Post-Bid or Post-Award Bid Protests Law on Local and State Public Contracts and Public Works Projects in California

Due to the competitive nature of most Government purchasing, services and Public Works Contracts in the current economy, fierce competition between bidders is now commonplace, as are Bid Protests by other bidders to the award of the job to a lower – or higher – bidder.

The means and manner for protesting a bid on a government contract are typically set out in the Instruction to Bidders for Project, Request for Proposals, or in other Contract Documents.

In some instances, the procedures may be set forth in a State or local ordinance or statute, which state to whom a protest must be submitted, what a protest must include, and when the protest must be submitted

Before or immediately after you have submitted a bid, be sure to check these procedures, in case you need to make a bid protest, or in case you are required to respond to a protest from another bidder.

The Time period to submit a Bid Protest after the bid opening, or to respond to a Bid Protest from another bidder are typically very, very, very short, often as little as 3-5 days after bid opening, or possibly even less!

Therefore, do not wait until the government formally awards the contract to another bidder, as that could well be too late.

If you are late, the government and the other bidder may argue that your protest should be rejected, as they have been prejudiced since the contract may have been signed and mobilization has begun.

If it is an important project for your company, attend the Bid Opening, and if you think you might want to protest, ask the public agency for a copy of their Tabulation of the Bids and a copy of the Bid(s) of the Bidder(s) you might want to protest, pursuant to the “California Public Records Act”, they are usually required by this Act to give you these documents.

Check their bids for math or clerical errors, and for non-conformance with the requirements of the Instructions to Bidders or Bid Specifications or Request for Proposals.

Even if you do not have all the documents needed to evaluate the merits of your protest yet the time limits on protests may force you to file a protest now, and investigate the details later.

You may also need to contact an attorney familiar with Government contracts to help you write your Protest and add appropriate legal arguments. Do Not Delay.

If you are the apparent lowest responsible bidder and someone is Protesting your bid, it is also advisable to immediately get competent legal advice.

1. The bidder is not a “responsible” contractor,
2. The bid is not “responsive” to the Invitation for Bids or Instructions to Bidders, or the job specifications.

(1) A bidder’s “responsibility” may depend on whether it is properly licensed to do the work, has the experience required to do the work, or has subcontractors with the needed experience, or meets any special qualifications specified in the contract Documents as condition to the award of the contract.

When a challenge is made to a bidder’s responsibility, the public agency may be required by law to hold a public hearing on that part of the Bid Protest.

(2) A bid is “non-responsive”, for example, when the bid form is not completely filled out and signed, as required by the Instructions to Bidders, or where there are other errors or omissions on the Bid Forms.

A bid may also be non-responsive if for example, it does not have pricing for all alternates, does not list subcontractors performing more than 0.5% of the job, or if it does not meet the stated goals for LBE, SBE, DBE or other goals of the public entity and /or does not show good faith efforts to meet such goals, etc.

On projects that are in part Federally Funded, the failure to meet such goals or demonstrate good faith efforts to meet them is often the basis for Bid Protests.

In evaluating based on “responsiveness” of Bids or Bid Protests, a public agency has some degree of discretion or leeway to ignore “minor irregularities” in the bid, provided that those irregularities in the bid cannot have affected the price or given that bidder on unfair advantage over other bidders.

However, if the “irregularly” is a material typographical or numerical error by the bidder in filling out the Bid Forms, then the Public Agency has no leeway to ignore that error, as that kind of mistake gives the bidder an unfair advantage as such errors likely would by legally good grounds for withdrawing its bid without forfeiting its Bid Bond per Public Contract Code § 5103.

This gives that bidder unfair advantage over other bidders, because it could wait until after the bid opening, see what the others had bid, and them elect to withdraw its bid within 5 days if it wanted to.

Sometimes the public agency makes a mistake or shows bias in evacuating the bids, and that also may be grounds for a bid protest.

For simple errors such as misspellings, errors in the exact address or name or trade of a subcontractor, or any other similar minor errors or omissions in the bid, the law is clear that such technical errors may be ignored by the public agency in determining the responsiveness of the bids it receives.

“[A] bid which substantially conforms to a call for bids may, though it is not strictly responsive, be accepted if the variance cannot have affected the amount of the bid or given a bidder an advantage or benefit not allowed other bidders or, in other words, if the variance is inconsequential. [Citations.]” (47 Ops.Cal.Atty.Gen.129, 130 (1966), italics added, quoted with approval in Ghilotti, supra, 45 Cal. App.4th at pp. 904-905, Valley Crest, supra, at pp.1440-144, Konica, supra, 206 Cal.App.3d 449, 454, and National Identification Systems, Inc. V. State Bd. Of Control (1992) 11 Cal.App.4th 1446, 1453 [15 Cal.Rptr.2d 257].) “The rule of strict compliance with bidding requirements does not preclude the contracting entity from waiving inconsequential deviations.” (Ghilotti, supra, at p. 908, italics added.)”

MCM Const., Inc. v. City & County of San Francisco (1998) 66 Cal.App.4th 359, 373-374.

These kinds of errors can ignored by a public agency, provided they give the bidder no advantage in price or otherwise over other bidders.

The Public Agency may even allow such immaterial errors or omissions to be corrected, explained or ignored, even after the Bid Opening!

In making such a determination and in deciding whether to accept a bid despite supposed immaterial non-responsiveness or a mere technical omission and the like, it is important to remember that the public bidding laws and requirements were adopted by the Legislature for the benefit of the public and the public agencies, and not for the financial benefit or gain of any of the bidders.

“It certainly would amount to a disservice to the public if a losing bidder were to be permitted to comb through the bid proposal or license application of the low bidder after the fact, [and] cancel the low bid on minor technicalities, with the hope of securing acceptance of his, a higher bid. Such construction would be adverse to the best interests of the public and contrary to public policy.” ( Judson Pacific-Murphy Corp. v. Durkee (1956) 144 Cal.App.2d 377, 383 [301 P.2d 97].)” (emphasis added)

Ghilotti Construction Co. v. City of Richmond (1996) 45 Cal.App.4th 889, 908-909.

However, other material typographical or clerical mistakes or errors in filing out the bid forms, which might give the bidder an unfair advantage or an ability to withdraw its Bid under Public Contract Code section 5103, cannot be ignored by the Public Entity, and the Bid must be rejected as “non-responsive” if a timely Bid Protest has been filed, or if the public agency discover the mistake itself.

Thus, for example, in the case of Valley Crest Landscape, Inc. the Advertisement for Bids required that the general contractor subcontract not more than 50% of the total work on the job. The low bidder submitted a bid form which listed its subcontractors (including MBE and WBE subcontractors) as doing 83% of the total work.

Valley Crest wrote a letter protesting North Bay's bid on the basis it was “non- responsive” because, in violation of the bid requirements, the listed percentage of subcontractor work was 83 percent, and because North Bay had not made a good faith effort to meet the 20 percent affirmative action goal. North Bay listed no MBE/WBE subcontractors, while Valley Crest had 29 percent MBE/WBE subcontractors.

The Valley Crest Bid Protest added that permitting a postbid inquiry by the City and “clarification” to North Bay’s Bid would give North Bay an opportunity to consider whether it really wanted the work, and that this would give it an unfair "two bites at the apple."

“On July 26, Patrick Fitzsimmons, the City’s engineer, called and faxed a letter to [low bidder] North Bay concerning the 83 percent figure for the subcontractor work...”

“North Bay responded the next day, stating: ‘The subcontractor percentages shown on our bid proposal are not correct.’ It explained it did not have the final subcontractor figures until just before the bid closing, so it used estimated totals which resulted in higher percentages for subcontractor work. It provided “actual correct subcontractor percentages” totaling 44.65 percent.”

“The same day, Fitzsimmons and the public works director recommended to the City that the project be awarded to North Bay [and] explained North Bay was given a chance to explain the “irregularity” in its bid which showed 83 percent subcontractor Participation. They had spot-checked North Bay’s revised subcontractor percentages by contacting the five largest subcontractors and were satisfied 44.65 percent was the true number. The city attorney had reviewed the documents and her opinion was that the bid irregularity should be waived as the revised bid met the requirements, the subcontractor percentage listing was not a legal requirement but merely requested by the City, and the bid irregularity did not give North Bay a competitive advantage over other bidders.”

Ibid at 1436-1437. (Emphasis Added)

The Contract was then awarded to North Bay, and Valley Crest filed a Court Petition for Writ of Mandate and injunction. The writ was denied , and Valley Crest then appealed while North Bay performed the job.

The Court of Appeal reversed the lower Court decision, and held that the award of the Contract and the Contract were “invalid”!

In its decision, the Court discussed the City’s consideration of the post-bid changes in subcontractor information and percentages that were made by North Bay after bid opening, and after receiving the City’s letter inquiring about the subcontractor percentages, and requesting further “information” concerning them.

“In effect, the City waived the implied requirement to state the subcontractor [information] correctly in the bid, since it was convinced the error in stating them was an honest mistake. Valley Crest challenges the evidence relied upon to support this view of the change in the percentages.”

“We need not determine whether substantial evidence supports the finding that North Bay’s misstatement was innocent and there was no change in the actual percentage of work to be done by subcontractors. Even if the change in percentages was made only to correct a clerical error, the doctrine that inconsequential irregularities may be waived does not permit this change in the subcontractor percentages” (Emphasis added)

Valley Crest Landscape v. City Council, supra, 41 Cal. App. 4th at 1441.

“North Bay had an unfair advantage because it could have withdrawn its bid [per Pub. Cont. Code § 5101 et seq]. Misstating the correct percentage of work to be done by a subcontractor is in the nature of a typographical or arithmetical error. It makes the bid materially different and is a mistake in filling out the bid. As such, under Public Contract Code section 5103, North Bay could have sought relief by giving the City notice of the mistake within five days of the opening of the bid. N1 That North Bay did not seek such relief is of no moment. The key point is that such relief was available. Thus, North Bay had a benefit not available to the other bidders; it could have backed out. Its mistake, therefore, could not be corrected by waiving an ‘irregularity’”(Emphasis added)

Valley Crest Landscape v. City Council, supra, 41 Cal. App. 4th at 1442.

The Valley Crest was followed by another case decided by the Court of Appeal in San Francisco in the MCM Construction.

In that case San Francisco rejected as non-responsive the low bid where its bid forms failed to list the dollar amounts of work to be performed by its subcontractors (as required by the Instructions to Bidders), as a consequence of which failure MCM’s bid form did not show on its face that it had met the City’s “goals” for using MBE and WBE subcontractors, as required by the Advertisement for Bids and the City Code.

After the bid opening the City pointed out the missing information to MCM, and then other bidders also protested the MCM bid as being non-responsive.

MCM Construction argued the City could waive a failure to provide just some of the information regarding its subcontractors1 on the bid form forms because that did not affect the amount of its bid, and it thus was “insubstantial “ and could be waived. MCM Construction, supra, 66 Cal.App.4th at 373.

Following Valley Crest Landscaping, supra, the First District Court of Appeal rejected MCM’s appeal, holding:

“Valley Crest held that misstating the correct percentage of work to be done by a subcontractor was “in the nature of a typographical or arithmetical error. It makes the bid materially different and is a mistake in filling out the bid.’As such, the contractor could have sought relief under Public Contract Code section 5103. Consequently, the contractor’s ability to withdraw its bid without forfeiting its bond constituted an unfair advantage and the city could not waive the irregularity...”

“We believe the failure to state [required information on the bid form] is, like the misstatement of the correct percentage of work to be done by subcontractors in Valley Crest, ‘in the nature of a typographical or arithmetical error.’ As such, MCM could have sought relief under the statute and had an advantage not available to other bidders. The City was without power to waive the deviation”

Obviously, the issues on Bid Protests are often not as simple as they might seem, and legal advice from a competent government contracts attorney is frequently needed as soon as possible.