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.
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