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JOHN F. MCCLOSKEY AND CITY PHILADELPHIA v. INDEPENDENCE CABLEVISION CORP. AND ROSCOE MURPHY (05/25/83)

COMMONWEALTH COURT OF PENNSYLVANIA


decided: May 25, 1983.

JOHN F. MCCLOSKEY AND CITY OF PHILADELPHIA, APPELLANTS
v.
INDEPENDENCE CABLEVISION CORP. AND ROSCOE MURPHY, JR., APPELLEES

Appeal from the Order of the Court of Common Pleas of Philadelphia County in the case of Independence Cablevision Corporation et al. v. John F. McCloskey et al., No. 4019 March Term, 1983.

COUNSEL

Jill A. Douthett, Divisional Deputy City Solicitor, with her Mark A. Aronchick, Acting City Solicitor, and John J. Dibernardi, Assistant City Solicitor, for appellants.

Oscar N. Gaskins, Oscar N. Gaskins & Associates, P.C., with him Bruce W. Ficken and Joan A. Yue, Pepper, Hamilton & Scheetz, for appellants.

President Judge Crumlish, Jr. and Judges Williams, Jr. and Barbieri, sitting as a panel of three. Opinion by President Judge Crumlish, Jr.

Author: Crumlish

[ 74 Pa. Commw. Page 436]

This is an appeal by John F. McCloskey (Commissioner)*fn1 and the City of Philadelphia (City), and a cross-appeal by Independence Cablevision Corporation (Independence) from a Philadelphia County Common Pleas Court order. We affirm in part and reverse in part.

Facts and Procedure

In June, 1982, City Council adopted "An Ordinance Providing for the establishment within the city of Philadelphia of Cable Communication System (CATV) service" (Ordinance). The Ordinance directed the Commissioner to solicit and initially review, subject to the competitive bidding provisions of the Philadelphia Home Rule Charter,*fn2 proposals for the franchising of

[ 74 Pa. Commw. Page 437]

    cable television in each of four designated franchise areas. The Commissioner issued a Request for Proposal (RFP) which established December 22, 1982, as the bid submission deadline. Independence, a 100% minority-owned and managed television cable company, submitted separate proposals for Areas 2 and 3, but had included in the Area 3 proposal a blank copy of the RFP's "Form G: Financial Pro Forma" (Form G).*fn3

After preliminary review, CTIC Associates*fn4 advised the Commissioner that, due to the absence of a completed Form G, Independence's Area 3 proposal was non-responsive to both the Ordinance and the RFP, and consequently any meaningful evaluation thereof was impossible. Although not officially informed of any deficiency in its bid,*fn5 Independence hand-delivered the completed Form G to the Commissioner on March 2, 1983. On March 4, 1983, the Commissioner notified Independence by letter:

(1) that its Area 3 proposal was submitted without a completed Form G;*fn6

(2) that Form G was a material and important element of the proposal;

(3) that the late submission of a completed Form G was an attempt to "substantively

[ 74 Pa. Commw. Page 438]

    amend" the proposal, a procedure prohibited by the RFP; and

(4) that the failure to include a completed Form G constituted a "material and non-waivable defect" mandating the proposal's disqualification from further consideration.

On March 22, 1983, Independence filed suit in common pleas court to enjoin the City from holding public hearings on the other Area 3 proposals*fn7 and from proceeding further with an Area 3 franchise award until the merits of Independence's disqualification could be reviewed judicially. On April 6, 1983, Judge Stanley M. Greenberg concluded that Form G's submission was not mandated by the RFP and issued a preliminary injunction requiring the City to reinstate Independence's proposal for further evaluation. The trial court, however, did not permit Independence to submit a completed Form G. The City appeals that part of the order requiring it to process further the proposal and, on April 8, 1983, Judge Greenberg vacated the automatic supersedeas provided under Pa. R.A.P. 1736(b) to a political subdivision on appeal. On April 22, 1983, this Court granted the City's petition to suspend the injunction pending appeal. Independence appeals that portion of the trial court's order which did not permit the late submission of a completed Form G. The appeals were consolidated for argument and disposition.

Issues

There are two issues for resolution:

(1) whether the absence of a completed Form G from Independence's Area 3 proposal requires the outright rejection of that proposal; and

[ 74 Pa. Commw. Page 439]

(2) whether the late submission of a completed Form G constitutes a "substantive amendment" under the RFP and thus cannot be accepted legally by the City.

Discussion

We preface our discussion with an acknowledged appreciation for the complexity and uniqueness of this situation. Due to the expenditure of public funds in the execution of a government contract, the courts traditionally have respected and preserved the sanctity of the competitive bidding process. Laws requiring the competitive bidding of public contracts serve "the purpose of inviting competition, to guard against favoritism, improvidence, extravagance, fraud and corruption in the awarding of municipal contracts. . . ." Conduit and Foundation Corp. v. City of Philadelphia, 41 Pa. Commonwealth Ct. 641, 646, 401 A.2d 376, 379 (1979). On the other hand, if the public wealth is to be expended prudently and honestly, and if the integrity of the bidding process is to be maintained, the bidders must be treated fairly and cannot be excluded unduly from participation. Although guided by well-entrenched legal and public-policy tenets, a court must avoid the mechanical application of these principles without close reference to the underlying facts and applicable legislation, and without balancing the harm of excluding the bidder against the effects of permitting his continued participation. With this in mind, we now examine the issues.

I

The City contends that the inclusion of a completed Form G in a proposal is required by both the Ordinance and the RFP and, thus, the absence of the completed form in the original submission mandates the outright rejection of Independence's bid.

[ 74 Pa. Commw. Page 440]

We appreciate the significance of the information contained on Form G.*fn8 An evaluation of a bidder's financial capability, as demonstrated by Form G, is indeed a vital component in the overall review process. Without the requested data, the City would not be able to determine a proposal's financial viability in relation to its technical design and proposed provision of service.

We disagree, however, that Independence's failure to include the completed form in its original submission mandates the peremptory rejection of its bid. Neither the Ordinance nor the RFP affirmatively provides that a bid will be rejected for failure to include a completed Form G in its original submission. The RFP advises prospective bidders that "[e]vasive, imprecise or incomplete responses can only serve to disadvantage the applicant,"*fn9 but there is no provision requiring the summary rejection of a deficient proposal.

Thus, we conclude that, although the information contained on Form G is necessary to enable the City to thoroughly and completely review Independence's proposal, the absence of the completed form does not require that the proposal be rejected at this time.*fn10

[ 74 Pa. Commw. Page 441]

    advantage in Independence's favor may exist.*fn12 If Independence is now permitted to submit a completed Form G, the benefits of any potential competitive advantage must be purged. Thus, in addition to allowing Independence to submit a completed Form G for Area 3 within ten (10) working days of the filing of this decision, we order the City to notify immediately all other applicants for the Area 3 franchise that they have the opportunity to submit a revised Form G within the same time period.*fn13 This will maintain the integrity of open and fair competitive bidding and also will permit the City, without substantial delay, to continue processing the proposals so that the primary legislative intent underlying the Ordinance will be realized, to wit, that the citizens of Philadelphia will be provided with a state-of-the-art Cable Communication System service.*fn14

[ 74 Pa. Commw. Page 443]

Conclusion

We cannot emphasize enough the unique character of this case,*fn15 and we hold that under no circumstances (except a precise factual posture) is this precedential. In an area of law that demands meticulous attention to

[ 74 Pa. Commw. Page 444]

    particular circumstances, the courts must weigh carefully the preservation of the competitive bidding process against the right of an individual to bid freely on public contracts. Only when these two components are balanced properly will the public interest be best served. Having undertaken this painstaking process, we conclude that the public interest will be best served by permitting Independence to submit its completed Form G in accordance with this Opinion, and by providing the opportunity to the other Area 3 applicants to resubmit their respective Form G documentation.

Affirmed in part and reversed in part.*fn16

Order

That part of the Philadelphia County Common Pleas Court order, No. 4019 March Term, 1983, dated April 6, 1983, requiring John F. McCloskey to rescind the rejection of Independence Cablevision Corporation's (Cablevision) Area 3 proposal and to accept said proposal for processing is hereby affirmed. However, that part of the Common Pleas Court order prohibiting

[ 74 Pa. Commw. Page 445]

Cablevision from submitting a completed "Form G: Financial Pro Forma" is hereby reversed. Cablevision is hereby permitted to submit a completed Form G within ten (10) working days of the filing of this Order. Additionally, John F. McCloskey is hereby ordered to notify immediately all other bidders who have heretofore submitted proposals for the Area 3 franchise that they have the opportunity to revise and resubmit their respective Forms G within ten (10) working days of the filing of this Order.

Disposition

Affirmed in part and reversed in part.


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