Bid Problems Don't Have to Be Big Problems Part Two: Managing Bid Protests

• Publication year: 2016
• Author: By Clare M. Gibson

Bid Problems Don't Have to be Big Problems Part Two: Managing Bid Protests

By Clare M. Gibson^*

MCLE SELF-STUDY ARTICLE

(Check end of this article for information on how to access 1.0 self-study credit.)

INTRODUCTION

This article is the second half of a two-part series on limiting and managing risk from bid protests arising from bidding on public works contracts.¹ Part One, on practical measures to avoid bid protests, was published in the Summer 2016 issue of the Public Law Journal (Vol. 39, No. 3). Part Two provides recommendations to help public agency counsel respond to and manage unavoidable bid protests.

Most public works contracts must be awarded to the lowest responsible bidder (with exceptions that are beyond the scope of this article).² Not surprisingly, most protests are filed by high bidders against low bidders in order to win the contract—at a higher price.

The vast majority of bid protests are based on allegations that a low bid is defective and must be rejected as nonresponsive. A bid is responsive if it complies with the bidding instructions.³ Responsiveness pertains to the bid, not the bidder, and is determined on the face of the bid.⁴ Less frequently, protests allege that the bidder itself must be disqualified on grounds that it is not a "responsible" bidder.⁵ Issues of responsibility pertain to the bidder and generally require outside investigation of the bidder.

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Regardless of the basis for protest, by planning ahead and following sensible procedures to respond to bid protests, agency attorneys can more effectively manage risk exposure when protests do arise.

PLANNING AHEAD

Establish Bid Protest Procedures

In terms of planning ahead, establishing comprehensive bid protest procedures is essential for timely, fair and efficient handling of bid protests. Absent these procedures, there simply are no limits on when a protest must be submitted, what it must contain, or how it must be submitted. Without agency procedural constraints, protesting bidders can be quick to take advantage of an open-ended opportunity to pursue their own agendas.

The Public Contract Code does not provide bid protest procedures or requirements for most public agencies, so it is largely up to agencies to adopt their own.⁶ Good bid protest procedures should ensure that all information necessary to evaluate the protest is provided promptly. They should enable agency counsel to analyze the protest quickly in order to advise the agency on its merits and the lawful actions the agency may take in response. The following should be considered for any set of bid protest procedures:

Limit to a single complete protest.

Protest procedures should require that the protest be specific, complete, and include all supporting evidence with no right to supplement after the protest is filed—that is, no second bite at the apple. Likewise the protested bidder should be given the opportunity to provide a single, complete response within a similarly limited amount of time. The protested bidder is often in the best position to explain why the protest lacks merit, so it can be quite useful to obtain its response as soon as possible.

Limit protester standing.

Protest procedures should limit protest standing to a general contractor who has actually submitted a bid, and therefore has a direct stake in the outcome.⁷ Subcontractors or suppliers with a secondary interest should be excluded. Standing may be limited further to a bidder that would be awarded the contract if its protest is successful, e.g., the next lowest bidder.

Limit time to file and respond.

Protest procedures should be structured for swift resolution to avoid any potential for delay in contract award. That means the procedures should specify short timeframes for submission and resolution. Protest submittal deadlines should also be short. Often bid protests are in the form of a letter from the protesting bidder; they are not annotated legal briefs that require considerable time for research and writing. For routine public works bids, two or three working days is generally adequate— as long as the agency makes the bids available for review immediately after the bid opening (more on that in Section III, below). An additional two or three working days is usually sufficient for the protested bidder to submit a response, plus a day or two for legal counsel to analyze and respond to the protest.

Likewise, the procedures need not suspend contract award until after the protest is resolved, thus avoiding the project delay that suspension can entail. Public Contract Code section 5110 provides that "the contract may be entered into pending final decision of the challenge."⁸

Do not require a public hearing for all protests.

There is no need to require public hearings for all bid protests. A bidder whose bid is challenged on grounds of responsiveness—the most frequent basis for a bid protest—is not entitled to a hearing as a matter of law. Review is limited to the face of the bid and outside evidence should not be considered to determine responsiveness.⁹ Adding a mandatory hearing requirement will needlessly delay resolution of protests. Typically, agency action to reject a protest and award to the low bidder can be handled administratively by the awarding official or included on the agency's consent calendar.

A bidder alleged to be non-responsible is entitled to a due process hearing only if the agency intends to disqualify the bidder as non-responsible based on credible evidence, following independent investigation of the allegation.¹⁰ This is a fairly rare occurrence, so it is not necessary to include a special procedure for responsibility hearings if the agency has already adopted general evidentiary hearing procedures that comply with due process.

The procedures should be...