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Dunnet Bay Construction Co. v. Hannig

March 25, 2010

DUNNET BAY CONSTRUCTION COMPANY, AN ILLINOIS CORPORATION, PLAINTIFF,
v.
GARY HANNIG, IN HIS OFFICIAL CAPACITY AS SECRETARY OF TRANSPORTATION FOR THE ILLINOIS DEPARTMENT OF TRANSPORTATION, DEFENDANT.



The opinion of the court was delivered by: Jeanne E. Scott, U.S. District Judge

OPINION

This matter has come before the Court on Plaintiff Dunnet Bay Corporation's (Dunnet Bay) Amended Motion for Temporary Restraining Order (d/e 8). Dunnet Bay asks the Court to issue a temporary restraining order (TRO) to restrain Defendant Gary Hannig (Secretary), in his official capacity as Secretary of Transportation for the Illinois Department of Transportation (Department), from entering into a contract for repair work on the Eisenhower Expressway in Cook and DuPage Counties, Illinois. Dunnet Bay contends that the bid letting process violated its right to equal protection under the Fourteenth Amendment to the United States Constitution. As set forth below, Dunnet Bay fails to demonstrate a right to a TRO. The Motion is, therefore, denied.

STATEMENT OF FACTS On December 4, 2009, the Department issued an invitation for bids on Contract No. 60157 for repair work on the Eisenhower Expressway (Project). Amended Verified Complaint for Declaratory and Injunctive Relief (d/e 7) (Verified Complaint), ¶ 30. The announcement stated that the bids would be let on January 15, 2010. The Project was federally funded. The Department estimated the cost of the Project to be $9,092,000.00. Motion to Substitute Affidavit (d/e 12), attached Affidavit of Christine Reed (Reed Affidavit), ¶ 11. The Department also published the "IDOT For Bid List of Bidders" (List of Bidders) which listed the general contractors that would be expected to bid on the Project. The Department erroneously omitted Dunnet Bay from the List of Bidders. Verified Complaint, ¶ 38.

Pursuant to federal regulations, the bid specifications set a goal (DBE Goal) of the percentage of work going to contractors and subcontractors that fit the federal criteria for Disadvantaged Business Enterprises (DBE).

DBEs are businesses controlled by socially and economically disadvantaged individuals. See 49 C.F.R. §§ 26.5, 26.67; Northern Contracting, Inc. v. Illinois, 473 F.3d 715, 715 (7th Cir. 2007). Dunnet Bay did not fit the definition of a DBE. Dunnet Bay, thus, had to secure DBE subcontractors to meet the DBE Goal.

Dunnet Bay alleges that the DBE Goal for the Project was 8 percent originally, but was changed to 22 percent. Verified Complaint, ¶¶ 31-33. Dunnet Bay alleges that the increase to 22 percent was arbitrary and capricious and was not done in compliance with federal regulations. Id., ¶¶ 34-35. Christine Reed, the Director and Chief Engineer of the Department's Division of Highways, states that the Department followed its standard procedures for setting the 22 percent DBE Goal. Reed Affidavit, ¶ 7. Reed states that the procedures were approved by the United States Court of Appeals for the Seventh Circuit. Id. (citing Northern Contracting, Inc.).

Dunnet Bay submitted the low bid on the Project in the amount of $10,548,873.98. Dunnet Bay alleges that it made a good faith effort to meet the 22 percent DBE Goal, but could only secure 8 percent DBE participation in the bid. Verified Complaint, ¶ 38. The Department rejected Dunnet Bay's bid as non-responsive because of the failure to meet the DBE Goal.

Dunnet Bay asked for reconsideration because it alleges that it had made a good faith effort. The applicable regulations stated that the Department would issue a waiver of the DBE Goal requirement if the bidding contractor made a good faith effort to meet the DBE Goal set for the particular project. Id., ¶¶ 12, 18. Dunnet Bay presents evidence that the Department instituted an unwritten policy not to issue waivers regardless of whether contractors made good faith efforts to meet a DBE Goal (No Waiver Policy). On January 6, 2010, the Department's District 8 EEO officer announced at an informational meeting for general contractors that the Department would no longer grant waivers with respect to DBE contract goals. Amended Motion for Temporary Restraining Order (d/e 8), Exhibit A, Declaration of Gary Prough, ¶ 9. The Secretary personally told Dunnet Bay's President Tod Faerber that he was under pressure not to give out waivers. The Secretary further told Faerber that the Illinois Director of Diversity Enhancement called the Secretary every day to tell him not to give out any waivers. Verified Complaint, ¶ 46. Dunnet Bay argues that the No Waiver Policy effectively turned the DBE Goal into a rigid quota.

The Department held a reconsideration hearing before the Department's Chief of Staff Bill Grunloh. The Department denied reconsideration. Response to Plaintiff's Amended Motion for Temporary Restraining Order (d/e 11), attached Affidavit of Bill Grunloh (Grunloh Affidavit), ¶ 6. Dunnet Bay alleges that the Department denied reconsideration because of the No Waiver Policy. Grunloh states that he denied reconsideration because Dunnet Bay did not use all reasonable and available means to solicit DBEs. Grunloh Affidavit, ¶ 8.

Dunnet Bay's representative at the reconsideration hearing also complained that Dunnet Bay was left off the List of Bidders issued by the Department. Grunloh decided that the omission of Dunnet Bay from the List of Bidders tainted the process. The Department decided to re-let the bid to correct the omission of Dunnet Bay from the List of Bidders. Grunloh Affidavit, ¶¶11-13. The Department could still cancel the bid process at this stage of the process. 30 ILCS 500/20-40. The Department was also motivated to re-let the Project because all of the bids exceeded the Department's cost estimate. Reed Affidavit, ¶15.

The Department issued a new invitation for bids for the Project and included Dunnet Bay on the List of Bidders. The Department also modified the bid specifications for the Project in order to lower costs. Reed Affidavit, ¶¶ 16-17. The DBE Goal remained 22 percent, however. Id., ¶ 18. Dunnet Bay submitted a revised bid in the sum of $10,199,793.45. Id., ¶ 20. This time, Dunnet Bay exceeded the DBE Goal; Dunnet Bay had 23.18 percent DBE participation in its bid. Id., ¶ 20. This time, however, Dunnet Bay was the third lowest bidder. The lowest bidder was Albin Carlson & Co., with a bid of $9,637,998.74. Id., ¶ 19. The Albin Carlson & Co. bid had a DBE participation rate of 22.7 percent. Id., ¶ 19. The Department plans to enter into Contract No. 60157 for the Project with Albin Carlson & Co. on April 5, 2010.

ANALYSIS

Dunnet Bay asks the Court to restrain the Defendant Secretary from entering into Contract No. 60157 for the Project with the new low bidder Albin Carlson & Co. Dunnet Bay argues that the arbitrary DBE Goal set for the Project and the No Waiver Policy imposed an unconstitutional racial preference into the bid process in violation of Dunnet Bay's right to equal protection. The Secretary argues that Dunnet Bay lacks standing, that the Eleventh Amendment bars injunctive relief, and that Dunnet Bay has not established a right to a TRO. The Court will address the standing and Eleventh Amendment issues first, and then the elements of the TRO.

Dunnet Bay alleges a sufficient violation of its rights to establish standing. The elements of standing are: (1) an invasion of a legally protected interest that is concrete and particularized; (2) a causal connection between the injury and the conduct of which the plaintiff complains; and (3) a likelihood that the injury will be redressed by a favorable decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). In the context of government contracting, Dunnet Bay "need only demonstrate that it is able and ready to bid on contracts and that a discriminatory policy prevents it from doing so on an equal basis." Northeastern Florida Chapter of Associated General Contractors of America v. City of Jacksonville, Fla., 508 U.S. 656, 666 (1993). Dunnet Bay alleges that the Defendant set arbitrary goals ...


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