Contract Law Case Study

Jilted Contractor

The unfortunate case of Cromuel Contractor is a sad one to read. This is said because the detailing of the events surrounding the contract bidding war seemed to show that Ridley was the clear winner and that BFE was the clear loser. Given that Cromuel was a subcontractor under the Ridley bid, that would seem to have been a boon for Cromuel. However, what ended up happening was basically the opposite. The end result was so diametrically opposed to what seemed to be the initial arrangement post-award that there are legitimate questions about whether Cromuel was intended to be a partner or a pawn. While a lot of what is insinuated in the case study is about appearances and conjecture rather than hard truth, the confluence of all of the circumstantial evidence that exists should lead anyone to conclude that Cromuel was treated very poorly and that Ridley and BFE were clearly in cahoots the entire time even though they were bidding opponents at one point.

Analysis

There is indeed one thing that works against Cromuel, so that will be mentioned first. It is mentioned within the case study that Cromuel is very much in its nascent stages as the company is a scant five years old. It is also mentioned that Cromuel is not experiences when it comes to the building of prisons. However, this is more than mitigated by the fact that they are not the primary contractor that was bidding. Of course, the main bidder was Ridley and this was clear from the onset. Despite the dearth of prison experience from Cromuel, the Ridley bid was the clear favorite and clearly superior in both rounds of the contract bid process. A good upside for Cromuel being involved in the process is that they are a minority-owned firm. Any time that a minority- or female-owned company that has traditionally been dominated by white males, that would be a good thing. This would include industries like construction, computers in general, doctors and so forth. Diversity for diversity's sake is not the answer either as the quality of the work has to be on par. However, the quality of the bid that Ridley put forth makes it clear that Cromuel was not a drag on the bid as they were far and away scored better than the BFE bids. To summarize, Cromuel was clearly not the most experienced bidder among the Ridley group but they clearly were not a net drag on the overall bid as Ridley won the bid going away. Also, Cromuel was the only local firm in the bidding collective. That surely improved their standing during the bidding process as there is much to be said from an ethics and corporate social responsibility standpoint to include a company that is both minority-owned and local in terms of its workforce. Wages paid to people in Richmond means more money spent locally with Richmond businesses. However, everything that happened after the awarding of the bid clearly points to bad faith and collusion. Even if the hard evidence is not conclusive, the totality of the circumstantial evidence is staggering. These pieces of circumstantial evidence that point to Cromuel being the victim and Ridley and BFE being in cahoots in a way that clearly are as follows:

The first sign of trouble comes very early in the case study and that was the inclusion of seven employees from BFE, which happens to be the company that lost out to Ridley. In other words, Ridley brought on seven employees from the company that they had literally just defeated in the bidding process. This is no small thing given that it is stated clearly elsewhere in the case study that if BFE had been the only bidder that arrived at the table, the entire bidding process would have been scrapped and started over with a fresh pool of applicants. Even with the confusing optics of this move, it is what happens soon after that which really makes this move with BFE very suspect (Monckza, 2011).

Not long after BFE is brought on and despite the fact that Cromuel was assured that it was just an administrative move, Cromuel is excised from the project entirely by Ridley and this happens concurrent to a "thirty days' notice." Those three words are in quotes because the manner in which the notice was executed runs counter to what "thirty days' notice" means in just about every legal realm and field when it comes to doing business, renting a house or anything else. A letter was sent on June 29th and stated that the services of Cromuel would no longer be needed. However, the letter stated that the endpoint of the services was roughly thirty days in the past, rather than in the future. Indeed, the stated cutoff point was May 25th. Even if the contract was stated that way (unlikely), it would quite likely not hold up in court because such a clause is inherently unfair and favors the primary contractor entirely too much. For it to be fair, the clause would have to give notice for Cromuel until at least July 29th, if not the end of July. If the clause was to be retroactive, Cromuel would be foolish to sign it. If no relevant clause was within the overall contract, it is likely that normal standards and customers for such contracts would take hold and it is likely that some sort of notice would be called for. Indeed, cutting off a business as of the present day, let alone thirty days in the past, is quite unprofessional and inequitable in so many ways. Many businesses plan their work out weeks if not months in advance and leaving them with no work immediately and no payments thirty days prior is the very epitome of being unprofessional even if it is not a violation of contract laws and standards or even criminal law (Monczka, 2011).

The author of this report previously looked at the totality of the case study and has come to a conclusion that is very unflattering to the city and Ridley. Even so, it is supported by basically everything that is known to be true. The author referred to Cromuel as a "pawn" in the introduction to this report and that is almost surely what they were. The above points made were bad enough in terms of appearances and the possible logic behind such moves. However, the below facts and developments in the case study really make the actions of Ridley and/or the city look rather damning:

Cromuel was the only party involved that was a small minority-owned business. Based on the content of the case study, this was not true for any other party involved in the bidding process or what happened afterward (San Antonio, 2016).

Cromuel was the only party involved with local ties to Richmond. The fact that Cromuel was part of the bidding party and was then tossed aside (for this and the immediately previous item mentioned) really muddies the waters in terms of potential or actual motives (Monckza, 2011).

Four of the seven people added from BFE after the Ridley proposal was accepted were relatives of one another. There was Al Bowers and three relatives of his. Al's brother Curtis was included as was his sons Sean and Travis. This group of relatives is more than half of the seven people included in the contingent from BFE. This screams of nepotism and favoritism even if BFE is a family outfit and there could also be kickbacks involved (Weschler, 2010). It should be about the best people for the job and not for cronies and people that benefit from being related to the right people. Complicating things greatly for the Bowers side of the equation is that there was a bit of a tussle surrounding another contract involved in the situation. Bowers was among a throng of people that complained about the lack of local presence and transparency when it came to the bid that was done for the related project to be done by Tompkins-Ballard Joint Venture (Cohen, 2015). The muddling of Bowers and his two companies is also cause for concern. Bowers' involvement in that and his later benefit from the reworking of the contract Ridley won after the bid was awarded is very unseemly to put it lightly (Snyder, 2015).

The addition of the Bowers family members (as well as the other three) was not handled in the right way based on what the contract supposedly said and what supposedly happened. There was a clause in the contract that afforded the city the privilege to review the resumes of the people being added. The city and Ridley were asked about that but they stated that this was only in reference to "key" personnel and not anyone or everyone on the job. However, pushing out a subcontractor on the job could absolutely qualify as "key" personnel. The definition of "key" personnel should be in the contract. If it is not, then defining that word would be up to the discretion of an arbitrator or judge that is reviewing the situation if legal action is brought. The quote in the case study that says "the clause does not pertain to a prime contractor's relationship with a sub-contractor" is all well and good if the contract actually says that. However, it does not say if "key personnel" is ever defined or if it is included and does offer a definition that would seem to indicate that Cromuel and/or its leaders were among the key people in the project (Monckza, 2011).

Taking the key personnel point a bit further, Ridley surely would be where most of the key personnel are but they are bringing on those subcontractors for a reason. If there is a sudden shift right after the contract is accepted and the new people being brought on are from the failed bid, that looks bad. When the subcontractor forced out as part of this shift is the only minority-owned contractor, that is even worse. Finally, when the subcontractor that is forced it is the only local one, that screams "pawn" in that the Cromuel group was seemingly only included to score points with the city, the media or the populace. It would seem highly likely that Cromuel was just there for window dressing and was then tossed aside after they had served their purpose. As per the words of Monckza, the contract must be executed and delivered upon per the conditions and definitions in the contract. If it is not, that would be a breach (Monckza, 2011).

Another damning piece of evidence is the non-response response that Vicki Rivers gave when openly questioned about the accusations of malfeasance from Cromuel. Such a non-response when it comes to private industry may fly, but not in situations like this. First of all, there are taxpayer funds involved. While Ridley and BFE are private firms, the prison would presumably be run and operated by the city. For that reason alone, transparency and openness should be the norm rather than the exception. To come back to the point about Rivers, her statement that "I don't think it's prudent for us to speak to the media regarding a formal complaint that may require a legal response." Normally, that would be enough because saying things in public in advance of a legal action might not be the wisest thing. However, it is advice for people that are normally in legally precarious situations and the city surely knows that, even if they did not personally violate the rights and good faith of Cromuel, they condoned it and allowed it. If the BFE / Cromuel swap was done for a particular and valid reason, the city should not be afraid to state what the reasons were. However, based on the timing of the removal of Cromuel and the seemingly illegal way (from a contract standpoint) via which the change was made, Rivers is probably wise to keep her trap shut. If this goes to court (and it should), the city and Ridley (not to mention the BFE benefactors) are going to have some explaining to do (Monckza, 2011).