This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.
PUBLIC CONTRACTS -- Lowest Responsible Bidder (criteria and procedure for determining responsibility)
SCHOOL DISTRICTS -- Transportation Contracts (criteria and procedure for determining "responsibility" of lowest bidder)
EDUCATION LAW, §305(14); GENERAL MUNICIPAL LAW, §103: A bidder's criminal record may be taken into account in determining whether the bidder is a responsible bidder. When the determination of non-responsibility would adversely affect a bidder's ability to carry on his business, the bidder has a cognizable due process liberty interest and is entitled to notice of the reasons for the municipality's concern over his responsibility and an opportunity to rebut the charges.
This is in reply to your letter concerning the award of a contract by a school district to a bus company for transportation of students. You state that the bus company has an office and outdoor parking facility near the homes of certain residents of the school district. These residents allege, among other things, that the bus company has violated certain local enactments concerning parking and noise abatement and that the buses of the company have been operated in an "unsafe and illegal manner". You indicate, however, that the company has not been formally charged with any violations in this regard. You ask whether the school district, based solely on the allegations of these residents, may find the bus company not to be a responsible bidder.
General Municipal Law, §103, which is generally applicable to contracts of a school district (General Municipal Law, §100), provides that, except as otherwise expressly provided by act of the Legislature, all contracts for public work involving an expenditure in excess of $7,000 and all purchase contracts involving an expenditure in excess of $5,000 shall be awarded by the appropriate officer, board or agency of a political subdivision to the "lowest responsible bidder furnishing the required security after advertisement for sealed bids in the manner provided by this section". However, contracts made by a school district for transportation of students are governed by the procedures set forth in section 305(14) of the Education Law, rather than General Municipal Law, §103.
Section 305(14) of the Education Law, like General Municipal Law, §103, provides for the award of contracts to the "lowest responsible bidder" and further provides that "responsibility shall be determined by the board of education". Section 305(14) also expressly makes such contracts subject to the approval of the New York State Commissioner of Education and authorizes the Commissioner to reject any or all bids "if, in his opinion, the best interests of the district will be promoted thereby". Inasmuch as the Commissioner of Education has express statutory authority to reject the award of the contract in question after competitive bidding, we do not believe it would be appropriate for this Office to render an opinion on the specific question raised in your inquiry.
Nonetheless, in order to provide some assistance, we have enclosed a prior opinion in which we discuss some general principles which relate to determining responsibility under General Municipal Law, §103 (1986 Opns St Comp No. 86-19, p 34). The enclosed opinion notes that, although the words "responsible bidder" are not defined in section 103, the courts have described the phrase as encompassing factors including pecuniary and financial responsibility, accountability, operational responsibleness, reliability, skill, capacity, ability, judgment, integrity and moral worth. Further, we noted in that opinion that whether a bidder is "responsible" under section 103 is a question of fact to be determined on a case-by-case basis, in the first instance, by the appropriate local officials, in accordance with the guidelines established by the courts. The determination by the local officials, however, must have a rational basis and may not be arbitrary and capricious.
Although it is not clear whether it is pertinent in this situation, we note that, in addition to the general criteria for determining responsibility discussed in the enclosed opinion, the courts have specifically held that a bidder's criminal record may be taken into account in determining responsibility (Abco Bus v Macchiarola, 52 NY2d 938, 437 NYS2d 967, cert den 454 US 822, 70 L ed 2d 94, 102 S Ct 107), and that a criminal investigation of, or an indictment against a contractor can provide a rational basis for a finding that a bidder is not a responsible bidder (Schiavone Construction Co. v Larocca, 117 AD2d 440, 503 NYS2d 196; Matter of Zara Contracting Co. v Cohen, 23 AD2d 718, 257 NYS2d 118; NYS Asphalt Pavement Association, Inc. v White, 141 Misc 2d 28, 532 NYS2d 690; Lord Electric Co., Inc. v Litke, 122 Misc 2d 112, 469 NYS2d 846). Further, since an awarding body may "consider past or present criminal involvement in evaluating whether or not a bidder is responsible, a bidder can be required to answer questions designed to elicit relevant information as part of the bidding process" (NYS Asphalt, supra, 141 Misc 2d at p 35, 532 NYS2d at p 695; see also ARC Plumbing & Heating Corp. v Board of Responsibility, 135 Misc 2d 413, 515 NYS2d 685).
Finally, it should be noted that, as a matter of due process, a bidder is generally entitled to notice and an opportunity to be heard prior to a determination that the bidder is "not responsible". Although a low bidder does not acquire a due process property right in a contract (Matter of Callanan v City of Schenectady, 116 AD2d 883, 498 NYS2d 490), it has been held that when the determination of non-responsibility would adversely affect a bidder's ability to carry on his business, the bidder has a cognizable liberty interest and is entitled to notice of the reasons for the municipality's concern over his responsibility and an opportunity to rebut the charges (Schiavone, supra; NYS Asphalt, supra).
July 16, 1990
Dr. Glenn E. Grube, Superintendent of Schools
Valley Stream High School District