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L & M Bus Corp. v. New York City Dep't of Education

December 22, 2009


Cross appeals from an order of the Supreme Court, New York County (Carol Edmead, J.), entered on or about December 17, 2008, which, to the extent appealed from, declared sections 1.35 and 4.24 and parts of section 4.10 of request for bids BO553 unlawful, declined to hold section 1.5(A) unlawful, ordered respondents to include "the addresses of all children presently at the schools to and from which children are to be bused" in a revised specification, and implicitly denied intervenor's motion to compel respondents to complete the record. Petitioners purportedly cross appeal from an order, same court and Justice, entered on or about April 9, 2008, which granted intervenor's motion for leave to intervene, and/or from an order, same court and Justice, entered May 16, 2008, which, upon granting petitioners' motion for reargument, adhered to its April 9 decision.

The opinion of the court was delivered by: Tom, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

Luis A. Gonzalez, P.J., Peter Tom, Richard T. Andrias, David B. Saxe, JJ.


At issue on this appeal is the propriety of a request for bids (RFB) issued by respondent New York City Department of Education (DOE). The RFB invites bids for providing transportation between home and school to handicapped children participating in pre-K and early intervention (EI) programs*fn1. Bids are required to be submitted "on a per rider per day basis" so that DOE can track transportation costs per child for purposes of its own reimbursement.

DOE solicited bids on a five-year contract to transport participants to program sites, not necessarily located in the same borough, based on what can only be described as a very rough estimate of the number of participants, an inexact description of their location or the frequency and level of transportation required, and no guarantee that any of these factors will remain stable over time. The contract, terminable at DOE's option, contains employee protection provisions (EPPs) and provides that any contract vendor who needs new employees is required to hire workers laid off by a competitor at the worker's same rate of pay and to maintain welfare and pension contributions. The contract also provides DOE with a 2% discount for timely payment and vendors with increased reimbursement as the result of a reduction in the number of children transported, but only if the decrease exceeds 30% of ridership.

This petition under CPLR article 78 was brought by 23 prospective bidders seeking a declaration that various provisions contained in the RFB violate the public bidding law. Petitioners contended that the RFB is anticompetitive because the inclusion of EPPs renders the calculation of a bid impossible; the bid specification permits adding and dropping schools, programs and participating children without a commensurate reimbursement adjustment; the RFB fails to provide the addresses of participating children; and the 2% reduction for prompt payment is confiscatory, providing for the imposition of what amounts to a 2% fee whether or not a vendor participates in DOE's electronic payment system, for which the fee is imposed. To assist in preparation of their bids, petitioners sought to require DOE to provide "the addresses of all children presently at the schools to and from which children are to be bused."

In their answer, respondents averred that "EPPs (1) ensure labor peace, and, thus, contractual performance without disruption; (2) facilitate the use of proven, experienced workers; and (3) remove a major impediment to bidding (pension 'withdrawal liability')." With respect to petitioners' request for the addresses of the children to be transported, respondents did not contend that disclosing such information would offend federal privacy laws.

Local 1181-1061, Amalgamated Transit Union, AFL-CIO was granted leave to intervene. The union moved to dismiss the petition for failure to state a cause of action insofar as it sought to bar the inclusion of EPPs. In the alternative, the union sought leave to conduct discovery.

Supreme Court, inter alia, granted so much of the petition as sought to strike the EPPs as contrary to the public purpose embodied in the competitive bidding statute and directed that DOE provide the addresses of participating children. It also mandated the removal or revision of provisions that it found merely promote the inflation of bids, specifically, a provision limiting the increase in vendor reimbursement to those contractors experiencing a 30% drop in ridership and the provision for a 2% early payment discount.

Due to the complexity of the bid specifications and the uncertainty resulting from the inability to predict likely revenues and anticipate costs, we agree with Supreme Court's disposition. The RFB provides that transportation is to be provided under a "requirements contract" for the five-year period from July 1, 2008 through June 30, 2013, with two one-year extensions at DOE's option. Contractors are to "supply transportation service from anywhere in the City to all eligible program participants attending sites within [a particular geographic] zone... It is [DOE's] intention... that the successful bidders... will assume responsibility for any new work that should arise in their geographic zones after July 1, 2008."

Payment to a contractor for transportation provided to a participating child varies according to which of six "categories" the child is assigned. Classification depends on the program in which the child is registered (pre-K or EI), whether the child resides in the same or a different borough as the program site and, for the older EI participants, whether the child is ambulatory or not. The RFB specifies that "children who reside in and are provided services in the same borough should not spend more than one hour on the run each way," and "children who reside in one borough and receive services in another borough or county should not spend more than one and one-half hours on the run each way." Price adjustments for labor and fuel costs over the life of the contract are provided based on the rate of inflation.

The RFB presents a considerable challenge to potential bidders due to the complexity in ascertaining the extent of the transportation services to be supplied. Bids are solicited for "classes" delineated by the geographic zones in which the various pre-K and EI service sites are located. The intricacy of estimating a bid for a particular class is compounded by the uncertainty as to the number of participating children within the particular zone who are included in each of the six categories. Section 4.2 of the RFB states that DOE "shall provide each bidder with the weighting proportion of each category of service expected in each class. In addition, [DOE] shall indicate the estimated number of children to be served in each service category." However, Section 1.18 warns that DOE's "estimate of the number of children requiring transportation is only an approximation..."The number of children actually requiring transportation may be less or more than so estimated, and if so, the service must be provided as offered and no claim, action or change order for damages or loss of profits shall accrue to the Contractor by reason ...

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