DAYTON — The company that won a $6.1 million city contract this month to install electronic security equipment at Dayton International Airport was selected despite a competitor’s claims questioning the legitimacy of the winner’s bid.

Wagner-Smith Co., also known as Wagner Industrial Electric Inc., should not have been eligible for the contract because it and another competitor, ESI Electrical Contractors, are owned and controlled by the same parent company, and both Wagner and ESI bid on the same project, Chapel Electric Co. said in a Sept. 23 letter of complaint to the city. Chapel, which also bid for the project, was challenging the Wagner bid that Dayton ultimately chose.

Montana Dakota Construction Services Group Inc. owns both companies, Chapel noted. The city’s bidding specification forbid bidders to submit “more than one proposal from the same partnership, firm or corporation under the same or different name,” Chapel said in its complaint.

Wagner is to install a system of video cameras, a data center, and electronic door-access controls at the airport. The project to replace outdated security equipment is to be paid for with a $4.8 million federal grant and $1.3 million from airport revenues.

The Dayton Daily News, through a public records request, obtained the letters between the companies and the city that detailed the dispute.

The Dayton City Commission approved the contract with Wagner-Smith in mid-November. Work is to start by year’s end and should be done by the end of 2010, city officials said.

Chapel declined to comment for this article. Airport officials also declined comment, citing the legal issues.

ESI withdrew its bid for the project this summer, informing the city in a letter that ESI realized it had mistakenly understated its estimate by omitting a $418,272 subcontractor expense.

Wagner, in its response to the city, said that Wagner and ESI are separate corporations, each with its own work force, corporate office and employer tax identification numbers. Wagner said that Chapel failed to cite any basis for denying subsidiaries of a parent company the right to bid on the same public project. Wagner also said that Chapel’s bid was $611,000 more than Wagner’s offer.

ESI’s bid was $5,499,679 and Wagner’s was $5,571,322, airport officials said. The remaining cost in the $6.1 million contract is for a maintenance agreement and spare parts for the security system, airport spokeswoman Linda Hughes said Friday, Nov. 27.

Contact this reporter at (937) 225-2242 or jnolan@DaytonDailyNews.com.