McMaster Construction, Inc. v. Board of Regents of Oklahoma Colleges

McMaster Construction, Inc. v. Board of Regents of Oklahoma Colleges
1997 OK 21
934 P.2d 335
68 OBJ 790
Case Number: 86856
Decided: 03/04/1997
Mandate Issued: 04/03/1997
Supreme Court of Oklahoma

McMaster Construction, Inc., a corp.; Lippert Bros., Inc., a corp.; Utility & Environmental Constructors, Inc., a corp.; L. F. Downey Construction, Inc., a corp.; Buckner & Moore, Inc., a corp.; Lambrecht Construction, Inc., a corp.; Terra Construction, Inc., a corp.; and Wynn Construction Co., Inc., a corp., Appellants,
v.
Board of Regents of Oklahoma Colleges, a Constitutional Board; Gene Nelson, Belva Howard, Wayne Sallsbury, Leonard Wilkins, Tracy Kelly, Paul Barby, Joe Paul Hemphill, Mike Brown and Sandy Garrett, all members of the Board of Regents of Oklahoma Colleges; University of Central Oklahoma, an Oklahoma institution of Higher Education; George Nigh, President and Chief Administrative Officer of the University of Central Oklahoma; Flintco, Inc., a corp.; and Sverdrup Facilities, Inc., a corp., Appellees. 

 ON CERTIORARI TO THE COURT OF CIVIL APPEALS DIVISION II

¶0 Board of Regents of Oklahoma Colleges approved plan for University of Central Oklahoma to utilize construction managers for capital improvements. University solicited proposals and awarded contracts without complying with Oklahoma Public Bidding Act, Okla. Stat. tit. 61, §§ 101-33 (1991). Taxpayers and disgruntled applicants filed suit seeking declaratory judgment and injunction. Trial court, Honorable Niles Jackson, granted defendants' motion for summary judgment. Court of Civil Appeals affirmed.

CERTIORARI PREVIOUSLY GRANTED; COURT OF CIVIL APPEALS' OPINION VACATED; JUDGMENT OF TRIAL COURT AFFIRMED.

John B. Hayes, Looney Nichols, Johnson & Hayes, Oklahoma City, Oklahoma., For appellants
Drew Edmondson, Attorney General of Oklahoma, Ross Johnson, Guy L. Hurst, Oklahoma City, Oklahoma, for Appellees Board of Regents, Members of the Board, University of Central Oklahoma, and George Nigh
Sheridan A. McCaffree, Board of Regents of Oklahoma Colleges, Oklahoma City, Oklahoma
C. Max Speegle, Edmond, Oklahoma, for Appellees University of Central Oklahoma and George Nigh
Drew Neville, Russell Cook, Deborah A. Wolfe, Linn & Neville, Oklahoma City, Oklahoma, for Appellee Sverdrup Facilities, Inc.
Clyde A. Muchmore, Robert G. McCampbell, Crowe & Dunlevy, P.C., Oklahoma City, Oklahoma, for Appellee Flintco, Inc.

Hodges, J.

[934 P.2d 336]

¶1 The threshold issue in this appeal is whether the management construction contracts entered into by the University of Central Oklahoma (UCO) and defendants Flintco and Sverdrup Facilities (construction management companies) are subject to the [934 P.2d 337] competitive bidding procedures as set forth in the Oklahoma Public Bidding Act (Act).

I. Facts

¶2 In 1992, the people of Oklahoma authorized a bond issue for capital improvements to UCO. The Board of Regents of Oklahoma Colleges (Regents) approved UCO's plan to utilize construction managers

¶3 UCO received seven proposals, including ones from plaintiffs Lippert Bros. and Wynn Construction Company and defendants Flintco and Sverdrup Facilities. After several companies made presentations, the Regents voted to contract with Flintco and Sverdrup to provide construction management services. On January 10, 1995, UCO entered into a contract with Sverdrup Facilities. Then on February 17, 1995, UCO entered into a contract with Flintco.

¶4 The construction management contracts of Sverdrup and Flintco are similar.

¶5 The plaintiffs initiated this suit by filing a petition in the district court on May 19, 1995, asking for a declaration that the contacts are void, for an injunction prohibiting further performance and payment under the contracts, and a writ of mandamus requiring UCO to comply with the requirements of the Oklahoma Competitive Bidding Act (Act).

¶6 The plaintiffs filed this appeal arguing the contracts are void for the following reasons: (1) the construction management contracts are subject to Oklahoma Competitive Bidding Act because they are contracts for the purpose of making a public improvement or constructing a public building, and the Act was not followed; (2) the contracts require the companies to perform architectural and engineering services without being licensed; and (3) if the management contracts are not subject to Oklahoma's Public Bidding Act, then the management companies are consultants within the meaning of and subject to [934 P.2d 338] the State Consultants Act,

I. The Oklahoma Competitive Bidding Act

¶7 Absent a constitutional, statutory, or regulatory restraint, Oklahoma's public entities are free to contract for construction services without soliciting bids.

¶8 The purpose of the Act is to "obtain the best results at the lowest cost, the greatest value for the fewest dollars."

¶9 In Carpet City, Inc. v. Stillwater Municipal Hospital Authority,

¶10 The overwhelming majority of jurisdictions which have addressed the issue have concluded that construction management contracts which do not call for the furnishing of equipment, building labor or materials are not subject to competitive bidding statutes.

III. The Public Building Construction and Planning Act or the State Consultants Act

¶11 Neither the Public Building Construction and Planning Act

¶12 Initially, the plaintiffs conceded that the State Consultants Act does not apply. Plaintiffs have changed their position and now argue if the Oklahoma Public Competitive Bidding Act does not apply, then the State Consultant Act applies and has not been followed. Pursuant to sections 60 and 61 of the State Consultant Act, it applies only to licensed architectural, registered engineering, and registered land surveying services. Because the construction management contracts do not fall within any of these categories, they do not come within the purview of the State Consultant Act.

IV. Unlicensed Practice of Architecture and Engineering

¶13 Plaintiffs argue that the contracts require the construction management [934 P.2d 340] companies to practice architecture and engineering without a license. For a service to constitute the practice of engineering, the service must require "engineering education, training and experience in the application of special knowledge of the mathematical, physical and engineering sciences. . . ."

IV. Conclusion

¶14 The Board of Regents and UCO did not violate the Oklahoma Public Competitive Bidding Act, the Public Building Construction and Planning Act, or the State Consultants Act in letting the construction management contracts with Flintco and Sverdrup. Because we find the contracts do not fall within the confines of Oklahoma Public Competitive Bidding Act, we need not address whether the plaintiffs complied with title 61, section 122 of the Oklahoma Statutes. Further, the services called for by the contracts do not call for the unlicensed practice of architecture or engineering.

¶15 The Court of Civil Appeals' opinion is vacated. The judgment of the district court is affirmed.

CERTIORARI PREVIOUSLY GRANTED; COURT OF CIVIL APPEALS' OPINION VACATED; JUDGMENT OF TRIAL COURT AFFIRMED.

¶16 Summers, V.C.J., Hodges, Lavender, Simms, Hargrave, Wilson, Watt, JJ. - concur;

¶17 Opala, J. - dissent;

¶18 Kauger, C.J. - not participating.

FOOTNOTES

1 Okla. Stat. tit. 61, §§ 101-33 (1991).

2 "The construction management technology centers on utilization of a construction manager who coordinates and manages the building process. Attlin Construction, Inc. v. Muncie Community Schools, 413 N.E.2d 281, 285 n.3 (Ct. App. Ind. 1980).

3 A general contractor employees the construction crew or subcontracts the actually construction and purchases the materials.

4 Both contracts require the companies to, among other things, (1) develop a project time schedule and update it as necessary, (2) review design documents and make recommendations to the architect, (3) make recommendations to UCO regarding the construction project, (4) assist UCO in soliciting and awarding bids and ascertaining that the contractors carry the proper insurance, (5) coordinate the contractor's work and delivery of materials, (6) schedule and conduct meetings to inform UCO of the progress, problems, and scheduling, (7) coordinate meetings between the architect and the contractors, (8) inspect the contractor's work and make recommendations for payment to the contractors, (9) assist in obtaining permits, (10) assist in the testing and start up of all utilities and equipment, (11) obtain from the contractors adequate instructions for maintenance and operation of equipment, and (12) generally assist in the transfer of the construction to UCO.

5 Krohnberg v. Pass, 244 N.W. 329 (Minn. 1932).

6 Okla. Stat. tit. 61, §§101-33 (1991). Oklahoma's Competitive Bidding Act requires public agency award construction contracts for more than $7,500.00 to the lowest responsible bidder. Id. at §§ 102, 103.

7 Okla. Stat. tit. 61, §§ 60-65 (1991).

8 Section 122 of title 61 of the Oklahoma Statutes provides:

Any taxpayer of the State of Oklahoma, or any bona fide unsuccessful bidder on a particular public construction contract, with ten (10) days after any such contract has been executed, is empowered to bring suit in the district court of the county where the work, or the major part of it, is to be done to enjoin the performance of such contract if entered into in violation of the provisions of this act.

9 Independent Ins. Agents of Okla., Inc. v. Oklahoma Turnpike Auth., 876 P.2d 675, 679 (Okla. 1994); Cimarron Utilities Co. v. City of Guymon, 43 P.2d 143 (Okla. 1935); 64 Am. Jur. 2d Public Works and Contracts § 34 (1972).

10 Okla. Stat. tit. 61, § 103 ( 1991), provides:

All public construction contracts shall be let and awarded to the lowest responsible bidder, by free and open competitive bidding after solicitation for sealed bids, in accordance with the provision of this Act.

11 Id. at § 102(4).

12 Independent Ins. Agents v. Oklahoma Turnpike Auth., 876 P.2d 675, 679 (1994); 64 Am. Jur. 2d Public Works and Contracts § 37 (1972).

13 Mongiovi v. Doerner, 546 P.2d 1110, 1113 (1976).

14 Id.

15 Weathers v. Layton, 230 P. 750 (Okla. 1924).

16 Id.; 64 Am. Jur. 2d Public Works and Contracts § 43 (1972).

17 536 P.2d 335, 338 (Okla. 1975).

18 The plaintiffs argue that for the purposes of the Oklahoma Public Bidding Act, the Public Building Construction and Planning Act's definition of construction should apply. See Okla. Stat. tit. 61, § 202 (1991). We reject this position because section 202 specifically limits the definitions contained therein to the Public Building Construction and Planning Act. Id.

19 See Weathers v. Layton & Forsyth, 230 P. 750, 752 (Okla. 1924).

20 D-1 Constructors, LTD., v. Unified School District No. 229, 788 P.2d 289 (Kan. Ct. App. 1990); State of Indiana v. Brown, 422 N.E.2d 1254 (Ind. Ct. App. 1981); Attlin Construction, Inc. v. Muncie Community Schools, 413 N.E.2d 281 (Ind. Ct. App. 1980); Krohnberg v. Pass, 244 N.W. 329 (Minn. 1932); Malloy v. Boyertown Area School Board, 657 A.2d 915 (Pa. 1995); Mongiovi v. Doerner, 546 P.2d 1110 (Or. Ct. App. 1976); Gulf Bitulithic Co. v. Nueces County, 11 S.W.2d 305 (Tex. Ct. App. 1928); City of Houston v. Potter, 91 S.W. 389 (Tex. Ct. App. 1906); 15 A.L.R. 3d 733, 745-46 (1976).

21 The plaintiffs cite City of Inglewood-Los Angeles County Civic Center Authority v. Superior Court of Los Angeles County, 500 P.2d 601 (Cal. 1972), Achen-Gardner, Inc. v. Superior Court of the State of Arizona, In and For the County of Maricopa, 839 P.2d 1093 (Ariz. 1992); City of Colorado Springs v. Coray, 139 P. 1031 (Colo. Ct. App. 1914), that construction management contracts are subject to competitive bidding statutes. The cases of Inglewood and Achen-Gardner are easily distinguished.

In Inglewood, the company employed to oversee the construction also guaranteed the price. The court reasoned that "the management contracting procedure as proposed and followed [in Inglewood was] too closely akin to traditional lump sum general construction contracting to be held exempt from the statutory competitive bidding requirements."

In Achen-Gardner, the City of Chandler was attempting to completely avoid the competitive bidding process by having a private developer make public improvements and be reimbursed from public funds. The agreement called for the developer to construct an additional lane on two roads, install a traffic signal, landscape, reconstruct a cul-de-sac, and construct street lights. Further the developer was to perform the work itself. The developer was not acting as a representative of the City in the capacity of a construction manager but as a general contractor responsible for the furnishing or procuring the work and materials.

Plaintiffs reliance on City of Colorado Springs, a decision of the Colorado Court of Appeals, would appear to be misplaced. In McNichols v. City and County of Denver, the Colorado Supreme Court stated that a contract involving professional or skilled services would not be subject to the statutory competitive bidding requirements.

22 Okla. Stat. tit. 61, §§ 201-211 (1991).

23 Id. at §§ 60-65.

24 Okla. Stat. tit. 59, §475.2(4) (1991).

25 Id. § 46.3(A)(1) & (B).

26 Both the Association of American Architects and the Associated General Contractors of America recognize the concept of construction management and have developed form contracts.