2.1.9.5 Common Bid Errors

• Jurisdiction: Arizona

The following is a list of common bid errors that may disqualify a contractor’s bid from being considered:

1. Late Bid. Lateness is poison to a bid. A bid submitted after bid opening nearly always must be rejected.^[180] The main if not only exception to this rule is where the late submission resulted from government mishandling.^[181] Neither Maricopa County nor Tucson mentions this exception.^[182]

2. Failure to Sign the Bid. This usually is fatal to a bid, though some courts have found an excuse for a contractor’s failure to sign a bid, where, for example, the contractor has signed other documents in the bid package (such as a bid bond), which shows the contractor’s intent to be bound to its bid.

3. Omission of Price Figures. This also can be a fatal error but, again, exceptions exist. One occurs where the missing figures can be determined from the face of the bid. For example, if a bid contains 25 items plus the bottom line and 24 items and the bottom line are filled in, by simple arithmetic one can figure out the amount of the omitted 25th line. That type of error may be overlooked. Another example occurs where, for a particular item, a contractor has filled in an extension but not the per unit rate. By dividing the extension by the listed quantity, the unit rate can be determined. Finally, where alternates are used and a contractor fails to fill in an alternate price, the contractor’s bid should fail if that alternate is selected but should be considered if that alternate is not selected.

4. MBE/WBE Requirements. Failure to comply with all minority-owned business enterprise (MBE) and women-owned business enterprise (WBE) requirements usually makes a bid non-responsive. For example, Phoenix requires a contractor to achieve certain percentage goals of MBE and WBE participation.^[183] Failure to satisfy those goals at time of bid submission should render a bid non-responsive.^[184]

5. Bid Bonds. Bid bond errors, such as an unsigned bond, use of the wrong form, or a bond issued by a non-authorized surety, also constitute grounds for disqualification of a bid as non-responsive. At the federal level, bid bond requirements are strictly enforced and constitute grounds for disqualification. The state and local authorities have not been so strict and sometimes have allowed a contractor to cure a bid bond error after opening of bids.^[185]

6. No License or Wrong License. It is rare that an unlicensed contractor will bid for public work, but occasionally a contractor may not have the right license or the right combination of licenses. For example, a building project may also include some approaches for which a Class-A engineering license also is required. Clearly a contractor in Arizona must have all required licenses before signing the contract with a public agency, and merely submitting a bid without a license or without the right license can subject a contractor to discipline from the Registrar of Contractor’s office.^[186]

The more intriguing question is the effect that a lack of the right license or combination of licenses at the time of bid submission will have on whether the bid can be considered at all. The first place to look to answer the question is the bid documents, because they very well may make a proper license a condition for bidding as well as for signing the contract.

For federally-aided projects, A.R.S. § 32-1163 recognizes that federal requirements override the Arizona licensing statutes, and the federal rule generally is that licensing is a matter of responsibility and obtaining the requisite license by contract award should suffice.^[187]

At the state and local level, for purposes of having a bid considered, the answer depends on whether the substantial-compliance doctrine is applicable.^[188] Based on specific language in a public bidding statute (A.R.S. § 34-241), the Arizona Supreme Court twice has held that a contractor must have the right license even to have its bid considered.^[189] However, the legislature amended A.R.S. § 34-241 in 1981, deleting the language relied on by the Arizona Supreme Court.

Later, relying on these cases, the Arizona Court of Appeals held that A.R.S. § 32-1151 required a contractor to have all necessary licenses when it submitted a bid.^[190] The court went on, however, to apply the substantial-compliance doctrine on the facts before it, and excused the failure of a contractor holding an A license to have a B-1 license as well, when both were required.

7. Subcontractor Lists. Often a public owner will require a bidder to include a subcontractor list with the bid. Whether the omission of such a list renders a bid non-responsive and requires its rejection depends on the language of the bid documents and the purpose for which a subcontractor list was required. If the bid documents require the submission of the subcontractor list merely to determine the responsibility of the subcontractors, the owner can waive a bidder’s failure to include the list with the bid package, so long as it is submitted before contract award. If, however, the purpose of requiring a contractor list is to prevent bid shopping or to ensure compliance with MBE/WBE requirements, the failure to submit a list with the bid package should constitute grounds for rejecting the bid.

8. Experience Requirements. From time to time a public owner may require a bidder to establish a certain number of years of experience in performance of all or part of the work. This typically will occur if the work is particularly difficult or requires special technologies or skills. If the bidder itself has not been in business for the required number of years, the owner should look at the experience of the bidder’s employees who will perform the work for which the experience is required. A bidder often will be incorporated and a corporation itself is lifeless and must depend on the skills of its employees. If a newly formed corporate bidder has an employee with 30 years of experience in an area for which only 5 years’ experience is required, it makes no sense to disqualify the corporate bidder just because it has been newly formed. In this respect, the experience of its employees should be the controlling factor.

9. Proprietary Specifications. A basic principle of public contracts law requires that specifications be drawn to afford the maximum amount of competition. The use of a proprietary specification runs counter to this principle. A proprietary specification is one that identifies a product or component by reference to a particular manufacturer. Sometimes there are good reasons for using a proprietary specification. For example, a particular manufacturer may be the technological leader in a particular field. However, a proprietary specification also may be used to steer a job to a particular contractor. Thus the use of a proprietary specification may be grounds for protest. It all depends on the facts of the case. A note of caution is in order with proprietary specification protests: Always make the protest before the date of bid submission. This is the type of protest that usually can be fixed by an addendum or otherwise before bid opening. Thus, a protest after bid opening probably will be too late.

10. Unbalanced Bids. An unbalanced bid is the result of a bidder shifting costs from one line item in a schedule of values or bid to another for no cost-related reason. An unbalanced bid may result from a contractor’s attempt to “front-load” a bid or for cash-flow purposes to shift costs from the end of the job to the front. If the bid documents prohibit the practice, an unbalanced bid is non-responsive and should be rejected. The problem with this issue is proving that a bid is unbalanced. Except in the worse cases, unbalancing may fall in the “I know it when I see it” category. This can form grounds to protest, but its usefulness is reduced by the difficulty in proving the unbalancing.

^[180] See PCR R2-7-328(A); SDPR R7-2-1028(B); MCPC § 1-321(B).

^[181] PCR R2-7-317(B), R2-7-328(A); SDPR R7-2-1028(B).

^[182] MCPC § 1-321(B); TPC § 28-17(4).

^[183] Phoenix Code, ch. 18, art. VI, § 18-105.

^[184] Id. § 18-107(A)(2).

^[185] See, e.g., Marshall v. Dietrich, 30 Ariz. 54, 60-61, 243 P. 910 (1926) (upholding the allowance of a post-bid-opening supplement of a deficient cash bid bond); see also § 2.1.6.2, above.

^[186] This rule is relaxed somewhat by the substantial compliance doctrine adopted by the Arizona Supreme Court in Aesthetic Prop. Maint., Inc. v. Capitol Indem., 183 Ariz. 74, 900 P.2d 1210 (1995).

^[187] Lederle-Praxis Biologicals, 94-1 CPC 277 (1994).

^[188] See Aesthetic Prop. Maint., Inc. v. Capitol Indem., 183 Ariz. 74, 900 P.2d 1210 (1995) (adopting the doctrine and explaining its application).

^[189] See Arnold Constr. Co. v. Arizona Bd. of Regents, 109 Ariz. 495, 498-99, 512 P.2d 1229 (1979); City of Phoenix v. Superior Court, 109 Ariz. 533, 514 P.2d 454 (1973); see also Urbatec v. Yuma County, 614 F.2d 1216, 1218 (9th Cir. 1980) (license required at bid submission).

^[190] City of Phoenix v. Superior Court, 184 Ariz. 435, 437, 909 P.2d 502, 504 (Ct. App. 1995).

Cases

Achen-Gardner v. Superior Court, 173 Ariz. 48, 839 P.2d 1093 (1992).................................... 2.1-1, 3, 13

Aesthetic Prop. Maint., Inc. v. Capitol Indem., 183 Ariz. 74, 900 P.2d 1210 (1995).......................... 2.1-30

Arnold Constr. Co. v. Arizona Bd. of Regents, 109 Ariz. 495, 512 P.2d 1229 (1979)....................... 2.1-31

Blount v. United States, 22 Cl. Ct. 221 (1990)......................................................................................... 2.1-27

Brown v. City of Phoenix, 77 Ariz. 368, 252 P.2d 358 (1954).................................................. 2.1-1, 25, 26

Chaney v. City of Tucson, 148 Ariz. 571, 716 P.2d 28 (1986)................................................................. 2.1-8

Chicago Title Ins. v. Renaissance Homes, 139 Ariz. 494, 679 P.2d 517 (Ct. App. 1983).................. 2.1-27

City of Phoenix v. Superior...