Hemphill Construction Company, Inc. v. City of Clarksdale, Mississippi
Hemphill Construction Company, Inc. v. City of Clarksdale, Mississippi
Opinion of the Court
¶ 1. The City of Clarksdale ("City") solicited sealed bids for a public construction project. The City received sealed bids from Landmark Construction Company, GCI ("Landmark"), and Hemphill Construction Company, Inc. ("Hemphill"). When unsealed, both bids exceeded the project's allocated funds by more than ten percent. Rather than rebidding the contract, the City conditionally awarded a contract to Landmark, dependent upon the City's obtaining additional public funds to match Landmark's bid. The City's actions were not provided for in the public bidding laws. Accordingly, we reverse the judgment of the Coahoma County Circuit Court and remand the case to the trial court.
FACTS AND PROCEDURAL HISTORY
¶ 2. In February 2015, the City issued an Advertisement for Bids for the 2014 Community Development Block Grant ("CDBG") Wastewater Improvements - Contract # 1 (Equipment and Controls). The Advertisement called for the City to receive written, sealed bids at the Clarksdale Public Utilities Commission ("CPU") up to and until 1:30 p.m. on May 27, 2015, at which time any bids would be opened publicly and would be considered by the City at the next meeting of the Board of Mayor and Commissioners of the City.
¶ 3. The sealed bids were opened on May 27, 2015, and the Certified Tabulation of Bids revealed Landmark's lump-sum bid was $924,527 and Hemphill's lump-sum bid was $953,800.
¶ 4. Twelve days later, the City held a meeting. The June 8, 2015, minutes of the City reflect that Bill Coker, the City's grant consultant on the project, presented the Certified Tabulation of Bids, which showed that Landmark's bid, combined with the lowest bid on Contract 2: Solid Waste-Denali Water Solutions, LLC- exceeded the project budget by more than ten percent, specifically, $216,182.
¶ 5. On June 19, Hemphill protested the award to Landmark. The City responded to Hemphill on July 9, stating that the City disputed Hemphill's claims, and advised that the contract had been awarded to Landmark.
¶ 6. On July 13, Coker informed the City that the additional CDBG and CPU funding had been acquired. The City then granted the Mayor permission to execute the Mississippi Development Authority Modification on Wastewater Treatment Plant Contract, which modified the budget by increasing it to $216,182. That same day, the City authorized the Mayor to execute a Notice of Award to Landmark.
¶ 7. Hemphill filed a Bill of Exceptions in the Circuit Court of Coahoma County pursuant to
Mississippi Code Section 11-51-75 (Rev. 2012), appealing the City's July 13 decision to award the contract to Landmark. Hemphill argued,
inter alia
,
if the lowest and best bid is not more than ten percent (10%) above the amount of funds allocated for a public construction or renovation project, then the agency or governing authority shall be permitted to negotiate with the lowest bidder in order to enter into a contract for an amount not to exceed the funds allocated .
¶ 8. After a hearing, the circuit court held that the City's award of the project to Landmark did not violate state law, finding that:
[t]he purpose of [ Mississippi Code Section] 31-7-13(d)(iv) is to allow a governmental entity to negotiate with the lowest bidder to bring the bid within the amount of funds allocated. In this case Clarksdale did not negotiate with Landmark. Clarksdale obtained additional funds from the MDA and the CPUC to meet the lowest bid. The bid laws do not prohibit this, accordingly, Clarksdale's actions were not improper.
...
From a policy perspective, the State Legislature has left the decision on when to rebid construction projects with the local governing authorities. [ Mississippi Code Section] 31-7-13 does not prohibit Clarksdale from obtaining or allocating additional funds to meet the lowest bid and since it does not, Clarksdale's award of the Contract to Landmark was not improper.
¶ 9. It is from this Order that Hemphill appeals. Hemphill requests that this Court reverse and remand for a trial on damages.
ISSUES
¶ 10. Hemphill frames the issue on appeal as follows:
Whether the circuit court erred in not finding that Clarksdale violated Mississippi Code Annotated Section 31-7-13 when the bids submitted by Landmark and Hemphill in response to its Advertisement for Bids exceeded the allocated/budgeted funds by more than ten percent (10%) and rather than rejecting these bids and re-advertising, Clarksdale elected to secure additional funding and awarded the contract to Landmark.
¶ 11. Hemphill also argues that the City's decision to award the contract to Landmark was arbitrary and capricious. The first issue is case-dispositive.
STANDARD OF REVIEW
¶ 12. "Our analysis begins with a determination of the scope of review. Municipalities have only such powers as are expressly granted or necessarily implied by statutes. Such powers are to be construed most strongly against an asserted right, if the right is not clearly given."
Hemphill Constr. Co., Inc. v. City of Laurel
,
¶ 13. For questions of law, a municipal board's decision is reviewed de novo.
Nelson v. City of Horn Lake ex rel. Bd. of Aldermen
,
DISCUSSION
¶ 14. The public-purchase laws concerning bidding requirements neither expressly grant, nor clearly give, any municipality the power to award a contract, post-bid-opening, to a bidder whose bid exceeded the allocated
The term "necessarily implied" is somewhat restrictive. "Necessarily implied" refers to a logical necessity and means that no other interpretation is permitted by the words of the instrument construed, and it has been defined as an implication which yields so strong a probability of intent that any intention to the contrary cannot be supposed leaving no room for doubt.
Miss. Pub. Serv. Comm'n v. Columbus & Greenville Ry. Co.
,
¶ 15. The City allocated public funds to finance a public construction project. The City then solicited sealed bids for the project. Landmark and Hemphill submitted sealed bids. It is undisputed that, after the bids were unsealed, both bids exceeded the original allocated funds by more than ten percent. Therefore, the City was without statutory authority under Section 31-7-13 to award either bid. Notwithstanding, the City sought and procured additional public funds for the project, requiring Landmark to hold its bid open, contingent upon the City's receipt of additional funding. The City then allotted the original allocated funds,
plus
the newly procured public funds, to the project and accepted Landmark's bid. These steps, taken after the bids were opened, frustrate the powers expressly granted, clearly given,
or necessarily implied in the public-purchasing laws and render the ten-percent limitation not only superfluous, but meaningless. "A construction which will render any part of a statute inoperative, superfluous, or meaningless is to be avoided."
McCaffrey's Food Market, Inc. v. Miss. Milk Comm'n
,
¶ 16. Mississippi Code Section 31-7-13(d)(iv) specifically provides that, if the lowest and best bid is not more than ten percent above the amount of funds allocated for a public construction project, then governing authority shall be permitted to negotiate with the lowest bidder in order to enter into a contract for an amount not to exceed the funds allocated .
¶ 17. In considering a statute passed by the Legislature,
the first question a court should decide is whether the statute is ambiguous. If it is not ambiguous, the court should simply apply the statute according to its plain meaning and should not use principles of statutory construction. Whether the statute is ambiguous or not, the ultimate goal of this Court is to discern and give effect to the legislative intent.
Miss. Ins. Guar. Ass'n v. Cole ex rel. Dillon
,
¶ 18. Mississippi Code Section 31-7-13 (d)(iv) is unambiguous. In its plainest terms, the statute provides that an agency or governing authority (here, the City) shall be permitted to "
negotiate
...
to enter into a contract
" if the "bid is not more than ten percent (10%) above the amount of funds
allocated
" for the project. (Emphasis added.) Three words/phrases in this statute are examined: (1) "funds allocated," (2) "negotiate," and (3) "enter into a contract." Each word and phrase must be read together and given effect.
See
Morgan v. State ex rel. Dist. Attorney
,
¶ 19. The first phrase, "funds allocated," is included twice in the statute. The term "funds allocated" is in the past tense and can only refer to funds that already have been allocated, not funds to allot in the future. The City's authority to "negotiate ... to enter into a contract" was limited by the amounts originally allocated for the project, i.e. , before the bids were opened. Based on the plain and precise language of the statute, the City was without statutory authority to negotiate, conditionally accept, or enter into a contract with either Landmark or Hemphill based on the amount of funds that the City had allocat ed when the bids were opened. Both bids exceeded the funds allocat ed for the project by more than ten percent, both when the bids were made and later opened.
¶ 20. Hemphill submitted to the trial court an Attorney General public-bidding opinion that recognized this principle. While Attorney General opinions are not binding on this Court, "they certainly are useful in offering guidance to the Court."
Jones Cty. Sch. Dist. v. Dep't of Revenue
,
a determination as to the amount of the funds allocated, as contemplated in Section 31-7-13(d)(iv), is a factual determination to be made by the public entity seeking to procure the construction contract. While there is no specific statutory provision directing a public entity as to whether the determination is to be made prior to the solicitation of bids or may be made after bids are received, such determination as to the amount of funds available for the procurement of the proposed construction contract should be made prior to the solicitation of bids. In fact, the term "allocated" is in the past tense and presumes that the allocation has already been completed.
Op. Miss. Att'y Gen. 2012-00195 (April 20, 2012) (emphasis added). The Attorney General further opined that only the funds that the public entity contemplated using for the procurement of the construction contract may be considered to trigger its authority to negotiate with the lowest and best bidder under Mississippi Code Section 31-7-13(d)(iv).
¶ 21. The City unconvincingly counters that Mississippi Code Section 31-7-13 applies only when the governing authority "negotiates" with the lowest bidder. The City argues that Mississippi Code Section 31-7-13(d)(iv) does not apply in this case because it "did not negotiate with Landmark nor did it change the plans and specifications set forth in the Advertisement to allow for negotiations." The City's actions belie its words.
¶ 22. Clarksdale conditionally accepted Landmark's bid before awarding Landmark the contract. Clarksdale's action required Landmark to keep its bid open if and until (1) Clarksdale could acquire additional CDBG match funds, (2) Clarksdale could acquire additional CPU match funds, (3) approval was given by the Mississippi Development Authority, and (4) the City attorney reviewed and approved the transaction. Despite the delay created by the City's conditional acceptance, Landmark reciprocated by leaving its bid open for an uncertain time. While the City argues that it did not negotiate with Landmark, one need not modify a construction plan or change advertisement specifications to "negotiate." Indeed, "negotiate" is defined as follows: "to transact business," "to confer with another so as to come to terms or reach an agreement," or "to settle or arrange by conferring or discussing." Negotiate , Webster's II New College Dictionary 732 (2001).
¶ 23. Assuming
arguendo
that the City did not negotiate with Landmark, the applicable statute states that a governing authority "shall be permitted to negotiate with the lowest bidder
in order to enter into a contract for an amount not to exceed the funds allocated
."
¶ 24. Next, the City argues that, "if the Legislature did not want a municipality to have the option to obtain additional funding, it would have prohibited it." The City then asserts that "it is reasonable to
infer
" that it had such statutory authority. Such an argument exposes the invalidity of the actions taken by the City. The City did
not
have authority to procure additional funds post-bid-opening, for municipal powers "are to be construed most strongly
against
an asserted right,
if the right is not clearly given
."
Hemphill Constr. Co., Inc
,
¶ 25. Finally, the City argues that its
ultra vires
acts were consistent with the principles behind the public-purchasing laws because it awarded the public contract "to the lowest and best bidder." This Court previously has rejected this very same argument. In
Hemphill Construction Co. Inc.
, Harold West Contractors, Inc., ("West") submitted the lowest bid for a construction project and later was allowed to amend its bid price after the bids already had been opened.
Hemphill
,
¶ 26. The foundational principles underlying the statutory requirements of competitive bidding negate any inference that the City could obtain additional public funds post-bid opening. Such a concocted procedure does not "protect the public from collusive contracts," or "prevent favoritism, fraud, extravagance, and improvidence."
CONCLUSION
¶ 27. The City was without statutory authority to procure additional public funds post-bid-opening to award the contract to Landmark, for its bid exceeded ten percent of the public funds allocated for the project. We hold that the circuit court erred in affirming the City's decision to award the contract to Landmark. Accordingly, the Court reverses the judgment of the Coahoma County Circuit Court and remands the case for proceedings consistent with this opinion.
¶ 28. REVERSED AND REMANDED.
WALLER, C.J., COLEMAN, MAXWELL, BEAM AND CHAMBERLIN, JJ., CONCUR. ISHEE, J., DISSENTS WITH SEPARATE WRITTEN OPINION JOINED BY KITCHENS, P.J., AND KING, J.
The CDBG Wastewater Treatment Improvements Project was broken into two contracts: Contract # 1: Equipment and Controls, and Contract # 2: Solid Waste. This appeal concerns Contract # 1 only.
Hemphill also argued that it met the requirements for preference under Section 3 of the Housing and Urban Development Act of 1968; therefore, the City was required to award Hemphill the contract. The circuit court found that Hemphill was not entitled to Section 3 preference. Hemphill does not appeal that determination.
Allocate : "1. To set aside for a special purpose. 2. To distribute according to plan: ALLOT." Webster's II New College Dictionary 30 (2001).
McCaffrey's Food Market, Inc.
,
Dissenting Opinion
¶ 29. The majority holds that Mississippi Code Section 31-7-13(d)(iv) precludes a governing authority from procuring additional funding for a public-construction project after the opening of sealed bids. (Maj. Op. ¶ 27). I would find there to be no such preclusion. Accordingly, I must respectfully dissent.
¶ 30. Section 31-7-13, Hemphill argues (and the majority agrees) required the City to reject both bids because they both were ten percent more than the original amount allocated for the project. But Clarksdale argues that, while the text of Section 31-7-13(d)(iv) grants a municipality the discretion to negotiate under certain circumstances, it does nothing to prevent a governing authority from securing additional funding. After examining the text of the statute, I agree.
¶ 31. My agreement with Clarksdale's position is based on the text of the provision, which provides that if the bid is not more than ten percent higher than the amount (originally) allocated, a governing authority "
shall be permitted to negotiate
with the lowest bidder in order to enter into a contract for an amount not to exceed the funds allocated."
¶ 32. Absent from the text of the statute, however, is any language which prohibits a governing authority from obtaining additional funding to pay for a public project. To be sure, when reading the text of Section 31-7-13(d)(iv), it is reasonable to infer that if all of the submitted bids exceed the funding a governing authority possesses for a project, the governing authority in that instance has no choice but to reject all bids, as it simply could not pay the price of the bid. However, if all bids exceed the budgeted amount for a project, but the governing authority can procure additional funding, there is simply nothing in the text of the statute that prohibits it from doing so.
¶ 33. In support of its finding that Section 31-7-13(d)(iv) precluded Clarksdale from obtaining additional funding, the majority reasons that the allocated amount is to be determined before bid solicitation. (Maj. Op. ¶ 20). In doing so, the majority cites an opinion of the Attorney General that-ironically enough-states that, while the funding determination should be made before bids are solicited, "there is no specific statutory provision directing a public entity as to whether the determination is to be made prior to the solicitation of bids or may be made after bids are received." Op. Miss. Att'y Gen. 2012-00195 (April 20, 2012) (emphasis added). So, while that Attorney General's opinion suggests that it may be a wise and preferable policy to require such determination before solicitation, it also simultaneously reinforces my position that no statute demands such.
¶ 34. For the reasons stated above, in the end, I would affirm the City's award of the contract to Landmark. I respectfully dissent.
KITCHENS, P.J., AND KING, J., JOIN THIS OPINION.
Reference
- Full Case Name
- HEMPHILL CONSTRUCTION COMPANY, INC. v. CITY OF CLARKSDALE, Mississippi
- Cited By
- 5 cases
- Status
- Published