Court Opinion

ID: 9766964
Source: CourtListenerOpinion
Date Created: 2023-08-29 05:04:45.549936+00
Date Added: 2024-06-11T07:30:27.487458
License: Public Domain

McDERMOTT, Justice,
dissenting.
The issue here is whether a municipal authority may dodge statutorily mandated competitive bidding procedures through an imaginative financing scheme. The plan in question placed the management of a project in the hands of an agent when the project was financed in great part by the municipal authority’s tax-free revenue bonds.1
The majority holds that the strategy employed by the Allegheny County Hospital Development Authority (“Authority”) Children’s Hospital, Mellon-Stuart and the Mellon Bank survives without competitive bidding since the contracts here were made by the private parties engaged as agents, and that the Authority itself did not make the contracts or the construction. To reach this result, the majority strictly construes the “made by” language of section 312(A) of the Municipal Authority Act:2
*275All construction, reconstruction, repairs or work of any nature made by any Authority, where the entire cost, value or amount of such construction, reconstruction, repairs or work, including labor and materials, shall exceed four thousand dollars ($4,000), ... shall be done only under contract or contracts to be entered into by the Authority with the lowest responsible bidder upon proper terms, after due public notice has been given asking for competitive bids as hereinafter provided. (Emphasis supplied.)
53 P.S. § 312(A).
I disagree with the majority’s resolution of this ambiguity. I believe the language of the statute must be broadly construed to effectuate the important public policies sought by the legislature when, in 1945, it mandated a system of competitive bidding for contracts involving municipal authorities.
Cutting away the complex financial minutiae of this case, we have a relatively simple problem of statutory construction. However, the majority has turned the traditional rules of statutory construction upside down, recklessly allowing an evisceration of a vital component of the Municipal Authorities Act.
“The object of all interpretation and construction of statutes is to ascertain and effectuate the intention of the General Assembly.” 1 Pa.C.S. § 1921(a);3 Casey v. Pennsylvania State University, 463 Pa. 606, 615, 345 A.2d 695, 700 (1975); Commonwealth v. Monumental Properties, Inc., 459 Pa. 450, 467, 329 A.2d 812, 820 (1974). Further, statutory language should be liberally construed to effectuate legislative intent. 1 Pa.C.S. § 1928(c). In ascertaining legislative intent, the court should look to the mischief sought to be remedied. 1 Pa.C.S. § 1921(c)(3).4
*276This Court has previously stated the end sought to be gained by competitive bidding: “guarding against favoritism, improvidence, fraud, and corruption in the awarding of public contracts." Weber v. City of Philadelphia, 437 Pa. 179, 262 A.2d 297 (1970); Yohe v. City of Lower Burrell, 418 Pa. 23, 28, 208 A.2d 847, 850 (1965); Corcoran v. City of Philadelphia, 363 Pa. 606, 609, 70 A.2d 621, 623 (1950). In Price v. City of Philadelphia Parking Authority, 422 Pa. 317, 221 A.2d 138 (1966), this Court held that the competitive bidding provision of the Parking Authority Law5 should be read liberally to encompass the need to bid out leases to air space above proposed parking lots. Because the leases were not bid out, the leases were held void. The Court, emphasizing the public policy sought to be furthered, cautioned against circumventing statutory competitive bidding requirements. We should follow that lead. Price v. Philadelphia Parking Authority, supra, 422 Pa. at 332, 221 A.2d at 146. See also, Conduit and Foundation Corp. v. City of Philadelphia, 41 Pa.Cmwlth.Ct. 641, 401 A.2d 376 (1979).
The policies underlying competitive bidding have also been stressed by commentators and courts of other jurisdictions. See, 10 McQuillin, Municipal Corporations § 29.29 (1979); Note, “The Necessity of Competitive Bidding in *277Municipal Contracts,” 27 U.Pitt.L.Rev. 117, 123 (1965); Annot., 81 A.L.R.3d 979, 981-82 (1972); Istari Construction, Inc. v. City of Muscatine, 330 N.W.2d 798 (Iowa 1983); John J. Brennan Construction Co. v. City of Shelton, 187 Conn. 695, 448 A.2d 180 (1982); Libby v. City of Dillingham, 612 P.2d 33 (Alaska 1980); Marriott Corporation v. Metropolitan Dade County, 383 So.2d 662 (Fla.App.1980); LeCesse Bros. Contracting, Inc. v. Town Board of Town of Williamson, 62 A.D.2d 28, 403 N.Y.S.2d 950 (1978), aff'd 46 N.Y.2d 960, 415 N.Y.S.2d 413, 388 N.E.2d 737 (1979); Platt Electric Supply, Inc. v. City of Seattle, Division of Purchasing, 16 Wash.App. 265, 555 P.2d 421 (1976); Seaboard Construction Co. v. Atlantic City, 204 F.2d 163 (3d Cir. 1953); Cyr v. White, 83 Cal.App.2d 22, 187 P.2d 834 (1947); Coller v. City of St. Paul, 223 Minn. 376, 26 N.W.2d 835 (1947).
Additionally, courts have held that statutory competitive bidding requirements must be construed against a municipal authority seeking to avoid the requirements: When there is an ambiguity, bid. See Cabe v. Union Carbide Corp., 644 S.W.2d 397, 403 (Tenn.1983); Cosentino v. City of Omaha, 186 Neb. 407, 183 N.W.2d 475 (1971).
The majority argues that the oft-stated concerns which motivated the legislature to mandate competitive bidding are not implicated here since public funds were not involved. Thus, the majority urges, since the squandering of private funds was not what concerned the legislative, competitive bidding was not required. It is true that the funds provided by the Authority were not gained from the taxpayers. However, it would be incorrect to label the $54 million involved as purely private moneys. The $54 million was gained from revenue bonds floated by the ACHDA, a public authority.6 Public officers were responsible for investing the funds raised by the Authority. See Commonwealth ex rel. McCreary v. Major, 343 Pa. 355, 22 A.2d 686 (1941). In exchange for the funds provided, the Authority was granted a leasehold interest in the hospital premises until the *278year 2014. And, probably most important, the funds provided by the Authority were tax-free: taxpayers leveraged this project.
If we were to endorse this exemption from the competitive bidding process, nothing would prevent other Commonwealth authorities from skirting competitive bidding requirements: merely employ the device the majority provides for them. Rather than have the authority itself construct and contract for a project, funnel the tax-free funding through the authority to an agent, a private company, which would in turn manage the project and make all the contracts for the project. With the perceived annoyance of competitive bidding out of the way, the agent or the public official who appointed the agent could award his friends and political allies lucrative contracts. The concerns of favoritism, improvidence, fraud and corruption, while not hinted at in this case, are implicated when competitive bidding procedures are avoided through a scheme like the one employed here.
Appellees might complain that competitive bidding is an onerous burden. The Children’s Hospital project is certainly an important one. However, it cannot be said that competitive bidding would unduly handicap such a project. Competitive bidding has successfully passed the test of time, governing the award of municipal authority contracts in the Commonwealth since 1945, and other governmental contracts since the turn of the century. It is not so much to ask that, in exchange for the $54 million of tax-free financing, the parties competitively bid out contracts as required by statute.
Further, competitive bidding requirements are not inflexible and unyielding. The statute requires contracts to go to the lowest responsible bidder, giving some discretion to the Authority and/or its agent. 53 P.S. § 312(A), supra. If, as alleged here, appellants were not qualified for the job, their bids could have been rejected under the Act.
The Children’s Hospital project was made possible by the public Authority. Competitive bidding procedures should *279be adhered to when an Authority, operating under the Municipal Authorities Act, provides the financing for a project’s construction, repair and other work.
Since the lower courts’ construction of the statute was not a reasonable one, I would reverse the order of the Commonwealth Court.
NIX, C.J., joins in this dissenting opinion.

. $54.5 million of the $74.3 million project was provided by the sale of the Authority's bonds.

. Act of February 18, 1982, P.L. 86, No. 31, § 2 as amended, 53 P.S. § 312(A).

. Statutory Construction Act, Act of December 6, 1972, No. 290, § 3, 1 Pa.C.S. § 1501 et seq.

. Another rule of statutory construction directs that we ascertain legislative intent through administrative interpretations. 1 Pa.C.S. § 1921(c)(8); Hospital Association of Pennsylvania v. MacLeod, 487 *276Pa. 516, 523, 410 A.2d 731, 734 (1980); See also, Morton v. Ruiz, 415 U.S. 199, 94 S.Ct. 1055, 39 L.Ed.2d 270 (1974). Here, the "General Guidelines for Obtaining Long-Term Financing of Hospital Facilities through the Allegheny County Hospital Development Authority under the Municipality Authorities Act of 1945, as amended” requires hospitals and their agents to award construction contracts in accordance with competitive bidding requirements. The requirements state:
Competitive Bids: Where construction is initially undertaken by ACHDA [Allegheny County Hospital Development Authority], ACH-DA will take by assignment all plans and specifications for the project and will competitively bid the construction work as required by the Act [Municipality Authorities Act of 1945]. However, where it is to the economic advantage of the hospital to initially award contracts with subsequent assignments thereof to ACHDA. All contracts so awarded by the hospital must have been first made the subject of competitive bidding in accordance with the Act.
Article VI(a). (Emphasis supplied.)

. Act of June 5, 1947, P.L. 458, § 11, 53 P.S. § 351.

. Act of May 2, 1945, P.L. 382, § 1, 53 P.S. § 301 et seq.