IN RE: HELLMAN ELECTRIC LLC et al. (2026)

Judgment (denominated an order), Supreme Court, New York County (Gerald Lebovits, J.), entered on or about January 14, 2026, which granted the cross-motion of respondents to dismiss the petition to annul the November 18, 2025 determination of respondent agency the City of New York Department of Transit (DOT) to renew petitioners' procurement contracts without considering whether petitioners' prices were still fair and reasonable, and dismissed the proceeding brought pursuant to CPLR article 78, unanimously affirmed, without costs.  Order, same court and Justice, entered on or about June 1, 2026, which, upon granting petitioners' motion for leave to reargue, adhered to the prior determination, unanimously affirmed, without costs.

Petitioners won a competitive bidding process for the installation of accessible pedestrian signals at crosswalks throughout the City. Their selection necessarily entailed a finding that their proposed price was “fair and reasonable” in comparison to other bid proposals (9 RCNY 2–06;  see 9 RCNY 1–01).  The resulting contracts granted the DOT the option to renew for one year on the same terms, conditions, and prices, in conformity with the City of New York Procurement Policy Board Rules (the PPB Rules), which were the governing regulations, defining contract renewal as “re-registration of previous contracts with the same vendor, with substantially unchanged terms and conditions, but possibly revised quantities, lists, or schedules or items to be supplied” (9 RCNY 4–04[a] ).

The DOT's exercise of its option to renew the contracts was not arbitrary and capricious or affected by an error of law (CPLR 7803[3];  see Matter of Pell v Board of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County, 34 NY2d 222, 231 [1974] ).  As relevant here, the renewal process differs from competitive bidding in that a fair reasonable determination is not categorically required.  Specifically, agency personnel's recommendation for renewal “shall include ․ all applicable determinations called for by these Rules, including a determination, if applicable, that the prices set forth in the contract are still fair and reasonable” (9 RCNY 4–04[c][17] ).  Petitioners contend that the referenced still-fair-and-reasonable determination is always applicable, unless the agency has already decided not to hold the vendor to its original pricing.  However, this interpretation removes their proposed exception from the definition of renewal by substantially altering the terms and conditions and essentially reads the phrase “if applicable” out of the regulation altogether (see Matter of Lemma v Nassau County Police Officer Indem. Bd., 31 NY3d 523, 529 [2018] ).

We find the DOT's interpretation that the requirement is applicable where there was no initial competitive bidding process, either because only one bid was submitted or where there was only one source for the required goods or services, to be rational (see 9 RCNY 3–02[q], 3–05).  In such situations, determining whether the contract price is still fair and reasonable protects the public fisc from renewals upon inflated pricing where there were no price comparators at the time of procurement (see Matter of AAA Carting & Rubbish Removal, Inc. v Town of Southeast, 17 NY3d 136, 142 [2011] ).

Contrary to petitioners' contention, PPB Rule 4–04(c)(17) is not designed to protect them from having to accept prices during renewal periods that they themselves set, having been aware of the DOT's contractual option to renew when bidding.  The laws and regulations governing procurement “were not enacted to help enrich the corporate bidders but, rather were intended for the benefit of the taxpayers” (Matter of Conduit & Found. Corp. v Metropolitan Transp.  Auth., 66 NY2d 144, 148 [1985];  see General Municipal Law § 103[1];  NYC Charter § 313[b][2];  9 RCNY 1–03[a][1][i] ).  Thus, the governing authority must “be construed and administered with sole reference to the public interest” (Matter of Conduit & Found.  Corp., 66 NY2d at 148).

We have considered petitioners' remaining contentions and find them unavailing.