However, what happens when there is no formal agreement to extend the bid acceptance
period? That was an issue in Prime Contractors Inc. vs. City of Girard (655
N.E. 2d 411 [Ohio App. 1995]), where a disappointed low bidder contested
an award to the second bidder.
In 1993, the city of Girard, Ohio, sought bids for repavement of a road.
The bid documents included the city's right to determine if the bidder had
the ability to perform the work at the bid price, and they also contained
a provision requiring bidders to attach materials showing they had complied
with the state's Equal Employment Opportunity Commission (EEOC) requirements.
When the bids were opened, Prime Contractors' bid was substantially lower
than the bid submitted by Gennaro Pavers. In trying to comply with the EEOC
requirements, Prime Contractors attached a copy of a Conditional Certificate
of Compliance that had expired two days before the bid's submission.
On Oct. 12, 1993, the city council met to determine which of the bids to
accept. Before voting, the council was advised by the city's law director
and safety service director that, in their opinion, the amount of Prime
Contractrors' bid was not sufficient to complete the project in the proper
manner. Based on that opinion, the council authorized the safety service
director to award the contract to Gennaro Pavers.
Prime Contractors filed a lawsuit seeking an injunction against the municipality
prohibiting it from entering into the contract with Gennaro Pavers. In addition,
Prime Contractors argued the bidding process had to be redone because the
city and Gennaro Pavers had never entered into a written contract predicated
upon the acceptance of Prime Contractors' bid.
After a two-day trial, the court held that the city had not abused its discretion
in rejecting Prime Contractors' bid and awarding the contract to Gennaro
Pavers. In its decision, the trial court held that the failure to enter
into a written contract would only be a basis to verify if either the city
or Gennaro Pavers had objected.
On appeal, Prime Contractors relied on an Ohio statute that requires the
award and execution of a contract to be done within 60 days. The failure
to award and execute a written contract within that time frame invalidates
the entire bid proceedings and all bids submitted, unless the time for awarding
and executing the contract is extended by mutual consent of the owner and
bidder.
The court found the 60-day limit could be extended by "mutual consent."
As to this point, the court emphasized that the parties to the proposed
contract need not "agree" to extend the 60-day period. Instead,
mutual consent could be reasonably inferred by conduct.
Under this interpretation, the court concluded the bid does not automatically
become invalid at the end of 60 days: It continues to be valid until one
party indicates to the other that it is withdrawing its consent.
In this case, the court found no evidence that either the city or Gennaro
Pavers had revoked their consent to extending the 60-day period. In fact,
the evidence showed that Gennaro Pavers had already begun to perform the
work on the project even though a written contract had not been executed.
On that basis, the court refused to grant the injunction sought by Prime
Contractors.
In most cases, public owners specifically request extensions of the bid-acceptance
period when some problem holds up an award. Suppose a public owner did not
seek an extension and the low bidder did not revoke its bid. Could the public
owner require the bidder to perform by a notice of award several months
later?
Obviously, the answer to that question depends on the wording of the statute
or bid proposal. Interestingly, the Ohio Court of Appeals found a consent
to extend that did not require a formal agreement. m
Editor's note: Effective Feb. 1, Cordell Parvin is a partner in the law
firm of Leonard, Hurt & Parvin, a professional corporation with offices
in Austin, Texas; Dallas; Houston; Richmond, Va.; and Washington, D.C. He
will work out of the firm's Richmond and Dallas offices. You may write to
him in care of the editor.
