turn to the next lowest bidder if the first is found unfit.
Tufaro Transit Co., 436 N.Y.S.2d at 889. Accord Dick Fischer Dev. No. 2, Inc. v. Department of Admin., State of Alaska, 778 P.2d 1153, 1155 (Alaska 1989) ("Acceptance [of a bid] is incomplete if the requirements of a condition precedent or of a condition subsequent are not fulfilled.").
The cases cited by this court in its earlier order-- Lord Electric Co. v. Litke, 469 N.Y.S.2d at 848; Lynch v. Mayor, 37 N.Y.S. at 799; and Roosevelt & Cross, Inc. v. County of Albany, 421 N.Y.S.2d at 683--each involved an unconditional award. Once the award was made, a contract was formed. In Tufaro Transit, Inc., however, the governmental body initially accepted the lowest bids "subject to" an investigation. Tufaro Transit, Inc., 436 N.Y.S.2d at 887. After an investigation, two bidders were properly rejected. Id. No contract had been formed with those parties. See Molloy, 198 N.Y. at 409; Dick Fischer Dev. No. 2, 778 P.2d at 1155.
In this case, six conditions were listed in the "Notice of Award" letter sent to plaintiffs on June 15, 1987. Item 1, Exh. B. The letter stated clearly: "The award has been made to Seneca Mineral Company, Inc. pending receipt of the following. . ." Id. (emphasis added). It then listed the conditions. There is no dispute that plaintiff satisfied four of these conditions. There is also no dispute that defendant rejected plaintiff's bid after deciding that plaintiff failed to (1) obtain DEC permits and (2) meet technical specifications for its brine. Item 46, Exh. G (August 18, 1987, rejection letter).
In deciding to reject plaintiff's bid, "the governmental agency has the right to determine whether a variance from bid specifications is material or whether to waive it as a mere irregularity, and that determination must be upheld by the courts if supported by any rational basis." Varsity Transit, Inc. v. Board of Educ. of the City of New York, 130 A.D.2d 581, 515 N.Y.S.2d 520, 521 (N.Y. App. Div.), appeal denied, 70 N.Y.2d 605, 519 N.Y.S.2d 1029, 513 N.E.2d 1029 (N.Y. 1987). See also 400 East 54th Street Garage Corp. v. Green, 179 A.D.2d 452, 578 N.Y.S.2d 190, 191 (N.Y. App. Div. 1992); In re C.K. Rehner, Inc., 106 A.D.2d 268, 483 N.Y.S.2d 1, 2 (N.Y. App. Div. 1984); William A. Gross Constr. Assoc. v. Gotbaum, 150 Misc. 2d 478, 568 N.Y.S.2d 847, 849 (N.Y. Sup. Ct. 1991). Thus, the court must evaluate whether the County's decision to reject plaintiff's bid for failure to (1) obtain DEC permits and (2) meet technical specifications, was "irrational, dishonest or otherwise unlawful." Id.
Plaintiff argues that it met defendant's second condition: "Receipt of specified permits no later than August 15, 1987." Item 1, Exh. B. The only permit at issue under this requirement was a waste hauler permit issued by DEC. Plaintiff argues, first, that it did not need this permit; second, that it was informed on July 15, 1987, by George Riedesel, Director of the DPW, that it did not need this permit; and third, that it could meet this requirement by hiring a licensed hauler. None of these arguments has merit.
The parties agree at this point that the DEC did not require a contractor hauling non-waste brine to obtain a waste hauler permit. See Item 13 at 7; Item 44, Exh. F (December 8, 1987, letter from Robert Wozniak, DEC). The parties also agree that such a permit was required to haul and/or dispose of waste brine. See id. Thus, plaintiff did not need a waste hauler permit to haul the non-waste brine that it intended to supply from its wells to the County's brine tanks.
In addition to supplying brine to the County, however, plaintiff was also required, pursuant to the bid specifications, to supply environmental control for the County's brine tanks "at no additional charge to the County . . . ." Item 1, Et. A at 2. This environmental control included cleanup of spills, the cleaning of tanks, and the disposal of any residue of waste brine in such tanks. Id. The previous supplier for the County--Duff's--had used waste brine. The County believed that some of that waste brine may have remained in its tanks during the summer and fall of 1987. Thus, it was completely logical for the County to require those companies bidding in 1987 to obtain a waste hauler permit from DEC in order to be able to clean up waste brine as part of their environmental control duties under the 1987 contract. This conclusion is underscored by a letter dated August 27, 1987, by Robert Wozniak, Solid Waste Specialist II at DEC, in which he informed the County that "any movement of brine that is presently in the Chautauqua County storage tanks would have to be done by a permitted hauler." Item 46, Exh. J. Consequently, defendant's bid specifications unequivocally required bidders to obtain a waste hauler permit. Item 1, Exh. A at 2. Plaintiff did not obtain this permit. Accordingly, defendant's decision to reject plaintiff's bid for non-compliance with this condition was not irrational. Varsity Transit, 515 N.Y.S.2d at 521; In re C.K. Rehner, Inc., 483 N.Y.S.2d at 2; Gotbaum, 568 N.Y.S.2d at 849. See also LeCesse Bros. Contracting, Inc. v. Town Bd. of Town of Williamson, 62 A.D.2d 28, 403 N.Y.S.2d 950, 952 (N.Y. App. Div. 1978), aff'd, 46 N.Y.2d 960, 415 N.Y.S.2d 413, 388 N.E.2d 737 (N.Y. 1979) ("the rule is that a municipality may decline bids which fail to comply with the literal requirements of the bid specifications"); Southern Steel Co. v. County of Suffolk, 51 Misc. 2d 198, 273 N.Y.S.2d 99, 103 (N.Y. Sup. Ct. 1966), aff'd, 29 A.D.2d 662, 286 N.Y.S.2d 204 (N.Y. App. Div. 1968) ("Clearly, bids may be rejected for their failure to comply literally with specifications.").
Plaintiff cannot escape this conclusion by arguing that the permit requirement was waived by Mr. Riedesel in a meeting with Douglas Painter on July 15, 1987. Based on the affidavits and deposition testimony submitted to the court, there is no support for plaintiff's contention that Mr. Riedesel told plaintiff that no permit was required. Rather, it is apparent that Mr. Riedesel took the position that plaintiff should check with the DEC. See Item 44, Exh. B at 83, 171 (Riedesel deposition). Plaintiff then argues that Robert Wozniak at the DEC informed it that no permit was required, but this allegation is refuted by Mr. Wozniak's August 27, 1987, letter referred to above. In that letter, Mr. Wozniak clearly states that any movement of brine then in Chautauqua County's tanks would have to be done by a permitted hauler. Item 46, Exh. J.
Similarly, plaintiff may not escape the County's requirement by suggesting that it could have hired a licensed hauler to dispose of waste brine. Contrary to plaintiff's assertions, the bid documents do not waive the strict requirement that "vendor shall provide within 30 days from notification of award, all permits required for hauling and storage by: . . . NYS DEC - Waste Hauler plus Additive Permit." Item 1, Exh. A at 2. The bid documents only state that "all emergency [environmental control] requests will be honored by the Contractor immediately, if not, the County may hire an outside contractor at the vendor's expense." Id. (emphasis added). This clause offers no help to plaintiff.
For this reason alone, the court concludes that the County acted rationally in deciding to reject plaintiff's bid. See Verblaw Motor Truck Sales, 482 N.Y.S.2d at 381-82. At least one court has gone further and held that even where a bidder was rejected unreasonably, its proper remedy was under Article 78 and not breach of contract. Woods Advertising, Inc. v. Koch, 577 N.Y.S.2d at 22-23. See also DiBerardino's, Inc. v. Rome Consol. Sch. Dist., 510 N.Y.S.2d at 791-92 (since bidding process is a "quasi-judicial governmental function," and decision whether to award a bid is a discretionary act of the responsible official, the only way to review such decisions is by way of an Article 78 proceeding). Having arrived at this conclusion, the court need not reach the second ground given by the County in rejecting plaintiff's bid, viz., that plaintiff's brine failed to meet the County's bid specifications.
Once the bid was rejected, as stated above, the "plaintiff, therefore, did not sustain a contractual relation with the defendant and cannot sustain this action as upon contract." Molloy, 198 N.Y. at 408-09. Accordingly, defendant's motion for summary judgment on plaintiff's breach of contract claim is granted, and that claim is dismissed.
This order does not dispose of plaintiff's fourth and fifth causes of action, however. The parties shall write the court forthwith informing it of the status of these claims.
JOHN T. CURTIN
United States District Judge
Dated: July 9, 1992