August 1, 2010

Knowing Whether to Initiate a Bid Protest — Washington


Summer 2010

Most bid protests involve "responsiveness," which relates to price, quality, quantity or delivery.

The lack of private-sector construction work coupled with an increase in public construction projects through stimulus funding has made it more important than ever for contractors to understand the public bidding process.

A bidder may challenge the award of a public construction contract to another bidder by initiating a bid protest. In deciding whether to protest, the following issues should be considered.

Responsiveness, Responsibility

Usually contracting authorities must award a contract to the bidder whose bid is responsive, who is responsible, and whose price is lowest. Most bid protests involve responsiveness.

To be responsive, a bid must comply with all essential requirements of the contracting authority's invitation to bid. Essential requirements are those that affect price, quality, quantity or delivery. For example, failure to acknowledge an amendment that changed the location of a new road, increased the pavement thickness, increased its length, and shortened the time for completion of the work would make a bid nonresponsive because the amendment affected price (if the new location made the road more difficult to build), quality (the increased thickness would likely result in a higher quality road), quantity (the thicker pavement and longer length would increase the amount of necessary materials), and delivery (there would be less time to complete the work).

A bid might also be nonresponsive if it fails to comply with some other important aspect of the invitation to bid, such as proposing to subcontract a higher percentage of the work than allowed or failing to submit a bid bond or to sign a disadvantaged business enterprise certification.

There is no way to know with certainty whether the failure to comply with such requirements would make a bid nonresponsive, but an analysis of the language used in the invitation to bid is crucial. "Shall" and "must" typically create mandatory requirements, while "may" typically creates permissive requirements. If mandatory language is used, it is more likely that failing to comply with the requirement will make a bid nonresponsive (even if that is not the intent of the contracting authority).

Bidders must also be responsible.

A bidder is responsible if the contracting authority determines that the bidder will be able to perform the work. The contracting authority will evaluate a bidder's financial resources, record of performance, integrity, reputation and similar factors. If a contracting authority finds that a bidder is not responsible, the bidder may appeal by presenting additional information. If a contracting authority rejects the appeal, the bidder has two business days to file a lawsuit to challenge the finding.

Responsibility determinations are rarely challenged because contracting authorities have broad discretion to make such determinations.

Eligibility and Timing

In Washington, a protesting bidder must claim that all lower bidders are ineligible. In other words, the third-lowest bidder cannot protest an award unless it can say that the two lower bidders are ineligible.

A protesting bidder must also act quickly. After a contracting authority signs a contract (which may occur within days of the bid opening), a court will not force the contracting authority to award the contract to the protesting bidder even if the protestor is right. In such a situation, the protesting bidder is not entitled to recover its bid preparation costs or lost profits and may even be required to pay the contracting authority's attorney fees.

Before suing, protesting bidders should exhaust any review process mandated by the contracting authority's rules. Under the rules that govern most contracting authorities in Washington, written protests must be submitted to the authority within two business days of the bid opening.

If a contracting authority rejects a protest, the authority cannot execute a contract for at least two business days after it gives the protesting bidder written notice of the rejection, which means that lawsuits to challenge such rejections should be brought within two business days of the contracting authority's rejection notice.

The point here is the award of the contract is the only available remedy, and bidders must act quickly and in conformance with the contracting authority's rules to preserve any chance of being awarded the contract.

Agency Discretion

Contracting authorities may waive informalities and errors if they are not "material."

An informality or error is material if it gives a bidder a substantial advantage over other bidders. A mistake involving price, quality, quantity or delivery (the primary requirements for responsiveness) is usually material and not waivable. But returning fewer than the required number of signed bids to the contracting authority or submitting a bid shortly after the submittal deadline could be nonmaterial informalities.

Clerical errors (e.g., transposition errors or typographical mistakes) may also be nonmaterial and waived if the error is obvious.

A contracting authority is not required to waive informalities or errors, and courts will usually defer to the contracting authority's decision on such matters (even if the decision is inconsistent with the authority's prior practice or will result in a higher cost).

Therefore, while protesting bidders often want to threaten legal action in their written protest, if the protest involves a nonmaterial informality or error, the bidder should be respectful and simply point out the benefit to the contracting authority and public in accepting the protest.

Bid protests are always driven by the rules that govern a contracting authority and by the facts of the particular situation. Reviewing those rules and analyzing the issues above will help bidders decide whether to initiate a bid protest.

For more information on this topic, please contact or call (888) 598-7070.


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