The Ohio Supreme Court recently held that the Franklin County Board of Commissioners failed to exercise sound discretion in awarding a painting contract for Huntington Park, home of the Columbus Clippers. In 2008, the Commission rejected a bid from The Painting Company (a non-union shop) in favor of a bid from a union shop that was $46,000 more.
The court, reversing two lower court decisions, held that the Commissioners abused their discretion by not awarding the contract to The Painting Company due to alleged wage violations. In rejecting the low bid submitted by The Painting Company and awarding the contract to the second-lowest bidder, the county applied its Quality Contracting Standards, interpreting the contractor’s settlement agreements with the Ohio Department of Commerce as prevailing wage “violations” and ruling that the contractor was barred from receiving the contract.
The Painting Company had been previously accused of paying workers less than the required prevailing wage, but such accusations resulted in settlements with the state in which the Company admitted to clerical errors, not intentional violations, and paid the difference between its wages and the prevailing standard. As a result, a majority of the Supreme Court stated that the Company had not violated the prevailing wage law, and thus should have been awarded the contract
The court also held that, although a public owner has wide discretion to create its own policy establishing criteria to evaluate bids for public work contracts, its bid evaluation criteria must be applied by exercising sound discretion.
Finally, the court held that the prevailing wage component cannot be used as a “single criterion” to throw out otherwise qualified bids. Instead, the prevailing wage component must be considered with all other bid criteria in the exercise of the county’s sound discretion.
The implications of this case are largely unknown but could be quite significant, especially to Columbus small businesses. This is certainly a reassuring ruling for contractors trying to navigate a web of complicated prevailing wage requirements, that their entire contract won’t be thrown out based on one issue. As the court states, although a public authority has wide discretion in determining who to award a bid to, the prevailing wage component cannot be used as a “sole gate-keeping criterion.”
It is also a positive ruling for anyone involved in similar contracts, due to the clarity provided by the Supreme Court’s defining “violation,” as well as the potential that a definition of “violation” will at some point be included in the law itself. The defining of what constitutes a violation will provide clarity both to contractors and public entities at the outset, as well as to attorneys if a dispute arises.
This ruling may also cause contractors to take more precautions in evaluating any prevailing wage cases brought against them to make sure that they avoid any “violations” that may have an impact on their ability to successfully bid on future projects.
Finally, this holding marks the first time in almost three decades, since the court’s 1981 decision in City of Dayton ex rel. Scandrick v. McGee, that the court has held that a public entity abused its discretion in awarding a public contract. This is especially significant to both public entities as well as those bidding on public contracts because it re-establishes that a public entity cannot act arbitrarily when it awards public contracts.
Crumpton Law LLC is a Columbus Small Business Law Firm, with attorney Matthew Crumpton serving as managing member and lead counsel.
Tags: Construction, Contractor, Ohio Supreme Court
