Opinion
Review Granted Jan. 20, 1994.
Previously published at 19 Cal.App.4th 1034, 24 Cal.App.4th 1297, 29 Cal.App.4th 1073
Kamine, Steiner & Ungerer, Bernard S. Kamine, and Phyllis M. Ungerer, Los Angeles, for plaintiff and appellant.
James K. Hahn, City Atty., and John F. Haggerty and Christopher M. Westhoff, Asst. City Attys., for defendant and respondent.
Jones, Day, Reavis & Pogue, Gerald W. Palmer and Patricia L. Davies, Los Angeles, for intervenor and respondent.
MASTERSON, Associate Justice.
In this opinion, we find that a charter city's minority and women business enterprise outreach program is invalid. We reach this result because the program is authorized solely by executive directive, and thus impermissibly creates a requirement for bidding on a public contract which is inconsistent with the charter. We therefore reverse a judgment denying a petition for a writ of mandate filed by a contractor who, although submitting the lowest monetary bid on a project, was not awarded the contract based on failure to document compliance with the outreach program.
BACKGROUND
With exceptions not applicable here, the Charter of the City of Los Angeles requires competitive bidding on contracts involving the expenditure of more than $25,000. (L.A. City Charter, § 386(b).) With other exceptions also not applicable here, the charter further requires that the contract On March 29, 1983, the City's mayor issued Executive Directive No. 1-B. The directive declared that it is the City's policy "to utilize Minority and Women-Owned Business Enterprise (MBE's) and (WBE's) in all aspects of contracting relating to procurement, construction, and personal services." It also set forth general guidelines for implementing this policy.
Unless otherwise specified, all charter references are to the Charter of the City of Los Angeles.
Unless otherwise specified, all charter references are to the Charter of the City of Los Angeles.
In a footnote, the directive defined MBE's and WBE's as "any business, bank or financial institution which is owned and operated by a minority group member or woman, or such business, bank or financial institution of whom 50% or more of it's [sic ] partners or stockholders are minority group members or women. If the business is publicly owned, the minority members or stockholders must have at least 51% interest in the business and possess control over management capital earnings."
On March 6, 1989, the mayor issued Executive Directive No. 1-C, which was "intended to clarify the implementation of Executive Directive No. 1-B in light of [Richmond v. J.A. Croson Co. (1989) 488 U.S. 469, 109 S.Ct. 706, 102 L.Ed.2d 854]." This directive provided that assessment of a bidder's good faith efforts to include MBE's and WBE's would be based on 10 enumerated factors. The directive further provided that achievement of expected levels of MBE and WBE participation would be used only as an indicator of the bidder's good faith effort to recruit MBE's and WBE's, and that the failure to achieve expected levels of participation could not be used as the sole basis of awarding a contract away from the low bidder.
Croson found that a city's requirement of a 30 percent set-aside for minority subcontractors violated the Equal Protection Clause of the United States Constitution. As stated in Digital Biometrics, Inc. v. Anthony (1993) 13 Cal.App.4th 1145, 1158, footnote 7, 17 Cal.Rptr.2d 43, the Croson majority "concluded that the city had failed to demonstrate a compelling interest for the racial set-asides because there was nothing approaching a prima facie case of specific constitutional or statutory violations by anyone in the city's construction industry; past society discrimination cannot serve as justification for rigid racial preferences; and the inflexible set-asides were not narrowly tailored to remedy the effects of past alleged discrimination. (488 U.S. at pp. 498-508 [109 S.Ct. at pp. 724-730].)"
These factors are whether the bidder (1) made efforts to obtain participation by MBE's and WBE's; (2) attended a pre-bid meeting; (3) identified and selected economically feasible units to be subcontracted to MBE's and WBE's; (4) advertised for MBE and WBE firms in general circulation media; (5) provided written notice of its interest in receiving sub-bids from MBE's and WBE's; (6) followed-up on the initial solicitations; (7) provided interested MBE's and WBE's with sufficient information about the project's plans and specifications; (8) requested assistance from organizations that assist MBE's and WBE's; (9) negotiated in good faith with MBE's and WBE's; and (10) made efforts to advise and assist MBE's and WBE's in obtaining bonds, credit, and insurance.
We take judicial notice of documents submitted by the City to the extent they establish that, in response to Croson, the City has authorized a study to determine the extent of past discrimination affecting MBE's and WBE's. The study, which has not yet been completed, may justify the future use of specific goals and requirements for MBE and WBE participation in public contracts under Croson.
The Los Angeles Board of Public Works established an "outreach program" for MBE and WBE participation in public contracts which was patterned after Executive Directive No. 1-C. In October 1991, Public Works issued a request for bids on a contract to provide a computer control system for the City's Hyperion Secondary Sewage Treatment Plant ("the project"). The request specified that bidders would be required to submit documentation of their compliance with the outreach program within three days after the bids had been opened.
Four contractors were "prequalified" by Public Works to bid on the project. Two of Domar submitted the lowest bid at $3,335,450. Bailey was next lowest at $3,987,622. However, Domar failed to submit the documentation of its compliance with the outreach program as required by the bid specifications. Based on this failure, the contract on the project was awarded to Bailey.
On November 24, 1992, Domar filed a petition for a writ of mandate in the superior court seeking, inter alia, to prevent Public Works from entering into a contract on the project with any contractor other than itself. By stipulation, Bailey intervened in the action.
Domar's petition was denied on December 8, 1992, the trial court finding that the outreach program was not illegal or unconstitutional. Judgment on the petition was filed on January 5, 1993. This appeal followed.
On December 17, 1992, Domar filed a petition in this court requesting that the trial court's judgment be stayed and that the outreach program be declared invalid. The petition was summarily denied on December 21, 1992.
ISSUES
Domar contends the outreach program is invalid because it (1) impermissibly creates a requirement for the award of a public contract which is not included in the city charter; (2) violates Public Contract Code section 2000, which permits compliance with an outreach program to be predicated on either demonstrating good faith in seeking MBE and WBE participation or meeting specific goals and requirements for such participation; and (3) constitutes an unconstitutional race-conscious program (or at least will do so until the study commissioned by the City empirically demonstrates the existence of past discrimination).
We find merit in Domar's first contention, and therefore do not reach the other two contentions.
The City asserts that we need not reach the merits of any of Domar's contentions because (a) our previous denial of Domar's writ petition constitutes the "law of the case," and (b) the appeal is moot. The City and Bailey assert that (c) it was proper to award the contract away from Domar because Domar failed to comply with bid specifications relating to the outreach program and additional items.
DISCUSSION
" 'The proposition is self-evident ... that an ordinance must conform to, be subordinate to, not conflict with, and not exceed the [city's] charter, and can no more change or limit the effect of the charter than a legislative act can modify or supersede a provision of the constitution of the state.' [Citations.]" (Currieri v. City of Roseville (1970) 4 Cal.App.3d 997, 1001, 84 Cal.Rptr. 615; see also 5 McQuillin, Municipal Corporations (3d ed. 1989 revision) § 15.19, pp. 98-99.) "Consequently, an ordinance violative of or not in compliance with the city charter is void." (Op. cit. supra, at p. 99, fn. omitted.) Domar's contention regarding the invalidity of the outreach program is simple and straightforward: With exceptions not applicable here, the charter requires that a public contract be let to the "lowest and best regular responsible bidder." (§ 386(f).) The outreach program, while laudable in purpose, is not part of the charter. The requirement of compliance with the outreach program is therefore void because it is ultra vires.
For purposes of this case, it is of no consequence that the outreach program was authorized by executive directive rather than by municipal ordinance.
The City asserts that Domar's failure to submit documentation of its good faith efforts to comply with the outreach program provided a basis for rejection of its bid as "nonresponsive." In support of this assertion, the City offers three examples of requirements which, if violated, would render a bid nonresponsive--failure to submit a performance bond, failure to submit a non-collusion affidavit, and failure to comply with any anti-apartheid policy adopted by the city council. These examples merely beg the question.
Unlike the requirements of the outreach program, the charter specifically requires that a bidder submit a performance bond and a non-collusion affidavit, and that the bidder comply with an authorized anti-apartheid policy. Contrary to the City's assertion, the ability to reject a bid as nonresponsive because it does not satisfy a charter requirement does not create any basis to reject a bid for noncompliance with a requirement which is not in the charter.
"Said notice [inviting bids] shall specify the amount of the bond to be given for the faithful performance of the contract." (§ 386(c).) "[W]ithin thirty days after the contract is awarded to the successful bidder, said bidder shall ... post the faithful performance bond." (§ 386(g).)
"The bid ... shall be supported by a non-collusion affidavit...." (§ 386(d).)
"Notwithstanding any other provision of this Charter to the contrary ... the City ... shall not enter into or renew any contract ... unless the bidder is in compliance with ... any anti-apartheid policy adopted by the City by ordinance...." (§ 386(f).)
Without citation of authority, Bailey asserts that a requirement of compliance with the outreach program is authorized by Charter sections 2 and 40. We disagree.
Section 2 of the charter provides that the City has the power to, inter alia, make and enforce laws and regulations (§ 2(4)), make and enforce local police, sanitary, safety, welfare and other regulations (§ 2(6)), and establish offices, departments, procedures, procedure ordinances and other instrumentalities for municipal government (§ 2(11)(p)). Section 40(6) provides that the Mayor "shall perform such other duties and have such other powers as are ... imposed upon or granted to him."
Interpretation of a city charter is governed by the same rules as interpretation of a statute. (Currieri v. City of Roseville, supra, 4 Cal.App.3d at p. 1001, 84 Cal.Rptr. 615.) One of these rules is that a specific provision will control over more general language on the same subject. (Agricultural Labor Relations Bd. v. Superior Court (1976) 16 Cal.3d 392, 420, 128 Cal.Rptr. 183, 546 P.2d 687; see also Code Civ.Proc., § 1859.) This rule would be violated if we were to accept Bailey's assertion that the general language of Charter sections 2 and 40 may be read to impose a requirement in addition to the specific competitive bidding provisions of section 386. Accordingly, we decline to do so.
Our conclusion that the outreach program is invalid is bolstered by the case of Assoc. Gen. Contr. of Cal. v. City & County of S.F. (9th Cir.1987) 813 F.2d 922. Like Los Angeles, the San Francisco Charter requires that certain contracts be let to the lowest responsible bidder. A 1984 ordinance established set-asides and preferences to minority and women business enterprises. The ordinance was upheld in the District Court on the ground that "responsible" could be interpreted as "socially responsible." (Id. at pp. 924-925.) Relying on the California definition of "lowest responsible bidder," the Court of Appeals rejected the notion that the San Francisco Charter authorized consideration of "social responsibility." (Id. at pp. 925-927.) The Court of Appeals further rejected an argument that the ordinance was proper because the San Francisco Charter did not expressly prohibit affirmative action plans. (Id. at p. 927.) The ordinance was declared void. (Ibid.)
" 'The term "lowest responsible bidder" has been held to mean the lowest bidder whose offer best responds in quality, fitness, and capacity to the particular requirements of the proposed work.' " (City of Inglewood-L.A. County Civic Center Auth. v. Superior Court (1972) 7 Cal.3d 861, 867-868, fn. 2, 103 Cal.Rptr. 689, 500 P.2d 601, citing West v. Oakland (1916) 30 Cal.App. 556, 560-561, 159 P. 202, emphasis omitted; see also R & A Vending Services, Inc. v. City of Los Angeles (1985) 172 Cal.App.3d 1188, 1193, 218 Cal.Rptr. 667.)
No argument has been advanced in this case that the competitive bidding requirement of the Charter of the City of Los Angeles may be read to include "social responsibility." Given this state's longstanding definition of "lowest responsible bidder," such an argument would surely fail. Indeed, the fact that the anti-apartheid provision was submitted to the electorate as a charter amendment reinforces the conclusion that exceptions to the competitive bidding requirement which are based on principles of "social responsibility" must be included in the charter.
The parties have not suggested that there is any significance in the difference between the charter's phrase "lowest and best regular responsible bidder," and the phrases "lowest responsible bidder" and "lowest reliable and responsible bidder," which are discussed in various cases.
The anti-apartheid policy appeared as measure "L" of the Los Angeles City Special Municipal Election of November 6, 1990. The chief legislative analyst's impartial summary of the measure provided that, "[u]nder [then-] current Charter provisions regulating the City's competitive bid process, many City contracts in excess of $25,000 must be awarded to the lowest responsible bidder without consideration of anything except the lowest price and the ability of the bidder to perform under the contract. [p] In 1986, the City adopted an ordinance to regulate the City's contracting policies with companies doing business in or with South Africa. The ordinance does not currently apply to competitively bid contracts in excess of $25,000 because of Charter restrictions and established case law relative to competitive bidding." (Italics added.)
The outreach program unquestionably purports to establish a non-charter exception to the competitive bidding requirements and exceptions set forth in Charter section 386(f). As such, it does not conform to, is not subordinate to, conflicts with, and exceeds the charter. (Cf. Currieri v. City of Roseville, supra, 4 Cal.App.3d at p. 1001, 84 Cal.Rptr. 615.) Consequently, it is void.
Under these circumstances, the trial court erred in finding the outreach program to be valid. The judgment denying Domar's petition must therefore be reversed, and the matter remanded to determine appropriate relief in favor of Domar.
DISPOSITION
The judgment is reversed and the matter is remanded for further proceedings consistent with this opinion. Appellant Domar Electric, Inc., is awarded costs on appeal.
ORTEGA, J., concurs.
SPENCER, Presiding Justice, dissenting.
I respectfully dissent. I would affirm the trial court's judgment on the ground that the outreach program fairly may be said to be authorized by the city charter.
In the municipal scheme of things, the charter is the supreme source of local law, analogous to a state constitution. (Campen v. Greiner (1971) 15 Cal.App.3d 836, 840, 93 Cal.Rptr. 525; see also Currieri v. City of Roseville (1970) 4 Cal.App.3d 997, 84 Cal.Rptr. 615.) Consequently, " 'an ordinance must conform to, be subordinate to, not conflict with, and not exceed the [city's] charter, and can no more change or limit the effect of the charter than a legislative act can modify or supersede a provision of the constitution of the state.' [Citations.]" (Id. at p. 1001, 84 Cal.Rptr. 615.) It follows that an ordinance which violates As Domar sees it, since the charter generally requires that a public contract be let to the "lowest and best regular responsible bidder"(§ 386(f) 1), the requirement of compliance with the outreach program, which is not part of the charter, necessarily is ultra vires and therefore void. The simplicity of the argument is attractive, but I find it deceptive.
The charter contains a number of other requirements, some of which pertain to the reliability and quality of the bidder and others of which represent purely political policy choices. In the former category is the requirement that a bond in an amount specified in the published bid invitation "be given for the faithful performance of the contract." (§ 386(c).) Another requirement in this category is that every bid be accompanied by a certified or a cashier's check, payable to the order of the City of Los Angeles, for an amount which is at least 10 percent of the aggregate sum of the bid, or a satisfactory surety bond in like amount, guaranteeing that the bidder will enter into the proposed contract if awarded it. (§ 386(d).) Further, the bid must be accompanied by a noncollusion affidavit. (Ibid.) Additionally, "[b]idders may be required to submit with their proposals detailed specifications of any item to be furnished, together with guarantees as to efficiency, performance, characteristics operating cost, useful life, time of delivery, and other appropriate factors." (§ 386(c).)
In the latter category is the requirement that the bidder be in compliance with "any anti-apartheid policy adopted by the City by ordinance." (§ 386, subd. (f).) Other provisions in this category are the allowance of a preference for California or Los Angeles County firms, and the inclusion of a domestic content requirement. (Ibid.) As may be seen, none of these provisions have any bearing on the reliability or quality of the bidder.
Clearly, any requirement which simply represents a policy choice must be set forth fully and expressly in the charter. Such a policy choice deals with a narrow, discreet area, and could not reasonably be construed to authorize a similar, unspecified policy requirement.
In contrast, the other contracting requirements found in the charter have a bearing on the reliability, competence, quality and fitness of the bidder. Thus, bid requirements which similarly bear on these matters may find their source of authority in any one or more of a number of charter provisions. While a bid requirement related directly to the competitive bidding process and performance of the contract must of course find authorization in the charter provisions, those provisions are, as noted ante, to be construed broadly. (Taylor v. Crane, supra, 24 Cal.3d at pp. 450-451, 155 Cal.Rptr. 695, 595 P.2d 129.)
Bid specifications routinely contain any number of requirements which are not set forth in the charter. Most of these requirements will have to do with the manner in which a particular contract is to be performed, i.e., the type and quality of materials to be used, the time for performance, the precise specifications of the project and similar items. Other requirements, however, do not address the specifics of a particular project. Whether these requirements legitimately may be included turns on whether they logically may be said to be authorized by the charter.
In the instant matter, the bid specifications require that the bidder carry specified insurance, sign an indemnification clause, Additionally, the specifications require that the bidder sign a nondiscrimination clause, document compliance with respondent's employment and training policy or demonstrate good faith efforts to so comply, include and document a specified affirmative action plan and agree to make specified good faith efforts to comply therewith, meet minimum subcontract requirements and document good faith efforts to comply with the MBE and WBE outreach program. Each of these requirements is designed to counteract what might be termed "in-breeding," or the long-recognized tendency of public works contractors to recruit workers from familiar sources (such as the friends, neighbors and relatives of present employees), to avoid broad-spectrum training or apprenticeship programs in favor of "family" training, to deal only with familiar subcontractors or to avoid subcontracting altogether.
This is not a matter of "social responsibility" (see Assoc. Gen. Constr. of Cal. v. City & County of S.F. (9th Cir.1987) 813 F.2d 922, 925-927), but simply of responsibility in the usual sense. As noted in City of Inglewood-L.A. County Civic Center Auth. v. Superior Court (1972) 7 Cal.3d 861, 867-868, footnote 2, 103 Cal.Rptr. 689, 500 P.2d 601, " '[t]he term "lowest responsible bidder" has been held to mean the lowest bidder whose offer best responds in quality, fitness, and capacity to the particular requirements of the proposed work.' " (See also R & A Vending Services, Inc. v. City of Los Angeles (1985) 172 Cal.App.3d 1188, 1193, 218 Cal.Rptr. 667.) The requirements discussed above promote diversity in the sense of broadening the pool of participants. This in turn promotes competition.
Our national economic policy, as reflected in the antitrust laws, is founded " ' "on the premise that the unrestrained interaction of competitive forces will yield the best allocation of our economic resources, the lowest prices, the highest quality and the greatest material progress...." ' [Citations.]" (Cianci v. Superior Court (1985) 40 Cal.3d 903, 917, 918-919, 221 Cal.Rptr. 575, 710 P.2d 375.) Thus, those requirements which promote competition tend to lower bidding prices and enhance the quality of the product offered by qualified bidders. This entire process serves the underlying purposes of the lowest-responsible-bidder provision. (§ 386(f).)
Accordingly, it fairly may be said that a bidder of equal quality and capacity whose reach is broader and thus more competitive is more fit than one whose reach is narrow and provincial, in the sense of being more efficient. That is, these bidders will, in the long run, produce higher quality and lower prices due to the impact of the " ' "unrestrained interaction of competitive forces" ' " thus unleashed. (Cianci v. Superior Court, supra, 40 Cal.3d at p. 919, 221 Cal.Rptr. 575, 710 P.2d 375.)
Since the charter specifically permits the use of bid requirements relating to efficiency and "other appropriate factors" (§ 386(c)), the requirements discussed above fairly may be said to be authorized by the charter. In my view, it follows, then, that the outreach program is not invalid on the ground that it creates a requirement for the award of a public contract which is not authorized by the city charter.
This definition generally conforms to the definitions of "minority" and "minority business enterprise" set forth in Public Contract Code section 10115.1, which was enacted in 1988. (Stats.1988, ch. 61, § 3.)
Public Contract Code section 2000, which was enacted in 1986 (Stats.1986, ch. 1060, § 2), permits a local agency to require that the lowest responsible bidder for a public contract either meet goals and requirements for participation by MBE's and WBE's, or make a good faith effort to do so as measured by the 10 enumerated factors set forth in subdivisions (b)(1) through (b)(10). These 10 factors are essentially the same as the factors set forth in Executive Directive No. 1-C.
We reject these assertions in short order:
(a) Nothing in Kowis v. Howard (1992) 3 Cal.4th 888, 12 Cal.Rptr.2d 728, 838 P.2d 250 suggests that an appellate court's order summarily denying a post-trial writ petition establishes the "law of the case."
(b) The appeal is not moot even though Bailey has already begun work on the project because Domar may still be entitled to quasi-contractual relief. (See National Coach Corp. v. State Bd. of Control (1982) 137 Cal.App.3d 750, 753, fn. 1, 187 Cal.Rptr. 261.) Contrary to the City's assertion, the record does not establish that Domar has declared a quasi-contractual remedy to be inadequate.
(c) Regardless of the precise scope of Domar's nonresponsiveness to bid specifications, the record is clear that the contract was awarded away from Domar solely because it failed to submit the documentation required to demonstrate compliance with the outreach program, the validity of which is the subject of Domar's legal challenge. (Compare Taylor Bus Service, Inc. v. San Diego Bd. of Education (1987) 195 Cal.App.3d 1331, 1343-1344, 241 Cal.Rptr. 379 [contract properly awarded away from the lowest bidder because bid "nonresponsive" in that it failed to include requisite certificate of insurance coverage, and awarding authority determined that bidder's offer of self-insurance was inadequate].)