Tuesday, January 8, 2019
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Court of Appeal:
City May Not Award 10 Percent Preference To Bidder Based on Post-Bidding Pledge
By a MetNews Staff Writer
The Court of Appeal yesterday revived a union’s challenge to the procedure under which a city gave a 10 percent preference to a company that promised in its bid to retain employees of the current contractor for at least 90 days—a preference required by statute—then accorded the same advantage to a rival bidder that had made no such pledge in its bid, and proceeded to award it the contract.
Reversal of a judgment of dismissal of a writ petition filed by the International Brotherhood of Teamsters, Local 848 came in an opinion by Justice John Segal of this district’s Div. Seven. Although the effect of the reversal is to reinstate the union’s action, the wording of Segal’s opinion signals that the writ petition should be granted.
The dismissal came after Los Angeles Superior Court Judge Amy D. Hogue sustained, without leave to amend, a demurrer by the City of Monterey Park.
Union’s Contentions
The union contends that Labor Code §1072(a), in declaring that a bidder “shall declare as part of the bid” a pledge to retain current employees in order to qualify for the preference, does not allow for an award of a preference based on a promise supplied in the course of post-bidding negotiations. In particular, the union asserts, First Transit should be stripped of its contract for running Monterey Park’s public bus system because it was awarded a 10 percent preference based on a pledge not set forth in its bid, and would otherwise not have landed the contract.
Hogue disagreed, saying:
“A bidder who fails to state in its bid that it will retain prior employees may nevertheless communicate to the City its willingness to retain some or all of the employees of the prior contractor or subcontractor. In such a situation, the City has discretion as to whether or not it will confer a 10 [percent] preference.”
Segal’s Opinion
In announcing the reversal, Segal wrote:
“The statutory language is unambiguous. Section 1072, subdivision (a), requires a bidder to state in its bid whether it will retain employees for at least 90 days….Nothing in the statutory language authorizes a public agency to give the section 1072 preference to a bidder who did not make the declaration required by section 1072, subdivision (a), ‘as part of the bid.’ The public agency does not have to award the contract to a bidder with the 10-percent preference under section 1072, subdivision (b), but the public agency can only give the 10-percent preference to a bidder whose bid qualifies under section 1072, subdivision (a), and First Transit’s bid did not. Contrary to the trial court’s ruling, the statute does not allow a public agency to award a preference under section 1072 to a contractor who communicates its willingness to retain employees other than in its bid.”
Segal went on to declare:
“The City’s interpretation of section 1072 would undermine the Legislature’s purpose in enacting the statute….Section 1072 incentivizes bidding contractors to declare they will retain existing employees for at least 90 days by giving those contractors a preference in the bidding process. To allow the City to give a preference under section 1072, subdivision (b), to contractors who do not comply with section 1072, subdivision (a), would eliminate the incentive for contractors to retain employees, exactly the opposite of the Legislature’s stated goal. A bidding contractor would have no reason to agree to retain employees for at least 90 days as part of its bid if a public agency could give the same preference to a contractor who did not make the same agreement. After all, if everyone gets a 10-percent preference, then no one is getting a 10-pecent preference.”
The case is International Brotherhood of Teamsters v. City of Monterey Park, 2019 S.O.S. 139.
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