Jacob E. Roussel | Breazeale Sachse & Wilson LLP | July 19, 2018
Contractors performing public works projects are well aware that they must comply with the Public Bid Law and the public entity’s bidding documents in submitting their bids. But what if it is impossible to do so?
That was the scenario in the case of Command Constr. Indus., L.L.C. v. City of New Orleans, 2018 WL 3046136 (La. App. 4 Cir. 6/20/18). In that case, the City of New Orleans solicited bids for two projects where the invitation for bids on each project required bidders to possess licenses from the Louisiana State Licensing Board for Contractors in the classifications of “Public Works Construction” and “Highway, Street & Bridge Construction.” The problem was that La. R.S. 37:2156.2 sets forth the categories of contractor licenses and includes “Highway, Street, and Bridge Construction” but does not include a classification by the name of “Public Works Construction,” although it does include a classification titled “Municipal and Public Works Construction.”
The City initially advised that it intended to award the contracts to the low bidder on each of the projects. However, in response to a protest letter, the City later decided that it would reject all bids on both projects because no bidders had a contractor license in the non-existent classification required by the bidding documents. As a result, one of the contractors filed two lawsuits challenging the City’s right to reject all bids on each of the projects, which lawsuits were consolidated for trial.
In the recent appellate decision by the Fourth Circuit Court of Appeal, the Court first addressed the contractor’s argument objecting to the City’s decision to reject all bids based upon the principle set forth in Wallace C. Drennan, Inc. v. Sewerage & Water Bd. of New Orleans, 00-1146 (La. App. 4 Cir. 10/3/01), 798 So.2d 1167, that “[o]nce the public entity has exercised its option and accepted a lowest responsible bid, it cannot reject all bids and re-advertise the project.” The Court held that the doctrine was inapplicable because the City had not yet awarded the contracts, but rather only issued an “intent to award” pending receipt and approval of the contractors’ post-bid documentation.
The contractor also asserted several arguments contending that the City waived its objection to the faulty licensing requirement in the bidding documents because the City did not raise the issue before the submission of the bids. First, the contractor relied upon Apolinar v. Prof’l Constr. Servs., 95-0746 (La. 11/27/95), 663 So.2d 17, wherein the Louisiana Supreme Court held that a bidder must timely protest any objectionable provision in the bidding documents at a time that allows the public entity to issue a correction or clarification. Second, the contractor relied upon La. R.S. 37:2163(D) which requires the architect, engineer, or awarding authority to classify public projects and then permits “any interested person” to object thereto by way of a certified letter. Third, the contractor relied upon the City’s procurement policy which requires a protest to be filed within fifteen business days after the protester knew or should have known of the factual basis for the protest. The Court rejected each of these arguments, holding that each basis for waiver only applied to bidders and not to the City as a public entity.
With respect to the merits, the Court stated that a public entity is vested with the power and discretion to reject all bids if none are satisfactory, as long as that discretion is exercised in a fair and legal manner and not arbitrarily. The Court then held that, although the bidding documents were flawed rending compliance impossible, the Public Bid Law provides that the requirements of the bidding documents could not be waived. Thus, since no bids were submitted in compliance with the bidding documents, the Court ruled that the City was justified in rejecting all bids on both projects.
According to this recent decision, contractors risk the rejection of all bids if discrepancies in the bidding documents rendering compliance impossible are not raised and corrected prior to the bid opening. Otherwise, strict compliance with the bidding documents may be required even where it is impossible to do so.