Court Opinion

ID: 9628930
Source: CourtListenerOpinion
Date Created: 2023-08-22 09:34:31.720855+00
Date Added: 2024-06-11T18:07:13.172270
License: Public Domain

MATTHEWS, Justice,
dissenting.
I.
Section 16.35.010 of the Fairbanks North Star Borough Procurement Code is titled “Maximum practicable competition.” It requires that “all specifications shall ... encourage maximum free and open competition. ...”1 The text of the ordinance, taken together with the title, mandates that all specifications facilitate maximum practicable free and open competition. By contrast, the PLA discourages competition by disadvantaging both open shop contractors and subcontractors. It thus violates the Borough Code, unless it would not be practicable to bid without the PLA. As the Borough has not shown that bidding without the PLA would be impracticable, using the PLA violates section .010 of the code.
The PLA is a contract specification. It requires that all contractors and subcontractors on the Lathrop High School project employ only union workers. In other words, all contractors and subcontractors must either be, or become, union shop employers. “Open shop” contractors and subcontractors employ workers without regard to union affiliation. While open shop contractors are not legally excluded from bidding on the project, they are placed at a serious disadvantage, since, as the trial court found, the restrictive hiring hall practices of the unions limit their ability to employ their permanent or accustomed work crews.2 Further, the PLA requires all contractors to make fringe benefit payments into union health and pension plans. For open shop contractors that maintain their own plans this can result in a double payment for fringe benefits.3 And, assuming that open shop contractors are able to employ their permanent workers, the workers may not benefit from the union *440health and pension plans because they may not work long enough to meet vesting thresholds.4
Open shop contractors and subcontractors make up a significant part of the construction industry. About seventy-five percent of all construction work in the United States is performed by open shop contractors.5 Further, about eighty percent of the construction workers in the United States are nonunion.6
Does the PLA then “encourage maximum free and open competition” as required by the Borough Code? Obviously, by discouraging participation by open shop contractors it does just the opposite. Is it thus illegal? The answer may be yes, per se. However, the title of section .010 suggests that the requirement of maximum competition is not absolute, and that what is actually required is maximum “practicable” competition. If so, the PLA contravenes the Borough Code unless there exist overriding reasons which render “impracticable” a bid package which does not contain a PLA.7
“Practicable” means “possible to practice.” Webster’s Third New Int’l Dictionary 1780 (1968). “Reasonably possible” is a synonymous phrase. In the context of section .010 the term clearly relates to cost. Thus the question is whether it would be reasonably possible from a cost standpoint for the Borough to bid the Lathrop project without the PLA specification.
The Borough has not shown that bidding the project without a PLA specification would be economically unreasonable. The Borough Assembly passed a resolution stating that PLAs “have proven to be of economic benefit to their owners.” This statement may be true in some cases, as where PLA’s prevent expensive work stoppages. But this *441statement does not establish that bidding this project 'without a PLA would not be reasonably possible.8 Although Mayor Sampson testified that, in his view, the PLA specification would “ensure labor stability” for the Lathrop project, it is equally clear from his testimony that there had been no work stoppages on any school construction project during his term as mayor. Cf. Empire State Chapter of Associated Builders & Contractors, Inc. v. City of Oswego, 659 N.Y.S.2d 672 (N.Y.App.Div.1997) (concluding that absent a history of labor unrest, “general concernfs] that the project be complete in a timely manner” do not justify the use of a PLA).
Intuitively, PLAs would seem to increase rather than decrease costs, because they reduce the pool of interested bidders.9 The Borough responds that it has wrested concessions from the unions participating in the PLA. It is, however, speculative as to whether these would result in a bid lower than one that would have been submitted by a contractor deterred by the PLA from bidding.10 *442Further, it has not been shown that union shop bidders could not obtain the same or better concessions on their own.
Public owners have been contracting in Alaska without PLAs since statehood. Was it then not reasonably possible for the Borough to bid the Lathrop project without a PLA? The answer, in my view, is that on this record the Borough has fallen well short of making such a showing.
I would therefore reverse the decision of the superior court and remand this case with instructions to enjoin the invitation for bids. Thereafter, the Borough would be able to solicit bids for the project without a PLA. Alternatively, the Borough Assembly could, by ordinance, amend the Borough Code to permit the use of PLAs.
II.
In the above paragraphs I have explained how I think that this case should be decided. In what follows I will explain my disagreement with three aspects of today’s opinion concerning the Borough Code.
First, the court does not use a textual approach in determining whether the maximum free and open competition clause of section .010 has been violated. Instead of focusing on the specific language of section .010, the court relies on cases from New York and Ohio.11 The only statutes quoted in those cases are statutes requiring that bids be awarded to the lowest responsible bidder. See New York Thruway Auth., 643 N.Y.S.2d at 484, 666 N.E.2d at 189, 193; Jefferson County Bd. of Comm’rs, 665 N.E.2d at 727. These cases do not refer to a requirement that specifications must be drafted to encourage maximum competition.12 Even though the New York and Ohio eases did not discuss requirements analogous to the specifications requirement of section .010, this court draws from these cases the principle which it uses to decide this case. The principle is that so long as there exists a reasonable basis to conclude that a specification furthers “the interests underlying the Borough’s procurement code,” the specification is lawful. Op. at 435. The court has thus approached this ease as if there were a common law of competitive bidding which, at bottom, merely requires that public agencies act reasonably in light of the multiple purposes of competitive bidding.13
*443By contrast, I view this case as one involving the meaning of an ordinance which governs the conduct of the Borough with the same authority as a state statute. The ordinance has a specific mandate: all specifications must encourage maximum competition insofar as practicable. The case turns not on whether the Borough’s action was reasonable in some general sense but on whether the specification in question encourages maximum practicable competition. And, as I have attempted to explain above, when this question is specifically addressed, the answer is clear: the PLA specification falls well short of the mark.
Second, today’s opinion relies on a statement made in a concurring opinion by Justice Rabinowitz in Libby v. City of Dillingham, 612 P.2d 33 (Alaska 1980). The quoted statement is: “[A]s a general rule, municipal corporation competitive bidding requirements are construed narrowly, since ‘[i]n the absence of some statutory provision, competitive bidding is not an essential prerequisite to the validity of contracts by and with public bodies.’ ” Op. at 434 n. 15 (quoting Libby, 612 P.2d at 44 (Rabinowitz, J., concurring) (footnote omitted)). Such a rule has never been adopted by this court. Further, the statement was dictum even in the context of Justice Rabinowitz’s concurring opinion. The majority in Libby, including Justice Rabinowitz, strictly interpreted the statutory competitive bidding requirements to invalidate a negotiated lease entered into by the city.14
Libby does not therefore stand for the proposition that the requirements governing municipal corporation competitive bidding are not strictly enforced. Further, none of our other cases have, to my knowledge, indicated that public bidding requirements should not be strictly enforced. E.g., McBirney & Assocs. v. State, 753 P.2d 1132, 1138 (Alaska 1988) (voiding lease agreement due to irregularities in bidding process, noting that “this court has shown itself willing to protect the integrity of the state’s competitive bidding process on numerous occasions.”); State v. Bowers Office Prods., Inc., 621 P.2d 11, 14 (Alaska 1980) (upholding administrative decision strictly enforcing bidding procedures); Kelly v. Zamarello, 486 P.2d 906, 918-19 (Alaska 1971) (“[S]trict maintenance of the competitive bidding procedures required by law is infinitely more in the public interest than obtaining a pecuniary advantage in individual cases by permitting *444practices which do violence to the spirit and purpose of the law.”) (quoting Superior Oil Co. v. Udall, 409 F.2d 1115, 1119-20 (D.C.Cir.1969)).
Third, today’s opinion implies that because the Assembly acted in conjunction with the Borough mayor in approving the PLA specification, we should be less rigorous in our review for compliance with the maximum free and open competition clause of section .010. Op. at 435-436 n. 19. A resolution passed by a legislative body does not change the meaning of a law or ordinance. See State v. A.L.I.V.E. Voluntary, 606 P.2d 769, 773-74 (Alaska 1980) (“A mere resolution ... is not a competent method of expressing the legislative will, where that expression is to have the force of law ....”) (quoting Mullan v. State, 114 Cal. 578, 46 P. 670, 672 (1896)). Further, a legislative body has no special competence to interpret the meaning of an enactment of an earlier legislature. University of Alaska v. Tumeo, 933 P.2d 1147, 1156 (Alaska 1997). Thus, I fail to see how the existence of the Assembly resolution can affect our duties on appeal.

.The full text of section 16.35.010 is as follows:
Maximum practicable competition. All specifications shall be drafted so as to promote overall economy for the purposes intended and encourage maximum free and open competition in satisfying the borough's minimum needs, and shall not be unduly restrictive. The policy enunciated in this section applies to all specifications, including but not limited to, those prepared for the borough by architects, engineers, designers and draftsman.

. See also United States General Accounting Office, General Government Division, Briefing Report to the Honorable Steve Symms, U.S. Senate: Labor-Management Relations, 91-80BR (May 1991) at 5, 22-23.

. Id. at 5, 22-24.

.Id. at 23-24. One witness, the president of an open shop construction company in Fairbanks which employed more than 600 construction workers, detailed the deterrent effects of the Project Labor Agreement on open shop contractors, and workers, as follows:
The effect of the Project Labor Agreement as contained in the specifications for the Project will be to deter open shop contractors and subcontractors from submitting bids and sub-bids for the Project. These potential open shop bidders will not be able to accurately estimate their costs and they will be required to abandon their long-time employees. Open shop contractors will not be able to utilize the historical productivity rates of their open shop construction craft employees and will have to base their estimates of labor productivity on the unknown capability and motivation of union construction craft workers and the unknown effects of restrictive union jurisdictional rules and work practices. As a consequence of the PLA on the Eielson Elementary School project ("Eielson Project") which was bid on Tuesday, March 26, 1996, no open shop general contractors submitted bids. By effectively excluding open shop general contractors from bidding the Eielson Project, the Borough significantly limited the free and open competition which its statutes require it to practice when procuring public works construction projects.
The PLA on this Project operates to exclude open shop construction craft workers in two ways. First, to the extent that open shop general and specialty contractors and subcontractors do not bid the Project, the employees and potential employees of these entities will not be able to work on the Project because they are not members of the Fairbanks Unions. Second, even if open shop contractors and subcontractors submitted low bids on the Project, few open shop employees would be able to work on the Project due to the restrictive hiring hall practices of the Fairbanks Unions. Even if open shop construction craft employees were able to join the Fairbanks Unions, it is unlikely that more than a very few would be able to run the gauntlet of the restrictive Fairbanks Unions’ hiring hall practices and actually obtain employment on the Project. Those who did join the Fairbanks Unions and did obtain employment on the Project ... would be involuntarily required to pay substantial sums of money in the form of dues, assessments and health and welfare contributions, the benefits of which they would never realize because of the restrictive vesting requirements imposed by these unions.
Affidavit of George Osborne, Jr.

. H.R. Northrup, “Salting” The Contractor’s Labor Force: Construction Unions Organizing With NLRB Assistance, J. Lab. Res., Vol. XIV, No. 4 at 470 (1993).

. Bureau of Labor Statistics, U.S. Dep’t of Labor, Employment and Earnings (Jan. 1, 1994).

. The Attorney General has interpreted the similar but less demanding requirement of AS 36.30.060(c) that specifications must "encourage competition in satisfying the state's needs” as prohibiting project labor agreements except where a showing can be made that "requiring prospective contractors to use organized labor was the only available means to assure the construction.” 1990 Informal Op. Att’y Gen. 9 (July 1, 1990).

.The trial court suggested, but did not specifically find, that the dominant motive underlying the Assembly resolution was a desire to ensure the hiring of local construction workers on the project. Thus the trial court described the discussion leading up to the passage of the resolution as follows:
Mayor Sampson thereafter introduced a resolution supporting the use of Project Labor Agreements on the Eielson and Lathrop projects. The Assembly took testimony from Mr. Swamer [of the Trades Council], who outlined the benefits the Borough would purportedly receive if it adopted the PLA. Swamer particularly stressed the local hire aspects of PLAs as most unions have restrictive residency requirements. Swamer did indicate that if the successful bidder was from Anchorage or the lower 48, they would be allowed to bring up their key people for the project.
Mayor Sampson spoke next and also lauded the concessions contained in the PLA. He also acknowledged the local hire advantages inherent in PLAs, although he stressed that was not the intent behind the agreement. Mayor Sampson assured the Assembly that the building trades had agreed in another document that they would practice local hire, but that it was not the proper function of the borough government to compel local hire in its public works contracts. The Assembly then acknowledged the 200 union workers in attendance and promptly passed the resolution supporting the use of PLAs.
Later, the trial court described the Borough’s motivation as follows:
As to the legitimacy of the Borough's purpose, the Court must give great deference to the legislative body. Here, the Assembly supported the PLA because it was found to provide an economic benefit to the Borough as owner of the project. Although it appears from the minutes of the Assembly meeting that local hire was considered a substantial benefit, this issue was not mentioned in the language of the Assembly’s resolution. Supporting local hire would not have been a legitimate reason for the Borough to support this PLA. Economic benefits, however, which flow to the Borough when acting in its proprietary function, are a legitimate reason which the Court will not second guess.
And, still later in its decision, the trial court stated: "The Assembly was clearly concerned with local hire rather than fostering free and open competition.”

. The law journal article cited by the majority opinion, Henry H. Perritt, Jr., Keeping the Government Out of the Way: Project Labor Agreements Under the Supreme Court’s Boston Harbor Decision, 12 Lab. Law. 69 (1996), acknowledges this possibility, but is undisturbed by it:
PLA requirements may be attacked because they possibly result in award to a bidder who quotes a price higher than a bidder who has been disqualified by the PLA requirement. But the same thing can be said for any bid specification that tends to exclude some potential bidders. The question should be whether the bid specification is a legitimate requirement for the project. State procurement laws almost always require award to the lowest “responsible” bidder or lowest "best” bidder, signifying that no state legislature believes that price is the only consideration. Rather, requests for proposals and other bid specifications may specify various requirements for public works projects even though the requirements have the effect of excluding some bidders and increasing the price. Because project labor agreements are legitimate in the narrow sense that they preserve labor peace on a project, and also in the broader sense that they facilitate private, decentralized governance of project activities, they are entirely consistent with the basic concept of public bidding.
Id. at 87-88.

. Lampkin introduced a study relating to large electrical intertie projects in Alaska indicating that including a PLA specification with union concessions will result in higher bids than bidding without such a specification. Herbert R. Northrup & AJ. Thieblot, Chugach Electric Association Study, Cost Review for Contracting Alternatives for Transmission Facilities in Alaska ivv, 62-67 (Jan.1996). The Borough has failed to engage in any specific projection of how the PLA may result in lower bids. Cf. New York State *442Chapter, Inc. v. New York State Thruway Auth., 88 N.Y.2d 56, 643 N.Y.S.2d 480, 486, 666 N.E.2d 185, 191 (1996) (upholding a PLA specification where the bridge authority commissioned a "detailed” study of cost savings).

. The cases are New York State Chapter, Inc. v. New York State Thruway Authority, 88 N.Y.2d 56, 643 N.Y.S.2d 480, 666 N.E.2d 185 (1996), and State ex rel. Associated Builders & Contractors v. Jefferson County Board of Commissioners, 106 Ohio App.3d 176, 665 N.E.2d 723 (1995).

. In that respect, those cases are unlike George Harms Construction Co. v. New Jersey Turnpike Authority, 137 N.J. 8, 644 A.2d 76, 94 (1994), which is based on a New Jersey statute requiring that all specifications be drawn "in a manner to encourage free, open and competitive bidding.” The court in that case found that the PLA specification did not meet this requirement and was invalid. Id. 644 A.2d at 95. The New Jersey statute, in turn, is similar to the mandate of the Fairbanks ordinance that specifications "encourage maximum free and open competition.”

. Further, I do not agree that the result in this case could he justified under New York authority even if similar statutes were involved. The majority concludes "that the correct approach ... is that taken by the New York ... courts, as modi-fled by the deferential standard....” Op. at 435. Since the hallmark of the New York approach is a heightened standard of review requiring "more than a rational basis,” New York State Thruway Auth., 643 N.Y.S.2d at 485, 666 N.E.2d at 190, the majority’s use of a deferential standard of review marks a fundamentally different approach.
The majority also notes that if the New York heightened standard of review were used, utilization of the PLA in this case would be permissible. Op. at 435 n. 18. Comparison of the salient facts of this case with the two projects reviewed in New York State Thruway Authority shows that the important features of this project more closely resemble the project to modernize the cancer facility for which the New York court rejected the use of a PLA, rather than the project to improve the bridge for which the court approved of its use. The Roswell Park Cancer Institute project involved the five-year comprehensive renovation of 18 buildings spread over a 25-acre campus. New York State Thruway Auth., 643 N.Y.S.2d at 492, 666 N.E.2d at 196 (Smith, J., dissenting). The adopting authority’s primary concerns included the minimization of any disruption in the patients’ routines and the avoidance of delays in construction. Id. Work stoppages could subject cancer patients to an in*443creased risk of infection and foreclose treatment opportunities for those waiting to be admitted. Id. Such concerns mirror the Borough’s emphasis on the need to ensure uninterrupted class schedules for Lathrop High students during periods of construction. As significant as these objectives were, the New York court concluded that the use of a PLA simply could not be justified absent convincing evidence that its adoption furthered competitive bidding goals. Id. at 488, 666 N.E.2d at 193. Cautioning against "post hoc rationalization,” the court noted that the record was devoid of specific projections of cost savings and legitimate concerns of labor unrest. Id. The record established by the Borough in support of its PLA is equally threadbare in particulars. By contrast, before deciding to adopt a PLA for the four-year project to improve the Tappan Zee Bridge, the Thruway Authority hired a consultant to prepare a comprehensive report of estimated labor savings. Id. at 486, 666 N.E.2d at 191. These cost savings were ultimately projected at $6 million. Id. Concerns for efficient construction stemmed not only from issues of public safety and convenience, but from the $45 million in yearly revenue generated from the toll bridge. Id. at 485, 666 N.E.2d at 190. Moreover, the bridge had previously been the target of labor unrest that required police intervention. Id. Thus, the Authority’s "detailed focus on the public fisc,” the size and complexity of the project and the demonstrated history of labor unrest convinced the New York court that the PLA was "directly tied” to competitive bidding goals. Id. at 486, 666 N.E.2d at 191. In view of the fact that the Borough has failed to adequately justify the PLA on the record before us, I suggest that the New York Court of Appeals’ conclusion with respect to the renovation of the cancer facility would also be applicable here:
To say that [the public owner’s] adoption of the PLA is justified simply by its desire for labor stability so that the work will be completed on time is tantamount to wholesale approval of PLAs — every public entity wants its projects completed on time, and public projects are presumptively important to the public. The competitive bidding requirements, however, demand that something more be shown in order to justify the significant restrictions imposed by PLAs.
Id. at 488-89, 666 N.E.2d at 193-94.

. In reaching this conclusion, Justice Rabinow-itz found untenable the city's determination that the leased facility was a "beneficial new industry” and thus exempt.