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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.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 (preference to bidder employing prescribed percentage of local residents); (requiring apprenticeship training program as pre-condition to) -- Bids (restricting bids only to bidders employing prescribed percentage of local residents) -- Lowest Responsible Bidder (responsibility of bidder as distinguished from debarment)
LOCAL LAWS -- Competitive Bidding (pre-emption by General Municipal Law, §103) -- Pre-emption (preference to bidder employing prescribed percentage of local residents); (requiring apprenticeship training program as pre-condition to); (restricting bids only to bidders employing prescribed percentage of local residents); (responsibility of bidder as distinguished from debarment)
CONSTITUTIONAL LAW -- Equal Protection (preference to bidder employing prescribed percentage of local residents) -- Privileges and Immunities (preference to bidder employing prescribed percentage of local residents) -- Commerce Clause (preference to bidder employing prescribed percentage of local residents)
GENERAL MUNICIPAL LAW, §103; MUNICIPAL HOME RULE LAW, §§10, 33; STATE CONSTITUTION, ART 1, §11; UNITED STATES CONSTITUTION, ART I, §8, ART IV, §2, AMENDMENT 14: A local government may not adopt a post-1953 local law which provides for an award of a contract after competitive bidding to a bidder which employs a prescribed percentage of local residents even though that bidder is not the lowest responsible bidder or which restricts competition only to bidders which employ a prescribed percentage of local residents for the purpose of benefiting the local economy. Such enactment would also raise constitutional questions of compliance with the commerce, privileges and immunities and equal protection clauses of the Constitution. A local government also may not adopt a post-1953 local law which requires as a precondition to the award of a contract that a bidder maintain an apprenticeship training program or which debars bidders from future contracts as a sanction for not complying with procurement requirements. Prior inconsistent opinions are superseded.
This is in reply to your letter requesting an opinion regarding a proposed local law which would establish a "county residents job policy" for county contracts. In pertinent part, the proposal would require any bidder on a county construction project to certify that (1) at least 50% of the total "employee person hours" shall be performed by county residents and (2) the bidder is a participant in a bonafide apprenticeship program.
Bidders who are unable to meet the certification requirements may still submit bids, but their bids will only be considered if no bids meeting the certification requirements are received. The proposed enactment would also authorize the county to impose sanctions upon contractors found to be in noncompliance, including the denial of the right to participate in future county construction projects for up to three years.
Municipal Home Rule Law, §10(l)(i) authorizes local governments to adopt and amend local laws, not inconsistent with any general law or the Constitution, relating to their property, affairs or government. In addition, Municipal Home Rule Law, §10(1)(ii)(a) authorizes local governments to adopt and amend local laws, not inconsistent with any general law or the Constitution, relating to certain specific subjects matters, whether or not they relate to the property, affairs or government of the local government, except to the extent that the State Legislature shall restrict the adoption of such local laws. Pertinent to this inquiry, these specific subject matters include the transaction of the business of the local government (Municipal Home Rule Law, §10[ii][a]); the protection, welfare and safety of persons employed by any contractor or sub-contractor performing work, labor or services for the local government (Municipal Home Rule Law, §10[ii][a]); and the government, protection, order, conduct, safety, health and well-being of persons or property within the local government (Municipal Home Rule Law, §10[ii][a]).
While the general subject matter of the proposal is arguably a proper subject for a local law under Municipal Home Rule Law, §10, the doctrine of pre-emption represents a fundamental limitation on home rule powers. Where the State has pre-empted the field, a local law regulating the same subject matter is deemed inconsistent with State law whether or not the terms of the local law actually conflict with the State statute (Albany Area Builders v Guilderland, 74 NY2d 372, 547 NYS2d 627; Jancyn v County of Suffolk, 71 NY2d 91, 524 NYS2d 8). The Legislature may expressly state its intent to pre-empt or that intent may be implied from the nature of the subject matter being regulated and the purpose and scope of the State legislative scheme, including the need for State-wide uniformity in a given area (Albany Area Builders, supra).
General Municipal Law, §103(1) provides as follows:
Except as otherwise expressly provided by an act of the legislature or by a local law adopted prior to September first, nineteen hundred fifty-three, all contracts for public work involving an expenditure of more than seven thousand dollars and all purchase contracts involving an expenditure of more than five thousand dollars, shall be awarded by the appropriate officer, board or agency of a political subdivision ... to the lowest responsible bidder furnishing the required security after advertisement for sealed bids in the manner provided by this section .... (Emphasis added; see L 1991, ch 413, §§54-56, effective January 1, 1992, which increases the monetary thresholds of section 103 and adds a new section 104-b to the General Municipal Law to require the adoption of procurement policies and procedures).
This Office has previously concluded that the opening clause of section 103 evinces a legislative intent to pre-empt the field and to preclude the adoption of local laws on or after September 1, 1953 (1991 Opns St Comp No. 91-1, p 1; 1981 Opns St Comp No. 81-109, p 111; 1980 Opns St Comp No. 80-696, unreported; 1976 Opns St Comp No. 76-248, unreported; see Associated Builders v City of Rochester, 67 NY2d 854, 501 NYS2d 653 492 NE2d 781; Grimm v City of Troy, 60 Misc 2d 579, 303 NYS2d 170; Williams v Bryant, 53 AD2d 229, 385 NYS2d 425; Pacificorp Capital Inc. v City of New York, 741 F Supp 481, 486; cf. McMillen v Browne, 14 NY2d 326, 251 NYS2d 641 and Anjac v Westchester County, Supreme Court, Westchester County, Jan. 30, 1989, Index #629/89, concerning whether Labor Law, §220 pre-empts local laws). With respect to the scope of the State pre-emption under General Municipal Law, §103, we have expressed the opinion that section 103(1) is not intended to preclude the adoption of local laws on or after September 1, 1953 which are essentially revisions, simplifications, consolidations, codifications or restatements of pre-1953 special or local laws applicable to a local government (Opn Nos. 91-1, 81-109 and 80-696, supra).
The Court of Appeals has stated that section 103 and other competitive bidding statutes:
evince a strong public policy of fostering honest competition in order to secure the best work or supplies at the lowest possible price. In addition, the obvious purpose of such statutes is to guard against favoritism, improvidence, extravagance, fraud and corruption. (Jered v NYCTA, 22 NY2d 187, 192-3, 292 NYS2d 98; see also General Municipal Law, §100-a).
It is well-established that, consistent with the requirements of section 103, municipalities may fix reasonable standards and limitations which bidders are bound to observe (see, e.g., Randolph McNutt v Eckert, 257 NY 100; Gerzof v Sweeney, 16 NY2d 206, 264 NYS2d 376). Based on the purposes of the competitive bidding statutes, however, the courts have struck down conditions or restrictions in bid specifications or in resolutions or ordinances which tend to limit the list of otherwise qualified bidders to achieve objectives not within the intendment of section 103 (see, e.g., Associated Builders v City of Rochester, 67 NY2d 854, 501 NYS2d 653; Warren Bros. v Craner, 30 AD2d 437, 293 NYS2d 763; American Institute v County of Erie, 32 AD2d 231, 302 NYS2d 61; see also Subcontractors v Koch, 96 AD2d 774, 465 NYS2d 825).
The Warren Bros. and American Institute cases, supra, considered the propriety of geographical limitations which restrict bidders. In Warren Bros., the court reviewed a bid specification which required bidders to have access to a plant within the county. The court stated as follows:
The location of a plant within a political boundary of the state is not a proper requirement or test for the need of a product or the ability of the manufacturer to produce it and hence the right to bid to supply it. If distance is a proper factor, the requirement should be measured in miles or in a time factor, not by political boundaries. The latter do not go to the merits of need, and such test lends itself too readily to manipulation and evasion of the statutory requirement of open competition. (18 Opns St Comp, 1962, p 370; 10 Opns St Comp, 1954, p 404) (30 AD2d at p 439-440, 293 NYS2d at p 767)
Similarly, in American Institute, the court struck down a county resolution requiring that contract documents for capital projects of a county provide that only steel made in mills located in the United States would be supplied in the performance of contracts or subcontracts, stating as follows:
The county rather feebly contends that the resolution has some relationship to quality control of steel. To the contrary the words of the members who sponsored the resolution make clear the intent: 'I would hope that 'public projects' would be built with American products which is in the best interest of our American economy ...'
There may be excellent reasons why United States industry and labor should be protected - at the expense of the taxpayers - from importation of foreign manufactured steel. The attempt here, however, by a county legislative body to intrude into this area of mandated competitive bidding appears to be as much in conflict with the provisions of section 103 of General Municipal Law as would an attempt by county officials to confine bidding to one company, firm or individual or to exclude arbitrarily a potential bidder by a requirement that its plant be within the county (citations omitted; 32 AD2d at p 233; 302 NYS2d at p 63-4).
In Associated Builders, supra, the Court of Appeals, considered whether a municipality, by ordinance, may establish as a precondition to the award of a contract to the lowest responsible bidder that a bidder maintain an apprenticeship training program. In that case, the Court stated that apprentice training, while a desirable end (see Labor Law, §810), was not intended by the State Legislature to affect the qualifications of an otherwise responsible low bidder. The Court, therefore, declared the ordinance invalid because it conflicted with General Municipal Law, §103, which has its "predominate purpose ... the protection of the public fisc by requiring competitive bidding" and because it was not expressly authorized "by act of the Legislature or by local law adopted prior to September first, nineteen hundred fifty-three" (67 NY2d 854, 861, 501 NYS2d 654; see also 1982 Opns St Comp No. 82-128, p 158).
There are no judicial decisions in this state that expressly discuss the authority of a political subdivision to impose, by local law, upon a non-complying bidder the sanction of debarment from future contracts for a prescribed period of time. The courts, however, have held that the authority of the State to award contracts to the "lowest responsible bidder" (see, e.g., Highway Law, §38; State Finance Law, §174) does not expressly or by necessary implication authorize an awarding body to debar or suspend contractors, prospectively, from future contracts (Matter of Liquid Asphalt Distribution Association v White, 137 AD2d 913, 524 NYS2d 580; Matter of Callanan v White, 118 AD2d 167, 503 NYS2d 930, lv den 123 AD2d 462, 506 NYS2d 287 and 69 NY2d 601, 511 NYS2d 1027; see also NYS Asphalt Pavement v White, 141 Misc 2d 28, 532 NYS2d 690). As stated in Matter of Callanan, supra:
Certainly, the Department can and should consider past conduct by a bidder in making its decision as to whether the bidder on a particular contract is responsible. However, in no statute has the Legislature granted the Department authority to commence any sort of proceeding for the purpose of punishing an irresponsible bidder or debarring such a bidder from submitting bids in the future.
* * * * Nor can the power to debar bidders be necessarily implied from the authority to reject bids made by irresponsible bidders. The ability of the Department to reject bids of irresponsible bidders is not frustrated by its inability to debar future bids. Once the Department finds a bidder to be irresponsible for a particular reason, assuming that such a finding was not arbitrary or capricious, it could proceed to reject each of that bidder's future bids, in effect creating the sort of debarment accomplished in the instant case.
However, this would force the Department to consider anew the bidder's responsibility upon each bid and, presumably, change its position when and if the bidder remedies the cause of the finding of irresponsibility. (citations omitted; 118 AD2d at 169-171, 503 NYS2d at 932-3)
It is our opinion that the same principles apply to political subdivisions (but see Hi-Tech Mechanical, Inc. v City of New York, Supreme Court, NY County, NY Law Journal, 3/1/88, p 7, col. 1 and A.I. Smith v Fire Department of City of New York, _____ AD2d _____, 574 NYS2d 34, involving NYC Charter provisions and regulations pertaining to debarment).
Based on the foregoing judicial decisions and our view that section 103 evinces an intention on the part of the State Legislature to pre-empt local legislation, it is our opinion that a post-1953 local law which limits the class of potential bidders to achieve objectives not contemplated by section 103 would be in conflict with section 103 and would be prohibited. Thus, if the primary purpose of a post-1953 local law which limits competition to bidders employing a prescribed percentage of local residents is to benefit the local economy, in our opinion, it would be in conflict with section 103 and would be prohibited (see also 1981 Opns St Comp No. 81-142, p 146; 1977 Opns St Comp No. 77-554, unreported; 1975 Opns St Comp No. 75-610, unreported; 28 Opns St Comp, 1972, p 188; 1983 Atty Gen [Inf Opns] No. I 83-46). It is our opinion that a post-1953 local law which provides for an award to a bidder which employs a prescribed percentage of local residents, even though that bidder is not the lowest responsible bidder, would be in conflict with the requirement in General Municipal Law, §103 to award contracts only to the lowest responsible bidder and also would be prohibited.
We also conclude, based on Associated Builders, supra, that a local government may not require, by post-1953 local law, as a precondition to the award of a contract to the lowest responsible bidder under section 103 that a bidder maintain an apprenticeship training program. Finally, since General Municipal Law, §103, like the statutes at issue in Matter of Liquid Asphalt and Matter of Callanan, supra, provides for an award of a contract to the "lowest responsible bidder" but contains no authorization to debar prospective bidders, it is our opinion that a post-1953 local law debarring bidders from future contracts is also in conflict with section 103 (see also J. Weinstein Building Corp. v Scoville, 141 Misc 902, 254 NYS 384; cf. Labor Law, §220-b, relating to debarment of contractors violating prevailing wage requirements).
In reaching the above conclusions, we are not suggesting that a political subdivision is precluded from including reasonable requirements in its bid specifications that are consistent with the purposes of section 103. For example, to the extent that the proximity of a vendor to the municipality is reasonably related to the performance of the goods or services being sought, it would be consistent with section 103 to prescribe a distance factor in the bid specifications (see, e.g., Salle v OGS, 134 AD2d 809, 521 NYS2d 868, upholding a bid specification requiring that the supplier of dry ice be located within a certain distance from the facility served; see also 1980 Opns St Comp No. 80-440, p 127, concerning the purchase of and and gravel to be hauled to a municipal facility by the municipality). Similarly, it would be consistent with section 103 to require in bid specifications that bidders provide information necessary to the determination of a bidder's responsibility, including information in connection with previous municipal contracts (see, e.g., Harran Transportation Co. v Board of Education, 71 Misc 2d 139, 335 NYS2d 465 revd on other grnds 71 Misc 2d 143, 335 NYS2d 971).
In addition to the state law issues discussed above, the proposed local law raises federal constitutional questions under the Commerce Clause (US Const, art 1, §8, cl. 3); the Privileges and Immunities Clause (US Const, art IV, §2, cl. 1) and the Equal Protection Clause (US Const, 14th Amendment; see also NY Const, art 1, §11) (see, gen., 36 ALR 4th 941). In White v Mass Council of Construction Employers, 460 US 204, 75 L Ed 1, 103 S Ct 1042 , the U.S. Supreme Court addressed the question of whether an executive order, which required that all construction projects funded in whole or in part by municipal funds or funds which the municipality had authority to administer should be performed by a work force at least one-half of which consisted of bonafide residents of the municipality, violated the Commerce Clause. The Court stated that when a state or local government enters a market as a participant, rather than as a regulator, it is not subject to the Commerce Clause (see also Hughes v Alexandria Scrap, 426 US 794, 49 L Ed 2d 220, 96 S Ct 2488). Insofar as the municipality expended its own funds for construction contracts for public projects, the Court held the municipality was a market participant. The Court also upheld the executive order insofar as it was applied to projects funded in part with federal moneys under programs having regulations which affirmatively sanction local residency preferences, stating that where state or local government action is specifically authorized by Congress, it is not subject to the Commerce Clause even if it interferes with interstate commerce.
Shortly after White, supra, the Supreme Court, in United Building v Mayor and Council of the City of Camden, 465 US 208, 79 L Ed 2d 249, 104 S Ct 1020, examined whether a city ordinance requiring at least 40% of the employees of contracts and subcontractors working on city construction contracts to be city residents was in violation of the Privileges and Immunities Clause, which states that "(t)he citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States". The Court first noted that the Privileges and Immunities Clause applies to enactments of local governments as well as those of a State. Further, the Court concluded that the Clause applies to an ordinance which discriminates against out-of-state residents solely on the basis of municipal, rather than state, residency.
The Court then held that while the opportunity to seek employment with private contractors and subcontractors engaged in public whose project was a "protected privilege" under the Clause, the Clause does not provide an absolute protection:
It does not preclude discrimination against citizens of other States where there is a 'substantial reason' for the difference in treatment. '[T]he inquiry in each case must be concerned with whether such reasons do exist and whether the degree of discrimination bears a close relation to them.' Ibid. As part of any justification offered for the discriminatory law, nonresidents must somehow be shown to 'constitute a peculiar source of evil at which the statute is aimed. (465 US at 222, 79 L Ed 2d at 261; see also Hicklin v Orbeck, 437 US 518, 98 S Ct 57, 2482 L Ed 397; Salla v County of Monroe, 48 NY2d 514, 423 NYS2d 878, cert den 446 US 909, 64 L Ed 262, 100 S Ct 1836; WCM Window v Bernardi; 730 F 2d 486; E & E v State of Illinois, 674 F Supp 269; cf. Winkler v Spinnato, 72 NY2d 402, 534 NYS2d 128 cert den 109 490 US 1005, 104 L Ed 2d 155, S Ct 1640)
A local law which grants an employment preference to local residents may also raise the question of compliance with constitutional equal protection guarantees (see, e.g., C.D.R. Enterprises LTD v Board of Education, 412 F Supp 1164 affd sub nom Lefkowitz v CDR, 429 US 1031, 97 S Ct 721 50 L Ed 2d 742; cf. Gould v Bennett, 153 Misc 818, 276 NYS 113; People v Crane, 214 NY 154 affd 239 US 195, 60 L Ed 248, 36 S Ct 85). Generally, classifications granting preferential treatment to a particular class of persons have been found to be permissible where the classification has a rational basis and is not arbitrary, where there is uniformity within the class, and where the classification bears some substantial and rational relationship to the accomplishment of a legitimate government purpose (see, e.g., Maresca v Cuomo, 64 NY2d 242, 485 NYS2d 724 dsmd 475 US 807, 88 L Ed 2d 28, 106 S Ct 34). If, however, a local enactment infringes on fundamental right, a local government must show that the classification is necessary to accomplish a compelling state interest (id.). The right to travel or to migrate is a constitutionally protected fundamental right and, therefore, a residency classification which penalizes the exercise of that right subjects the classification to the compelling state interest test (Attorney General of NY v Soto-Lopez, 476 US 898, 90 L Ed 2d 899, 106 S Ct 2317; see also E & E, supra; cf. Winkler, supra).
In summary, a local government may not adopt a post-1953 local law which provides for an award of a contract after competitive bidding to a bidder which employs a prescribed percentage of local residents even though that bidder is not the lowest responsible bidder or which restricts competition only to bidders which employ a prescribed percentage of local residents for the purpose of benefiting the local economy. Such enactment would also raise constitutional questions of compliance with the commerce, privileges and immunities and equal protection clauses of the Constitution. A local government also may not adopt a post-1953 local law which requires as a precondition to the award of a contract that a bidder maintain an apprenticeship training program or which debars bidders from future contracts as a sanction for not complying with procurement requirements.
Prior opinions are hereby superseded to the extent their rationale and/or conclusions are inconsistent herewith.
December 9, 1991
Robert C. Mulvey, Esq., County Attorney
County of Tompkins