Labor: The Ohio Supreme Court Sides with ABC Contractor over the Application of Bid Criteria
By Nick A. Nykulak On March 25, the Supreme Court of Ohio held that the Franklin County Board of Commissioners “failed to exercise sound discretion” in disqualifying a contractor painting company’s bid for a painting contract for the Huntington Park Baseball Stadium project, because 14 prevailing wage complaints had been filed against the painting company in prior years.
In 2002, Franklin County enacted a resolution establishing “Qualitative Contracting Standards” that allowed it, among other things, to disqualify any bidders who have been debarred from a public project or found by the State of Ohio to have violated the State’s prevailing wage laws more than three times in a two-year period within the last ten years.
On this particular project, only two contractors had submitted bids for the painting contract. The painting company, which is non-union, submitted a bid for the project that was $46,000 lower than the only other bid, submitted by a union contractor.
In holding that Franklin County failed to exercise sound discretion in rejecting the painting company’s bid, the Supreme Court stated that the 14 prevailing wage complaints filed against the painting company resulted in findings of unintentional violations, were settled with the Department of Commerce with disclaimers of any wrongdoing, or the complaints were closed with no findings of liability. The Supreme Court held that although bid criteria which would take into account a contractor’s prevailing wage compliance would be permissible, Franklin County failed to properly apply its prevailing wage bid criteria to the painting company when rejecting its low bid for the project.
In rendering its ruling, the Supreme Court found that neither Ohio’s Prevailing Wage Law, nor Franklin County’s bid criteria, provides a definition for the term “violated.” The Supreme Court reasoned that under the resolution, a contractor’s mere non-compliance with prevailing wage laws would not constitute a “violation,” as restitution could be made by the contractor and any non-compliance issues remedied under the Ohio Revised Code. More so, the Supreme Court stated that a settlement agreement is not evidence of a “violation,” as a settlement is, by its very terms, a negotiated conclusion to a dispute. As such, the Court concluded that “violated,” as used in the resolution, must refer to the situation in which the director of the Department of Commerce has made a formal finding that a contractor has intentionally violated prevailing wage laws and all appeals are exhausted. Because the painting company was never found to have intentionally violated Ohio’s Prevailing Wage Law, Franklin County abused its discretion in rejecting the contractor’s low bid for the project.
The Supreme Court also noted that Franklin County failed to exercise sound discretion when failing to apply its other bid criteria to the painting company to determine whether to reject or accept its bid, ignored the painting company’s record of successful performance on similar projects, and ignored without reason Franklin County’s construction manager’s recommendation that the painting company receive the contract.
Due to the state of the economy and the deteriorating private construction market in Ohio, more and more contractors are starting to bid on public projects in order to sustain their businesses and keep their workers employed. Under Ohio law, public authorities are required to award public construction contracts to the lowest and responsible bidder or to the lowest and best bidder. However, with increased competition for public projects comes the inclusion of bid criteria or other onerous requirements which may be specifically designed to exclude an otherwise qualified contractor from bidding. If you have any questions regarding any bid criteria on public projects, or feel that certain bid criteria may be unfair or is being applied in an unlawful manner, please feel free to call Alan Ross or Nick Nykulak to discuss.
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