Ciy of New York v. Beame

Per Curiam. Section 343 of the New York City Charter says, in effect, that if a contract for work, labor, supplies, materials or equipment involves more than the sum of $2,500, it must be [90] founded on a sealed bid public letting, “ except that in a special case the board of estimate by a two-thirds vote may order otherwise ”. At issue here is a management consulting contract for $250,000, awarded by the Mayor without competitive bidding and without Board of Estimate approval. The Comptroller has refused to register it as a valid contract or to certify it against the appropriation, pursuant to the Administrative Code (§ 93c-3.0). Special Term has upheld the Comptroller. We agree, but for additional reasons. Special Term found that the work was irregularly done pursuant to a “ letter of intent ’ ’ dated March 4, 1969, calling for a fee of $100,000, but that the Assistant Director of the Budget did not issue a certificate of approval—in the sum of $250,000, or 150% beyond the letter of intent—until June 23,1970, or long after the work was completed; that procedures and designated forms were not followed, and the Comptroller, not being a ‘ ‘ rubber stamp ’ ’, did not have to blindly register an illegal contract. We go further. We find that the Charter, having been adopted by popular vote, should be interpreted by ‘ ‘ the meaning which the words would convey to an intelligent, careful voter ”. (Matter of Kuhn v. Curran, 294 N. Y. 207, 217.) And the purpose of the Charter is both ancient and obvious, to prevent the giving of contracts to executive favorites; they, by assuming the work, then make the obligation binding on the city. And the Charter explicitly mandates that contracts, in a generic sense, involving more than $2,500, are to be public, “ except in a special case ”. In the latter situation, the Board of Estimate must approve. Arcane case law is not helpful, or needed, when the .statute’s purpose is so unmistakable. The cases relied upon by the petitioner-appellant, City of New York, adopted by the dissent, are entirely distinguishable. Not a single one of these arose out of or discussed subdivision a of section 343 of the Charter or any provision of a referendum— adopted Charter, or any provision of law substantially similar to subdivision a of section 343. In People ex rel. Smith v. Flagg (17 N. Y. 584, 592), decided in 1858: “ The Court reserved its opinion upon the question whether the services of the relator [a surveyor]- were of such a character as to come within the statute requiring advertisement and. contract with the lowest bidder, putting the judgment upon the other grounds stated” (emphasis and bracketed words supplied); and significantly the statute there involved had no provision authorizing the designating of particular work contracts as a “ special case ”, such [91] as is provided in subdivision a of section 343 of the Charter. O’Brien v. City of Niagara Falls (65 Misc. 92, 95-96 [Sup. Ct., Niagara Trial Term]) decided in 1909, involved the appointment of a stenographer to a councilmanic investigation, in regard to which, it was obvious that the independence of the council was involved (see Barry v. City of New York, 175 Misc. 712, affd. 261 App. Div. 957 [1st Dept., 1941]) and the court merely held that under the statute there involved such employment did not need the unanimous approval of the Niagara Board of Estimate and Apportionment. To the extent that dicta suggested that the approval of a body vested by statute with power to authorize noncompetitive technical work contracts is not necessary to the validity of such contracts, it is in direct conflict with Wooley v. City of Schenectady (226 App. Div. 383, 385-386 [3d Dept., 1929]). In Potts v. City of Utica (86 F. 2d 616, 618), the contract there involved was unanimously approved by the appropriate bodies, which, pursuant to statute had authority to exempt contracts which it found inappropriate to submit to public bidding. All that the court held was that those provisions of the statute requiring public bidding were, in the circumstances, rendered inapplicable. The recent Fourth Department case, Hurd v. Erie County (34 A D 2d 289, 292), as the opinion there shows, involved a statute (General Municipal Law, § 103) which provided: “ that all contracts for public work involving an expenditure of more than twenty-five hundred dollars * * * shall be awarded * * * to the lowest responsible bidder * * * after advertisement for sealed bids ”. (Italics supplied.) It contained no provision such as is contained in subdivision a of section 343 of the Charter vesting in a municipal body the power to authorize noncompetitive technical service contracts. Significantly, in Hurd the court noted (pp. 293-294): ‘ ‘ There is no serious dispute that the pool from which these professionals can be drawn is quite small, since there are so few ventures of this magnitude * * * which can serve as a training grounds for the required expertise ” — an obvious contrast to the present situation, for there are, as is admitted in the brief of appellant, literally scores of management consultant firms operating in this city. (See Directory of Consultant Members, 1970, 8th ed. Amer. Mgt. Ass'n) And there is respectable authority that activities which are under appeal are not to be regarded as 1 ‘ professional services”. (Matter of Booz v. Bragalini, 2 A D 2d 639; Matter of Backman v. Bates, 279 App. Div. 1115; People ex rel. Moffett v. Bates, 276 App. Div. 38, 41-42, affd. 301 N. Y. 597.) [92] The so-called “ judicially engrafted exception ”, on which the city relies, can have no application here where the pertinent statute required to be construed was adopted pursuant to a public referendum requiring its interpretation in the popular sense and not in some special and distorted, esoteric manner to which no awareness may be expected of the average intelligent voter. (Matter of Kuhn v. Curran, 294 N. Y. 207, supra; see, also, Gerzof v. Sweeney, 22 N Y 2d 297, 304.) The cases relied upon by the appellant are inapplicable in that they simply dealt with competitive bidding statutes containing no “ special case ” provision and where it was held, although a strict reading of the pertinent statute would preclude the municipality from contracting for work for which competitive bidding was impossible, the courts would read into a statute an exception for such contracts. This is not the situation here presented, for subdivision a of section 343 of the Charter is specially designed to take care of any “ special case ” in which competition is not an acceptable method of obtaining work by empowering the Board of Estimate to determine that a particular kind of work constitutes a “ special case ”. Past practice and treatment of the Charter is not determinative; and it is apparent the present practice of “letter of intent ’ ’ has now assumed gargantuan proportions, requiring judicial scrutiny. In our view, the dissent, in stating that the respondent Comptroller “ does not particularly urge that this contract for professional services required competitive bidding but rather that, being an exception to that requirement, was a ‘ special case ’ requiring approval by the Board of Estimate ”, misreads both the Comptroller’s challenge and the pertinent statute. The ‘ ‘ special case ’ ’ requiring approval by a two-thirds vote of the Board of Estimate cannot be severed from and has direct applicability to those situations where the “ work or labor to be done ” exceeds a cost of $2,500, in which case competitive bidding is required, unless the Board of Estimate makes an exception. Thus, we cannot say the Comptroller was arbitrary in finding noncompliance with the Charter and the Administrative Code. Indeed, ordinary prudence and basic public policy support his decision, although this matter has now acquired an academic aura. Recent legislation, as envisaged by Special Term, renders a recurrence unlikely, and we learned on oral argument that in any event, the respondent, McKinsey & Co., Inc., will be treated fairly by the city. Thus, we affirm, without costs and without disbursements.