Ronkonkoma, New York – Quanta Services has initiated a lawsuit in State Supreme Court, contesting the Long Island Power Authority’s (LIPA) decision to reject its bid for operating the Long Island electric grid. Quanta claims the move is unlawful and is seeking a court order to prevent LIPA from awarding the contract to PSEG Long Island.
The lawsuit marks another effort by Quanta, a Houston-based firm, to overturn LIPA’s board decision made in April. Despite a strong recommendation from an internal committee advocating for Quanta’s contract award, LIPA’s board ultimately opted for PSEG. This decision came despite reports indicating that PSEG’s proposal did not meet certain basic requirements.
Quanta’s legal action could complicate negotiations between LIPA and PSEG concerning a contract extension that may last up to five years. An announcement regarding this agreement is anticipated at a LIPA board meeting set for next week. PSEG has been responsible for operating the electric grid for LIPA since 2014, with their current contract set to expire at the end of the year.
LIPA spokeswoman Jen Hayden stated that the authority does not comment on ongoing litigation. Quanta’s representatives have also refrained from making public statements regarding the suit.
In its filing, Quanta is requesting not only an injunction to halt the contract award process but also a court declaration that LIPA’s May decision to terminate the bidding process is “void and unlawful.” Furthermore, Quanta seeks expedited access to specific documents and communications from LIPA that it says are pertinent to the case but have not yet been provided.
The lawsuit articulates concerns that go beyond mere contractual issues, emphasizing the significance of fair competition and accountability within LIPA’s Request for Proposals (RFP) process. Quanta’s suit argues that the board’s actions have undermined public confidence and fairness, highlighting what it deems an abuse of discretion by LIPA.
Adding complexity to the situation, a state Inspector General’s inquiry into LIPA is reportedly underway. This investigation coincides with an internal ethics evaluation initiated by a law firm recently hired by LIPA in light of an ethics complaint involving individuals associated with the bidding process.
Quanta entered this bidding episode under the impression that the process would be equitable. However, the lawsuit describes the outcome as heavily flawed, reflecting a sentiment echoed by former LIPA board members, who have characterized the situation as tragic and in need of urgent rectification.
Key figures within LIPA had previously supported Quanta’s bid, including John Rhodes, the former chairman of the Public Service Commission, who was part of the internal committee that recommended Quanta’s selection. He has since been succeeded by Carrie Meek Gallagher.
Despite the committee’s findings highlighting Quanta’s qualifications and operational capabilities, six board members, most of whom were appointed by Governor Kathy Hochul, opted to reject Quanta’s proposal. They cited various concerns, including reported issues with Quanta’s prior management of the Puerto Rican electrical grid.
The rejection was also linked to the stock ownership of a procurement committee member in Quanta, but the firm contends that the rationale for the board’s decision was not only unjustified but also hastily conjured. These points were raised in the lawsuit, which also lists the board members involved in voting against Quanta.
Meanwhile, a newly formed committee, now inclusive of three LIPA board members, is set to negotiate with PSEG regarding its contract. Even if an agreement is reached next week, the final contract will still require reviews by the state Attorney General and Comptroller before it can be finalized.
In pursuing its case, Quanta has expressed concerns regarding how misinformation about its operations in Puerto Rico influenced LIPA’s decision-making process, alleging that some evaluations lacked clarity and transparency. The company has called upon LIPA to respond to an exhaustive request for information, which includes various documents related to the procurement process and the board’s interactions.
As of summer, Quanta reported that it had yet to receive meaningful responses from LIPA officials, including a lack of outreach from the governor’s office after the company sought intervention in the matter.
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