A challenge to a public bid or contract ultimately depends on the “standing” of the challenger to bring the challenge. Standing means that the party initiating legal action must show that it has been “aggrieved” – i.e., that it has a “substantial, direct, and immediate interest in the outcome of the matter. A recent decision by the Commonwealth Court squarely addressed the issue of standing in the context of a public bid solicitation and found it lacking.
In December 2017, the Pennsylvania Department of Transportation (PennDOT) issued a bid solicitation for a contract to perform highway improvements to US Route 202 in Norristown. The bid required contractors to sign a project labor agreement (PLA) with the Building and Construction Council of Philadelphia and Vicinity.
Two employees of a nonunion contractor, Allen Myers LP (Meyers), filed an action in the Commonwealth Court seeking to enjoin PennDOT from requiring contractors to sign the PLA as a condition for bidding and performing work on the Route 202 project. They alleged that the PLA precluded nonunion contractors from bidding on the project and applied different standards to different bidders, and alleged that the PLA requirement violated the Commonwealth Procurement Code and the State Highway Law.
PennDOT objected to the employees’ action due to their lack of standing. The Commonwealth Court agreed with PennDOT, and first held that the employees did not meet the test for traditional standing:
We agree … that Petitioners do not have an interest that is substantial, direct, and immediate. Neither bid on this project, and the only relation they have to the bidding process is that their employer may have submitted a bid if there were no PLA requirement. While there are conceivable scenarios where Petitioners would be employed to work on this project, there are just as many scenarios where they would not. Both could be terminated tomorrow; both could quit and work for another contractor. Both could continue working for Myers but be assigned to different construction projects. Petitioners are not, therefore, sufficiently aggrieved to meet the requirements for traditional standing.
The Commonwealth held second that the employees did not meet the test for “taxpayer” standing even though they were admittedly taxpayers because the governmental action which they were challenging was in fact being challenged by Myers, their employer, and another nonunion contractor as well:
While the enactment of the Procurement Code did not take away the right of taxpayers to bring an action in equity in our original jurisdiction, taxpayers still must satisfy Biester to do so. For the reasons set forth above, Petitioners do not satisfy the Supreme Court’s test for taxpayer standing.
The plain takeaway from this recent decision is that the concept of standing remains critical in crafting a challenge to a public bid or contract award. Without standing, a challenger cannot object to a public bid or contract, and irregularities or improprieties in public procurement may well go unchallenged.
The Commonwealth Court decision can be found here.
If you need assistance with a public contracting issue, feel free to call or email me. I’ll be happy to assist in anyway possible.
Christopher I. McCabe, Esq.
