Court Opinion

ID: 9705077
Source: CourtListenerOpinion
Date Created: 2023-08-26 00:56:01.937442+00
Date Added: 2024-06-11T18:22:07.796052
License: Public Domain

HANDLER, J.,
dissenting.
I
In this case, the Court invalidates a public bidding specification that requires the successful bidder to negotiate a project labor agreement. The agreement was required to assure the expeditious completion of the project by avoiding delays attributable to labor stoppages. The project itself involves the substantial improvement and renovation of the county library system. The work entails three successive phases of construction, each covered by a separate contract. The first phase of the project relates to construction on the Ewing, Hopewell and Lawrence branches of the Library System. Phase Two involves three other branches of the Library System, and Phase Three is expected to consist of renovations to two other library branches. The entire project will have an approximate cost of $18 million dollars, and will take several years to complete.
The Mercer County Improvement Authority (“MCIA”), in the issuance of the first-phase bid documents containing specifications, adopted Executive Order 94-2. The Executive Order expressed the finding that such an agreement was necessary to avoid labor strife and to ensure timely and orderly completion of the project. The Order directed that in “appropriate construction projects,” each contractor and subcontractor was required to sign a project labor agreement. The Order provided that the agreement was “to establish the hours of work, wage rates, fringe benefits, dispute and grievance procedures and any other terms that might be necessary to ensure a harmonious relationship between the parties.”
*153The specification further required that a contractor would have to bargain with a labor organization that could adequately represent the interest of the workers, so that labor peace could be assured. The project labor agreement was to be negotiated between the construction manager or architect of the contractor and “the appropriate Building and Construction Trade Unions.” Under Executive Order 94-2, the only entity qualified to bargain on the part of the workers was the Mercer County Building and Trades Council (“BTC”).
Bids were scheduled to be received on April 13, 1995, but on April 6, counsel for the Associated Builders and Contractors, the Utility and Transportation Contractors Association of New Jersey, and Tormee Construction, Inc. requested that the MCIA delete sections of the project agreement. Following discussions concerning the general terms for a project labor agreement, the MCIA issued a second addendum to the bid documents, expressed in Executive Order 95-1, which made several changes in the specifications and extended the deadline for bids until April 27, 1995. One of the changes deletes the specific reference to the BTC, and instead specifies that the project labor agreement be negotiated with an “Appropriate Labor Organization in the Building and Construction Industry.”
Notwithstanding those changes, plaintiffs, claiming that the specification requiring a project labor agreement was unlawful, on April 25, 1995, filed a declaratory judgment action, and sought temporary and permanent injunctions to restrain the MCIA from receiving bids on the construction projects. The Law Division found the requirement for the PLA valid, dismissed the complaint, and denied a request to stay the judgment. The trial court stressed that the original specification, which required negotiation of the project labor agreement with a member in the Building and Trades Council, was invalid under George Harms Construction Co., Inc. v. New Jersey Turnpike Authority, 137 N.J. 8, 644 A.2d 76 (1994) because it was too restrictive in limiting a contractor’s source of labor to a single union. However, the trial court found *154that the amended specification, which required an agreement with an “appropriate labor organization,” did not offend Harms, and thus the change in the specifications rendered the PLA requirement valid.
The Court granted plaintiffs’ petition for direct certification. 141 N.J. 90, 660 A.2d 1191 (1995). Subsequently, the New Jersey State AFL-CIO filed a motion to appear as amicus curiæ, which was granted.
Ten contractors submitted bids for the contract, and the combined estimate of the three lowest bidders was approximately $276,000 dollars under the MCIA’s budget. This first phase of the project was scheduled to last a maximum of 420 calendar days. Plaintiffs then moved for a stay of the award of bids for Phase One of the Project. On May 5, this Court denied the stay and, on May 22,1995, the MCIA awarded three contracts for construction on the three library branches in Phase One, for an aggregate cost of approximately $6.03 million.
Thereafter, in connection with Phase Two of the project, plaintiffs moved for a stay of the receipt and award of bids. On September 14, 1995, the stay was temporarily granted in respect of the opening of bids, the award of the contracts, and the commencement of construction. The receipt of bids, however, was not stayed. On September 20, the Court granted a permanent stay, and in its order declared that the project labor agreement requirement was invalid. Accordingly, the Court ordered the return of all bids, and allowed the MCIA the option of having the project rebid without the PLA requirement. The Court’s opinion now explains its reasons for declaring the project labor agreement to be invalid. I disagree with its reasoning and conclusion.
II
The premise of the majority opinion is that public bidding policy “requires competition among bidders. The more companies that can bid on a project, the greater the likelihood that the public entity will receive the lowest possible price from responsible *155bidders.” Ante at 148, 669 A.2d at 1371. My problem with the majority’s approach is not in its recognition of the vital importance of competition in public bidding. Rather, I am disturbed by its singular focus on competition, seemingly to the exclusion of other important considerations that bear on the responsibility of bidders and the sound and expeditious completion of public works.
Without doubt, competition is essential in the awarding of public contracts. It is well established that
the fundamental philosophy of our competitive bidding statutes is that economy be secured and extravagance, fraud and favoritism prevented. Such statutes are designed to safeguard the public good and should be rigidly enforced by the courts to promote that objective. This common good is best advanced by cultivating the most extensive competition possible under the circumstances and municipalities should organize their efforts in that direction.
[Skakel v. North Bergen, 37 N.J. 369, 378, 181 A.2d 473 (1962) (citations omitted) ].
Requirements that needlessly limit and constrict competition can compromise the integrity of the public bidding system. The promotion of competition in public bidding on the awarding of contracts serves the public interest by discouraging “favoritism, improvidence, extravagance and corruption.” Terminal Constr. Corp. v. Atlantic County Sewerage Auth., 67 N.J. 403, 410, 341 A.2d 327 (1975) (quoting Hillside Tp. v. Sternin, 25 N.J. 317, 322, 136 A.2d 265 (1957)).
However, as important as competition in public bidding may be, competition is not an end in itself. Other factors — experience, responsibility, honesty and skill — are all important to assure that public work is properly performed in the public interest. Consequently, there is no absolute mandate that “an agency must, in every action it takes, promote competition at the expense of all other concerns.” Harms, supra, 137 N.J. at 44, 644 A.2d 76 (Handler, J., concurring). If soundness, efficiency, and integrity can otherwise be assured, “[t]he ability to perform the work required is of the very essence of any contract for public work,” Bil Jim Construction, v. Board of Education, 236 N.J.Super. 603, 605, 566 A.2d 585 (App.Div.1989). Thus, a public body may impose standards designed to ensure that bidders are able to *156perform the work to the satisfaction of the contracting agency, and to prescribe specifications based on those standards to determine the eligibility of contractors to engage in public contracts.
Any standard governing capacity to perform the work, whether set by the job specifications or inherent in the nature of the job itself, will exclude from the bidding process parties that are unqualified because they cannot meet that standard. The fact that a specification “limits the number of bidders simply because some potential bidders cannot satisfy the specification” does not render that specification “unreasonable and invalid.” Harms, 137 N.J. at 49, 644 A.2d 76 (Handler, J., concurring). Competition that is circumscribed by a valid standard reasonably related to the work is not “anti-competitive” within the purpose and intendment of the public bidding laws. Ibid.
Given the importance of competition in bidding, it is clear that any standard that restricts competition must be directly related to the performance of the public work. The Local Public Contracts Law, N.J.S.A 40A:11-13, provides that
specifications for an acquisition under this act, whether by purchase, contract or agreement, shall be drafted in a manner to encourage free, open and competitive bidding. In particular, no specifications under this act may:
(a) Require any standard, restriction, condition or limitation not directly related to the purpose, function or activity for which the purchase, contract or agreement is made
Under this statute and the prevailing case law, specifications are deemed anti-competitive and invalid only when they are not reasonably related to the proposed project. Greenberg v. Fornicola, 37 N.J. 1, 178 A.2d 339 (1962); Waszen v. Atlantic City, 1 N.J. 272, 63 A.2d 255 (1942); 18 Eugene McQuillan, The Law of Municipal Corporations, § 29.44 (3d ed. 1984). A restriction that reduces competition and cannot be justified as reasonably necessary for the completion of the work is one that in all likelihood opens the door to favoritism, fiscal extravagance, improvidence and corruption.
In this case, the critical inquiry should be not whether the specification that requires a project labor agreement places a limit *157on competition. Rather, the question must be whether such a specification is reasonably related to the work proposed by the public contract. “A specification that limits the number of bidders should invite critical scrutiny, but it should not be stigmatized as unreasonable without such scrutiny.” Harms, supra, 137 N.J. at 49, 644 A.2d 76 (Handler, J., concurring). Even though it may reduce the number of parties eligible to compete for the contract, the specification calling for a PLA is not an invalid, anti-competitive standard, if the PLA is reasonably related to the satisfactory performance and completion of the public job.
I think that the record in this case supports a finding that the project labor agreement is reasonably related to the work proposed. In the briefs and in oral argument, counsel for the MCIA described the Authority’s previous problems with delays, work stoppages and cost overruns in the recent construction of the Parkway School. The Authority adopted a resolution, Mercer County Improvement Authority Resolution No. 95-154, which clearly identifies its problems with its construction projects in the past, and demonstrates the need for the requirement of a PLA to prevent such problems in the proposed library construction.
It has been widely recognized and clearly established that where the experience of a public contracting agency confirms the risk that its project will be threatened by labor disputes, interrupted by strikes or delayed by work stoppages, a valid and effective method of addressing and preventing those contingencies is through a project labor agreement. E.g., Building and Constr. Trades Council v. Associated Builders and Contractors, Inc., 507 U.S. 218, 113 S.Ct. 1190, 122 L.Ed.2d 565 (1993) (hereinafter Boston Harbor); New York State Chapter Inc. v. New York State Thruway Authority, 620 N.Y.S.2d 855, 207 A.D.2d 26 (1994), appeal granted, 86 N.Y.2d 703, 631 N.Y.2d 607, 655 N.E.2d 704 (1995) (hereinafter Tappan Zee); General Building Contractors of New York State, Inc. v. Dormitory Authority of the State of New York, 620 N.Y.S.2d 859, 210 A.D.2d 788 (1994); Minnesota Chapter of Associated Builders and Contractors, Inc. v. St. Louis *158County, 825 F.Supp. 238, 244 (D.Minn.1993); Associated Builders and Contractors, Inc. v. City of Seward, 966 F.2d 492, 499 (9th Cir.1992), cert. denied, 507 U.S. 984, 113 S.Ct. 1577, 123 L.Ed.2d 146 (1993); Phoenix Engineering, Inc. v. MK-Ferguson of Oak Ridge Company, 966 F.2d 1513 (6th Cir.1992), cert. denied, 507 U.S. 984, 113 S.Ct. 1577, 123 L.Ed. 146 (1993); cf. Glenwood Bridge, Inc. v. City of Minneapolis, 940 F.2d 367 (8th Cir.1991) (indicating project labor agreement invalid if superfluous in light of existing anti-strike conditions).
Further, the feasibility and utility of a project labor agreement as a method to overcome the threat of labor strife, stoppages and delays has been confirmed by two successive executive administrations. Governor Florio’s Executive Order No. 99 (dated September 13, 1993), 25 N.J.R. 4543 (October 4, 1994); Governor Whitman’s Executive Order No. 11 (dated March 21, 1994), 26 N.J.R. 1558-59 (April 18, 1994). Governor Florio’s Order mandated that all public projects proceed pursuant to a project labor agreement. Governor Whitman’s Order superseded the prior Order, emphasizing that project labor agreements be applied to public contracts on a project-by-project basis according to the problems and needs of the particular public jobs. Both Orders have recognized the necessity and reasonableness of such agreements.
The majority does not impugn the reasonableness of project labor agreements; nor does it invalidate the authority of the executive branch of government, state and local, to determine if a project labor agreement will assure the successful and expeditious completion of a public project. Nevertheless, it presumes that the judiciary is in a better position to determine when a project labor agreement is reasonably called for. Thus, it suggests that only large-scale projects should be eligible for a project labor agreement. Ante at 148-149, 149-150, 669 A.2d at 1371-1372, 1372. Some of the cases that addressed the validity of project labor agreements involved public contracts of a much greater scale than the library improvement and expansion in this case. The Tappan Zee project is certainly an example of a complicated project, totalling $1 billion and requiring coordination of nineteen labor *159unions. The Boston Harbor case is often cited for its huge size and $6.1 billion cost. Nonetheless, I question the majority’s assertion that a project labor agreement is allowable in public projects only or primarily when the project is of massive size, scope or cost.
A standard that allows PLA’s only in grand-scale projects of great cost would leave local governments at a distinct disadvantage in dealing with labor unrest and stoppages in their public works. Therefore, I conclude that considerations of size and cost must not be made in a vacuum; rather, the determination of the need for a PLA must include a consideration of the size and cost of the project relative to the need for the project, the importance of timely completion, and the resources of the contracting governmental agency. Although the project in this ease is modest in comparison to the undertakings in Boston Harbor and Tappan Zee, there is still reason to find a project labor agreement appropriate. This project calls for significant improvements of the county library system; it involves three major phases of work, each covered by separate contracts; its anticipated costs are six million dollars for each contract phase, for a total contract cost of eighteen million dollars. The public work is clearly substantial, needed and important.
Further, there is a documented history of labor disputes on prior projects that impelled the MCIA to address and confront the threat of delays arising from labor strife. That experience justifies the determination made by local government in this case that the interests of efficiency and timely completion of the entire project called for the use of a PLA.
I also disagree with the majority that this project does not qualify under Governor Whitman’s Executive Order, which allows PLA’s on a “project by project” basis. Ante at 149-150, 669 A.2d at 1372. When the county’s history of labor problems is considered in conjunction with the nature and the scope of the project relative to the needs and resources of the contracting agency, it is clear that this project passes muster under Governor Whitman’s Executive Order.
*160The majority also betrays, in this case, a distrust of local government that goes beyond the obligation to demonstrate that a PLA is reasonably related to the satisfactory completion of the library project. The majority is unwilling to allow the use of a PLA unless the agreement required by bidding specifications also contains comprehensive and detailed terms and conditions that will constitute a virtual iron-clad guarantee of labor peace. The Court’s detailed replication of the extensive provisions of the Tappan Zee Bridge project agreement is offered as the exemplar of an acceptable and valid PLA. Ante at 148, 669 A.2d at 1371. However, a valid specification for a project labor agreement does not require the itemization of all of its operative terms to satisfy the standard that it be reasonably related to the work. It should suffice if the proposed agreement, as the one in this case, requires the inclusion of not only basic terms that will “establish the hours of work, wage rates, fringe benefits, dispute and grievance procedures,” but also “any other terms that might be necessary to ensure a harmonious relationship between the parties.”
The majority’s insistence on the necessity to detail the terms of the agreement also recalls Justice O’Hern’s opinion in Harms, which briefly addressed the constitutional implications of a project labor agreement. Justice O’Hern’s constitutional analysis included an assessment of the public need for a project labor agreement measured against the availability of other (presumably “better”) means of achieving the goals of labor peace and uninterrupted work, such as mediation agreements and no-strike clauses. Harms, supra, 137 N.J. at 32, 644 A.2d 76. Similarly, in the present case, the majority once again seems to feel that a project labor agreement should not be permitted where its purposes might be accomplished by different means. Although there may be more narrowly-drawn means to assure the accomplishment of the goals of prevention of labor strife, the efficient mediation of disputes, and the expeditious performance of the work, there is no showing that the proposed agreement, which must include terms necessary to assure labor peace, cannot be fully carried out.
*161The majority, I believe, also uncritically characterizes the project labor agreement in this case as being invidiously anti-competitive. It thus accepts the plaintiffs representations that the PLA would restrict prospective contractors to a choice of one of two labor organizations as the bargaining agent for all workers on the project. Ante at 147, 669 A.2d at 1371. The majority credits the plaintiffs allegations that the use of the PLA would effectively prevent non-union contractors from using non-union labor and thus preclude non-union contractors from bidding on the job. However, according to amicus, the AFL-CIO, the contractor is not limited by the proposed PLA to employing union workers exclusively. The contractor would have certain rights under the agreement, such as the right to retain key employees as well as the right to turn to other sources of labor if the supply of union labor is inadequate or unsatisfactory. Thus the PLA provides sufficient flexibility to allow the contractor to retain a measure of control over the job, even though the union would be the overall source of labor for the project. In addition, the majority fails to note that the MCIA received ten bids on this contract, and does not demonstrate whether participation in the bidding would have been measurably enlarged without a restriction that would assure labor peace in the performance of the contract.
I acknowledge that this case clearly raises important and complex considerations of governmental policy and implicates a number of controversial issues. Ultimately, those concerns, thus far determined by the executive and judicial branches, should be addressed by the Legislature, the branch of government most fit and best able to weigh and resolve the. policy consideration implicated by the use of project labor agreements in public contracts.
I am satisfied, however, on the basis of this record, that the requirement of the project labor agreement is reasonable and does not constitute an invalid anti-competitive standard.
I therefore dissent from the majority opinion.
Chief Justice WILENTZ joins in this opinion.
*162For reversal and remandment — Justice POLLOCK, O’HERN, GARIBALDI, STEIN and COLEMAN — 5.
For affirmance — Chief Justice WILENTZ, and Justice HANDLER — 2.