When a publicly bid construction contract is awarded, the legal mandate is usually "low responsive, responsible bidder," sometimes expressed as "lowest and best bidder." In such a scenario, contract award should be based on the lowest bid, compliant with the terms of the solicitation, submitted by a bidder capable of completing the contract.
The sufficiency of the bidder has traditionally been a business assessment of the financial, technical, and administrative capabilities of the company. Some public project owners, however, have started adding other requirements. The City of Cincinnati required bidders to contribute to employee health care plans and employee retirement programs.
Non-union contractors challenged the requirement, arguing it was a transparent attempt to rig the competitive bidding process in favor of union contractors. A union intervened in support of the city. A federal appeals court ruled that regardless of the motive, the requirement was legally permissible.
The other case in this issue involved an indemnification clause in a subcontract. Although the clause seemed to run afoul of a state statute limiting indemnification against one's own negligence, the statute did not apply. The anti-indemnification law pertained to the construction of a "building or structure." The project in question was for improvements to underground utility lines.
