In California, the law requires competitive bidding for public works projects and government contracts to avoid favoritism, corruption, and fraud when those contracts are awarded. In general, contracts are awarded to the lowest responsible and responsive bidder—in addition to eliminating fraud, this is meant to obtain competitive pricing for public improvements in order to conserve tax revenue and to provide a fair means for qualified and bonded contractors to compete for these projects.
While submitting a bid for such a project can be a lengthy and complex process, requiring detailed information on a contractor’s capacity and the proposal for the project, winning this type of award can provide a significant windfall. Thus, competition is often stiff for contracts to construct government buildings, school sites, university facilities, and other such projects. However, successfully bidding and being awarded a contract is not always the end of the story.
Bidding is a tightly regulated process; per California law, bid instructions control the evidence and standards required for the bids. Any deviation from the bid instructions, even the most minor, can open up the possibility of a bid protest. After the lowest bidder is determined by the governmental agency and an “Intent to Award” has been posted, other bidders have the right to file a protest for a limited amount of time, usually five days. A protest halts the award of the bid until it is withdrawn or resolved.
The process is meant to serve as an additional check on contracts being awarded to unqualified bidders or for bids that do not meet the required standards. Although bid protests can be used to vindicate the rights of some who have unfairly lost the bid, they can also be misused as described below.
A bid protest process can be used properly by a contractor who honestly examines the lowest bid and finds irregularities that show the bid was not responsive to the bid documents. This means not all the conditions were met or parts of the scope were not properly estimated or a variety of other things that were wrong. This way the contractor can file a bid protest to challenge the lowest bid.
In one such case, we at Ghassemian Law Group, helped draft a proper bid protest for award of a $5 million contract that challenged the lowest bid both factually and legally. The result was the invalidation of the lowest bid and awarding of the contract to our client.
On the other hand, bid protests can be misused in a manner that unfairly hinders competition.
Nitpicking the minutiae of bid instructions is a common strategy for losing bidders. Larger companies often go after smaller companies that have outbid them, because they have the resources to research and spend time dissecting their competitors’ bids in search of grounds to submit a protest. Usually, they will protest the omission of information that, while not material to the contractor’s ability to complete the project, has been asked for in the bid instructions. They count on those smaller competitors not having the legal expertise or means to defend themselves against the challenge to their award.
A recent case we handled is a good clear illustration of the misuse of bid protests to discourage competition. Our client had won a $1.2 million bid on a public project, a business-changing award for this small local construction company. However, their joy at winning didn’t last—the second-lowest bidder submitted a protest detailing several issues that were outside of the instructions.
Our client’s story had a happier ending than many of these cases. Rather than give into the attack on their legitimacy as the winner by the large corporation protesting their bid, our client came to Ghassemian Law Group instead. We drafted an aggressive and proficient legal response to their bid protest and represented them in front of the City Council. As a result, we were able to preserve their bid and save the $1.2-million contract for them.
When bidding on public contracts, your focus should be on meeting the terms of the bid and getting a fair shot at projects where your company meets eligibility criteria. Whether it is the filing of a bid protest or responding to one, the construction law experts at Ghassemian Law Group can help with decades of experience and deep understanding of the intricacies of the public bidding process. We can defend your rights by drafting a bid protest or challenging an improper one. To learn more about how our attorneys can help you, contact us here today.
This article is informational only and meant to provide guidance. It is not meant to be legal advice and it does not create an attorney-client relationship. For what to do in your specific situation, please consult with a qualified Construction Law attorney.
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