Public Contract
| Author | Jeffrey Lehman, Shirelle Phelps |
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An agreement to perform a particular task to benefit the community at large that is financed by government funds.
Federal, state, and local governments enter into contracts to purchase goods and services. The construction of public buildings, highways, bridges, and other structures is governed by a well-defined contractual process of competitive bidding that seeks to protect the public against the squandering of public funds and prevent abuses such as FRAUD, favoritism, and extravagance.
A public contract is a legally enforceable commitment of a party to undertake the work or improvement desired by a public authority. Public contracts are largely governed by the general law of contracts. Private individuals and corporations are held to stricter standards in their dealings with the government than in their private dealings. Conversely the government must deal fairly with those who contract with it. It can enter contracts within the limitations imposed by constitutional and statutory provisions. In addition, federal laws must be observed because most public projects receive financial aid from the federal government.
The method by which contracts are awarded is ordinarily regulated by statute or constitutional provision, and the prescribed method must be followed. For significant expenditures of public funds, government bodies usually must use a bidding process. In the awarding or letting of public contracts, the public body invites bids or makes "requests for proposals" so that it can award the contract to the bidder who qualifies under the terms of the governing statute. The submission of a bid in response to an invitation is considered an offer, and although it may not be freely withdrawn prior to acceptance, it does not become a contract unless and until such time as it is accepted by the proper public authority. A bid that does not respond to the terms contained in the invitation to bid is not within statutory requirements but is considered to be a new proposition or a counterproposal.
For major government expenditures, such as construction of public buildings and highways, government bodies require competitive bidding, which is a well-defined public process of letting a contract. Competitive bidding is a means of preventing political graft and corruption because the public nature of the process discourages favoritism and fraud. The integrity of the process is a central goal of competitive bidding. If a public official or employee is later found to have had an interest in a public contract, the agreement is void and unenforceable, and the interested parties may be subject to criminal prosecution.
To provide bidders with an opportunity to bid competitively on the same work, the appropriate public authorities must adopt plans and specifications that definitely set the extent and type of the work to be done and the materials to be furnished. The public entity itself must prepare these plans and specifications, and it must provide all prospective bidders with the same specifications from which to prepare their bids. The specifications must not be drafted so as to restrict bidding to a single bidder unless it is clearly essential to the public interest to do so.
The plans and specifications cannot be changed once an invitation for bids or the bids
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themselves have been made unless all bidders are notified so that they have an opportunity to bid under new conditions. In making specifications, the public authority has wide discretion concerning the particular equipment or product that it might require as part of the contract. For example, it might designate a specific product covered by a patent held or...
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