In its August 2013 decision in Matter of Staten Island Bus Inc. v. New York City Department of Education, the New York Supreme Court ruled against an incumbent bus operator that had challenged the New York Department of Education’s employee protection provisions. The incumbent operator argued that the provisions put it at a competitive disadvantage against other bidders who would not be subject to the requirements after the future validity of the provisions was cast into doubt by a New York Court of Appeal decision. The operator argued that the provisions, which dated back to a 1979 strike, should therefore be struck out of its existing contract in order to maintain even competition among operators in future bids. As the court noted:
Petitioners did not bid on any of the service routes covered by the December RFB. They claim that they were hobbled by the EPPs contained in their existing contracts, and that these EPPs would have required them to include higher labor costs in a bid for routes covered by the December 2013 RFB. Petitioners argue that these higher labor costs caused by the EPPs had this negative effect on the bids of incumbent venders who did bid on the December RFB. Petitioners assert that incumbent vendors were unable to submit competitive bids. It appears that only one vendor with another continuing contract with DOE was awarded any of the service classes included in the December RFB.
The court noted that the incumbent operator interpreted its current contracts as requiring it to maintain the employment protection provisions in future contracts with the Department of Education due to the phrase “or thereafter” contained in the provisions. The court disagreed with that interpretation, finding that:
The words “or thereafter” do not carry the heavy freight assigned to them by petitioners. The phrase says nothing about future contracts with the DOE. Any attempt to make the EPPs apply to future contracts would run athwart the public policy that governmental entities must be free to enter into contracts that address the changing needs of the public, the availability of public funds, and a host of other factors. As the Court of Appeals stated in Varsity Transit Inc. v Saporita (48 NY2d 767, 768):
[T]he inclusion of certain requirements in bid specifications contained in prior public contracts does not comprise an implied representation that similar requirements will be mandated with respect to subsequent contracts.The court therefore ruled against the incumbent operator, finding that it failed to make the case that it was being subject to a competitive disadvantage since it would not be required to maintain the employment protection provisions in future contracts unless those provisions were made part of the request for bids for all operators. As this case illustrates, the performance standards established under government contracts should be uniformly applied to ensure a level playing field between competing bidders.
