Avoiding the competitive bid process

I don't make a practice of writing columns about isolated court decisions, particularly those that turn on fine points of state law, but the editors or CONTRACTOR magazine have brought to my attention a recent opinion that would warm the heart of any contractor patient enough to wade through its 18 pages, plus six more pages of footnotes. In Great West Contractors Inc. v. Irvine Unified School District, Case No. G041688, the court of appeals shone the brightest light of day on the normally dark behind-the-scenes processing of public bids.

In this case, it found that a school district's decision to reject a bid because it was not "responsive" (i.e., that all necessary information was included and the form was filled out properly) was a subterfuge — to put it politely. Under California law, rejecting a bid because of a clerical mistake is just about unreviewable, allowing the school district to quickly move forward to award the contracts to higher bidders before the low bidder could do anything about it. Or, as the court put it: Assuming [the low bidder's] position is correct, then a public entity otherwise bound to award a contract to the lowest responsible bidder can, by the simple imperial ukase of declaring a specific answer to a question required on a bid form to be "nonresponsive," bald facedly circumvent the public contracting law that required contracts to be awarded to the lowest responsible bidder.

The court considered this issue to be "of vital interest to all taxpayers," notes Westlaw slip opinion, page 11.

The gist of the next five or so pages of the decision is that public agencies have to watch carefully to keep the concepts of "responsiveness" and "responsibility" separate. If the bidder didn't include its bid bond, or didn't sign the bid, or didn't fill in all the prices — that all goes to whether the bid was responsive, and should be limited to black-and-white issues of things that prevent the agency from being able to compare "apples to apples."

"Usually, whether a bid is responsive can be determined from the face of the bid without outside investigation or information," notes Great West slip opinion, page 14, citing Valley Crest Landscape Inc. v. City Council.

Responsibility is a different concept entirely: Is there something about a bidder which would make him a bad choice, a history of not completing on time, being defaulted for defective work, etc.? These are the kinds of things that bear some investigation because there might be an explanation which vindicates the contractor. The court in the Great West case, after a lengthy discussion about what kinds of factors identify responsibility, found that the school district used an answer to a question on a form about prior licensure to throw a bid out without first giving any opportunity for an explanation to see if it really did disqualify the bidder.

What bothered the judges as much as anything else was the timing and process used to thwart the objections of the low bidder. The court observed that the school district waited until May to award the contract, and then used the urgency of the short performance time as an excuse for why it could not wait to have an investigation before going to the third-low bidder. The court noted that the school district gave a copy of the low bid to the third-low bidder immediately, but made the low bidder wait weeks, until it was too late to stop the process, before giving it similar information.

Everyone reading this has had an experience in which they suspected, even if they couldn't prove, that the rules were being bent, or too-strictly enforced, so that a particular bidder would either be disqualified or pushed ahead of others.

The problem we face is one of practicality. Even though this is the best legal system in the world (and I really believe that), it still isn't perfect. In Great West's case, the contracts were long finished by the time this court opinion was published, and in most states, the most that a contractor like Great West could recover would be its proven lost profit, and also in most states, it would not recover its legal fees.

With so little chance to break even, let alone come out ahead, how many contractors would take on the system? I would encourage you, perhaps through your industry associations, to get involved and stay involved. Vote for the best overseers of agencies. Use your state's Open Records Act to find out how the agencies operate. The more that officials know that you are watching, the less likely they all are to stray from the path of justice.

Susan McGreevy is a partner at Stinson, Morrison, Hecker LLP, Kansas City, Mo., 816/842-4800, e-mail to: [email protected].