Weber v. Philadelphia

Dissenting Opinion by

Mr. Justice Roberts :

The Philadelphia Home Rule Charter permitted the City to reject all bids for the concessions here involved 'only if such rejection was' “in the interest of the City.” See Home Rule Charter, §§8-200, -201. It is my view that when the City rejected the highest responsible bid for the sports stadium concessions, it violated this .Charter restriction. Not only does the record in this case fail to show how the City’s rejection of these bids will in any way serve or advance its interest, but, by the City’s own admission, the new bids will actually provide the City with less revenue than the rejected bids. I find it difficult to understand how it is “in the interest of the City” to diminish the revenue it will receive, from the concessions and I must therefore dissent.

The highly desirable aspects of sealed competitive bidding have often been emphasized by this Court. See, e.g., Yohe v. Lower Burrell, 418 Pa. 23, 28 , 208 A. 2d 847, 850 (1965). The public interest served by such •bidding' is not advanced, however, if bids can be re *190 jected at will or without cause, and thus the Charter provides for rejection only when it is in the City’s interest. Bidders will not be willing to invest great amounts of time and money in preparing and submitting the best possible bid if their offers can be set aside without cause. For once the bids are open, competitive advantage may easily be lost. Of course there may very well be times when rebidding will offer the City significant benefits. In such instances the City Avould be justified in rejecting all bids, for rejection would then clearly be in the City’s best interest, and in accord with the Charter.

In the instant case, however, I believe that the City has failed to demonstrate how rejection served the City’s interest. The City’s major justification 1 for rejection was that it Avould be better to have a single bid for the concessions and the stadium club, 2 thus ensuring a single operator for both. While the City did give two reasons for its assertion that it would be beneficial to have a single operator for both the concessions and the stadium club, neither demonstrates that such consolidation would truly be in the City’s interest.

*191 • Robert W. Crawford, Recreation Commissioner and a member of the Stadium Committee, testified that the only way the City could.get bids for the stadium club was to have it bid with the concessions. He asserted that nobody would bid for the club alone, since the City was “unwilling” to equip it, and since the club could not, out of its own receipts, finance the cost of equipment. 3 If the club were combined with the lucrative concessions, however, the City could be sure of bidders. Mr. Crawford then freely admitted the obvious—that the result of including the club with the concessions would mean lower revenues for the City, since the operator would have to cover the costs of the club by taking it out of the City’s profits from the concessions. In other words, the City would still be paying for the club, but indirectly, through reduced revenues from the concessionaire. 4 Mr. Crawford stated: “We don’t have the money to put it [the club] up. I think if we had the money it would be better . . . but we don’t have it and we cannot go back and ask the tax *192 payers for another bond issue, so we have to work out other solutions and that is what we were trying to do.”

Surely rejection of the bids for the above reason is not truly in the interest of Philadelphia. The taxpayers have the right to know how much their stadium is costing. They have already approved bond issues limiting expenditures. If the City feels the club is so important to the stadium, the taxpayers can be asked to approve more bond issues. It is not up to City officials to indirectly finance a stadium club by accepting reduced concession receipts. Techniques designed to hide from public view costs of public projects are hardly “in the interest of the City.”

The second theory was advanced by Harry Blat-stein, executive secretary of the Stadium Committee. He stated that the cost of the club, equipment and furnishings had no bearing on the decision to reject the bids. The Committee, in his view, decided on joint biddings because joint control would be more efficient. But the City submitted little beyond this general assertion. 5 Mr. Blatstein testified that after the bids were received he talked to only one or two other stadia to see how their clubs were run. He also conceded that a separate set of books for the concessions and the stadium club would still be required. 6 On the other hand, plaintiff produced expert witnesses who testified that the concessions and stadium clubs in St. Louis, Minneapolis, Washington, D.C., and San Francisco are under separate management.

*193 Whatever the merits of unified or separate management may he, the testimony adduced at trial does not indicate that one form of management is inherently superior to the other. Philadelphia did not insist on unified management and decided to have the club and concessions bid separately. This decision was originally made in 1965, some three years before the bids were rejected. There is evidence that the specifications were carefully considered before bids were invited. 7 Yet the City made its decision to reject all bids, some three months after they were received, based on what appears to be no more than a mere belief that a single concessionaire would be a good idea. This, in my view, is not sufficient proof that rebidding would be “in the interest of the City.” In fact, if we accept the City’s view that the stadium club will be unprofitable, a single bid will lower revenues and be against the City’s interest.

Neither the efficiency theory nor the financing theory can support the City’s actions here. Since the City has not in any way demonstrated how its interest would be advanced by rejecting all bids, I feel that the decree of the court en banc, entering judgment for the defendant, should be reversed. Accordingly, I dissent.

Three other reasons were given when the bids were, rejected: (1) the Phillies and Eagles should participate in the selection of the concessionaire; (2) the specifications should state that only a concessionaire who has had experience in other stadia of this type will be acceptable; and (3) the architects should study the feasibility of using gas at the concession stands. Reason one would not be legal; reason two was admitted by the City to he merely a “formal change;” and reason three, even if valid, makes no sense until the architects have at least considered the matter and state that only gas can be used by the concessionaires. The City, in its brief, also attempts to argue that there were other “substantial reasons” for rejecting the bids. But the City never indicated what these reasons were and I find it difficult to agree that these “reasons” warranted rejection without such knowledge.

The stadium club is to be a “plush restaurant” operated as a private club, with membership open, for a fee, to Phillies’ and Eagles’ season ticket holders. Among the guests will be “public officials from all levels.”

Mr. Crawford testified that the Stadium Committee “didn’t get any real facts or concrete figures of what the [stadium] clubs cost. We just knew generally what the cost would be.” He did estimate, however, that the club would probably cost about one million dollars to equip. Mr. Otto Winter, Procurement Commissioner, guessed that “a half a million dollars would do it.” Mr. David Lagerstedt, who for two and one-half years managed the stadium club at Yankee Stadium, testified that a club would cost between $200,000 and $350,000.

It is highly possible that a single bid may not satisfy the Home Rule Charter. As I have noted, the City through reduced ‘revenue, will be paying for the' costs of furnishing the club. Section 8-200'provides that contracts for purchasing equipment must he' awarded to the lowest' responsible bidder. Under the unified bidding arrangement presently envisioned by the City, however, it may not be possible to détermine whether the concessionaire who is the'-highest bidder 'for the concession (§8-201) will also'.be the lowest-bidder for-furnishing-the'cliib (§8-200).

For example, Mr. Blatstein asserted that a unified management might lead to an interchange of help. Mr. Lagerstedt, however, testified that the duties of the personnel aré “99% completely different” and that the unions at Yankee .Stadium and Minneapolis made it impossible to switch any employees.

The leases executed between the City and-the ball clubs give the clubs 15% of the gross receipts; from general concessions, but nothing from the stadium club.

Mr. Winter testified that investigations began in 1965 and that the City “did a lot of investigating before we started to prepare them.” A 1967 memorandum from Mr. Winter to the Deputy Managing Director indicates that several City agencies had reviewed the specifications and that their suggestions were incorporated into the specifications which were bid upon.