners would, nevertheless, still leave Cambria with a total abatement experience for 2008 of 961,178, which is still within the 800,000 total footage requirement for that year.

2007

For the year 2007 Cambria used the reduction of the subcontractor's abatement work of 425,000 to leave Cambria with 685,363 square footage for that year below the required 800,000 annual footage.

Assuming that almost 700,000 square footage is not "approximately" 800,000 square footage, the issue is raised as to whether it was proper to include its subcontractor's work where Cambria was the contractor who hired the subcontractor, and was responsible for the proper completion of the subcontractor's work as petitioner contends. The Court finds that the bid requirements do not impose such a "self-performance" restriction in its language for calculating square footage, nor does it prohibit use of the bidders subcontractors in calculating their prior abatement work. Accordingly, ESDC's interpretation of allowing such inclusion is a reasonable interpretation, and within the language of the bid.

Although the issue of whether demolition work by Cambria was part of its subcontractor's abatement work and may be included in its computation, is not reached in view of the above. If it were reached, the Court would find that allowance by ESDC of the inclusion of the past demolition work for year 2007 to fulfill the annual footage requirement, which demolition in the Midtown Mall as calculated by respondents will be

40% of the abatement job, such inclusion by ESDC would be reasonable and rational.

Friable Asbestos

As to petitioner's contention that Cambria has not shown sufficient experience in friable asbestos abatement as opposed to non-friable asbestos, there is no requirement in

the bids that such distinction be identified and shown.

Unlike the situation in Cave of the Winds and Ajay Glass where there were substantial variances with the bid specifications, here, the respondent Cambria submitted its detailed experience which in all years exceeded the standards of approximately [*8]800,000 square feet of abatement for consecutive five years and for which three were performed in NY and complied with the bid selection requirements. Upon a meeting, review and verification of the submitted qualifications by ESDC and its project manager, it was determined by ESDC that Cambria met the approximate 800,000 square footage requirement for each year.

Prior Experience in an "Urban Setting":

Petitioners contentions that even if Cambria had completed the requisite square footage, the qualifications were still not met because a majority of their work was not with buildings similar to those of this project "in an urban setting" is without merit. ESDC's qualification required the contractor to have completed some abatement work in similar designed buildings in populated areas rather than solely industrial buildings in unpopulated locations. Black's Law Dictionary defines urban as "of or belonging to a city or town. Within city limits". Cambria set forth its experience before ESDC in verified documents as well as a meeting with the engineer project manager at which their experience with abatement in populated settings was discussed, including several in Buffalo. Upon these discussions and proof, it was determined that Cambria was qualified to meet the task at Midtown.The Court finds a rational basis for such determination.

Size of Similar Properties, and Similar Buildings within Projects:

Viewing the scope of projects, and the type and size of the buildings performed by Cambria in contrast to the type and size of the buildings in the Midtown Mall, there is a rational basis for ESDC to conclude that they were sufficiently similar, and for ESDC to conclude that Cambria has the experience to perform and complete the Midtown project.

Low Bidder

It is undisputed that the alternative bid #

2 of Gramercy is $26,000 higher than Cambria. It is also undisputed that the chosen alternative was necessary because the additional property upon which alternative #

1 was computed was not able to be procured, and alternative #

3 all bids submitted were over the budgeted amount. Even assuming all bids under alternative #

3 were not over budget, Gramercy has not shown its alternative #

3 bid was lower than Cambria's. Accordingly, Gramercy has provided no basis to overcome the presumption of regularity which applies here, (In the Matter of Sicoli and Massaro v. Grand Island Central School, 309 AD2d 1229, (4th Dept., 2003)). Rather than alleged favoritism, the choice shows strict compliance with choosing the lowest [*9]responsible bidder.

Accordingly, this Court's review, which as aforesaid, is limited to whether there was a rational basis for ESDC's determination, finds upon the record and evidence submitted that there was sufficient evidence for ESDC to rationally determine that Cambria met the qualifications standards as required under the bid documents, and that there was no material variance between Cambria's bid and the bid specifications. Accordingly, the petitions are denied and dismissed.

This shall constitute the decision and order of the Court. The signing of this decision and order shall not constitute entry or filing under CPLR 2220. Counsel is not relieved from the provisions of that rule regarding entry, filing and notice of entry.

However, the filing of the underlying motion papers upon which this motion was made is hereby dispensed with pursuant to CPLR 2220. Attorney for the respondents Cambria is directed to enter this Decision/Order without notice and to serve all attorneys of record with a copy of this decision with notice of entry.

SO ORDERED.

Dated this 30th day of June, 2009 at Rochester, New York.

______________________________

Hon. William P. Polito

JUSTICE SUPREME COURT