Court issues decision in city litigation

The following decision has been released by the Highland County Common
Pleas Court:

 IN THE COURT OF COMMON PLEAS

HIGHLAND COUNTY, OHIO

BUILDING CRAFTS INC.    :  CASE NO: 09 CV 519

                  Plaintiff  : DECISION AND FINAL

                                          JUDGMENT ORDER

            v.    :

CITY OF HILLSBORO et al.   :


                  Defendants  :

      This cause came on for hearing this 19th day of October 2009 on
the motions for a preliminary injunction and final hearing, the Court
having consolidated the hearing on the motion for preliminary
injunction and the final hearing on the merits as agreed by the
parties pursuant to Civil Rule 65(B)(2).  Plaintiff was represented by
Patrick Devine, Attorney at Law, Columbus, Ohio.  Defendant City of
Hillsboro (hereinafter referred to as “the City” was represented by
Kathryn Hapner, Attorney at Law, Hillsboro, Ohio.  Defendant PAE
Associates (hereinafter referred to as “PAE”) was represented by
Robert Portune, Attorney at Law, Dayton, Ohio.  Defendant Dugan and
Meyers (hereinafter referred to as “Dugan and Meyers”) was represented
by John Higgins, Attorney at Law, Cincinnati, Ohio.

      At a hearing held on October 16, 2009, the Court denied the
City’s motion for judgment on the pleadings.  The parties further
stipulated to the admission of Joint Exhibits I-XXII.  Joint Exhibit
XXIII was marked prior to commencement of trial and stipulated by all
parties.

      The Court heard testimony from each of the parties and also
admitted in addition to the previously admitted joint exhibits, Joint
Exhibit XXIII, Plaintiff’s Exhibit 1 and Dugan and Meyers Exhibit A.
The Court ordered the parties to submit written arguments by
Wednesday, October 21, 2009.  The Court has reviewed the testimony and
all of the exhibits extensively and considered all of the parties’
written arguments and authorities cited therein.

CLAIMS OF THE PARTIES

      Plaintiff’s amended complaint seeks a preliminary and permanent
injunction against the City prohibiting it from awarding a bid for its
wastewater treatment plant upgrade to Dugan and Meyers as reflected in
Joint Exhibit XXIII adopted on October 19, 2009 by the City Council.
It also seeks declaratory judgment declaring it to be the party to
whom the bid should be awarded.

      PAE in its cross claim against the City seeks a preliminary and
permanent injunction against the City prohibiting it from awarding the
bid for the plant to Dugan and Meyers and declaratory judgment
declaring that it is the party to whom the bid should be awarded.
Dugan and Meyers seeks declaratory judgment declaring that it is the
party to whom the bid should be awarded.

      FINDINGS OF FACT

      The Court based upon the testimony and exhibits admitted in this
case hereby makes the following findings of fact:
    1.       The City requested bids for its wastewater treatment plant
upgrade pursuant to the bid and contract documents set forth in Joint
Ex. I.  Four addenda were issued after that date and prior to
September 10, 2009, the date that bids were opened.
    2.      The City requested bids be made pursuant to two tables set forth
in Joint Ex. I. Table 1 was designated “Combined Construction” which
included work for all trades in the project.  It had ten pay items
designated on the first column as G-1 to G-10.

   Table 2 was designated “By Trade”.
    3.      The five separate parts of Table 2 were as follows:
Part1-General Construction; Part 2-Electrical Construction; Part
3-HVAC Construction and Part 4-Plumbing Construction and C-1, Partial
Combination Construction.  Footnote three of Table 1 stated this was
for “any combination of parts”.  Part 1 of Table 2 had the same ten
pay items designated in the first column as G-1 to G-10 as were on
Table 1.
    4.      Mr. Drazba testified that the intent was to “encourage” general
construction bidders to bid on the combined contract for the entire
project.
    5.      On the advertisement for bids on page 00 11 13-2 of Joint Ex. I
the following statements appeared:

“Bids are invited for the following separate Schedules:”


“General Conditions (General Contractors shall submit a combined bid
in addition to the General Contract).

Electrical Construction.

HVAC Construction.

Plumbing Construction.

Combination of any or all of the above.”
    6.      Immediately below that on the same page it states:  “Bidders, at
their option, may submit a separate and independent Bid for any or all
of the separate schedules contemplated under this Advertisement for
Bids.  All schedules will be awarded under one contractor separately,
as best serves the interests of the owner.


    7.      On page 00 21 13-11, in Section 17.1.2 of Joint Ex. I, it states:



“Bidders shall submit a Bid on individual sections or any combinations
of Schedules as set forth in the Bid form”
    8.      On the same page in Section 17.1.2.1, Joint Ex. I states:



   “Bidders may submit a Bid for any of the separate Schedules or any

   combination of schedules as provided in the Bid Form.  Submission
of a Bid on

   any Schedule signifies Bidder’s willingness to enter into a
Contract for that

   Schedule alone at the price offered.”
    9.      The Court finds that Joint Ex. I has obvious conflicts within it
as to whether a bidder



could bid separately on general construction, Part 1 in Table 2
without submitting a


combined construction bid on Table 1.  The advertisement for bids says
both shall be


submitted, but this is then contradicted by all of the other above
cited sections.

    10.      Section 5.1.3 on page 00 41 13-4 of Joint Ex. I reads as follows:

“Each Bidder bidding on the combined construction Pay Items in Table
No. 1 is required to submit a Bid for the general construction Pay
Items in Table No. 2.

Failure to submit a Bid for general construction in both tables shall
be cause for

rejection of the Bid.

The Court notes that the first sentence of this section refers only to
those bidders submitting bids for the combined construction under
Table 1.  Therefore, the second sentence of this section refers to
rejection of Table 1 bidders who did not bid Table 2 general
construction under Part 1.  There is no similar provision referring to
Table 2 bidders bidding on pay items in that table being required to
submit a combined construction bid.
    11.      Mr. Drazba testified that if he had it to do over again, he
would change Section 5.1.3.
    12.       Both Table 1 and Table 2 as originally printed in Joint Ex. 1
at pages 00 41 13-5 through 8 had footnotes.  Footnote 2 appeared on
both tables as follows:

“Each Bidder bidding on the combined construction Pay Items in Table
No. 1 is required to submit a Bid for the general construction Pay
Items in Table No. 2.

Failure to submit a Bid for general construction in both tables shall
be cause for

Rejection of the Bid.”

This is the same language in Section 5.1.3.  The Court has previously
found that this applies only to Table 1 bids for combined construction
and not to Table 2 bids.
    13.      A pre-bid conference was held on August 20, 2009.  Attendance
by prospective bidders was mandatory.  There was no record of the
meeting kept and no summary of the discussion was reduced to writing
and distributed to prospective bidders.
    14.      There was conflicting testimony offered by the parties as to
what was discussed at the pre-bid meeting.  City Council member David
Shoemaker, Mr. Schirmer of Dugan and Meyers, and Mr. Willen of PAE
indicated that it was made clear during that meeting that a general
contractor must submit both a combined bid on Table 1 as well as a
Table 2 general construction bid.  Mr. Miller of BCI stated that it
was not discussed.  Engineer Randy Drazba indicated that he thought it
was clear and did not have any specific recollection of the discussion
on that issue.
    15.      On pages 00 21 13-6 and 7, Section 6.1 discusses the pre-bid
conference and provides that the engineer will issue such addenda as
he considers necessary in response to questions arising out of that
conference.  The last sentence of that section states:

   “Oral statements may not be relied upon and will not be binding or
legally

effective.”

    16.      On page 00 21 13-7, Section 9.1 of Joint Ex. I indicates that
interpretation or clarifications considered necessary by the engineer
in response to questions will be issued by addenda mailed or delivered
to all parties having received the documents.  The last sentence of
that section reads as follows:

“Oral and other interpretations or clarifications will be without
legal effect.”

    17.      On August 21, 2009 the engineer issued Addendum No. 3 to the
bid documents, which was admitted as Joint Ex. III.  On page 14, the
engineer noted that the Bid Form was modified at page 00 41 13-8 which
was page 2 of the Table 2 bid form.

The modification included deleting footnote 3 and replacing it with
the following


language:


(3) Any part or combination of up to 3 parts, note individual parts,
including alternatives, must be filled out.”
    18.      On September 2, 2009, Addendum No. 4, Joint Ex. IV was issued
by the engineer and



further amended the Table 2 bid form by replacing page 8, the second
page of Table 2 with a new page.  That page deleted the second
sentence of footnote two.  Mr. Drazba indicated that he did not know
why that was done and that it could have been a typo.  He testified
that he had not intended to do that.
    19.      Both Addenda No. 2 and No. 3 contained the following language:

“This Addendum forms a part of the Contract Documents and modifies the
original Bidding Documents as noted within this Addendum.  All
provisions of the Contract Documents not in conflict with this
Addendum shall remain in full force and effect.”
    20.      Mr. Drazba testified that Addendum No. 4 as to the second page
of Table 2 is in conflict with that language.  Therefore, it modifies
Joint Ex. 1.
    21.      The bids were submitted on Table 1 of the bid form as set forth
in Joint Exhibit 1 and

on Table 2 as modified in Addenda No. 2 and No. 3.
    22.       Bids were due and were opened on September 10, 2009.  Eight
bids were submitted by general contractors for the general
construction in Part 1 of Table 2.  Two of the general contractors,
including the Plaintiff and EGC Construction Corporation did not
submit bids for combined construction on Table 1.  All bids were
tabulated on a spreadsheet by the engineer, Joint Exhibit XIV.
Plaintiff was noted as being the apparent low bidder for General
Construction, HVAC and Plumbing on its Table 2 partial combination bid
in the amount of $12,779,017.00 and RJ Smith was the apparent low
bidder for the Electrical Construction in the amount of $1,640,982.00.
The total of the two bids was $14,419,999.00.
    23.      The lowest combined construction bid for Table 1 was Dugan and
Meyers in the amount of $14,726,000.00 which the engineer noted to be
$306,000.00 higher than the total of the combined Table 2 bids of
Plaintiff and RJ Smith in his email of 9-11-2009 to Ralph Holt and
Kirby Ellison, Joint Exhibit X.  The Dugan and Meyers bid for the
general, HVAC and electrical construction was $12,961.974.00 which was
the second low bid for that combination and was $182,957.00 more than
Plaintiff’s bid for the same combination of parts.
    24.      Dugan and Meyers protested that the Plaintiff’s Table 2 bid
should be disqualified due to its failure to present a Table 1 bid for
combined construction.
    25.       On September 22, 2009, Mr. Drazba sent a letter to City Safety
Service Director Ralph Holt summarizing all of the bids, Joint Ex. XI.
In that letter, he stated in the last paragraph on page one:  “Two
general contractors, Building Crafts, Inc. and EGC Construction
Corporation did not submit combined bids for the project in accordance
with the Contract Documents and therefore, their bids were
disqualified.”   He then stated on page four that there was no reason
why the City should not award a contract for the partial combined bid
to Dugan and Meyers and the electrical construction to RJ Smith.
    26.       Plaintiff filed this lawsuit on September 23, 2009.  The City
had not made an award of the contracts at that point.

27. On October 6, 2009 the City voted to suspend the three reading
rule and to adopt

      Resolution No. 09-47, Joint Ex. XIII which awarded the contract
to Dugan and

      Meyers based on its Table 1 bid in the amount of
$14,726,000.00.   However, only

      five council members were present and in the Law Director’s
opinion, the resolution

      was not adopted.  The resolution stated in Section One that it
found Dugan and

      Meyers bid to be “the lowest, responsive bid by a responsible bidder.”
    27.      On October 13, 2009 Mr. Drazba sent another letter to City
Safety Service Director Holt, Joint Ex. XII. On pages four through six
of that letter he outlined his opinion as to the benefits of awarding
a combined construction contract for the entire project versus
awarding two contracts, one for electrical and one for the rest of the
work.  He then reversed his previous recommendation in Joint Ex. X and
recommended the awarding of the contract for the combined construction
bid to Dugan and Meyers despite the fact that this was approximately
$123,000.00 higher than the two bids recommended to be accepted in
Joint Ex. XI.  He made no mention of any “unbalanced bids” or any
problems with the amounts of the partial combined bids on C-1 of Table
2.
    28.      On October 19, 2009, on its third try, the City Council adopted
the amended Resolution 09-47, Joint Ex. XXIII.  In Section One, the
City found Dugan and Meyers to be the “lowest, best, responsive and
responsible bidder” and awarded it the contract based upon its
combined construction bid of $14,726,000.00.  In Section Two, it
recognized the instant case was pending and determined that if the
Court determined the combined construction award was invalid, it would
then award contracts under the partial combined bid of Dugan and
Meyers and the electrical bid of RJ Smith as originally proposed in
the earlier version, Joint Ex. XIII whom they found to be the “lowest,
best, responsive and responsible bidder” for each of those two bids.
    29.      The attorneys for the City and Dugan Meyers argued that the
City rejected all Table 2 partial combination bids as being invalid
due to their being “unbalanced” and having mathematical errors.
Safety Service Director Holt initially testified that all of those
bids had been rejected.  However, he later indicated that the City
Council had not passed any motion or resolution that rejected all of
the partial combination bids on Table 2 and that there was no written
document setting forth this action by the Council.
    30.      The Court finds that there was no evidence proffered that the
City Council had in fact officially rejected any bids from any
contractors.  While Mr. Holt and Mr. Drazba talked about rejecting the
bids, they had no authority to do so since the City Council was the
body authorized to award the contract in this case.  Therefore, they
did not reject all Table 2 bids.
    31.      Safety Service Director Holt testified that this was his first
major construction bid opening.  He indicated that he had a problem
with the amount of the partial combined bids on Part C-1 of the Table
2 bids.  He noted that in each of the partial combination bids
involving the general construction, HVAC and plumbing bids, the amount
listed on C-1 was less than the sum of the bids of those contractors
for the individual parts of Table 2 for which they submitted bids.  He
thought that the total of the bids on Table 2 for general
construction, HVAC and plumbing bids should equal the amount of the
partial combined construction bid on C-1 of Table 2.  He felt that
these were “unbalanced” bids prohibited by Section 23.3 on page 00 21
13-13 of Joint Ex. I and had mathematical errors.
    32.      The Court finds that the partial combined bids submitted by the
bidders in this case were not unbalanced bids as known in the
construction industry and in law.  The Court finds that each of the
four parts as set forth in Table 2 of the Bid From was an individual
stand alone bid for which that bidder was willing to accept work for
that part. The partial combination bid was also a stand alone bid for
combinations of the work.  See Section 17.1.2, Joint Ex. I, page 00 21
13-11.
    33.      The assertion of the City and Dugan and Meyers that the amounts
of the bids on line C-1 of Table 2 were mathematical errors is also
incorrect.  That was a stand alone bid and was not required to be a
total of the bids for any of the other parts that were bid on by that
bidder.  In fact, the City benefitted from this because all of the
combined bids were lower than the sum of the separate parts.
    34.      The City’s engineer, Randy Drazba admitted that the City was
using a different definition of “unbalanced” than was commonly used in
the industry. He testified that he understood why the partial combined
bids were lower than the sum of the individual parts and indicated
that it was not uncommon in the bidding process.  However, he deferred
his professional judgment to the City because it was the client.  This
was not in the City’s best interest because it is clear that the
partial combination bids would save the City money, not cost it money.
Mr. Drazba knew that.
    35.       Dugan and Meyers presented a general construction bid on Part
1 of Table 2 but did not submit a bid for HVAC or plumbing as it did
not want to do only those parts of the project.  It did submit a
partial combination bid for Parts 1, 3 and 4.  That number also was
“unbalanced” under the City’s misinterpretation of that term.

   Dugan and Meyers was contacted by someone (neither the City
representatives or Mr. Drazba recalled doing this) and asked it to
submit numbers for Parts 3 and 4 since they had not been included in
its bid as set forth in footnote 3 of Table 2.  On September 15, Mr.
Schirmer sent an e-mail to Mr. Drazba with a copy to Mrs. Ellison,
Joint Exhibit XXII  which provided figures for those parts which when
added to its general construction bid for part 1 surprisingly, exactly
equaled its partial combination bid for all parts 1, 3 and 4.
    36.      Mr. Schirmer claimed that the numbers in his e-mail would have
been the bid for those parts and that he was not told that the City
thought that the amount of the partial combination bid should be equal
to the sum of its bid for each of the three separate parts.  The Court
finds that testimony not to be credible given the fact that each of
the bids for the three parts were stand alone bids and none of the
other bidders’ partial combination bids equaled the sum of their
separate bids for the three parts. It is clear from the evidence that
this seldom if ever occurs as explained by Mr. Drazba, Mr. Miller and
Mr. Willen.
    37.       The City also offered testimony that it disqualified the bid
of Dugan and Meyers because it did not insert the amounts of its bid
for HVAC and plumbing in its partial combined bid, contrary to
footnote 3 of Table 2.  Again, there was no testimony offered to
establish that the City did this.
    38.      The Court finds that the City’s assertion that it rejected all
Table 2 bids including that of Dugan and Meyers because of the alleged
errors in the partial combined bids is contradicted by its own
records, namely Joint Ex. XXIII which not only does not state that,
but in Section Two states that it will award contracts for the Table 2
bid to Dugan and Meyers if this Court invalidates its award in Section
One of the resolution. The Court concludes that the Section Two award
is impossible if the City Council had in fact rejected all Table 2
partial combined bids.
    39.      The Court finds that the engineer was not confused by any of
the bids submitted and understood all of them.  That is reflected in
his initial tabulation of the bids, Joint Ex. XIV, and his e-mail to
Mr. Holt on September 11, 2009, Joint Ex. X.
    40.      The Court finds that the City used the standard of “lowest,
best, responsive and responsible bidder” in determining the award of
the contract as stated in Joint Ex. XXIII.
    41.      The Court finds that the amount of the combined construction
bid of Dugan and Meyers is more than the total of the partial combined
bids of it and Plaintiff when added to the amount of the RJ Smith bid.
    42.      The Court finds that the City is a statutory city and has not
adopted any ordinances or resolutions pursuant to R.C. 9.312.
    43.      The Court finds that in awarding the contract, the engineer and
the City did not use any preferences for Ohio contractors as stated in
Mr. Drazba’s testimony.
    44.      The Court further finds that the only basis on which Mr. Drazba
rejected the Table 2 bids of BCI was its failure to submit a Table 1
bid for the entire project.  Both he and Mr. Holt testified that there
was no reason to believe Plaintiff could not perform the work.

CONCLUSIONS OF LAW

         Burden of Proof

      In order to prevail in an action seeking injunctive relief, the
party seeking the relief must prove its case by clear and convincing
evidence.  The Court’s findings of fact and conclusions of law are
based upon that standard of proof.

             Standard for evaluation of the bids

      In awarding a contract for a public improvement, a municipal
corporation is required to award the contract to the “lowest and best”
bidder pursuant to R.C. 735.05 and R.C. 153.52 unless it has adopted
by ordinance or resolution a policy to use the standard of lowest,
responsive and responsible bidder pursuant to R.C. 9.312(C).   R.C.
153.52 states:

      “The contract for doing the work belonging to each separate
branch or class of work specified in division (A) of section 153.50 of
the Revised Code, or for the furnishing of materials therefor, or
both, shall be awarded by the public authority referred to in section
153.50 of the Revised Code, in its discretion, to the lowest
responsive and responsible separate bidder therefor, in accordance
with section 9.312 of the Revised Code in the case of any public
authority of the state or any public institution belonging thereto,
and to the lowest and best separate bidder in the case of a county,
township, municipal corporation, or school district, or any public
institution belonging thereto, and shall be made directly with the
bidder in the manner and upon the terms, conditions, and limitations
as to giving bond or bid guaranties as prescribed by law, unless it is
let as a whole, or to bidders for more than one kind of work or
materials. Sections 153.50 to 153.52 of the Revised Code do not apply
to the erection of buildings and other structures which cost less than
fifty thousand dollars.”

      The City’s resolution awarding the contract, Joint Ex. XXIII
used the standard of “lowest, best, responsive and responsible bidder”
which is clearly contrary to law. In his testimony, Mr. Drazba stated
that there were benefits to the city to award the bid to a combined
bidder, and that it was “in the best interests of the project”.  Page
00 11 13-2 of Joint Ex. I states: “All schedules will be awarded under
one contractor separately, as best serves the interests of the Owner”.
During his testimony, Mr. Drazba indicated that there may be a comma
missing between the words “contractor” and “separately”.  Regardless,
this language is contrary to the provisions of R.C. 153.52 and R.C.
735.05.

      At page 00 21 13-13 in Section 23.8 of Joint Ex. I states: “If
the Contract is to be

awarded, Owner will award the Contract to Bidder whose Bid is in the
best interest of the


project.”   While some of the engineer’s reasons may have some merit,
these reasons do not permit the City to substitute its own standard of
evaluation for that set forth by the Ohio General Assembly in the law.
It is required to follow the statutes governing competitive bidding.
The City clearly used the wrong standard in evaluating the bids
presented in this case by stating in Joint Ex. XXIII that the contract
was to be awarded to the “lowest, best, responsive and responsible
bidder”.  This violation of law is sufficient reason for setting aside
the City’s award of the combined bid to Dugan and Meyers.

      Award of combined construction bid

      The City also failed to follow the provisions of R.C. 153.51(A)
in awarding a combined bid for all construction rather than separate
bids for the electrical construction and the partial combined bid for
the other four parts.  R.C. 153.50 reads as follows:

      “(A) An officer, board, or other authority of the state, a
county, township, municipal corporation, or school district, or of any
public institution belonging thereto, authorized to contract for the
erection, repair, alteration, or rebuilding of a public building,
institution, bridge, culvert, or improvement and required by law to
advertise and receive bids for furnishing of materials and doing the
work necessary for the erection thereof, shall require separate and
distinct bids to be made for furnishing such materials or doing such
work, or both, in their discretion, for each of the following branches
or classes of work to be performed, and all work kindred thereto,
entering into the improvement:

     (1) Plumbing and gas fitting;

     (2) Steam and hot-water heating, ventilating apparatus, and
steam-power plant;

     (3) Electrical equipment.

     (B) A public authority is not required to solicit separate bids
for a branch or class of work specified in division (A) of this
section for an improvement if the estimated cost for that branch or
class of work is less than five thousand dollars.”

      The City’s bid documents met these requirements.  It requested
separate bids for plumbing, HVAC and electrical construction.  The
Court notes that this statute does not require a public entity to bid
general construction separately.  Further, it contains no restrictions
on requiring general contractors to bid on other parts of the project.
Generally, public works projects contain a general construction part
to cover all work not covered by those three trades.

      The reason that a public entity is required to advertise for
separate bids is that the law encourages awards of separate contracts
for separate trades as stated in R.C. 153.51 which reads as follows:

      “(A) When more than one branch or class of work specified in
division (A) of section 153.50 of the Revised Code is required, no
contract for the entire job, or for a greater portion thereof than is
embraced in one such branch or class of work shall be awarded, unless
the separate bids do not cover all the work and materials required or
the bids for the whole or for two or more kinds of work or materials
are lower than the separate bids in the aggregate.

     (B)(1) The public authority referred to in section 153.50 of the
Revised Code also may award a single, aggregate contract for the
entire project pursuant to division (A) of this section. This award
shall be made to the bidder who is the lowest responsive and
responsible bidder or the lowest and best bidder, as applicable, as
specified in section 153.52 of the Revised Code.

     (2) The public authority referred to in section 153.50 of the
Revised Code may assign all or any portion of its interest in the
contract of the lowest responsive and responsible bidder or the lowest
and best bidder, as applicable, to another successful bidder as an
agreed condition for an award of the contract for the amount of its
respective bid. Such assignment may include, but is not limited to,
the duty to schedule, coordinate, and administer the contracts.

     (C) A public authority referred to in division (A) of section
153.50 of the Revised Code is not required to award separate contracts
for a branch or class of work specified in division (A) of section
153.50 of the Revised Code entering into an improvement if the
estimated cost for that branch or class of work is less than five
thousand dollars.”

      Under paragraph (A), a combined bid for an entire project shall
not be awarded unless it is less than the total of all of the bids for
the separate trades or combinations thereof or those bids do not
include all of the work in the project.

      The City awarded a contract under paragraph (B)(1) of R.C.
153.51 which refers to a contract covering the entire project as “a
single, aggregate contract for the entire project”.  The City and
Dugan and Meyers argue that this paragraph allows the award of a
combined bid even if it is higher than the sum of the separate or
partial combination bids.  That is incorrect because that language is
followed by this:  “pursuant to division (A) of this section.”

      Therefore, the General Assembly clearly intended that the
amount of a bid for the entire project had to be lower than the amount
of the total of the separate bids for all trades or combinations of
them as provided in paragraph (A).  In its brief, Dugan and Meyers
cited the case of Columbus Bldg. and Contr. Trades Council v. Moyer
(1955), 163 Ohio St. 189 in support of its argument that combined bids
need not be lower than the total of the separate or combination bids
of the trades under R.C. 153.51 and 153.52.  Its reliance on that case
is misplaced. That case involved interpretations of former General
Code Sections 2314-1 and 2314-2 which had been changed to Revised Code
Sections 153.02 and 153.03.

      Those former laws pertained to awards of state building
projects by state agencies.  GC 2314-2 required that every state
department award separate contracts for electrical, plumbing and HVAC
(such as it was then) “separately to responsible and reliable
individuals, firms or corporations”.

      The Ohio State University proposed to remodel its Student
Services Building and in its advertisement for bids and bid documents,
invited bids for the separate trades and for any combination of
divisions of trades.  It indicated that a single bid for any
combination of divisions could be lower than the total of separate
bids for such combinations of divisions.  The prior versions of what
is now Revised Code Section 153.52 was General Code Section 2364 which
had been amended to except Sections 2314-1 and 2314-2 from its
provisions.  The Ohio Supreme Court ruled that since those sections
were specific enactments, the University’s attempt to bid combination
bids for the separate trades under GC Sections 2364(now revised as
R.C. 153.52) was unlawful.

      The decision was based upon the laws as they existed in 1955.
R.C. 153.50, 153.51 and R.C. 153.52 have been revised since then and
the Court finds that the holding of the Ohio Supreme Court in that
case is not applicable to this case because of the subsequent changes
in those laws including House Bill 169 enacted in 1996.  In order to
assist the Court in determining the legislative intent of that law,
the Court obtained a copy of portions of the “Digest of Enactments,
121st General Assembly” which passed House Bill 169, a copy of the
Final Analysis of that bill by the Legislative Service Commission, and
a copy of House Bill 169 itself.  These are attached to this decision
as Appendices A, B and C.

      The first page of House Bill 169, Appendix C specifically states
in the title portion that it repeals former Revised Code Sections R.C.
153.02 and 153.03 which were the specific sections in issue in the
Moyer case that specifically required state agencies to award separate
contracts for separate trades.  The Act also enacted paragraph (B) of
R.C. 153.51 to allow a single aggregate contract for an entire project
“pursuant to division (A).  The General Assembly did not amend or
repeal the provisions of paragraph (A) that provided that no contract
for the entire job could be awarded unless the total of that bid was
less than the sum of the separate trade bids or combinations thereof.
The Legislative Digest, Appendix B and the Final Analysis of the bill
by the Legislative Service Commission reiterate this.

      Dugan and Meyers also argues that a public entity has the
discretion to determine that a combined bid for the entire project can
be the lowest and best bidder for the project under R.C. 153.51 and
153.52 even though it is more than the total of the bids for the
separate trades or combination bids.  The Court disagrees.  If that
were the case, based upon the reasoning of Mr.Drazba in his testimony
and his letter of October 13th, Joint Ex. XII, a public owner could
always justify the combined bid as being better even though not the
lowest.  That is clearly not the law nor was it the intent of the
General Assembly as previously noted.

      Here is the procedure that a public owner must follow under
R.C. 153.51 and 153.52 to award a contract.  First, the City as a
municipal corporation obligated to comply with R.C. 735.05 and R.C.
153.51, must tabulate the bids received for separate trades, for
combinations of one or more separate trades, and for the entire
project.  Next, exercising its discretion, it must determine which of
those bids is the lowest and best bid in each of those categories,
Once it has determined which of those bids in each category is the
lowest and best bid, it compares the amounts of those bids.

      If the total of the separate bids is lower than the total of
the combination bids and lower than the bid for the entire project,
then it must award the contracts to the separate bidders.  If the sum
of the amounts of any two or more combination bids for the separate
trades are lower than the separate trades total, then the combination
bids receive the contract awards.  If the bid for the project as a
whole is lower than both the total of separate bids and the total of
the combined bids, then it awards the contract as a whole.  As
written, R.C. 153.51(A) does not allow a public entity any discretion
to decide how to award the contract.  It is simply a question of math.
The exercise of discretion is determining the lowest and best bidder
in each category.

      Therefore, the City’s award of a combined construction contract
for the bids in Table 1 for the entire project which is higher than
the sum of the total of the combined bids for the trades violates R.C.
153.51(A) and must be set aside.

Construction of Contract

      The Court has found that Joint Ex. I the bid documents were self
contradictory as to requiring general contract bidders to bid on both
Table 1 and Table 2.  Mr. Drazba testified repeatedly as to his
intent.  The bid documents often mentioned intent.  However, bidders
are not mind readers.  They cannot determine the intent of the
document, only its content.  The Court has found that Section 5.1.3
referred only to those bidders submitting a combined construction bid
under Table 1.  That provision did not apply to Table 2.  If the
engineer wanted to inform those bidders that the City would not
consider a bid on Table 2 unless it bid on Table 1, he should have
written a provision so stating.

      The Court recognizes that the advertisement for bids states that
general contractors had to submit a combined bid if it wanted to bid
on the general construction in Table 2.  However, numerous other
references in the actual bid specifications and procedures referred to
single schedules, any one or more of those schedules, etc.  The
documents conveyed a conflicting message.  BCI was not the only
contractor that submitted a Table 2 bid and not a Table 1 bid.  EGC
Construction did the same thing.  Thus two of the eight general
contractors, which is 25% of the total bidders for this part, did
this.

      The Defendants want the Court to consider the testimony that at
the pre-bid meeting, there were repeated references to the fact that
both bids had to be submitted.  BCI’s representative, Mr. Miller
denied that.  In any event, the Court has determined that due to the
provisions of Sections 6.1 and 9.1 of Joint Exhibit 1 testimony on
that issue cannot be considered in interpreting the bid documents.
The City has repeatedly argued that the Bidders were strictly bound by
the terms of the bid documents, Joint Ex. 1.  However, it then asks
this Court to ignore Sections 6.1 and 9.1 of that document which
unequivocally state that oral interpretations of the bid documents
will not be considered and shall have no legal effect.

      Counsel for PAE argues that this is an integration clause
similar to the parol evidence rule and that parol evidence should be
admissible.  The Court disagrees.  The parol evidence rule applies in
contract situations.  Joint Ex. 1 was not a contract; it was a set of
instructions for bidding.  There are good reasons for Sections 6.1 and
9.1, namely to prevent swearing contests such as in this case.  Mr.
Drazba stated minutes of pre-bid meetings are often taken and
distributed.  That was not done in this case.  Consequently, the
statements at the pre-bid meeting can not be considered.

      Further, Addenda 3 and 4 were issued by Mr. Drazba after the
pre-bid meeting on August 20, 2009.  He did not include any
clarification about any of the conflicts within his bid documents.  In
fact, Addendum 4 actually deleted the second sentence of footnote 2
that was on Table 1.  The Court has previously ruled that it did not
apply to Table 2 bids but even if it did, the deletion removed any
warning to Table 2 bidders.  By the language in the Addendum, any
language in the contract (bid) documents, Joint Ex. 1 that were not in
conflict remain in effect. It also advised prospective bidders that it
became part of the contract (bid) documents.  Therefore, if in
conflict with the advertisement for bids in that document, it
prevails.

      While Mr. Drazba testified that the deletion of that sentence
appeared to be a “typo” and in fact he did not include any verbage in
the body of the Addendum indicating the deletion, the fact remains
that he did it.  Again, bidders cannot read his intent, only his
content.  The content deleted it.  Bidders did use the Table 2 bid
form as amended in Addendum No. 4 and relied upon it to submit their
bids.

      Mr. Miller, BCI’s representative testified that he did not
submit a Table 1 bid because he interpreted the documents to mean that
he did not have to do so.  The Court resolves the conflict in the bid
documents in favor of Plaintiff and against the City.

“Unbalanced Bids”

      The City and Dugan and Meyers have argued that the BCI bid and
all other bids, except Dugan and Meyers (due to its post bid e-mail)
were unbalanced because the sum of the three parts of the partial
combination bid did not equal the amount of the partial combination
bid on C-1 of Table 2.  As has previously been noted, the Court has
found as a matter of fact that the partial combination bids were not
unbalanced and rules that they were not unbalanced as a matter of law.

      Mr. Drazba testified as to his experience with combination bids.
Mr. Miller, BCI’s representative and Mr. Willen, PAE’s representative
both testified that each of their bids on Parts 1,3 and 4 were stand
alone bids.  If they were the low bidder for any of those parts
separately, they would perform the work if awarded the contract.  In
fact, that is precisely what Section 17.1.2.1 of Joint Ex. 1 required.

      That was equally true of the partial combination bid on C-1 of
Table 2.  Each of the eight bidders was willing to enter into
contracts for the price stated in that bid.  Every one of their
partial combination bids was lower in price than the sum of the
separate bids.  If the City awarded a partial combination bid, the
price would be that stated in C-1 of the bid.  A bidder cannot change
its bid once it is accepted.

      The term “unbalanced bid” or “unbalanced bidding” as indicated
by Mr.Drazba in his testimony refers to the practice of “front
loading” a bid or overestimating or underestimating certain unit
prices in a bid.  An engineer generally estimates the costs for each
component of a project and bidders are to assign costs to that.  If a
bid is “front loaded” a bidder has assigned an excessive cost to a
component such as mobilization of equipment or clearing of the land.
If the estimate significantly exceeds the actual cost this will result
in the owner paying a greater cost for that item in the contract than
its value.  For example, if a contractor were permitted to charge
$500,000.00 for a pay item that was estimated to be $100,000.00 this
would be frontloading because the public owner would be paying for
more than the value received.  If the contractor went out of business
then, the project would be overpaid by $400,000.00. This is the same
as an advance payment which public owners cannot make.

      Another example of “unbalanced bidding” occurs in unit pricing.
Contrary to the assertions of the City and Dugan and Meyers, the
individual Parts 1-4 of Table 2 were not unit prices.  They were bid
prices based upon lump sum and unit prices for materials or units
installed in the project.  Pay items G 5-10 on Tables 1 and 2 clearly
identify units to be priced.  The bid amount was the estimated units
to be installed multiplied by the bid price of that bidder.  The
totals of units times the price per unit equaled the price included in
those pay items.  The argument that the provisions of unit pricing
applied to the actual bids for Parts 1-4 have no basis in fact, law or
even common sense.

      The reason for unit pricing is to establish an estimated amount
to be used to compare bids.  If the actual amount installed is more,
then the contractor will be paid the unit price in the contract for
the actual amount installed.  Therefore, if he bids an excessively
high amount for materials or units that he believes will be greater
than the estimate, he will make more money.  If he bids an excessively
lower amount for units that he believes will actually be less than the
estimate, he has less deducted.  That is also an “unbalanced bid”.

      The Court in its research found several authorities supporting
its determination of this issue. The Ohio Department of Transportation
Construction and Material Specifications Manual addresses this issue
in Section 102.08 entitled “Unbalanced Bidding.”  A copy of that is
attached to this decision as Appendix D.  The Federal Highway
Administration has definitions of “Materially unbalanced bid” and
“Mathematically unbalanced bid” in CFR Title 23, Section 635.102, a
copy of which is attached hereto as Appendix E.  Also attached hereto
as Appendix F is a copy of an administrative decision of the United
States Government Accounting Office, File No: B-292458.2, dated March
19, 2004, In the Matter of Burney & Burney Construction Company, Inc.

      Without a doubt, the argument that the partial combined bids of
Plaintiff, PAE, Dugan and Meyers and the other general contractors as
submitted on their Table 2 bids were “unbalanced” or mathematically
inaccurate is without merit.

Requiring General Contractors to Submit Combined Bids

      PAE’s counsel has correctly pointed out in his written argument
that R.C. 153.50 does not require separate bids and contracts for
general contractors.  It limits its application to plumbing, HVAC and
electrical.  The Court has found no case law on that precise point.
Therefore, there appears to be no prohibition to the City requiring
general contractors who wish to submit a separate bid for general
construction to submit a combined construction bid for an entire
project.  However, that bid could only be awarded if it was lower than
the total of the separate trades or combinations pursuant to R.C.
153.51(A).

      The Court has found that the City failed to require general
contractors to submit combined construction bids for the entire
project due to the conflicts in is bid documents, Joint Ex. I.  In
fact, Mr. Drazba’s testimony was that the intent was to “encourage”
bidders to submit both a general construction and a combined
construction bid for the entire project.  There is a difference
between encouraging and requiring.  Whether that is a good idea in a
particular case is up to the judgment of the public entity.
Therefore, the Court finds that the City could have required general
contractors to bid on the combined construction but failed to do so.

Abuse of Discretion

      The Court agrees with counsel for all parties that the Court
evaluates the actions of the City in awarding the contract in this
case under the standard of “abuse of discretion.”  As stated by the
Ohio Supreme Court: “The meaning of the term ‘abuse of
discretion’***connotes more than an error of law or of judgment, it
implies an unreasonable, arbitrary or unconscionable attitude***.”,
Dayton, ex rel. Scandrick, v. McGee (1981), 67 Ohio St.2d 356, 359.
The Court went on to state on page 359:  “Arbitrary” means “without
adequate determining principle***not governed by any fixed rules or
standard.” Black’s Law Dictionary (5 Ed.)”  “Unreasonable” means
“irrational.” Id.”

      The Court may not substitute its own judgment for that of the
public entity charged with exercising discretion.  Rather it is to
determine if the actions of the public entity were lawful.  Clearly,
under R.C. 733.05, R.C. 153.51 and R.C. 153.52, the City is granted
the discretion to determine which bidder is the lowest and best bidder
in each trade, each combination and for the whole project.  The Court
does not find that the actions of the City in making its decision as
set forth in Resolution 90-47, Joint Ex. 1 were capricious, but does
find that they were arbitrary and unreasonable as for the following
reasons:

      1. The City’s bid documents, Joint Ex. 1 contained numerous
conflicts in attempting to communicate its’ intention of “encouraging”
a general contractor that wanted to bid general construction work in
Table 2 to also bid the entire project on Table 1.  Rather than
acknowledge that, the City used an arbitrary standard in initially
indicating that it was disqualifying Plaintiff’s bid for that reason,
yet not disqualifying the bid of Dugan and Meyers for failing to
comply with footnote 3 of Table 2 in its partial combination bid by
completing information on Parts 3 and 4.

      2. The City acted arbitrarily and unreasonably if it did in
fact as claimed reject all Table 2 bids as being unbalanced or
mathematically inaccurate.  The City did not define the term
“unbalanced” in its bid documents.  After the bids were received, it
then used an incorrect definition of that term contrary to industry
and government practice. It did not indicate that it expected the sum
of the separate bids for bids for the parts in Table 2 to equal the
amount of the partial combined bid on C-1 of the Table 2 bid forms.
It then attempted to use the unit pricing provisions in Section 17.3
to justify its claim that the Table 2 bids were mathematically
inaccurate, except for Dugan and Meyers which was the only bidder
permitted to clarify the math of its partial combination bid by
providing additional numbers in Mr. Schirmer’s e-mail, Joint Ex. XXII.
  Clearly, the standards of evaluation were changing.

      3. The City used the wrong statutory standard to evaluate the
bids, by using the lowest, best, responsive, responsible bidder
standard rather than the required standard of lowest and best set
forth in R.C. 733.05 and R.C. 153.52.  It also used incorrect
standards in its bid document, Joint Ex.1. prepared by its engineer.

      4. The City failed to follow the requirements in R.C. 153.51(A)
by awarding a single bid for the entire project to Dugan and Meyers
that was higher than the sum of the combined bids.  Its combined bid
was approximately $306,000.00 higher than the partial combined bid of
Plaintiff and RJ Smith, the electrical contract low bidder, Joint Ex.
X.  It was also $123,044 higher than the partial combined bid of Dugan
and Meyers and RJ Smith.  While Mr. Drazba considered this to be a
negligible amount, it is odd that in the economic times that the
federal, state and local governments face, when cities and counties
are monitoring expenses down to the amount paid for paper, that any
public agency should want to pay more for something rather than less
regardless of the amount.

      5. The City allowed Dugan and Meyers to submit by email, Joint
Ex. XXII, numbers for parts 3 and 4 for which it did not submit bids,
to allow its bid to become “balanced” as the City mistakenly thought
it should be.  It then decided in its resolution, Joint Ex. XXIII to
award the contract for a the partial combination bid in Section Two,
to Dugan and Meyers when in fact it claimed it had rejected all Table
2 bids.  This gave Dugan and Meyers a competitive advantage over all
of the other general contractors who had submitted partial combined
bids because Dugan and Meyers was clearly aware that it what the City
wanted.

      While the Ohio Supreme Court has held in Cedar Bay Constr., Inc.
v. Fremont (1990), 50 Ohio St.3d 19 that a municipality does not abuse
its discretion by allowing clarifications and/or interpretations of a
bid by the bidding contractor, that is not what happened in this case.
Dugan and Meyers did not clarify or interpret what was in its bid,
rather it used the information that it had that the other bids did not
“balance” and provided missing prices for items for which it did not
bid, parts 3 and 4, to make its bid “balanced” to satisfy the City.
Further, it was allowed to provide information that should have been
provided if it was bidding on those parts per footnote 3 of Table 2.
That is an abuse of discretion and therefore was improper as to the
award of the partial combination bid in Table 2 in Section Two of the
resolution if that resolution were otherwise proper.

      PAE argues in its brief that this should invalidate not only the
Table 2 bid of Dugan and Meyers, but also the Table 1 bid.  The Court
does not agree for this reason.   The Court has found that the partial
combination bids were not unbalanced and therefore the email was not
necessary.  It is an abuse of discretion only if the bids were truly
unbalanced.  Since they were not, it does not otherwise disqualify
Dugan and Meyers’ Table 2 bid.  Further, even if it did invalidate the
Table 2 bids, it did not affect its Table 1 bid as it did not require
itemization for the four separate parts.

6. Once the bids were opened, the actions of the City’s
representatives and engineer created the appearance that it favored
Dugan and Meyers over all other bidders, and was determined to award
it the contract.  First, Dugan and Meyers was permitted to send the
e-mail supplying information for parts 3 and 4 to make its bid
“balanced.”  Second, the City did not permit or invite Plaintiff, PAE
or any of the other bidders to do that.  If it was okay for Dugan and
Meyers to provide figures that it felt were omitted, why not ask BCI
to provide theirs for Table 1 and allow all other bidders to provide
their numbers for the Table 2 bids?  Again, this was a changing
standard of evaluation of the bids.

      Third, the engineer initially indicated that he recommended that
the City award Dugan and Meyers a partial combination contract based
upon its Table 2 bid and RJ Smith the electrical contract, Plaintiff
filed this lawsuit.  At the pre-trial hearing held on October 5, 2009,
legal counsel for Dugan and Meyers appeared with the City’s Assistant
Law Director as “Of Counsel” on behalf of the city.  This Court
immediately recognized that to be a conflict and prohibited it by
entry filed October 5th.

      At that hearing it was the Assistant Law Director admitted that
the City Council had not taken action to award the contract.
Therefore, the City was permitting the attorney for a bidder who had
not yet been awarded a contract to appear on its behalf thereby
creating the appearance of an alliance between them.  How could the
City fairly evaluate Dugan and Meyers’ bid if its attorney was acting
on its behalf?  The appropriateness of the Court’s action was
confirmed when Dugan and Meyers was granted leave to intervene in this
case and was represented by the same attorney who had appeared on
behalf of the City at the October 5th hearing.

      Fourth, after the October 5th hearing, on October 6th, the City
Council passed resolution 90-47, Joint Exhibit XIII awarding Dugan and
Meyers the partial combination contract and RJ Smith the electrical
contract.   Due to the lack of enough members to waive the three
reading rule, the City Law Director determined that resolution was not
effective.  The resolution passed on October 13th changed the award to
award Dugan and Meyers a combined bid for the entire project at a
higher price than the earlier version of the resolution, and if that
was disallowed, then again awarded the contracts to Dugan and Meyers
as provided in the first version of the resolution based upon the
Table 2 bids which its legal counsel claimed were all rejected.

      The Court does not feel that the members of City Council were
acting with any malice or intent to violate the law or to create an
impression of favoritism.  They were acting upon recommendations of
their advisors such as their engineer who was their agent.
Unfortunately, these actions when viewed as a whole certainly create a
cloud of suspicion over its proceedings in adopting the resolution
awarding the bids, leading others to suspect that Dugan and Meyers was
going to receive the bid no matter what.

      Taken as a whole these actions are in the Court’s judgment,
clear and convincing evidence that the City did abuse its discretion
by acting unreasonably and arbitrarily in awarding the bids as set
forth in Joint Ex. XXIII.  This is not a personal criticism of any
individuals but simply a finding as to the effect of the actions
collectively of the City through its various representatives and the
City Council.

Possible loss of funding

      The City presented evidence that if the Court finds that the
contract has been improperly awarded, that it may lose grants and
loans to fund the project which may result in higher costs to the
citizens of Hillsboro who will pay for the project through sewer fees.
The Court received this evidence only because none of the parties
objected.  The fact that it was admitted does not mean it must be
considered if it is improper to do so.  The Court believes that this
testimony has no bearing on whether the City acted in compliance with
the law in awarding the bids in Resolution 09-47.  This suggests that
the loss of funding is a justification for violating the law.  In
other words, the money justifies the action.  It could also be
construed that if funding is lost, the Judge will be blamed.

      Comment one to Rule 2.4 of the Code of Judicial Conduct states:
An independent judiciary requires that judges decide cases according
to the law and facts, without regard to whether particular laws or
litigants are popular or unpopular with the public, the media,
government officials, or the judge's friends or family. Confidence in
the judiciary is eroded if judicial decision making is perceived to be
subject to inappropriate outside influences.  This Judge will not be
swayed by such concerns.

CONCLUSION AND JUDGMENT ORDER

      Therefore, in accordance with the findings of fact and
conclusions of law set forth in this decision and entry, the Court
does hereby grant judgment granting a preliminary and permanent
injunction in favor of the Plaintiff and against Defendant City of
Hillsboro enjoining the City from awarding the contracts in the manner
set forth in Sections One and Two of City Council’s Resolution 90-47
and enters declaratory judgment regarding this matter as hereinafter
set forth:
    1.      It is hereby ordered and adjudged, that the City of Hillsboro is
hereby permanently enjoined from awarding contracts for the wastewater
treatment plant pursuant to its resolution 90-47 adopted October 19,
2009, Joint Ex. XXIII.
    2.      It is further ordered and adjudged that the City of Hillsboro is
hereby permanently enjoined from awarding the lowest and best combined
construction bid for the entire project unless it is less than the
total of the lowest and best bids for the separate parts of Table 2
and is less than the total of the lowest and best bid for the combined
bids for separate parts as required by R.C. 153.51(A).
    3.      The Court declares that Joint Ex. I as amended by Joint Ex. III
and IV did not require a general contractor to bid on both general
construction in Part 1 of Table 2 and combined construction in Table 1
and the City cannot reject bids on Table 2, Part 1 for that reason.
    4.      The Court further declares that the City cannot reject any Table
2 partial combination bids as being unbalanced or mathematically
inaccurate because the amount of the partial combination bids did not
equal the sum of their bids for separate parts of the bid.
    5.      The Court further declares that the City cannot use the standard
of “lowest, best, responsive, responsible bidder” in its evaluation of
the bids submitted for this project, but is required by R.C. 735.05
and R.C. 153.52 to use the standard of “lowest and best bid.”
    6.      The Court further declares that the City may reconsider awarding
the bids submitted in accordance with this judgment, reject all bids
and re-advertise as provided by law or proceed in any manner provide
by law.
    7.      It is further ordered that the demands in the complaints of
Plaintiff, Defendant PAE and Defendant Dugan and Meyers for
declaratory judgment declaring that each is entitled to be awarded the
bid for the project are hereby denied, and judgment is entered in
favor of the Defendant City on that issue.
    8.      Costs are ordered to be paid by the Defendant City of Hillsboro
within thirty days of the filing of this entry.

This is a final appealable order and the Court finds that there is no
just cause for delay.




      The Clerk is directed to serve copies of this decision and final
judgment entry upon all parties and all counsel of record as provided
by law.

                                                ENTER:

                                                Rocky A. Coss, Judge[[In-content Ad]]