# AAA Carting & Rubbish Removal, Inc. v. Town of Southeast

> New York Court of Appeals · June 9, 2011 · 17 N.Y.3d 136

URL: https://www.frixlaw.com/law-library/cases/9782704

## Case

- **Full name:** In the Matter of AAA Carting and Rubbish Removal, Inc., Appellant, v. Town of Southeast Et Al., Respondents, and Sani-Pro Disposal Services Corp., Doing Business as Suburban Carting, Respondent
- **Court:** New York Court of Appeals
- **Decided:** June 9, 2011
- **Citations:** 17 N.Y.3d 136; 2011 NY Slip Op 4765; 927 N.Y.S.2d 618; 951 N.E.2d 57
- **Precedential status:** Published
- **Opinion:** Dissent by Pigott
- **Judges:** Ciparick, Pigott
- **Cited by:** 19 later opinions in the Frix Law Library

## Citator (automated)

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## Opinion text

Pigott, J.
(dissenting). General Municipal Law § 103 (1) and Town Law § 122 require that public work contracts be awarded “to the lowest responsible bidder.” The majority holds, for the first time, that a contract subject to such competitive bidding statutes must be awarded to the lowest bidder that meets the express bid specifications, regardless of whether the municipality, exercising discretion, considers it to be a responsible bidder. This ruling is a mistake, defying precedent and good policy.
The term “responsible bidder” is not defined by statute, but case law gives it a clear meaning. A responsible bidder is one that is able to perform the terms of a contract successfully in all respects. In determining whether a bidder is responsible, a municipal agency has an obligation to consider the bidder’s skill, judgment, and business integrity (Matter of DeFoe Corp. v New York City Dept. of Transp., 87 NY2d 754, 763 [1996]). Because such qualities do not admit of reduction to a checklist, we have accepted that “responsibility” is “an elastic word” (Abco Bus Co. v Macchiarola, 75 AD2d 831, 833 [2d Dept 1980, Hopkins, J.P., dissenting], revd for reasons stated in dissenting mem 52 NY2d 938 [1981], cert denied 454 US 822 [1981]).
Competitive bidding statutes protect the public purse “by obtaining the best work at the lowest possible price” (Matter of New York State Ch., Inc., Associated Gen. Contrs. of Am. v New York State Thruway Auth., 88 NY2d 56, 68 [1996] [emphasis added]; see also Matter of Conduit & Found. Corp. v Metropolitan Transp. Auth., 66 NY2d 144, 148 [1985]). Only by exercising its sound business judgment on the question whether a bidder is financially and technically responsible can a municipal agency ensure that the best work consistent with a low price is obtained — as opposed to merely adequate work that costs less in the short term, but may cost public money in the future. The dispositive question is always whether it is in the public interest to disapprove a low bid; competitive bidding statutes exist to benefit the public, not contractors. “Neither the low bidder nor any other bidder has a vested property interest in a public works contract” (Matter of Conduit & Found. Corp., 66 NY2d at 148-149 ).
*146 We have always regarded the municipal agency’s duty of determining the lowest responsible bidder as requiring “honest judgment and discretion” (Syracuse Intercepting Sewer Bd. v Fidelity & Deposit Co., 255 NY 288, 294 [1931]; accord Picone v City of New York, 176 Misc 967, 969 [Sup Ct, NY County 1941]). Accordingly, we have stated that the standard of review of public work contract awards is deferential. “Although the power to reject any or all bids may not be exercised arbitrarily or for the purpose of thwarting the public benefit intended to be served by the competitive process, the discretionary decision ought not to be disturbed by the courts unless irrational, dishonest or otherwise unlawful” (Matter of Conduit & Found. Corp., 66 NY2d at 149 [citations omitted and emphasis added]). I cannot accept the majority’s ruling that the Town of Southeast acted unlawfully in selecting Suburban Carting over AAA Carting.
The majority makes much of the fact that Councilmember Johnson, in a report written after visiting AAA Carting’s facilities, opined that AAA Carting could reasonably be construed as being “responsible.” However, close attention to Johnson’s report, the fuller report of Councilmembers Johnson and Ho-neck following their visit to Suburban Carting’s facilities, and an e-mail of Town Supervisor Rights suggests a different picture. Comparison of the AAA Carting and Suburban Carting facilities made it plain to the Town that AAA Carting had, as the Supervisor put it, “insufficient existing infrastructure and capacity.” It is true that Johnson and Honeck tended to couch their evaluations in comparative terms: Suburban Carting’s “operations, cleanliness, professionalism and process are head- and-shoulders superior to that of AAA [Carting]. It is clear that [Suburban Carting] could deliver a more consistent, reliable and safer service . . . [Suburban Carting’s] visibly newer fleet should also translate into fewer breakdowns as well.” But what their analysis amounted to was a judgment that AAA Carting was an unprofessional organization that would not be able to ensure the “health, safety and welfare of residents” — in short a finding that AAA Carting was not a responsible bidder. They may well have been wrong, but, on this record, I cannot conclude that their conclusion was unreasonable.
In restricting the duty of a municipal agency to determining whether or not the lowest bidder has promised to fulfil the bid specifications, the majority has stripped municipalities of their sound discretion to decide whether a lowest bidder’s undertaking is based on a real ability to perform. This ruling will mean *147 that contractors will be able to obtain public work simply by bidding low and vowing to comply with bid specifications. The result will be that municipalities will often be forced to accept shoddy work by unprofessional contractors the only virtue of whom is that they are cheap.
Moreover, it is impractical to suppose, as the majority does, that all criteria relevant to responsibility may be specified in the bid request. The case law demonstrates that bidders have been ruled not responsible for a large variety of reasons that will elude easy capture in verbal specifications (see e.g. Matter of Interstate Indus. Corp. v Murphy, 1 AD3d 751 [3d Dept 2003] [unresolved investigations by other agencies into alleged organized crime connections]; Matter of Ciprietti-Tolisano Assoc. v Kamovsky, 268 AD2d 234 [1st Dept 2000] [failure to disclose information about taxes and corporate status]; Matter of Deol Elec. Contr. v Barrios-Paoli, 258 AD2d 327 [1st Dept 1999] [failure to have work inspected by licensed master electrician]; Matter of Donson Transp. Servs. v County of Broome, 257 AD2d 825 [3d Dept 1999] [to fulfill the contract, transportation corporation would need to expand its fleet of vehicles in a very brief time frame]; Romano Enters. of N.Y. v New York City Dept. of Transp., 254 AD2d 233 [1st Dept 1998] [bid-rigging scheme on prior contracts, misrepresentation of criminal record]; Matter of Adelaide Envtl. Health Assoc. v New York State Off. of Gen. Servs., 248 AD2d 861 [3d Dept 1998] [possible insolvency]; Municipal Testing Lab. v New York City Tr. Auth., 233 AD2d 105 [1st Dept 1996] [overcharging in a previous contract, questionable billing practices, and employment of uncertified persons]; National States Elec. Corp. v City of New York, 225 AD2d 745 [2d Dept 1996] [falsified records]; Matter of Tully Constr. Co. v Hevesi, 214 AD2d 465 [1st Dept 1995] [corrupt activity and failure to comply with an investigative subpoena regarding illegal waste disposal]; Matter of Mid-State Indus. v City of Cohoes, 221 AD2d 705 [3d Dept 1995] [prior criminal convictions and willful violations of the Labor Law]; Matter of N.J.D. Elecs. v New York City Health & Hosps. Corp., 205 AD2d 323 [1st Dept 1994] [bribery of city inspectors]; Matter of J. N. Futia Co. v Office of Gen. Servs. of State of N.Y., 39 AD2d 136 [3d Dept 1972] [delays, lack of cooperation, and poor performance on prior projects]). In short, the majority ignores our well-established doctrine that evaluation of responsibility requires flexibility and discretion, not simply the unthinking comparison of a bid with a checklist of specifications.
*148 Consequently, I would affirm.
Chief Judge Lippman and Judges Graffeo, Smith and Jones concur with Judge Ciparick; Judge Pigott dissents and votes to affirm in a separate opinion in which Judge Read concurs.
Order reversed, etc.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9782704. Public record. Not legal advice.