ConstructionPro Week, Volume: 4 - Issue: 11 - 03/20/2015

Should Bidders Be Allowed to Sue Each Other?

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.

COMMENTS

I have no problem bidding small NY prevailing rate or non-prevailing rate jobs. The problem I have run into, on several occasions, is that small municipalities or small fire districts do not properly inform small local contractors (who might be inexperienced in the myriad of prevailing rate rules) of the requirement to pay prevailing rate in the bid documents. On several occasions, I have had to contend with local officials responsible for letting out small construction projects who did not know that their small construction project was subject to NY Labor Law 220 or the local official out right rejected the requirement.

I would never make trouble for a fellow contractor, but I have, on several occasions, complained to the NYS Labor Department Bureau of Public works at the beginning of the bidding process about local officials who did not properly inform prospective bidders of the prevailing rate requirements. On some occasions this led to the rebidding of the project and on other occasions this led to a prompt bid addendum.

Also, bidding small jobs where there isn't a pre-bid meeting to ask questions or questions are answered randomly to one or another bidder and not all bidders are provided with the same information is very problematic. I have seen this happen (and complained) on both small prevailing rate jobs and small jobs for non-profits (i.e., Habitat, Churches, etc.).

Competition is the American way. I enjoy competition. What bothers me is when all of the bidders are not bidding the exact same plans, specifications, rules, etc.
Posted by: Andrew Wisoff - Friday, March 20, 2015 4:12 PM

If the stated facts are true; prosecution for fraud is indicated, as a contract was signed mandating the minimum wages. Also where was the contracting office in not doing due diligence in their Davis Bacon wage surveillance program they are mandated to do. They should be party to the lawsuit also especially if they can be proven to derelict inn their duties. When the Government does not do their job then legal action in the courts is the only redress an honest and aggrieved contractor has left.
Posted by: Ronald Vietmeier - Friday, March 20, 2015 4:13 PM

The real contractor with ethics would never try to unseat the LOW bidder. Then again there are a lot of whores (CONTRACTORS) out there that would do something like that.
Posted by: Bryan - Friday, March 20, 2015 5:29 PM

When the government does not do there job the government should pay the low bidder the money, if low bidder can prove that the government didn't do there job.
Posted by: Julio Trevino - Sunday, March 22, 2015 1:54 PM