Matter of AAA Carting & Rubbish Removal, Inc. v. Town of Southeast (Motion for leave to appeal granted on Nov. 23, 2010) 74 A.D.3d 959 (2d Dep’t 2010)
This appeal impacts public entities and their ability to analyze and chose bids for contracts in excess of the sum of $10,000. In this appeal, the Town Board of the Town of Southeast solicited bids for a refuse disposal contract. Although petitioner AAA Carting’s bid was lower, the Town Board awarded the contract to Suburban Carting on the basis that Suburban Carting could offer superior service and therefore was the lowest responsible bidder.
General Municipal Law sec. 103(1) provides that, in awarding any contract in excess of the sum of $10,000, public entities must award the contract to “the lowest responsible bidder.” The Second Department noted that the “lowest responsible bidder” is an “elastic” concept including “considerations of skill, judgment and integrity.” Thus, financial considerations are not the only dispositive factor for public entities awarding contracts. “[W]here good reason exists, the low bid may be be disapproved or, indeed, all the bids rejected.” Unless a public entity’s decision is irrational, dishonest or otherwise unlawful, courts should not disturb the entity’s decision where it exercises its discretion to reject one or more bids. The Second Department concluded that it could not say that the Town Board acted arbitrarily or capriciously in awarding the contract to Suburban Carting rather than AAA Carting. Thus, it held that Supreme Court erred in substituting its judgment for that of the Town Board.
The Court of Appeals’ decision will likely guide public entities on what considerations they may rely upon beyond the financial aspect in awarding contracts in excess of the sum of $10,000.