By: Cordell Parvin
Decisions regarding bid protests often turn on how the contracting
agency deals with bidding irregularities or defects.
Agencies in Louisiana can reject a bid "for just
cause" but must reject irregular proposals. In Angelo E.F. Iafrate
Construction, LLC v. State of Louisiana, 818 So.2d 973 (La. App. 1 Cir. 2002)
the First Circuit Court of Appeals of Louisiana had to determine whether the
Department of Transportation and Development (LDOTD) was justified in rejecting
a low bid.
The LDOTD sought bids for a highway project on I-12. Several
addenda were issued. Five contractors submitted bids on the project, including
Angelo Iafrate Construction LLC, the apparent low bidder at $18,903,541.85. The
second lowest bid was submitted by Barriere Construction Co. LLC at
$20,755,033.24.
The LDOTD determined that Iafrate's bid was irregular
because it failed to replace certain forms in its bid proposal with new forms
provided in Addendum No. 4.
Iafrate acknowledged its failure to substitute the new bid
forms but stated that it used the correct quantities included in Addendum No. 4
to price its bid. The secretary of the LDOTD rejected Iafrate's bid.
Prior to the award of the contract to Barriere, Iafrate
filed suit seeking, among other things, a judgment before the trial declaring that
its bid was responsive and, as the lowest bidder, that it should be awarded the
contract.
No harm, no foul, no victory
The LDOTD awarded the contract to Barriere, at which point
Iafrate amended its initial pleading to seek damages for LDOTD's failure to
award the contract to it as the allegedly lowest responsive bidder.
The trial court granted Iafrate's motion for summary
judgment on the issue of liability alleging that its error in failing to submit
the bid forms provided with Addendum No. 4 was not substantive and, therefore,
that the LDOTD lacked just cause for rejecting its bid. The LDOTD appealed the
decision.
The trial court's decision was based on three points:
1) the failure to use the Addendum No. 4 bid forms was not
an error or defect in the bidding documents which affected the integrity of the
bidding process or gave an advantage to any of the parties submitting bids;
2) the LDOTD was aware that the actual bid submitted by
Iafrate was calculated using the quantities provided by Addendum No. 4; and
3) there was no just cause on which the LDOTD based its
rejection of Iafrate's bid. Points 1 and 3 deal with the same issue. In other
words, did the LDOTD properly reject Iafrate's bid?
Generally, under Louisiana law this turns on whether the
LDOTD had just cause.
The Louisiana statute defining just cause states, "for
the purposes of this section 'just cause' means, but is not limited to, the
following circumstances . . ." The statute lists five examples
constituting just cause which did not include failure to use the proper bid
form. The trial court apparently decided that just cause did not exist because
failure to use the proper bid form was not listed as an example supporting just
cause and because the court did not find that Iafrate received an advantage as
a result of its mistake.
But the LDOTD had amended the Louisiana Standard
Specifications for Roads and Bridges to specify that a proposal "on a form
other than that furnished by the Department" is an irregular proposal.
This is significant because Louisiana Revised Statute
48.255A requires the department to reject irregular bids. Generally the statute
defines as irregular any bid not in conformance with the bid requirements.
The trial court focused on whether or not the bidding process
was affected and concluded "no harm, no foul" because Iafrate did not
receive an advantage from its mistake.
The appellate court, however, focused on the letter of
statute 48.255A, which required that the agency reject irregular bids.
I believe the "no harm, no foul" argument was a
good one.
Unfortunately for the low bidder, the LDOTD Standard
Specification made the bid irregular which required rejection.
Jenkens & Gilchrist is making ?Design-Build Legal
Issues? available to the readers of ROADS & BRIDGES. The volume is
available for $42 (including shipping and handling). For more information,
contact Joyce Flo at 214/855-4490; e-mail: [email protected].
