American Institute for Imported Steel, Inc. v. Office of General Services

Sweeney, J. This appeal concerns the validity of defendants’ “ Ruy-American ” policy as expressed in paragraph 10 of its general specifications. Special Term," in granting defendants'’ cross motion for summary judgment, determined that defendant Office-of General Services of the State of New York (OGS) has the power to promulgate broad rules and standards for the purchase of products for the State on the basis of public policy and its “ Buy-American ” policy is within its statutory authority. We arrive at a contrary conclusion. The specification in question provides that “ all bids must be on domestic or domestic made commodities unless otherwise specified. ” Adhering to this provision, OGS refused to «place [119] plaintiff Widder Corporation on its mailing list because of the foreign origin of the products it wished to supply. Thereafter, in conjunction with the other plaintiffs who also engaged in selling foreign imported products, this action for a declaratory judgment was commenced. OGrS derives its authority to let contracts from section 174 of the State Finance Law, the pertinent part of which reads as follows: ‘ ‘ Contracts with the commissioner of general services or with a state department or institution, or other agency of a department, shall be let to the lowest responsible bidder, as will best promote the public interest, taking into consideration the reliability of the bidder, the qualities of the articles proposed to be supplied, their conformity with the specifications, the purposes for which required and the terms of delivery; provided, however, that no such contract shall be let to a bidder other than the lowest responsible bidder without the written approval -of the comptroller(Emphasis supplied.) It is fundamental that defendants’ actions and authority are circumscribed by the language of this statute. OGrS may not validly adopt a rule or standard which enlarges or alters the powers expressed therein. The purpose of this statute is to invite competition and thereby furnish the State with the best product at the lowest price practicable. In other words, its purpose is to conserve the taxpayers’ money. This beneficial purpose could easily be neutralized if any group of responsible bidders is wrongfully eliminated. In resolving this controversy, we are confronted with the narrow question of whether plaintiffs may be legally prohibited from bidding on State contracts on the sole ground that they propose to supply a nondomestic product. From an analysis of section 174, the Legislature, in our view, has established five criteria for determining the lowest responsible bidder, i.e., (1) the reliability of the bidder; (2) the quality of the article; (3) the conformity thereof with specifications; (4) the purpose for which it is required; and (5) the terms of delivery. Manifestly, OGrS may not add others. Defendants point out, however, that the statute was amended in 1941 by adding certain language (italicized above). They argue that the Legislature, by this amendment, intended that contracts shall be let to the lowest responsible bidder who will promote the public interest, notwithstanding the five criteria set forth in the statute. Specifically, they contend that considerations of public interest, as well as reliability of the bidder, support the adoption of the “ Buy-American ” specification in that foreign [120] commodities often present difficulties. We are unable to accept this interpretation. In our opinion, the successful bidder must be the lowest responsible bidder, based on the five criteria expressed in the statute. It is not merely that State contracts shall be let as will best promote the public interest. (Matter of Margrove, Inc. v. Office of Gen. Servs. of State of N. Y., 27 A D 2d 321, affd. 19 N Y 2d 901.) Defendants’ reasoning, in effect, would add a sixth criteria ánd frustrate the real intent of the Legislature by eliminating completely an entire class of bidders, those who supply foreign made goods. No supplier of foreign products, no matter how responsible or how superior its product at whatever the price offered, would be afforded an opportunity to compete. It may be desirable and beneficial to the national economy to purchase materials which are made in this country, but the Legislature has not so directed. (See American Inst. for Imported Steel v. County of Erie, 32 A D 2d 231.) Our conclusion as to the intent and purpose of this statute is bolstered by an examination of the memoranda submitted to the Governor at the time of the 1941 amendment. They clearly-demonstrate that the amendment, and particularly the addition of the words to “ best promote the public interest ”, was labor-relations oriented. The various memoranda indicate that the purpose of the amendment was to render the statute more flexible in order to permit the State to reject a bid submitted by a party, e.g., with bad labor relations which might result in a-strike and consequent delay in the progress of a project. We, therefore, conclude that the specification limiting State contracts to bidders supplying domestic products is invalid. We hold further that OGS, in awarding State contracts to the lowest responsible bidder, is restricted in its determination as to which bid will best promote the public iti'terest to a consideration of the five criteria expressed in section 174 of the State Finance Law. The order and judgment should be reversed, on the law, without costs, and summary judgment should be granted in favor of plaintiffs declaring that paragraph 10 of the Office of General Services ’ General Specifications and subdivision 8 of article 5 of State Design and Construction Master Specifications (formerly paragraph 174 of article 35 of the State Architects Standard Specifications of January 2, 1966) are null and void and of no force and effect.