Opinion 2002-17

This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

PUBLIC CONTRACTS -- Award (of prime contract to construction manager) -- Coordination of Work (by construction manager who is also a prime contractor) -- Separate Specification Requirement (award of prime contract to construction manager)

GENERAL MUNICIPAL LAW §§101, 103: A firm may not be engaged both as construction manager to act on behalf of a town in coordinating the work of the prime contractors, and as one of the prime contractors, on a town building construction project subject to General Municipal Law §101.

This is in response to your inquiry concerning a proposed town building construction project, governed by General Municipal Law §101. You indicate that the town is considering engaging the services of a construction manager to assist in certain pre-construction matters and to manage the project during construction. If the construction management firm has a separate division that performs general construction work, you ask whether it would be proper for the firm to also submit a bid and, if the lowest responsible bidder, to be awarded a prime contract for a portion of the construction work on the project.1

Article 5-A of the General Municipal Law (§100 et seq.) contains competitive bidding requirements for political subdivisions in this State. General Municipal Law §103 provides that, except as otherwise expressly provided by the State Legislature or by local law adopted prior to September 1, 1953, all purchase contracts involving expenditures in excess of $10,000 and all contracts for public work involving expenditures in excess of $20,000 shall be awarded by the appropriate officer, board or agency of a political subdivision or district therein to the lowest responsible bidder furnishing the required security after public advertisement for sealed bids.

Section 101 of the General Municipal Law contains further competitive bidding requirements with respect to contracts for the erection, construction, reconstruction or alteration of a building, when the entire cost of the work will exceed $50,000. Section 101 requires, in such cases, that separate specifications be prepared for: (1) plumbing and gas fitting; (2) steam heating, hot water heating, and ventilating and air-conditioning apparatus; and (3) electric wiring and standard illuminating fixtures. The specifications must be drawn so as to permit separate and independent bidding on each of the three subdivisions of work.

It has been generally held that section 101 does not authorize political subdivisions to delegate to one of the prime contractors project supervision and coordination responsibility and authority (General Building Contractors v City of Syracuse, 40 AD2d 584, 334 NYS2d 730 mod on other grnds 32 NY2d 780, 344 NYS2d 961; General Building Contractors v Oneida County, 54 Misc 2d 260, 282 NYS2d 385; cf. General Municipal Law §101[3],[4]; but see Valenti v Board of Education, 56 AD2d 884, 392 NYS2d 482). The political subdivision may allow an agent to perform coordination and supervision functions on behalf of the political subdivision; however, the agent may not be one of the prime contractors (see General Building Contractors v County of Oneida, supra; see also Construction Contractors Ass'n v Board of Trustees, Orange County Community College, 149 Misc 2d 440, 565 NYS2d 997 revd on other grnds 192 AD2d 265 600 NYS2d 953). Accordingly, in our opinion, it would be inconsistent with section 101, as construed by the courts, for the same firm to be engaged both as construction manager to act on behalf of the town in coordinating the work of the prime contractors, and as one of the prime contractors, on a construction contract subject to section 101.

Further, even if a project were not subject to section 101, the submission of a bid by a firm also engaged to coordinate construction work, in certain circumstances, creates the potential that the competitive bidding process under section 103 may be found to have been impaired. In Olean v Cattaraugus County, 30 AD2d 758, 291 NYS2d 861, a county had retained a chief engineer to prepare specifications to furnish and install equipment for courthouses. The engineer also generally was to supervise all work and, among other things, decide any questions as to quality and acceptability of materials or work. The engineer was an officer of a company that was a subcontractor of the firm that was awarded the contract. The county was aware of the relationship between the engineer and the low bidder. The court, in determining that, under the circumstances, competition was impaired, stated as follows:

Open competitive bidding was impaired, in this case, by the reasonable apprehension of prospective bidders that performance of the resulting contract would be supervised by [the engineer] and that he might exercise his powers under the specifications favorably to [the low bidder], if it obtained the contract, and unfavorably to its competitors, if they secured it. The contract awarded to [the low bidder] is, therefore, void and should be annulled because, under these circumstances, it violates the requirements of Section 103 of the General Municipal Law.

Respondent Board of Supervisors, if it desires to proceed with the project, should retain a Design Consultant who is independent of any potential bidder, and advertise for bids in accordance with section 103 of the General Municipal Laws. [citations omitted] (30 AD2d 758, 759, 291 NYS2d 861, 863)

We believe arrangements such as the one at issue here, in certain circumstances, could raise a similar "reasonable apprehension" among prospective bidders.2

Based on the foregoing, therefore, it is our opinion that a firm may not be engaged both as construction manager to act on behalf of a town in the coordinating work of the prime contractors, and as a prime contractor, on a town building construction project subject to General Municipal Law §101.

December 30, 2002

Kenneth M. Dodge, Supervisor
Town of Schuyler

1 Note that we have concluded that the consultative and coordination services of a construction manager constitute a professional service exempt from competitive bidding requirements of General Municipal Law §103 (1980 Opns St Comp No. 80-5, p 2). Such services, however, would be subject to the procurement policies and procedures of the town, adopted pursuant to General Municipal Law §104-b.

2 Note also that, with respect to the preparation of bid specifications by a prospective bidder, we have cautioned that, although the fact that specifications are drafted by a potential bidder does not necessarily mean that the specifications will be tailored for that firm to the exclusion of others (see Bailey v Colonna, 73 Misc 2d 299, 341 NYS2d 359), such specifications might at least be considered suspect in this regard (1980 Opns St Comp No. 80-503, p 140, citing McCardle v Board of Estimate, 4 Misc 2d 1014, 347 NYS2d 349, affd 45 AD2d 822, 357 NYS2d 1009; see also 1989 Opns St Comp No. 89-12, p 25).