Case Name: In the Matter of Margrove, Inc., Respondent, v. Office of General Services of the State of New York et al. Appellants
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1967-04-05
Citations: 27 A.D.2d 321
Docket Number: 
Parties: In the Matter of Margrove, Inc., Respondent, v. Office of General Services of the State of New York et al. Appellants.
Judges: 
Reporter: Appellate Division Reports
Volume: 27
Pages: 321–327

Head Matter:
In the Matter of Margrove, Inc., Respondent, v. Office of General Services of the State of New York et al. Appellants.
Third Department,
April 5, 1967.
Louis J. Lefhowits, Attorney-General (Henderson G. Riggs and Ruth Kessler Toch of counsel), for Office of General Services and another, appellants.
Bouck <& Holloway (Warner M. Bouck and Roger M. Fritts of counsel), for Sealtest Foods Division, National Dairy-Products Corporation, appellant.
Wiser, Shaw, Freeman, Van Graafeiland, Harter S Secrest {Bruce E. Hansen of counsel), for respondent.

Opinion:
Gibson, P. J.
Appeals are taken by the Office of General Services of the State of New York (OGS), the Comptroller of the State of New York (Comptroller) and Sealtest Foods Division of National Dairy Products Corporation (Sealtest) from an order and judgment of the Supreme Court at Special Term in Albany County, which, in a proceeding under article 78 of the CPLR, (1) annulled determinations of appellants OGS and Comptroller awarding to appellant Sealtest a certain contract for the fluid milk and cream requirements of the combined agencies of the Willard State Hospital and the Willard State Hospital, Sampson Unit, for the period July 1, 1966 to June 30, 1967; (2) rescinded, set aside and annulled said contract; and (3) directed appellants OGS and Comptroller to enter into a contract with petitioner-respondent Hargrove, Inc. for said requirements of said combined agencies (prorated for the time remaining of the original contract period) in accordance with the terms of petitioner-respondent's bid and proposal for said contract, the Specification dated April 15, 1966 and the General Specifications dated October 1, 1962.
The issues are clearly outlined and correctly decided in the comprehensive and well-considered opinion of Mr. Justice KoB-EMAn at Special Term (51 Misc 2d 596) and we write only to discuss the arguments advanced in the minority opinion and, as a necessary preliminary thereto, to state a brief synthesis of the parties' procedures culminating in the contract award which has properly been set aside.
Appellant OGS solicited bids for supplying the milk and cream requirements of some 39 separate Mental Hygiene agencies throughout the State. Among these many agencies were two units (Willard and Sampson) of Willard State Hospital, and with respect to these two the OGS proposal stated: " Combined award will be made for Willard and-Sampson ". Appellant Sealtest submitted bids for the requirements of Willard and Sampson and, additionally, for those of Binghamton State Hospital. Respondent Hargrove bid only for Willard and Sampson. Magic City Ice and Milk Company, not a party to this proceeding, became the low bidder for Binghamton upon Sealtest's refusal to accept the Binghamton award without the other two. The pertinent bids were as follows:
Margrove Sealtest Magic City
Binghamton No bid $ 86,701.12 $91,854.40
Willard $58,053.13 59,466.37 No bid
Willard-Sampson 36,623.10 37,283.94 No bid
Total $94,676.23 $183,451.43 $91,854.40
Clearly, the combined bid by Margrove of $94,676.23 was lower than the aggregate of Sealtest's bids of $96,750.31 for Willard and Sampson and under the OGS proposal the " [combined award * " * for Willard and Sampson " should have been to Margrove; and the correct decision of the case seems to us as simple and self-evident as that. Nevertheless, because of the circumstance that the total of Sealtest's bids for Willard and Sampson plus its bid for the completely separate and unrelated agency at Binghamton was lower than the aggregate of Margrove's bids for the Willard-Sampson units plus that of Magic City for the Binghamton facility, OGS and the Comptroller awarded for this new, previously unannounced and, in our view, completely unwarranted combination by contracting with Sealtest. As Special Term correctly held, " The lowest responsible bidder must be determined in accordance with the provisions of the specifications and proposal, namely the lowest responsible bidder for each agency or unit, and insofar as the subject contract is concerned, respondents OGS and the Comptroller were required to award it to the lowest responsible bidder for the combined agencies of the Willard Hospital and Sampson Unit." (51 Misc 2d 596, 598.)
We find no basis for the conclusion expressed in the dissenting opinion in this court that Condition 33 of the General Specifications and section 174 of the State Finance Law authorized this contract award as in "the best interests of the State" or so as to " best promote the public interest ". Indulging the doubtful assumption that the practice followed in this case, resulting in an apparent saving of $3,000, would promote the public interest and would not, on the contrary, discourage future alleged competitive bidding or engender other evils, nevertheless the proviso of section 174 upon which the minority relies is that contracts shall be let, not as will best promote the public interest in any event, but that contracts " shall be let to the lowest responsible bidder, as will best promote the public interest ". (Italics added.) As Special Term succinctly put it, " Public policy dictates that all responsible bidders be afforded equal opportunity to compete" (51 Misc 2d 596, 599). It is a fundament of fair play that there be no change in the rules during the competition but here, even worse than a violation of that concept, the rules were changed after the scores were posted. We are unable to agree with the minority view that a saving of approximately $3,000, accomplished by rejecting the low bids made in good faith and in every respect in compliance with the State's own specifications, is in the State's best interest or, indeed, is anything but degrading to it. Neither do we find any basis, in law or in reason, for the suggestion that Mar-grove 's rights were in some unexplained fashion limited by Sealtest's unilateral action in reserving a right to refuse an award that did not include the milk requirements of all three institutions named in its bids. Certainly, this was a proper escape clause, for Sealtest's benefit; but, with equal certainty, it was nothing more. We find likewise irrelevant the dissenters' reference to the right reserved to OGS to " reject all bids, in whole or in part "; the simple fact being that there was no such general rejection and appellants do not claim that there was.
The judgment and order should be affirmed.