School corporation’s renovation of building violated public bidding laws

The Indiana Court of Appeals ruled Wednesday that the Evansville Vanderburgh School Corporation’s renovation of a building to be used to house all administrative offices violated the state’s Public Bidding Laws.

In Alva Electric, Inc., Arc Construction Co., Inc., Danco Construction, Inc., Deig Brothers Lumber & Construction Co., Inc., et al. v. Evansville Vanderburgh School Corp., and EVSC Foundation, Inc., 82A01-1201-PL-2, several contractors sued – as taxpayers and as contractors – the school corporation and the nonprofit EVSC Foundation, claiming the school corporation’s renovation of an administration building should have been subject to the competitive bidding procedures required for a public work project under Indiana Code 36-1-12-4 and that the actions taken to accomplish the renovation constituted an antitrust violation under Indiana Code 24-1-2-3.

The school corporation wanted to renovate a warehouse into administrative offices and did not open the renovation process up to contractors for public bidding. Instead, through a series of transactions with the EVSC Foundation, it sold the building to the foundation and later purchased it back. Since the foundation is a nonprofit, it was not subject to the public bidding laws.

The trial court ruled in favor of the school corporation and foundation.

Judges James Kirsch and Rudy Pyle III reversed, finding that the school corporation under statute had to provide public notice and public bidding for the construction or renovation of the school property, or if it wanted to proceed under the lease-purchase agreement statutes, the school corporation had to hold a public meeting on the terms of the lease and submit plans to state agencies for approval. None of those events happened.

“…[the] School Corporation ‘selected a contractor to renovate a public building according to plans prepared by an architect selected by the School and fully intended to pay for the project and in fact is paying for the project with public funds, without following the public bidding laws,’” Kirsch wrote. “This scheme has not been authorized by our General Assembly and, indeed, violates the public bidding laws that it has enacted.”

The judges vacated the summary judgment and ordered further proceedings on the matter.

Judge Ezra Friedlander dissented, believing the actions of the school corporation and foundation were lawful and not subject to the competitive bidding procedures.

“I am unconvinced that the series of concededly lawful transactions at issue in this case adds up to a violation of the Public Bidding Laws or the Antitrust Act,” he wrote.

“Moreover, I believe that today’s opinion creates uncertainty for private foundations regarding the extent of support they may provide for public educational institutions before becoming subject to Public Bidding Laws.”