May 1, 2009

Knowing Whether to Initiate a Bid Protest


Spring 2009

The lack of private sector construction work coupled with the 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, analysis should touch on the following principal issues.

Eligibility and Timing

Under the rules governing most public contracting authorities in Oregon, 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 awards a contract, a court will not force the contracting authority to award the contract to the protesting bidder even if the protestor wins the protest. The protesting bidder will recover only its bid preparation costs and attorney fees, which are usually significantly less than what would be realized in winning the contract.

Before suing, protesting bidders must exhaust any review process mandated by the contracting authority's rules. Under the rules that govern most authorities in Oregon, written protests must be submitted to the authority within seven days. Under the Oregon Department of Transportation rules, the deadline is three days. Only after receiving a decision from the authority can a protesting bidder sue.

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

Responsiveness and Responsibility

Contracting authorities must award a contract to the bidder whose bid is responsive, who isresponsible, and whose price is lowest. Most bid protests involve responsiveness because contracting authorities have limited discretion in determining whether a bid is responsive.

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 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), quantity (the longer length of road increased the amount of necessary materials) and delivery (the time in which to complete the work was reduced).

A bid may also be nonresponsive if it fails to comply with some other important aspect of the invitation to bid. Possible examples include 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, where "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, and similar factors. Responsibility determinations are rarely challenged because contracting authorities have broad discretion to make such determinations.

Agency Discretion

Contracting authorities may waive minor informalities and clerical errors. A "minor informality" is a bid mistake that can be waived or corrected without giving the bidder an unfair advantage over the other bidders. A mistake involving price, quality, quantity, or delivery (the requirements for responsiveness) is not a minor informality and may not be waived. But returning fewer than the required number of signed bids to the contracting authority could be a minor informality. Clerical errors (e.g., transposition errors or typographical mistakes) may be waived if the error is obvious and the bidder confirms the correction in writing.

A contracting authority is not required to waive minor informalities or clerical errors, and courts will 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 may want to use strong terms in their written protest, if the protest involves a minor informality or clerical error, the bidder should be respectful and simply point out the benefit to the contracting authority and public in overlooking the mistake.

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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