AEP Resources Service Co. v. Long Island Power Authority

179 Misc. 2d 639, 686 N.Y.S.2d 664, 1999 N.Y. Misc. LEXIS 23
CourtNew York Supreme Court
DecidedFebruary 1, 1999
StatusPublished
Cited by1 cases

This text of 179 Misc. 2d 639 (AEP Resources Service Co. v. Long Island Power Authority) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
AEP Resources Service Co. v. Long Island Power Authority, 179 Misc. 2d 639, 686 N.Y.S.2d 664, 1999 N.Y. Misc. LEXIS 23 (N.Y. Super. Ct. 1999).

Opinion

OPINION OF THE COURT

F. Dana Winslow, J.

In a proceeding pursuant to CPLR article 78, the petitioner [643]*643AEP Resources Service Company’s (AEP) application by way of order to show cause seeking an order annulling the award by the Long Island Power Authority (hereinafter LIPA) to Hydro-Quebec doing business as Transenergie US, Ltd. (hereinafter Transenergie), setting aside any contract entered into between LIPA and Transenergie pursuant to the foregoing award, directing LIPA to award the public contract to them, or in the alternative, directing LIPA to revise the request for proposals (RFP) to exclude the construction phase of this contract and, for a preliminary injunction pursuant to CPLR 7805 staying, during the pendency of this hybrid proceeding, all actions in furtherance of the contract, and directing certain disclosure, and examinations under oath, is determined as follows:

LIPA published a request for proposals dated January 14, 1998 for the evaluation, design and construction of an off-island electrical transmission system for Long Island. The RFP was composed of two parts: one required an evaluation of the technical, economic and environmental feasibility of an electrical transmission system connecting Long Island with the “grid” in New York and New England (the evaluation phase), and the other contemplated the development and construction of the subsea cable system for the transmission of power to Long Island from “off-island” sources (the construction phase). LIPA used a competitive bidding process which required all bidders to pay a $10,000 fee upon submission of a proposal, which was to be used to offset the costs of evaluating the proposals. The RFP required separate prices for each phase of the RFP, with LIPA reserving the right to award more than one evaluation phase contract.

LIPA’s intention was to investigate alternative off-island sources of energy and decide whether or not to proceed with the construction phase of the RFP. In the event that the construction phase were not pursued, LIPA would then reimburse the awardee(s) the cost of the evaluation portion of the contract but if it were, the evaluation fee would merge into the construction contract. If LIPA were to proceed with the construction phase of the contract, the awardee of the evaluation phase would also then be awarded the construction contract. The construction phase of the RFP contemplated a substantially greater cost then the evaluations, a cost of approximately 100 times greater than that of the evaluation phase. The evaluation awardee would be permitted to unilaterally decline the construction contract without damages if the [644]*644original construction cost, as determined in the evaluation, were in excess of the bid estimates. LIPA would then be free to pursue alternative awardees or award the contract for the increased costs.

Three bids were submitted in response to the RFP. The petitioner submitted what was facially the lowest bid, and the respondent Transenergie, which was awarded the contract, submitted a bid that was $7, $31, $40, or $46 million higher depending upon variables in the calculation. Both Transenergie and AEP were found to be responsible bidders, and both submitted proposals of approximately $2,000,000 for the evaluation phase of the contract. AEP submitted a proposal for the construction phase of the project totaling approximately $157,000,000 and the respondent Transenergie submitted a proposal ranging between $179,000,000 and $203,000,000. The proposals were not identical and each involved differences requiring considerable expertise to evaluate. The third response, although the bidder is not a party, bears consideration because of its extremes. ENRON bid $1 for the evaluation phase and approximately $407,000,000 for the construction phase.

AEP makes the following claims. First, that LIPA’s action was contrary to law, including Public Authorities Law § 1020-cc, which subjects LIPA to the requirements of General Municipal Law § 103 and the State Finance Law, and in turn to certain filing requirements with the New York State Attorney-General and the Public Authorities Control Board (hereinafter PACE). Second, that LIPA acted arbitrarily and capriciously in failing to award the contract to AEP, ostensibly the lowest bidder. Third, that LIPA illegally granted a right of first refusal for the construction phase of the contract to Transenergie. Fourth, that LIPA breached an implied contract in failing to invest a level of effort in its evaluation of AEP’s bid commensurate with the amount paid ($10,000).

As a consequence, AEP seeks (1) a preliminary and permanent injunction enjoining LIPA from awarding a contract under the RFP to any concern other than AEP and/or from allowing performance under any contract awarded under the RFP to any concern other than AEP; (2) a declaratory judgment that (a) LIPA’s award of the RFP to Transenergie was contrary to law, arbitrary and capricious and is null, (b) AEP is the only appropriate awardee, (c) Transenergie is disqualified from receiving an award under this RFP, (d) denies a right of first refusal to Transenergie to perform the construction phase of [645]*645the contract as unlawful and void, and (e) declares LIPA breached its implied contract with AEP to devote effort in the evaluation of AEP’s proposal commensurate with the $10,000 fee paid; (3) an order setting aside any award to Transenergie and directing LIPA to award a contract under the RFP to AEP, or, in the alternative, directing LIPA to revise the RFP, solicit new proposals and to reevaluate those offers consistent with the revised RFP, together with the costs of this action, including attorney’s fees and expenses. AEP also seeks a temporary restraining order prohibiting LIPA from executing a contract reflecting the award of the Transenergie bid. The court notes that an agreement was reached during oral argument, and subsequent thereto, to the effect that LIPA will not execute a contract with Transenergie for a stated period which coincides with the publication of this determination.

The respondents oppose AEP’s application for preliminary injunctive relief, contending that the RFP called for the performance of services involving special skills and professional training and thus was outside the scope of the competitive bidding statutes, that the evaluation was sound, rationally based and wholly supported by the record, and AEP cannot meet the requirements for the injunctive relief sought.

STANDING

As a preliminary matter, Transenergie contests AEP’s standing to challenge LIPA’s statutory power to contract without approval from the PACE and standing to challenge LIPA’s violation of State Finance Law § 112 for failing to obtain approval from the New York State Comptroller (Comptroller) on the grounds that AEP is a citizen of Ohio, not New York. While LIPA does not directly contest AEP’s standing to challenge the contract pursuant to General Municipal Law § 103, LIPA’s position that the .contract was, in essence, one for specialized professional services and that, as such, was not subject to General Municipal Law § 103, also presents a threshold issue for consideration.

While the court recognizes the importance placed upon the resolution of this project by the litigants and the potentially profound effects on the public likely to ensue therefrom, the determination regarding standing must be based on something more than that “an issue may be one of ‘vital public concern’ ” (Society of Plastics Indus. v County of Suffolk, 77 NY2d 761, 769).

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Andre v. City of New York
10 Misc. 3d 361 (New York Supreme Court, 2005)

Cite This Page — Counsel Stack

Bluebook (online)
179 Misc. 2d 639, 686 N.Y.S.2d 664, 1999 N.Y. Misc. LEXIS 23, Counsel Stack Legal Research, https://law.counselstack.com/opinion/aep-resources-service-co-v-long-island-power-authority-nysupct-1999.