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Clearwater Construction, Inc. v. Northampton County General Purpose Authority

Commonwealth Court of Pennsylvania

July 10, 2017

Clearwater Construction, Inc. and Northampton County Bridge Partners, LLC, Appellants
v.
Northampton County General Purpose Authority, Northampton County Department of Community and Economic Development, and Kriger Construction, Inc.

          Argued: June 8, 2017

          BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge, HONORABLE JULIA K. HEARTHWAY, Judge, HONORABLE DAN PELLEGRINI, Senior Judge.

          OPINION

          RENÉE COHN JUBELIRER, Judge.

         Clearwater Construction, Inc. and Northampton County Bridge Partners, LLC (Clearwater, collectively) appeal from an October 3, 2016 Order of the Court of Common Pleas of Northampton County (common pleas), which found Clearwater lacked standing to challenge a contract awarded under the Public-Private Transportation Partnership Act (P3 Act), 74 Pa. C.S. §§ 9101-9124. Common pleas found that relief under Section 9109(n) of the P3 Act, 74 Pa. C.S. § 9109(n), was limited to a "development entity, " and Clearwater was not a "development entity" as defined by the P3 Act because it was not a party to a public-private partnership agreement. Finding no error in common pleas' interpretation of the P3 Act, we affirm.

         In April 2016, the Northampton County General Purpose Authority (Authority), on behalf of the Northampton County Department of Community and Economic Development (County), issued a Request for Proposals (RFP) for the Northampton County Bridge Renewal Program (Bridge Program), which called for replacement, rehabilitation, and/or maintenance of 33 bridges located in Northampton County. The RFP was issued under the P3 Act. Clearwater[1] and Kriger Construction, Inc. (Kriger) were among four offerors who responded to the RFP and submitted proposals. Ultimately, Kriger was selected to negotiate a public-private partnership agreement with the Authority to develop the Bridge Program.

         On September 19, 2016, Clearwater commenced this action by filing a Petition and Claim Pursuant to 74 Pa. C.S. § 9109(n) Protesting the Award of Government Contract (Petition), alleging multiple issues with the RFP process, as well as challenging Kriger's qualifications. On September 27, 2016, Clearwater also filed a Motion for a Preliminary Injunction. On September 28, 2016, the Authority filed Preliminary Objections to Clearwater's Petition, asserting Clearwater lacked standing to file the Petition because Clearwater is only an offeror.

         A hearing on the preliminary injunction request was scheduled for September 29, 2016, but common pleas initially heard argument on the preliminary objections because they raised a jurisdictional issue. Following oral argument and briefing, common pleas issued an Order on October 3, 2016, finding Clearwater lacked standing, denying Clearwater's motion for injunctive relief, and dismissing the action. This appeal followed.

         Whether a party that bids on a municipal project governed by the P3 Act but is ultimately not chosen for the project has standing to challenge the propriety of the selection process is a matter of first impression. The P3 Act is a lesser known and used procurement process, which our Court has only once before had occasion to address, albeit in the context of the Right-to-Know Law (RTKL).[2] See Dep't of Transp. v. Walsh/Granite JV, 149 A.3d 425 (Pa. Cmwlth. 2016). There, we compared the P3 Act with the better known Procurement Code (Code), 62 Pa. C.S. §§ 101-2311:

Under the Procurement Code, contracts are output-based, where the public sector owner identifies the exact outputs required through detailed specifications. Each phase of the project is procured separately and multiple contracts pertaining to that phase may be awarded. Contracts are awarded in stages: companies bid on the design; once the design is completed, a contract is awarded for construction; once construction is completed, it becomes the public entity's maintenance responsibility. Because the Procurement Code process is output-based, most of the risks associated with normal procurement contracts are assumed by the public sector entity. Usually, each project is financed directly by government through capital contributions or debt. . . .
The P3 [Act] presents an alternative method to [that] set forth in the Procurement Code to build or maintain public infrastructure. Under the P3 [Act], procurement of two or more of the project delivery phases can be integrated and those methods may involve anything from designing and constructing to operating, maintaining and financing the project. Moreover, P3 contracts have outcome-based specifications, meaning that the public sector owner specifies its requirements and the private sector partner determines the best way to meet them. Typically, in a P3 contract, the public sector partner would be responsible for securing its own financing, with the private sector partner financing the upfront capital costs and then recovering its investment over the term of the P3 agreement. Also, the private sector party assumes substantial financial, technical and operational risk, and a Public-Private Transportation Partnership Board was created to oversee the process and select P3 projects.

Id. at 430 (citations omitted).

         Under Section 9106 of the P3 Act, a public entity may solicit transportation projects through an RFP. 74 Pa. C.S. § 9106. Offerors submit a response, which is then evaluated by the public entity to determine if it is in the best interest of the public entity. Id. Here, the Authority, on behalf of the County, utilized this process to solicit bids for the Bridge Program. Clearwater submitted a bid but was not chosen. Unhappy with the selection made, Clearwater brought a claim under Section 9109(n) of the P3 Act. The trial court dismissed the claim, finding Clearwater lacked standing.

         "The core concept of standing is that 'a party who is not negatively affected by the matter he seeks to challenge is not aggrieved, and thus, has no right to obtain judicial resolution of his challenge.'" In re Milton Hershey School, 911 A.2d 1258, 1261 (Pa. 2006) (quoting City of Phila. v. Commonwealth, 838 A.2d 566, 577 (Pa. 2003)). Absent a statutory provision, a disappointed bidder lacks standing because he has no property interest in a public contract and, therefore, has suffered no injury that would entitle him to redress in court. Black Ash Servs., Inc. v. DuBois Area Sch. Dist., 764 A.2d 672, 674 (Pa. Cmwlth. 2000); James T. O'Hara, Inc. v. Borough of Moosic, 611 A.2d 1332, 1333 (Pa. Cmwlth. 1992); J.P. Mascaro & Sons, Inc. v. Bristol Twp., 505 A.2d 1071, 1073 (Pa. Cmwlth. 1986). A bidder that is an aggrieved taxpayer of the municipality awarding the contract has standing, however. Black Ash, 764 A.2d at 674.

         Clearwater maintains Section 9109(n) of the P3 Act provides a statutory basis for a disappointed bidder, such as itself, to challenge the ...


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