By Bruce Jervis
Bid protests are an inherent part of the competitive bidding process. A disappointed, second-low bidder seeks to displace the low bidder by challenging the sufficiency or responsiveness of its bid. This is generally a matter between each of the bidders and the public project owner. On rare occasions, however, bidders actually sue each other.
A California court recently allowed two disappointed bidders to sue the winner of multiple public works contracts for “intentional interference with a prospective economic advantage.” The plaintiffs alleged the defendant underbid them only by paying its workers less than the mandatory prevailing wage rates. The plaintiffs didn’t file bid protests at the times of contract award, but they claimed they didn’t become aware of the alleged misconduct until much later.
A private lawsuit between competing bidders is rather different from an administrative bid protest filed with public authorities. Is it wise to allow this type of litigation? Does it add yet another pitfall to the low-margin, high-risk realm of public construction contracting? Your opinion is welcomed.