TO: Chair
Doyle, Board Members & General Manager
FROM: David C. Laredo
RE: Analysis of Bid Protest
This
memo addresses an issue arising from construction bids received for the Santa Margarita
ASR project control building.
Issues
May the
Monterey Peninsula Water Management District waive a defect in the William A. Thayer
Construction, Inc.’s bid on the Santa Margarita ASR project control building?
And, if the
Monterey Peninsula Water Management District cannot waive the defect in the
Thayer bid, can the District waive the defect in the DMC Construction Inc.’s
bid?
Conclusion
The Monterey Peninsula Water Management
District may waive the defect in the William A. Thayer Construction, Inc.’s bid
for the Santa Margarita ASR project facility building as the deviation from the
bid requirements was inconsequential and William A. Thayer Construction, Inc.
received no competitive advantage as a result of the deviation. The question of
whether the District may waive the defect in DMC Construction Inc.’s bid
therefore does not arise.
Analysis
Background
On January 27, 2010, the Monterey
Peninsula Water Management District (District) held a bid opening for the Santa
Margarita Aquifer Storage Recovery project facility building. In response, the
District received six bids. The lowest competitive bid came from William A.
Thayer Construction, Inc. (Thayer). The second lowest bid was from DMC
Construction Inc. (DMC), followed by Avila Construction Company, Inc. (
Subsequent to the bid deadline,
Thayer Bid
DMC Bid
Regarding
Thayer’s failure to include copies of all addenda and bid question responses,
Thayer sent the District a letter, dated February 3, 2010, in which Thayer
acknowledged all addenda and question responses and indicated that Thayer
“fully intends to complete this project per the plans and specifications
including revisions through January 27, 2010.” (the day the bid closed).
Regarding the omission of pages 13 and 14
of the bid package, Thayer maintains that they did not submit pages 13 and 14
of the packet because of an ambiguity caused by a parenthetical statement at
the bottom of the document. In parenthesis at the bottom of both documents was
the following language: “This certificate must be executed by the successful bidder prior to the award of Contract.” (Emphasis added) Thayer
took this statement to mean that these certifications were to be submitted once
the District had selected the successful bidder.
Legal Standard
When the expenditure required for a
public project exceeds five thousand dollars ($5,000), it shall be contracted
for and let to the lowest responsible bidder after notice. (Cal.Pub.Con.Code §
20162)
In a review of a competitive bid protest,
the courts will look to see if the bid was awarded to the lowest “responsible”
bidder. [5]
However, “[t]he rule of strict compliance with bidding requirements does not
preclude the contracting entity from waiving inconsequential deviations.” Ghilotti Construction Company v. City of
A basic rule of competitive bidding is
that bids must conform to specifications, and that if a bid does not so
conform, it may not be accepted. However, it is further well established that a
bid which substantially conforms to a call for bids may, though it is not
strictly responsive, be accepted if the variance cannot have affected the
amount of the bid or given a bidder an advantage or benefit not allowed other
bidders or, in other words, if the variance is inconsequential. Ghilotti Construction Company v. City of
In
Konica Business Machines U.S.A.,
Inc. v. Regents of the University of California (1988) 206 Cal. App. 3d
449, 253 Cal. Rptr. 591, the Court considered four factors to determine whether
a deviation in a bid to provide the University of California systems with photo
copy machines was material or inconsequential. In considering whether a
deviation was a minor irregularity or a material change, the Court considered
1) whether deviation could be vehicle for favoritism, 2) whether the deviation
affects the amount of the bid, 3) whether the deviation influences potential
bidders to refrain from bidding, and 4) whether the deviation affects the
ability to make bid comparisons.
Discussion
Applying the Konica factors to the issue of Thayer’s lack of inclusion of all
addenda and bid question responses suggests that the deviation was
inconsequential in light of the fact that Thayer has demonstrated that they
fully intend to comply with all addenda and question responses.
1.
Favoritism
and Collusion. Thayer has stated that they fully plan to complete the project
per the plans and specifications including revisions through January 27, 2010.
As
such, it cannot be said that the District is showing Thayer any favoritism as
Thayer will have to comply with the same requirements all other bidder would
have had to comply with had they been the successful bidder.
2.
Price
Advantage. The question under this factor is to establish whether or not Thayer
obtained a price advantage by its deviation from this requirement. Thayer
cannot be said to gain a price advantage because Thayer will be required to
comply with all addenda and question answers, including revision made through
January 27, 2010.
3.
Influence
Others to Refrain from Bidding. Likely, the deviation would not influence other
contractors to refrain from bidding. The failure to include certain addenda and
bid question responses was not known to other bidders at the time, therefore
they were not likely to refrain from bidding because of the deviation.
4.
Bid
Comparisons. The omission of addenda and bid question responses would not cause
the District uncertainty in the bid process. The substantive portions of the
bid were in place, and the deviation did not leave other bidders in the unfair
position of having to guess what would satisfy the District’s needs as the
other bidders were unaware of the contents of Thayer’s bid at the time of
submission.
Similarly, under the Konica factors,
1.
Favoritism
and Collusion. The omission by Thayer of pages 13 and 14 of the bid package
would not lead to the conclusion that this deviation in the bid would confer
favoritism, or indicate collusion, on behalf of Thayer because pages 13 and 14 were
omitted due to the ambiguity of the requirements, based on the parenthetical
statements on the documents. That the
District will require the two documents from Thayer prior to award of contract
indicates that the District is not favoring Thayer by allowing a material
deviation. By allowing Thayer to sign
and submit the documents, the District is ensuring Thayer, and all other
bidders, have met all the requirements.
2.
Price
Advantage. The question under this factor is to establish whether or not Thayer
obtained a price advantage by its deviation from this requirement. The failure
to include a Fair Employment Practices Certification and a Security for
Compensation Certification would not give Thayer a price advantage because
Thayer acknowledged they were aware of these requirements and they will be
required to complete, and abide by, the requirements of the omitted forms.
3.
Influence
Others to Refrain from Bidding. Likely, the deviation would not influence other
contractors to refrain from bidding. The omission of pages 13 and 14 was not
known to other bidders when Thayer submitted their bid package.
4.
Bid
Comparisons. The omission of pages 13 and 14 would not prevent the District
from comparing bids because the District had all of the substantive information
from Thayer.
Konica, when read together with Ghilotti, provide clear guidance in
determining when an agency can waive a defect in a bid. Thayer did not receive
any competitive advantage from its deviations from the bid requirements. Thayer
has committed to complying with all addenda and bid question responses through
the bid closing date. With respect to pages 13 and 14 of the bid package, it is
understandable that Thayer read the documents as not having to be submitted
until after they were deemed the
successful bidder.
Conclusion
Because Thayer’s technical non-compliance
with the bid requirements did not confer a competitive advantage, and was in
part due to ambiguity in the bid documents, the District Board may waive the
defects and award the Santa Margarita ASR facility building contract to William
A. Thayer Construction, Inc. Additionally, Thayer has acknowledged that they
accounted for all addenda and bid question responses in the preparation of
their bid, and therefore has committed to abiding by those requirements.
Notes:
1)
Should
the District Board not waive the
deviations of the Thayer bid, further analysis into
2)
On
February 11, 2010, BCI Construction submitted a bid protest, dated February 9,
2010. The protest claims that the other five bidders were not responsive. Specifically, the protest claims that Thayer
failed to submit the Security for Compensation, the Fair Employment Practices
Certification or the Certificate of Workers Compensation. Only the Certificate of Worker Compensation
was not addressed above, however it must fail for the same reasons as stated
for the Security for Compensation and the Fair Employment Practices
Certification omissions, namely that Thayer received no competitive advantage
from its omission and has committed to abide by all requirements. Should the District not waive the deviation in the Thayer bid, further analysis into
BCI Construction’s claims would be required.
U:\staff\word\boardpacket\2010\20100225\ConsentCal\07\item7_exh7b.doc
[1] These statements have
been added for background completeness purposes, and to partially address notes
2 and 3.
[2] This wording is not in
either the 1/29 protest from
[3] Allowing for
information, other than a subcontractor’s name and location to be supplemented
“up to 24 hours after the deadline…”
[4] This claim was not made
in the 1/29 bid protest from
[5] California Public
Contract Code § 1103 defines “responsible” as a “bidder who has demonstrated
the attribute of trustworthiness, as well as quality, fitness, capacity, and
experience to satisfactorily perform the public work contract.”