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Don't use 'quality contracting' rules to steer contracts, court warns

Ruling could be costly for Franklin County

Government agencies may adopt "quality contracting" rules, but they can't use them to steer contracts to preferred bidders, the Ohio Supreme Court warned in a ruling last week that could be very costly to Franklin County.

Last week, the court found that county commissioners abused their discretion in disqualifying a non-union company that was low bidder on a baseball stadium painting project and awarding the work instead to a union contractor.

Justices said in a 5-2 opinion issued Thursday that commissioners misapplied one of their own quality contracting evaluation criteria in determining that the bid submitted by The Painting Company was not the lowest and best for the painting of the new Huntington Park.

The Painting Company, a non-union shop, turned in the lower of two bids for the work. Nevertheless, commissioners awarded the contract to a union shop contractor whose bid was $46,000 higher.

One of the quality contracting rules adopted by the county in 2002 requires contractors for public works projects to pay laborers and mechanics the "prevailing wage," generally union scale, in the locality where the work is being performed.

In rejecting the lowest bid, commissioners said the state had found The Painting Company violated Ohio's prevailing wage law more than three times in a two-year period within the last ten years, therefore making it ineligible for the contract.

The Painting Company acknowledged that a number of prevailing wage complaints had been filed against it in the past 10 years, but that the state did not formally adjudicate any of them.  Several resulted in determinations of no liability, while the rest were found to be underpayments due to clerical errors.

The company appealed the commissioners' decision, but both the Franklin County Common Pleas Court and the 10th District Court of Appeals held that the board had authority to set relevant criteria to evaluate bids on county public works projects.

Nonetheless, the Supreme Court reversed the appellate court and sent the case back for further proceedings.

Justice Robert Cupp, writing for the majority, said a finding that a wage underpayment has occurred does not automatically equate to a finding of an intentional prevailing wage violation.

"For instance, the wage underpayment could be excused upon restitution under," Cupp said.

"Nor do settlement agreements that resolve prevailing wage disputes between a contractor and the director constitute evidence of a violation. The settlement agreement represents a negotiated conclusion to a dispute," he said.

Commissioners never considered that under state law, wage underpayments resulting from "mere mistake" are excused from prosecution as a violation, he added.

Concurring were Chief Justice Thomas Moyer and Justices Evelyn Stratton, Maureen O'Connor, and Terrence O'Donnell.  Justices Paul Pfeifer and Judith Lanzinger dissented.

The Associated Builders & Contractors, representing non-union contractors, joined with the Painting Company in the lawsuit, one of three that have been filed against the county over the prevailing wage issue.

Last month the Supreme Court prohibited the commissioners from awarding a contract for electrical work at the county's new dog shelter.  They had planned to award the contract to Jess Howard Electric Co., even though its bid was $100,000 higher than that of Gaylor Electric, contending that Gaylor was guilty of prevailing wage law violations.

As a result of the court's ruling, the county be forced to pay claims for bid preparation costs, legal fees and lost profits that likely will be filed by the contractors who lost out on work at the ball park and dog shelter.

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