This month, I want to share with you a unique bid protest case involving an apparent attempt by an ineligible bidder to procure a project through a related company.
The case involves a project let by the Louisiana Department of Transportation and Development (LADOTD) for bridge joint repairs and replacements. A provision in the bid documents required the apparent low bidder to submit to the LADOTD within 10 days after being notified Form CS-6AAA, which shall contain disadvantaged business enterprise participation information.
In January 2010, the LADOTD received bids, but the apparent low bidder, TOPCOR Services Inc., failed to submit Form CS-6AAA. Consequently, the LADOTD decided to re-advertise the project. When the LADOTD re-let the project, Lamplighter Construction LLC was the apparent low bidder. However, the LADOTD determined that Lamplighter should be disqualified because a principal officer and owner of Lamplighter also is a principal officer and owner of TOPCOR, the ineligible bidder from the first letting. LADOTD relied upon Section 102.08(g) of the Louisiana Standard Specifications for Roads and Bridges, which provides that “[b]ids may be considered irregular and non-responsive and will be subject to rejection . . . [i]f an owner or a principal officer(s) of the bidding entity is an owner or a principal officer(s) of a contracting entity which has been declared by the [LADOTD] to be ineligible to bid.”
In response to a protest by Lamplighter, the LADOTD surprisingly reversed its decision and issued a notice of award to Lamplighter. This led to a protest by the second bidder, Gibson & Associates Inc., which the LADOTD denied. Gibson filed suit seeking an injunction against the award to Lamplighter and a writ of mandamus ordering the LADOTD to award the project to Gibson. The trial court agreed with Gibson. The LADOTD appealed. On appeal, Gibson argued that (1) Lamplighter, as an entity having an officer and part owner who also was an officer and part owner of TOPCOR, was disqualified from bidding pursuant to Section 102.08(g) of the Standard Specifications; and (2) the LADOTD violated public procurement statutes by failing to reject a bid that was not submitted in accordance with the bid requirements. The LADOTD did not contest the dual officership and ownership of TOPCOR and Lamplighter. Rather, the LADOTD argued that by its express terms, Section 102.08(g) applies only to “contracting entities” that had been disqualified from bidding projects due to, for example, contract performance issues, and not to bidders who were disqualified from bidding for reasons unrelated to their actions under a contract with LADOTD.
The appeals court criticized the LADOTD’s reading of Section 102.08(g) as too narrow and pointed out that such a reading is contrary to the public policies underlying the bidding statutes—to protect against favoritism and unfair pricing. The court also explained that such a reading would permit unscrupulous, ineligible contractors to simply create new companies to avoid ineligibility. It thus held in favor of Gibson and upheld the lower court’s injunction prohibiting the award to Lamplighter.
On the mandamus issue, however, the appeals court sided with the LADOTD and overruled the lower court’s mandamus, which ordered the LADOTD to award the contract to Gibson. The appeals court determined that the lower court had failed to consider whether the LADOTD had discretion to reject the remaining bids once the first bidder was disqualified. If an act is “discretionary” rather than “ministerial,” no court had the power to issue a mandamus. In this case, the LADOTD contended that it had the discretion to reject the remaining bids because all such bids were over the engineer’s estimate. Because the evidence in the record was not clear on the engineer’s estimate, the appeals court remanded the matter back to the trial court for consideration.