Dynacon, Inc. v. D & S CONTRACTING, INC.

899 P.2d 613, 120 N.M. 170
CourtNew Mexico Court of Appeals
DecidedJune 2, 1995
Docket15,702
StatusPublished
Cited by8 cases

This text of 899 P.2d 613 (Dynacon, Inc. v. D & S CONTRACTING, INC.) is published on Counsel Stack Legal Research, covering New Mexico Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dynacon, Inc. v. D & S CONTRACTING, INC., 899 P.2d 613, 120 N.M. 170 (N.M. Ct. App. 1995).

Opinion

OPINION

HARTZ, Judge.

D & S Contracting, Inc., (Contractor) appeals a summary judgment holding that it could not substitute roofing subcontractors on a public works contract. This appeal presents our first opportunity to interpret New Mexico’s Subcontractors Fair Practices Act (the Act), NMSA 1978, §§ 13-4-31 to -43 (Repl.Pamp.1992). By requiring prime contractors who bid on a public works project to disclose the subcontractors they will use on the project, the Act restricts the practices known as bid shopping and bid peddling. “Bid shopping is the use of the low bid already received by the general contractor to pressure other subcontractors into submitting even lower bids. Bid peddling, conversely, is an attempt by a subcontractor to undercut known bids already submitted to the general contractor in order to procure the job.” Southern Cal. Acoustics Co. v. C.V. Holder, Inc., 71 Cal.2d 719, 79 Cal.Rptr. 319, 325 n. 7, 456 P.2d 975, 981 n. 7 (1969) (en banc).

These practices have been widely condemned as contrary to the interests of both subcontractors and the public. See id.; In re Beers Constr. Co., 43 Comp.Gen. 206, 207 (1968) (General Services Administration has reported that bid shopping results in selection of subcontractors of questionable competence and responsibility and detracts from a truly competitive market among subcontractors, thus imposing greater costs on the government). Our legislature has expressed its condemnation in Section 13-4-32, which states:

The legislature finds that the practices of bid shopping and bid peddling in connection with the construction, alteration and repair of public works projects often result in poor quality of material and workmanship to the detriment of the public, deprive the public of the frill benefits of fair competition. among contractors and subcontractors and lead to insolvencies and loss of wages to employees.

The Act precludes bid shopping and peddling after a contract is awarded by providing that (1) the prime contractor must list in its bid the subcontractors who will be working on the project and (2) the prime contractor then must use the listed subcontractors except in certain enumerated circumstances. The listing requirement is set forth in Section 13-4C34, which states:

A. Any using agency [1] taking bids for any public works construction project shall provide in the bidding documents prepared for that project a listing threshold which shall be five thousand dollars ($5,000) or one-half of one percent of the architect’s or engineer’s estimate of the total project cost, whichever is greater. Any person submitting a bid shall in his bid set forth:
(1) the name and location of the place of business of each subcontractor under subcontract to the contractor [2] who will perform work or labor or render service to the contractor in or about the construction of the public works construction project in an amount in excess of the listing threshold; and
(2) the nature of the work which will be done by each subcontractor. The contractor shall list only one subcontractor for each category as defined by the contractor in his bid.
B. A bid submitted by any person which fails to comply with the provisions of Subsection A of this section is a non-responsive bid which shall not be accepted by a using agency.

Section 13-4-36 governs substitution of subcontractors. It reads:

A. No contractor whose bid is accepted shall substitute any person as subcontractor in place of the subcontractor listed in the original bid, except that the using agency shall consent to the substitution of another person as a subcontractor in the following circumstances:
(1) when the subcontractor listed in the bid, after having had a reasonable opportunity to do so, fails or refuses to execute a written contract, when such written contract, based upon the general terms, conditions, plans and specifications for the project involved and the terms of such subcontractor’s written bid, is presented to him by the contractor;
(2) when the listed subcontractor becomes bankrupt or insolvent;
(3) when the listed subcontractor fails or refuses to perform his subcontract;
(4) when the contractor demonstrates to the using agency or its duly authorized officer that the name of the subcontractor was listed as the result of an inadvertent clerical error;
(5) when a bid alternate accepted by the using agency causes the original low subcontractor’s bid not to be low;
(6) when the contractor can substantiate to the using agency that a listed subcontractor’s bid is incomplete; or
. (7) when the listed subcontractor fails or refuses to meet the bond requirements of the contractor.
B. Prior to approval of the contractor’s request for such substitution, the using agency shall give notice in writing to the listed subcontractor of the contractor’s request to substitute and of the reasons for such request. Such notice shall be served by certified or registered mail to the last known address of the subcontractor. The listed subcontractor who has been so notified has five working days within which to submit written objections to the substitution to the using agency! Failure to file such written objections shall constitute the listed subcontractor’s consent to the substitution. If written objections are filed, the using agency shall give at least five working days notice in writing to the listed subcontractor of a hearing by the using agency on the contractor’s request for substitution.
C. No contractor whose bid is accepted shall permit any such subcontract to be voluntarily assigned or transferred or allow it to be performed by anyone other than the original subcontractor listed in the original bid without the consent of the using agency.
D. No contractor whose bid is accepted, other than in the performance of change orders causing changes or deviations from the original contract, shall sublet or subcontract any portion of the work in excess of the listing threshold as to which his original bid did not designate a subcontractor unless the contractor fails to receive a bid for a category of work. Under such circumstances, the contractor may subcontract. The contractor shall designate on the listing form that no bid was received.

A listed subcontractor who is replaced in violation of the Act may sue in district court for damages, an injunction, or other relief. Section 13-4-41(D).

I. FACTUAL BACKGROUND

The material facts are undisputed.

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Cite This Page — Counsel Stack

Bluebook (online)
899 P.2d 613, 120 N.M. 170, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dynacon-inc-v-d-s-contracting-inc-nmctapp-1995.