WHAT TO DO IF YOU THINK A BID LOWER THAN YOURS SHOULD BE THROWN OUT AND THE JOB AWARDED TO YOU

Transcription

1 WHAT TO DO IF YOU THINK A BID LOWER THAN YOURS SHOULD BE THROWN OUT AND THE JOB AWARDED TO YOU Almost all public contracts are awarded pursuant to competitive bid. Generally, public construction contracts are awarded to the lowest responsive bid by a responsible bidder. Often, however, the lowest bid by a responsible bidder is not in compliance with the bidding instructions and is therefore nonresponsive and subject to challenge. Other times, the low bid is subject to challenge because it was submitted by a nonresponsible bidder. If your bid is next in line when the lowest bid is either nonresponsive or was submitted by a nonresponsible bidder, you can do something about it. If you believe a public agency erred in accepting a bid, you can initiate a bid protest. A bid protest is an argument raised by a contractor that an agency has acted improperly in awarding a contract. You may initiate a bid protest before receipt of bids or proposals, after the competitive range determination or after the contract is awarded. Pre-award bid protests focus on such issues as defective solicitation clauses, such as unduly restrictive specifications, or ambiguous evaluation criteria. This article focuses on post-award bid protests. The two most common challenges to public contract awards pursuant to competitive bidding are that the low bid was either nonresponsive or submitted by a nonresponsible bidder. Generally, a bidder is responsible if it has the fitness, quality and capacity to perform the -1-

2 Bid/2 proposed work satisfactorily. Determining nonresponsibility is a complex matter often involving information received outside the bidding process and requiring subtle judgments on the part of the agency. Most states laws allow public agencies ample discretion in deciding whether a bidder is responsible; the only requirement is that the agencies not act arbitrarily. By contrast, determining whether a bid is responsive requires an analysis of whether it promises to do what the bidding instructions demand. Usually, the analysis is made based on undisputed facts and does not involve an exercise of agency discretion. However, bid documents commonly include a provision stating the agency reserves the right to waive bid irregularities. Disputes frequently arise concerning whether a deviation from bid requirements renders the bid nonresponsive or is a minor irregularity that can be waived. When dealing with such disputes, one of two factors generally determines the outcome: whether the deviation gave the bidder an advantage over other bidders or whether, as a result of the discrepancy, an agency would not have been able to bind the bidder to execute the contract if the contractor chose not to do so. A bidder who fails to bid on all items, for example, or a defect related to the performance bond required to be furnished would be considered nonwaivable defects because the bidder would not be legally compelled to satisfy the contract requirements based on its bid. On the other hand, submitting a bid bond that does not include the execution date or submitting a bid bond rather than a certified check as bid security have been considered waivable irregularities

3 Bid/3 To protest a federal contract award, you can contact the contracting agency or the General Accounting Office (GAO), an investigative arm of Congress, or you can file a complaint in the U.S. Court of Federal Claims. Post-award protests filed with the contracting agency must be filed no later than 10 days after you knew or should have known about the basis for the protest. Federal regulations set forth the specific information required for each bid protest. If you file a protest with the contracting agency and are unsatisfied with the agency s response to your complaint, or if you wish to bypass protesting directly to the contracting agency, you can file a formal bid protest with the GAO 1. Federal regulations spell out in minute detail the bid protest procedure and the information required for a bid protest. The regulations require the GAO to issue its decision on all bid protests within 100 days after the protest is filed. Filing a protest with the GAO triggers an automatic stay of the award of the contract unless the federal agency takes certain steps to override the stay. Post-award bid protests must be filed no later than 10 days after you knew or should have known about the basis of the protest, whichever is earlier. If you first filed a bid protest with the contracting agency, the protest must be filed with the GAO no later than 10 days of actual or constructive knowledge of the initial adverse agency action. At the request of a party or on its own initiative, the GAO may conduct a hearing in connection with a protest. If the GAO determines the contracting agency acted improperly, the GAO may 1 As stated earlier, you can also file a protest with the U.S. Court of Federal Claims. You initiate the protest by filing a complaint, and the case proceeds in accordance with the Federal Rules of Civil Procedure

4 Bid/4 recommend that the agency implement any combination of the following remedies: Refrain from exercising options under the contract; terminate the contract; re-bid the contract; issue a new solicitation; award a contract consistent with the applicable statute and regulation; or such other recommendation(s) as the GAO determines necessary for compliance. If the GAO determines an award does not comply with the applicable statute or regulation, it may recommend that the contracting agency pay you the costs of filing and pursuing the protest, including reasonable attorney, consultant and expert-witness fees, and bid and proposal preparation. Also, if the contracting agency decides to take corrective action in response to a protest, the GAO may recommend that the agency pay you the costs of filing and pursuing the protest. For nonfederal public contracts, the first step in challenging an award to a lower bidder is to review the applicable state s bid-protest laws to determine whether there are any procedural requirements you must comply with to have the lower bid thrown out. As disappointed bidders often do, you may first seek to persuade the agency of the merits of your position. If unsuccessful, you will need to file a lawsuit with a local court seeking an injunction prohibiting the public agency from awarding the contract to the lowest bidder. Regardless of whether the public agency awarding the contract is a federal public agency or a state public agency, a lawsuit challenging the agency s award is an uphill battle, and the potential award may not be worth the fight. If grounds exist to challenge the award and you file - 4 -

5 Bid/5 a lawsuit seeking an injunction prohibiting the award of the contract, an emergency hearing will be scheduled for the parties to present arguments to the court. Generally, if the winning bid deviates from a statutory requirement of substance, the awarding authority must reject the bid. Likewise if the winning bid deviates from a requirement of the bidding specifications that affects the price or scope of work, the awarding authority must reject the bid. But if the winning bid violates a requirement of the bidding specifications and the requirement is neither a statutory requirement of substance nor a requirement that affects the price or scope of the work, the awarding authority has broad discretion to either accept or reject the bid or re-bid the contract entirely. If the contract has already been executed, the lawsuit can seek to void the contract. However, when considering injunctive relief, courts consider the parties involved and if the danger to one party is great while the probable harm to the other is minimal, relief is granted or refused in line with such probabilities. This process often favors allowing award of the contract to proceed if injunction and delay would cause hardship to the public. Also, injunctive relief is denied when there is an adequate legal remedy for recovering damages. In a bid protest situation, if potential lost profits are recoverable, the trial of the dispute and award of damages provides an adequate remedy for recovering those damages. In some states, however, lost profits are not recoverable by bidders wrongfully denied public - 5 -

6 Bid/6 contract awards. Instead, recovery is limited to only the reasonable costs of bid preparation. States that limit the award to reimbursement of bid-preparation costs figure that awarding lost profits would unduly punish the taxpaying public while compensating plaintiffs for efforts they did not actually make and risks they did not take. Just as you should check to be sure a bid s dollar amount is accurate before submittal, you should implement procedures to make sure a bid is fully responsive to the solicitation requirements and all bid forms are completed fully and accurately and do not contain inadvertent errors or omissions. If you believe a public agency improperly awarded a contract to another contractor, there are procedures available for you to have the bid award re-evaluated. # # # - 6 -