ConstructionPro Week, Volume: 6 - Issue: 11 - 03/17/2017

Should Low Bidders Be Sued for Abuse of the Process?

Second place bidders frequently look for ways to displace low bidders. The most common tool is a protest that the low bid is not responsive to the solicitation or the low bidder is not responsible. Two California contractors took the challenge to another level and the case went to the state’s highest court.

The two contractors were chronic second low bidders on highway improvement contracts, with a third company the consistent winner. The second place bidders sued the low bidder for damages on a theory of wrongful interference with the competitive bidding process. The plaintiffs alleged the low bidder priced labor at rates lower than required by the prevailing wage laws.

The California Supreme Court did not allow the suit to proceed. The court was unimpressed with the plaintiffs’ argument that recognition of such suits would be beneficial for the taxpaying public and laborers on public works contracts. In fact, said the court, allowing these private actions would be bad public policy.

What is your opinion? Wouldn’t private suits for damages enhance compliance with the competitive bidding laws? Or, as feared by the court, would these suits facilitate opportunistic claims and discourage good companies from participating in the public works sector?

COMMENTS

If the low bid contractor was not paying the correct prevailing wage then the state should pursue them. If the state does not pursue the low bid contractor and the 2nd low bid contractor believes there is evidence of cheating on the prevailing wage rate then the 2nd low contractor should pursue the state for not enforcing the law. But to have one contractor sue another for what they think is unfair is ridicules and only ties the courts up.
Posted by: Brett Fletcher - Friday, March 17, 2017 9:44 AM

How many times have we all been tempted to complain by an under bid project which gets awarded, especially to a firm that consistently low bid projects? The sad fact is that the phrase lowest and most responsible bidder is actually lowest bidder and responsibility no longer plays any part in awarding public project. You understand mistakes are made in the bid process and we have all made them, and yes at times we have also taken the project even with the mistake to avoid being penalized by the awarding entity by being excluded from future bids. You hope the mistake is not to large that better buy outs or scheduling expediency can overcome the bid shortfall. It is when you see a firm bid after bid is lower by over 20- 25% that technically they are doing the work below what you and other bidders reasonable consider your costs. It is with these public work (prevailing wage) bids that the bidding entity needs to up their game and either review the bidders bid or make sure the contractor and its subcontracting firms are strictly adhering to labor laws. Labor is typically where the shortfall is on low bids and it is also where the low bid firms try to make up that short fall. They do not pay prevailing wage, have workers work 10 hour shifts and pay them for 8, they also try to work on sites without the clients knowledge so these work shifts go unreported on the certified payroll. We all know this happens, but we are powerless for the most part to do anything about it, it is the lack of follow up by the public bidding entity that is the most frustrating. It is obvious to everyone but them that the bid is not a responsible one, but to them who based everything on guesstimated budgets (which we all know how that sometimes works) and as long as that low bidder falls within their guesstimated budget for this project life is wonderful, the responsibility of the project now moves over to a construction management division of the agency. So i guess what the two firms should have done was to question the low bidders numbers to the bidding entity and to continue to do so until someone's eyes open up and they begin to look a little more into these types of firms. Now in fairness to these public bidding entities there are some companies who make complaints more out of sour grapes and also with the hope that a low bidder may get disqualified and the bid will drop to them and it is not always because the bid amount that causes that to happen but it is the excuse to have the low bidders bid submittal scrutinized so a non-dollar value mistake is found. It is the world we bid in
Posted by: John B - Friday, March 17, 2017 9:48 AM

All the contractor unions would be sued because they do it all the time with concessions! They use concessions (money given to the bidding contractor) to bid labor costs lower than prevailing wage. While the rest of us must bid at prevailing wage. So there is abuse there, in my state it would be the construction contractor unions. Don't allow construction contractor unions to use concessions on prevailing wage jobs. Sadly no one / nor courts care here either.
Posted by: LillyLu - Friday, March 17, 2017 9:58 AM

The tendering system is a dysfunctional lottery disguised as a fair and effective system, we are stuck with it because no one will admit that it is a dysfunctional lottery. Anyone can bid at the rock bottom low end of what the client will accept, provided they can guess what it is.
Posted by: Trevor Rabey - Tuesday, March 21, 2017 7:47 AM

Awarding the bid requires due diligence of the owner to investigate the contractor's prior performance history and ability of the low bidder to perform the nature and scope of the project. Based upon this endeavor the owner can reject the low bidder. If the owner fails to fulfill this function, it deserves what it gets. Courts will give deference to the opinion of the public body awarding the contract to other than the low bidder if it can demonstrate due diligence was performed with anecdotal information about prior projects of the low rejected bidder.
Posted by: Lorence H. Slutzky - Thursday, March 23, 2017 6:21 PM