On California public works projects a bid protest can be a powerful tool to ensure the best shot at winning competitive bid work. Competitive bid work should always be awarded to the lowest responsive bid by a responsible bidder. (See Pub. Cont. Code, §§ 10167, 10180, 10501, 20111, 20121, 20162, 20192.) But for various reasons, this is not always the case. A bid protest provides a means to rectify this situation. This article covers the basic parameters for bid protests on California public works projects. While there are many similarities, we will cover federal bid protests in a separate article.
What is a Bid Protest in California Public Works?
As applied to California public works projects, a bid protest is a procedure that an unsuccessful bidder may employ to challenge a bid award. An unsuccessful bidder may do so when it believes that it is a responsible bidder and produced the lowest responsive bid, but has not been awarded the job. Given the prequalification procedures employed by most public entities in California before contractors are permitted to bid, bid protests generally center around bid responsiveness. A bid protest will either argue that the lowest responsive bid was improperly rejected as non-responsive or that the accepted lowest bid was improperly accepted when it was non-responsive. This procedure can alter who ultimately wins the job. However, who will ultimately obtain the work is uncertain even after a successful bid protest. This is because public entities have discretion to either accept the lowest responsive bid from a responsible bidder based on the issues resolved by the bid protest, or to simply reject all bids and rebid the job. (Pub. Cont. Code, § 10185.)
Responsiveness: When is a Bid Responsive?
A bid is considered responsive when it is in strict compliance with all requirements of the bid package. “ ‘A basic rule of competitive bidding is that bids must conform to specifications, and that if a bid does not so conform, it may not be accepted. [Citations.] However, it is further well established that 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.]’ [Citations.]” (Cypress Sec., LLC v. City & Cty. of San Francisco (2010) 184 Cal. App. 4th 1003, 1015, citing Ghilotti Constr. Co. v. City of Richmond (1996) 45 Cal. App. 4th 897, 904.)
Is a Public Entity Required to Waive Non-Material Variances from Bid Package requirements?
No. Strict compliance with all requirements of a bid package is the only way to ensure that a bid cannot be rejected as non-responsive. But public entities have discretion to deem a bid responsive notwithstanding variances from bid package requirements, provided that any variances are not considered material.(See MCM Const., Inc. v. City & Cty. of San Francisco (1998) 66 Cal. App. 4th 359, 373 [immaterial deviations from bid specifications can be waived in a public entity’s discretion].) As materiality is a question of fact. This is often the central issue in a bid protest.
When is a bid deviation material?
“[F]actors to determine whether deviation is minor irregularity or substantial departure include whether deviation could be vehicle for favoritism, affect amount of bid, influence potential bidders to refrain from bidding, or affect ability to make bid comparisons.” (Konica Bus. Machines U.S.A. Inc. v. Regents of Univ. of California (1988) 206 Cal. App. 3d 449, 455.) A deviation is generally considered material if the bid deviation:
- May have affected the price.
- Impaired the ability to compare the bid in question to competing bids.
- Afforded the bidder an advantage not enjoyed by fellow bidders.
- Showed favoritism for the bidder in question.
Responsibility: What is Bidder Responsibility?
A responsible bidder is “a bidder who has demonstrated the attribute of trustworthiness, as well as quality, fitness, capacity, and experience to satisfactorily perform the public works contract.” (Pub. Cont. Code, § 1103.) Most public entities address bidder responsibility by requiring bidders to prequalify. The Department of Industrial Relations is required to prepare standardized prequalification forms and procedures to be used by local agencies. (Pub. Cont. Code § 20101.)
What Rights Does a Contractor Rejected as Not Responsible have?
While a bid can be rejected as non-responsive without further action, a bidder that’s bid is rejected based on responsibility is entitled to due process via a hearing before the public entity in question. Specifically, “prior to awarding a public works contract to other than the lowest bidder, a public body must notify the low monetary bidder of any evidence reflecting upon his responsibility received from others of adduced as a result of independent investigation, afford him an opportunity to rebut such adverse evidence, and permit him to present evidence that he is qualified to perform the contract.” (City of Inglewood-L.A. Cty. Civic Ctr. Auth. v. Superior Ct. (1972)7 Cal. 3d 861, 871.)
Can a Public Entity choose a more highly qualified bidder if there is a lower responsive bid from a responsible bidder?
No. Responsibility in a minimum standard. Thus, awarding authority does not have authority to reject the lowest qualified bid and award the contract to a more qualified bidder. Court’s have found that to permit this would frustrate the purposes of the competitive bidding system and risk favoritism in public contract awards. However, public entities are given a great deal of discretion in determining whether a bidder meets the minimum threshold to qualify as responsible. (See Raymond v. Fresno City Unified Sch. Dist., (1954) 267 P.2d 69, 70.) Some public entities such as LAUSD have adopted rating systems that are factored into the competitive bidding process. These are permissible if they are uniformly applied.
Who can assert a bid protest on California Public Works?
Generally, an unsuccessful bidder on the project in question is eligible to challenge a proposed award of the contract to another party via a bid protest. However, the challenging bidder must be able to demonstrate a beneficial interest in the outcome of the bid protest. The most common “beneficial interest” is the chance to get the job if the protest is successful. Certain types of public work have further requirements. By way of example, with respect to contracts involving the acquisition of goods and services by California State agencies, only an entity that has submitted a bid and that will be the “lowest responsible bidder meeting specifications” if the protest were to succeed is eligible to submit a bid protest. (Pub. Cont. Code, § 10306.)
What are the time limits for the protest procedure?
Specific bid protest procedures vary depending on the project in question. Reference to the bid instructions should always be used when determining bid protest deadlines and procedures. Failure to meet mandated procedures and deadlines will result in forfeiture of the bidder’s right to protest.
What are the possible outcomes of a bid protest?
A bid protest can either be successful or unsuccessful. If a bid protest is unsuccessful, the public entity proceeds with the original contractor awarded the job. There are some risks to losing a bid protest. The protesting contractor may face consequences for bringing numerous unsuccessful protests including a finding by the public entity that the protesting contractor is no longer considered a responsible bidder – barring it from bidding on future projects for the public entity. If a bid protest is successful the public entity has two options, either award the job to the next lowest responsible bidder meeting specifications or reject all bids and rebid the project.
Can the bid protest decision be appealed?
If a bid protest is rejected by the public entity in question the decision can be appealed in state court by bringing a mandamus action. (Civ. Proc. Code, § 1085.) But the state court reviews the public entity’s decision solely for an abuse of discretion. This means that the decision to reject to the bid protest not only must be wrong, but must also be arbitrary, capricious, entirely lacking in evidentiary support or inconsistent with proper procedure. The public entity’s action is presumed to be proper and it is the protesting contractor who has the burden of proof to demonstrate to the court otherwise. (See Ghilotti Construction, supra, 45 Cal. App. 4th at page 903.) Overturning rejection of a bid protest via mandamus is extremely difficult. Further, a public entity is not required to delay work on a protect with the original winning bidder a result of a mandamus action.
What is recoverable after a successful California bid protest?
If a mandamus action is successful in vindicating a bid protest, the protesting contractor is entitled to recover the costs to prepare its bid as well as its bid protest expenses. A successful protester is not entitled to lost profits. And a court cannot compel a public agency to award the contract to any bidder, even the lowest responsible bidder. (Third Distric Rubino v. Lolli (1970) 10 Cal. App. 3d 1059, 1062.) The public entity always has the option to either rebid the job or accept the lowest responsive bid as determined by the court.