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decided: June 22, 1987.


Appeal from the Order of the Department of Transportation, Board of Review, in the case of In Re: Pennsylvania Department of Transportation v. Latrobe Road Construction Company, Inc., No. 003 Prequalification, Docket 85.


Donald J. Snyder, Jr., with him, B. Patrick Costello, Costello & Berk, for petitioner.

Gregory C. Santoro, Assistant Counsel, with him, Michael A. Finio, Spencer A. Manthorpe, Chief Counsel, and Jay C. Waldman, General Counsel, for respondent.

Judges Craig and Doyle, and Senior Judge Blatt, sitting as a panel of three. Opinion by Judge Blatt.

Author: Blatt

[ 107 Pa. Commw. Page 55]

Latrobe Road Construction, Inc. (petitioner) petitions for review of the order of the Board of Review (Board) of the Department of Transportation (Department) which affirmed the Department's three year suspension of the petitioner as a bidder on departmental contracts.

[ 107 Pa. Commw. Page 56]

The petitioner admits that, on August 27, 1984, it pled guilty in United States District Court to a Sherman Anti-Trust Act violation, 15 U.S.C. § 1, and that it paid a $100,000 fine as a result thereof. This plea arose from the conduct of the petitioner's estimator and corporate secretary, Mr. Rodkey, who, during the preparation of a bid on a Department contract (the contract), telephoned the president of a competitor to inquire if the competitor intended to bid on the contract. Upon being advised that the competitor had no such intention, Mr. Rodkey, acting on a belief that, if the petitioner were the only bidder, the contract would not be let, an assumption which is contradicted by the record in this case, requested the competitor's president to submit a "complementary" bid, higher than the petitioner's. The competitor's president agreed, and Mr. Rodkey revealed the petitioner's intended bid to the competitor. Mr. Rodkey then slightly lowered the petitioner's bid and submitted it to the Department. The competitor bid an amount slightly higher than the bid it expected the petitioner to submit. These were the only bids submitted on the contract and the contract was awarded to the petitioner. These events occurred in 1979. Neither Mr. Rodkey, nor any of the other corporate officers of the petitioner was individually charged in the criminal prosecution.

Due to the petitioner's conviction, the Department,*fn1 in a January 9, 1985 letter, notified the petitioner that it was suspended from bidding on Department work, that its Prequalification Certificate was revoked and that an application for reinstatement by the petitioner would

[ 107 Pa. Commw. Page 57]

    not be considered for three years from January 9, 1985, or until otherwise notified.*fn2

The petitioner appealed this determination to the Department's Prequalification Committee,*fn3 which, after what is described in the record before us as an informal hearing, i.e., a proceeding of which no record is made, affirmed the Department's actions. Upon the petitioner's further appeal, the Board*fn4 held a formal hearing, i.e., the hearing which generated the record in this matter. Thereafter, the Board rendered the written adjudication, which contained numerous and thorough findings of fact, the legal conclusions and the order*fn5 presently under review.

[ 107 Pa. Commw. Page 58]

The first question presented by the petitioner is whether or not the provisions of 67 Pa. Code, Chapter 457, Prequalification of Bidders, violate the due process requirements of the Fourteenth Amendment of the United States Constitution.

The petitioner's due process complaint cites the lack of a hearing prior to departmental prequalification suspensions or revocations. The petitioner also charges a due process violation on its allegation that the individual serving as the Board's chairman was also the individual over whose name the January 9, 1985 letter was sent, thereby impermissibly commingling the Department's prosecutorial and adjudicatory roles.

The Department responds, however, that the petitioner failed to raise these points before the Board and that, therefore, these arguments have been waived.

Pa. R.A.P. 1551 provides that, with respect to the review of quasijudicial orders, no question shall be heard on review which was not raised before the government unit. This bar extends to constitutional claims, which, as here, do not involve the validity of a statute. Long v. Unemployment Compensation Board of Review, 56 Pa. Commonwealth Ct. 174, 424 A.2d 587 (1981). And, inasmuch as our review of this record indicates that the petitioner failed to raise the foregoing questions before the Board, we must hold that these issues have been waived.

Next, the petitioner contends that the Department and the Board abused their discretion by imposing a three-year suspension and debarment.

The petitioner offers for our consideration a bifurcated argument, the first element of which is founded on the theory that the administrative action under review does not constitute a present evaluation of the petitioner's "responsibility" to perform work for the Commonwealth, but is, in reality, an unlawful punitive

[ 107 Pa. Commw. Page 59]

    measure. The petitioner attempts to support this theory by emphasizing that the underlying incident, the 1977 federal anti-trust violation, occurred approximately six years before the Department's action and that there is no evidence of a pattern of such conduct. Moreover, the petitioner stresses that the individual personally responsible for the anti-trust violation, Mr. Rodkey, has been removed from the post he held at the time of the violation and he is no longer involved in state contract bidding work.

The Department argues to the contrary that Section 404.1 of the State Highway Law*fn6 and the implementing regulations, 67 Pa. Code § 457.2(b)(3),*fn7 cloak the Department with broad powers to ensure the integrity of those bidding on its contracts, E. Smalis Painting Company, Inc. v. Department of Transportation, 70 Pa. Commonwealth Ct. 90, 452 A.2d 601 (1982), and that, under the Board's pertinent findings of fact, which are undisputed, even though the violation occurred in 1979, this illegal activity was not discovered until 1984 and that, while Mr. Rodkey was removed from his estimator position on February 28, 1985, such action came after the Department's January 9, 1985 suspension letter. Such circumstances, the Department argues, demonstrate that it did not abuse its discretion. We agree.

[ 107 Pa. Commw. Page 60]

We perceive no impropriety here or any inconsistency between the Department's statutory and regulatory obligations and its suspension order. We, therefore, reject this facet of the petitioner's argument.

The remaining element of the petitioner's abuse of discretion argument is that the suspension or debarment here imposed is beyond the Department's statutory authority to establish prequalification standards because Section 404.1 does not expressly empower the Department to establish punitive systems for violations of law.

It is true, of course, that an explicit grant of such authority is not present within the terms of Section 404.1. We believe, however, that the mandate to establish and maintain a system to qualify "competent and responsible bidders" which is found in Section 404.1 necessarily implies the creation of a disciplinary system to accomplish the legislature's intent.*fn8 We believe that this construction of Section 404.1 is consistent with our holding in E. Smalis and, inasmuch as we believe that the Department has acted within the bounds of its statutory and regulatory authority in imposing the suspension under review, we also believe that it did not abuse its discretion in so doing.

Accordingly, we will affirm the order of the Board.


And Now, this 22nd day of June, 1987, the order of the Board of Review of the Department of Transportation in the above-captioned matter is affirmed.



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