New York State Court Voids Project Labor Agreement Requirement On DOT Project – Orders Re-Bid

A New York State court judge in Albany rejected a Department of Transportation (DOT) requirement of a Project Labor Agreement (PLA) on a highway project on Route 17 in the Town of Wallkill, Orange County. In an Article 78 proceeding, which challenges the determinations of a public administrative agency, a non-union low bidder on the DOT project, who refused to enter into a PLA negotiated by the DOT and made a part of the bid documents, challenged the award which ignored its bid and went to the second bidder at an added cost reported to be $4.5 million. Because the DOT failed to demonstrate that the use of the PLA advanced the interests of the State’s public bidding statutes, the petition was granted. Barring an appeal, which is expected, the DOT will be required to re-bid without the PLA requirement.

In its decision, the Court characterized the DOT’s failure to provide a proposed PLA from the local trades council as well as “all relevant e-mail documentation it received and considered in approving the PLA at issue” as “blatant and unexcused record defects”. In dealing with this “record” issue, the Court took the somewhat unusual position of declaring the missing documents as non-existent and deeming the proceeding as fully submitted for decision by the Court.

Under the applicable law, the DOT bore the “burden of showing that the decision to enter into the PLA had its purpose and likely effect the advancement of the interests embodied in the competitive bidding statutes.” Those interests, the Court noted, include (1) protection of the public fisc, that is obtaining the best work at the lowest possible price, and (2) prevention of favoritism, improvidence, fraud and corruption.

The DOT relied primarily on affidavits of its Acting Chief Engineer although they provided no particular personal research, calculations or observations. Those affidavits relied almost exclusively on an impact study, and a revision of it, by a third-party consultant. While the Acting Chief Engineer focused on the study’s labor savings finding and a reduction/elimination of labor strife finding, that reliance was misplaced in the Court’s view. The Court concluded the DOT’s reliance on the consultant’s studies as unjustified because the revised conclusions contradicted the original conclusions regarding labor cost savings. Furthermore, the DOT’s own internal comments on the initial study conflicted with elements of the DOT’s ultimate determination regarding the Project’s urgency and the potential impact of labor strife.

The Court declared the PLA void, and the contract let pursuant to the bid documents that included the PLA a nullity. A re-bid was directed. See the decision here.