The opinion of the court was delivered by: HANNUM
This action arises from the October 11, 1985 award of the general construction contract on the Thomas Alva Edison High School and Technical Center project (Edison project) by defendant Board of Education to defendant J.J. White, Inc. (White) instead of to plaintiff Thomas P. Carney, Inc. (Carney). The plaintiffs, Carney, Anastasi Brothers Corporation (Anastasi) and Peter F. Schenck, allege that the defendant Board of Education rejected Carney's bid because it failed to meet the affirmative action requirements set forth at Section 14, paragraph II of the contract specifications. Plaintiffs concede that Carney's bid was not in compliance with the affirmative action requirements, but challenge the Board of Education's general construction contract award on the ground that the Board of Education violated Section 751 of the School Code of 1949, 24 P.S. § 7-751, by not awarding the general construction contract on the Edison project in a reasonable, non-discriminatory fashion to the lowest responsible bidder.
There is no dispute that Carney's bid was the lowest of the four bids submitted.
The plaintiffs seek injunctive relief from the Court which would prohibit White from continuing to work on the Edison project and would direct the defendant School District of Philadelphia to proceed with the Edison project as if Carney had been awarded the general construction contract. The defendants assert the equitable defenses of laches and unclean hands and contend that a preliminary injunction is not warranted because: (1) Carney's bid was materially non-responsive to the requirements of the bidding specifications; (2) the affirmative action requirements are not violative of Section 751 of the School Code of 1949; and (3) the harm that the public will suffer if the Court grants the plaintiffs the relief they seek outweighs any potential injury to the plaintiffs. The defendants also assert that the Court does not have the authority to award the general construction contract on the Edison project to Carney and that the plaintiffs have an adequate remedy at law.
This Court held a preliminary injunction hearing on December 18, 19, 20 and 23, 1985. Subsequent to the hearing, the parties submitted proposed findings of fact and conclusions of law as well as additional reply briefs. Following oral argument on February 14, 1986, the parties filed additional briefs as required by the Court. For the reasons developed in this Memorandum, the Court will not grant the plaintiffs the relief they seek.
On December 19, 1983, the Board of Education passed a resolution requesting the Superintendent of Schools to present to it a final report in June of 1987 with "definite recommendations regarding awarding of contracts to minority and female owned business." The resolution further provided that:
pending receipt of the final report from the Superintendent, the Board of Education will implement an interim measure establishing goals similar to that of the City of Philadelphia for the participation of minority and female owned businesses in the awarding of School District contracts for construction. . . . [and] direct the Superintendent to establish practices and procedures necessary for implementation of the interim plan including, but not limited to, developing reasonable waiver provisions for contracts and classes of contracts in appropriate circumstances.
a substantive criterion of compliance of all bid submissions for construction, including architectural and engineering services, in excess of $200,000 shall be the inclusion of a MINORITY AND FEMALE BUSINESS SUBCONTRACTING PLAN, whereby minorities shall be guaranteed subcontracting opportunities equal to no less than fifteen per centum (15%) of the value of the award, and whereby females shall be guaranteed subcontracting opportunities equal to no less than ten per centum (10%) of the value of the award.
On August 2, 1985, the School District began advertising for bids on the five contracts to be awarded in connection with the construction of the Edison Project. The Invitation to Bid contained a section titled Affirmative Action which included the following pertinent contract specifications:
The following paragraph is hereby a requirement of this bid specification and your [sic] are cautioned THAT FAILURE TO COMPLY AT THE TIME OF BID SUBMISSION WILL LEAD TO REJECTION OF YOUR BID.
AFFIRMATIVE ACTION REQUIREMENT
I. It is the policy of the Board of Education, School District of Philadelphia, that business owned and controlled by minorities and women shall have the maximum practicable opportunity to participate in the performance of all types of contracts let by the School District of Philadelphia.
The Contractor hereby agrees to carry out this policy in the awarding of subcontracts to the fullest extent consistent with the efficient performance of this contract. The contractor further agrees (1) to comply with any and all affirmative action requirements imposed pursuant to this contract; and, (2) to cooperate in any studies or surveys as may be conducted by the Board of Education, School District of Philadelphia, as may be necessary to determine the extent of the contractor's compliance with this notice clause.
The Contractor understands and agrees that failure to comply with any and all affirmative action requirements may result in rejection of the contractor's bid for nonresponsiveness.
II. CONSTRUCTION CONTRACTS IN EXCESS OF $200,000.00
THAT A MATERIAL ELEMENT OF COMPLIANCE FOR BID SUBMISSION OF THIS REQUIREMENT IS THE INCLUSION OF A MINORITY AND FEMALE BUSINESS SUBCONTRACTING PLAN WHEREBY MINORITY AND FEMALE OWNED AND OPERATED BUSINESSES SHALL BE GUARANTEED SUBCONTRACTING OPPORTUNITIES EQUAL TO NO LESS THAN FIFTEEN PER CENTUM (15%) FOR MINORITY BUSINESS CONCERNS, AND TEN PER CENTUM (10%) FOR FEMALE BUSINESS CONCERNS OF THE VALUE OF THE BID SUBMISSION.
(emphasis in original). The Invitation to Bid also contained a provision by which a bidder could request a waiver of the inclusion of a minority and female business subcontracting plan if it was unable to identify applicable subcontractors. On September 6, 1985, however, the School District issued Addendum No. 5 in which it clarified the waiver provision by providing that "no waivers of the sub-contracting requirement will be granted."
On September 19, 1985, Carney, White and two other contractors submitted sealed, written bids for the general construction contract on the Edison project. All four bids were higher than the architect's estimate of $18,570,200 and the construction program manager's estimate of $19,924,096. The base proposal amounts for the four bids ranged from Carney's bid of $22,267,706 to Curtis T. Bedwell & Sons, Inc.'s bid of $25,000,000. White's bid was $ 23,400,000 and the other contractor, R.M. Shoemaker Company, submitted a bid of $22,525,000. Although Carney's bid was the lowest, its proposal did not contain a minority and female business subcontracting plan which guaranteed that female-owned and operated businesses would receive subcontracting opportunities equal to 10% of the value of the bid submission.
White's proposal, however, did comply with the affirmative action requirement.
The Board of Education met at a special board conference on October 11, 1985 to discuss the Edison Project. Prior to the conference, the Board's members received a memorandum which described three options with respect to the general construction contract. At the conference, Sally Akan, Esquire, general counsel to the Board of Education and preparer of the memorandum, explained the three options. The first option was to reject all bids and invite new bids. Akan, Esquire, described this option as presenting no significant legal risk, but noted that it carried the risk of delay in the progress and completion of the project and the potential for increased costs. David Sonnenthal, a School District architect in charge of overseeing bidding for and implementation of construction projects, commented that adoption of the first option would push the occupancy date from the planned date of January of 1988 to September of 1988, with no assurance of better prices and with increased administrative costs.
The remaining two options were to award the general construction contract to either White or Carney. The second option proposed by Akan, Esquire, was to award the general construction contract to White on the grounds that it submitted the lowest bid "meeting all conditions of bidder responsibility and responsiveness to the specifications." With respect to this option, Akan, Esquire, explained that there might be a challenge to an award which rejected lower bids in favor of a higher bid that was the lowest bid to meet the affirmative action requirement on the ground that the affirmative action requirement was illegal. She opined that the outcome of such an action could not be predicted with any confidence because of the lack of precedent in Pennsylvania, but that "as a practical matter, the likelihood of a suit on the basis may be relatively low because such a case is likely to be lengthy and costly." The final option was to award the general construction contract to Carney, the lowest bidder, on the ground that its submission "meets the conditions of bidder responsibility, and bid responsiveness, despite failing to comply with bid specifications as to subcontracting with minority and women-owned businesses." This option was described by Akan, Esquire, as probably presenting the highest risk of legal challenge because in her opinion the bid documents did not allow the Board of Education to waive the affirmative action requirements.
Following the special board conference and a private session, the Board of Education held a special meeting at which it considered three resolutions drafted by Akan, Esquire, which corresponded to the three options, previously described by her. The Board of Education unanimously defeated a resolution which provided for the rejection of all bids on the five prime contracts and solicitation of new bids, and by a vote of eight to one it defeated a resolution which provided that the general construction contract be awarded to Carney. The Board, also by a eight to one margin, adopted a resolution awarding the general construction contract to White.
Carney initially retained Stephen B. Harris, Esquire, to represent it and on October 23, 1985, he wrote to Akan, Esquire, to inform her that Carney had "decided to bring a taxpayers['] suit against the School District of Philadelphia seeking an injunction preventing the award of the general contract to anyone other than Thomas P. Carney, Inc., or in the alternative, to have the contract rebidded [sic]." On October 31, 1985, the Director of Design and Engineering Services for the School District issued a Notice to Proceed to White. White was on the construction site as of November 1, 1985.
The plaintiff instituted this action on November 12, 1985 by filing a complaint and motion for a temporary restraining order. After receiving the defendant's response to plaintiff's motion and hearing argument from counsel for all parties, this Court denied plaintiff's motion on November 13, 1985 and set December 18, 1985, a date agreed upon by all counsel, as the date to commence a preliminary injunction hearing.
During the four day preliminary injunction hearing, the Court heard testimony from plaintiff Peter Schenck; Fred Chiarlenza, an executive vice-president of plaintiff Anastasi Brothers Corporation; John Carney, a vice-president of Carney; Richard Vanden Bosche, an expert on Critical Path Management scheduling; Dr. Samuel Beard, the executive assistant for school operations for the School District; David Sonnenthal, the project architect for the School District supervising the design of the Edison project; Joseph Trunkwalter, a general construction manager for White; and Clifford Thalwitzer, a construction manager for White. The evidence presented by these witnesses can be categorized into the following four topics: (1) the identity of the plaintiffs; (2) the background of the affirmative action requirement and of this action as previously related in this Memorandum; (3) the progress of the Edison project's construction and the ...