Robinson Brog Leinwand Greene Genovese & Gluck, P.C. - New York City Business Litigation Attorneys

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Court Of Appeals Voids Municipal Contract Awarded To Waste Hauler For Lack Of Competitive Bidding

John D. D'Ercole and Nicholas R. Caputo of Robinson Brog Leinwand Greene Genovese & Gluck P.C. obtained a victory for their client before the New York Court of Appeals. In the Matter of AAA Carting and Rubbish Removal, Inc. v. The Town of Southeast, No. 111, June 9, 2011, the New York Court of Appeals found that a contract to collect garbage in the Town of Southeast was improperly awarded to Suburban Carting in violation of New York’s competitive bidding statute, General Municipal Law §103. The Court found that the Town was not justified in awarding the contract to Suburban Carting because it was a higher bidder and the lower bidder, AAA Carting, was a responsible bidder within the meaning of General Municipal Law §103. The Court held a Town is precluded “in an open bidding process, from choosing a higher bid merely because it subjectively believes that a higher bidder is preferable and more responsible than a lower bidder based on criteria not set forth in the bidding proposal.”

The decision of the Court has statewide implications as it affects how every municipality or governmental agency conducts its competitive bidding process. The Court stated that towns, villages and municipalities under General Municipal Law §103 cannot accept a higher bid based on a subjective assessment of criteria not specified in the bid specifications since such conduct gives rise to speculation that favoritism, improvidence, extravagance, fraud or corruption may have played a role in the decision. The decision is a victory for New York State taxpayers since the Court of Appeals declared the contract awarded to Suburban Carting at a substantially higher price was null and void, and that the failure to award the contract to AAA Carting as the lower bidder was arbitrary and capricious.