Fundamental Issues in Competitive Bidding
Over the next few weeks this blog will discuss two key elements of competitive bidding: bidder responsibility and bidder responsiveness. Ensuring that public bids are awarded only to responsive responsible bidders is essential to fair competition and allowing the public to obtain the best price and service.
Bidder Responsibility
In this article we will begin by looking at the definition of responsibility and the difference between responsibility and responsiveness. One of the primary purposes of public bidding is to allow the people to receive their money’s worth of whatever they are contracting for. Awarding bids only to responsible bidders is one way to guard against default. There are others such as performance bonds and excellent contract administration which are beyond the scope of today’s blog.
The South Carolina Consolidated Procurement Code (Procurement Code) at 11-35-1410 provides the following definition:
(6) “Responsible bidder or offeror” means a person who has the capability in all respects to perform fully the contract requirements and the integrity and reliability which will assure good faith performance which may be substantiated by past performance.
The federal statutes give a lengthier definition that expressly touches on adequate financial resources, ability to comply with the schedule, prior performance record, integrity, organizational controls, skills and experience, adequate facilities, etc. See 41 USC 403(7). The Federal Acquisition Regulation is essentially the same.
Bidder Responsiveness Distinguished
Bidder responsibility and responsiveness are not the same thing. Where bidder responsibility concerns whether the bidder is capable of performing the job, bidder responsiveness refers to the terms of the bid offering to provide exactly what the owner wants to have performed. Sometimes the two concepts can seemingly apply to the same set of facts. For example if the solicitation requires site management by a person with ten years experience and the bid offers a person with five years experience, then the bid could be seen as no-responsive because the bid did not provide what the offeror sought but it could also be viewed as not responsible because the minimum amount of experience was not offered.
Monday, August 25, 2008
Friday, August 22, 2008
“Or Equal” or Not
Bid specifications frequently contain the identification of a product to be provided by the bidder but, then allow an "or equal". Bidders who receive the contract may find themselves in the position of being unable to provide the product specified because the product manufacturer has discontinued the line, gone out of business or only provided a limited supply. The contractor’s remedy in these circumstances may differ based upon the procurement policy or procurement code of the governmental entity with whom he has a contract. However, the general rule is "references in specifications to [products] shall be regarded as establishing a standard of quality and shall not be construed as limiting competition. The contractor may, at its option, use any equipment, material, article or process that . . . is equal to that named in the specifications . . ." FAR 52.236-5.
It has been held that under these circumstances, the contractor has the right to submit an "equal" even though the specification omitted the words "or equal." The Court noted that the government must omit or change the standard-of-quality language where it wants to require the use of only one product. The point here is that specifying only one product can be limiting upon competition and can drive the price up.
Sometimes a specification is written around a proprietary product. For example, a specification may be written with such descriptive words that only one product can be used, even though it has not been identified by brand name. In such a circumstance, a Federal Appeals Court held that a proprietary specification should be treated as though the product that was identified by its brand name, giving the contract to the right to submit an "equal" product even though no "brand name" was used in the specification. To hold otherwise would allow the government to subvert the competitive bidding process by writing specifications "around brand-name products." Construction Law Handbook section 7.02 [C][7][a][iii].
Once in a while, a contractor may encounter a brand name or equal specification, but later find that the specified brand name product is unavailable. The resolution of these cases involves a consideration of the contractor’s knowledge of availability at the time of bidding and the balancing of fault between the government and the contractor. Therefore, when a project is bid where the time between the bid opening and the date the product is used is lengthy and the manufacturer of the product goes out of business, and the contractor would have had no way of predicting this turn of events, the subcontractor should be allowed to submit an "or equal" product.
This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter
It has been held that under these circumstances, the contractor has the right to submit an "equal" even though the specification omitted the words "or equal." The Court noted that the government must omit or change the standard-of-quality language where it wants to require the use of only one product. The point here is that specifying only one product can be limiting upon competition and can drive the price up.
Sometimes a specification is written around a proprietary product. For example, a specification may be written with such descriptive words that only one product can be used, even though it has not been identified by brand name. In such a circumstance, a Federal Appeals Court held that a proprietary specification should be treated as though the product that was identified by its brand name, giving the contract to the right to submit an "equal" product even though no "brand name" was used in the specification. To hold otherwise would allow the government to subvert the competitive bidding process by writing specifications "around brand-name products." Construction Law Handbook section 7.02 [C][7][a][iii].
Once in a while, a contractor may encounter a brand name or equal specification, but later find that the specified brand name product is unavailable. The resolution of these cases involves a consideration of the contractor’s knowledge of availability at the time of bidding and the balancing of fault between the government and the contractor. Therefore, when a project is bid where the time between the bid opening and the date the product is used is lengthy and the manufacturer of the product goes out of business, and the contractor would have had no way of predicting this turn of events, the subcontractor should be allowed to submit an "or equal" product.
This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter
Thursday, August 21, 2008
S C Bid Protests
Changes to bids after the bids have been opened
The state of South Carolina launched into uncharted territory when it disallowed the protest of the second low bidder in the case of Martin Engineering, Inc. v. Lexington School District One, 365 S.C. 1, 615 S.E. 2d 110 (2005).
The school District put a school renovation project out for bid. Sharpe was the low bidder and Martin was second. When the bids were opened Sharpe asked to add $613,000 to its $16MM bid saying it had forgotten to include the built up roofing.
Martin protested saying that the School District procurement policy only allowed bid correction when the mistake was clearly evident from the face of the bid, the correction does not cause the bidder to have the low bid and it would not be prejudicial to fair competition.
The Supreme court found that the mistake was not apparent from the face of the bid but said “the mistake is clear, and the amount Sharpe intended to bid for the roof is evident, by examining the roofing sub’s sub-bid….” Furthermore, the Court found that allowing the upward correction was not prejudicial to fair competition.
The contrary view is that allowing the after the fact upward correction encourages unscrupulous contractors to play games with the bidding process. A contractor can deliberately leave out 10% of his price, as was the case in Martin Engineering, become the low bidder and then ask to correct saying that it is obvious he made a mistake. Then he can have his cake and eat it too. Such gamesmanship is almost impossible to prevent in the bid protest arena where there is no discovery and the case must usually be made in ten days or less.
Bryan Barnes
barnes@rtt-law.com
The state of South Carolina launched into uncharted territory when it disallowed the protest of the second low bidder in the case of Martin Engineering, Inc. v. Lexington School District One, 365 S.C. 1, 615 S.E. 2d 110 (2005).
The school District put a school renovation project out for bid. Sharpe was the low bidder and Martin was second. When the bids were opened Sharpe asked to add $613,000 to its $16MM bid saying it had forgotten to include the built up roofing.
Martin protested saying that the School District procurement policy only allowed bid correction when the mistake was clearly evident from the face of the bid, the correction does not cause the bidder to have the low bid and it would not be prejudicial to fair competition.
The Supreme court found that the mistake was not apparent from the face of the bid but said “the mistake is clear, and the amount Sharpe intended to bid for the roof is evident, by examining the roofing sub’s sub-bid….” Furthermore, the Court found that allowing the upward correction was not prejudicial to fair competition.
The contrary view is that allowing the after the fact upward correction encourages unscrupulous contractors to play games with the bidding process. A contractor can deliberately leave out 10% of his price, as was the case in Martin Engineering, become the low bidder and then ask to correct saying that it is obvious he made a mistake. Then he can have his cake and eat it too. Such gamesmanship is almost impossible to prevent in the bid protest arena where there is no discovery and the case must usually be made in ten days or less.
Bryan Barnes
barnes@rtt-law.com
Subscribe to:
Posts (Atom)
