Public project owners have long complained that certain contractors are “overly litigious” or even “claim mongers.” Now they are fighting back. There is a growing trend where public entities investigate a low bidder’s claim history and use that history to disqualify the low bidder as nonresponsible. And the courts are allowing this.
Recently the low bidder on an Ohio school project was viewed with disfavor by the school district. Several years earlier the bidder had pursued a successful claim against the district. The district said the bidder was not responsible, citing a variety of factors. There was little question, however, that the district was motivated by the prior claim experience.
The bidder complained it had recovered 90 percent of the demanded amount; its claim had not been frivolous. And rejection of the low bid would cost the taxpayers an additional $109,000. But to no avail. The school district had discretion to disqualify the low bidder as nonresponsible.
This raises some troubling questions. If a prior claim is grounds for disqualification, isn’t there a danger that vindictiveness and retaliation will trump the fairness and cost savings provided by the competitive bidding system? Also, public construction contracts allocate risk between the parties. In so doing, they confer rights and responsibilities. Won’t this trend have a chilling effect on the ability of contractors to enforce their contractual rights? I welcome your comments.
Featured in Next Week’s Construction Claims Advisor:
- Agency Personnel Costs Included in Liquidated Damages Rate
- Fast-Track Project Proceeded Without Written Contract
- Engineer Protected by Language in Construction Contract