Source: http://wraylaw.com/articles/awarding-authoritys-discretion-to-determine-low-bidder-is-alive-well/
Timestamp: 2019-04-22 08:39:18+00:00

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Does Compliance With Plans & Specs Relieve Contractor from Exposure?
Pierce Foundations, Inc. v. JaRoy Construction, Inc.
The Louisiana Public Bid Law requires that public contracts estimated to cost in excess of $100,000 be awarded to the lowest responsible bidder who had bid according to the contract, plans, and specifications as advertised. The Public Bid Law “is a prohibitory law founded on public policy. It was enacted in the interest of the taxpaying citizens and has for its purpose the protecting of them against contracts of public officials entered into because of favoritism and involving exorbitant and extortionate prices. It was not passed for the benefit of the officials and the entities which they represent.” Boxwell v. Department of Highways, 203 La. 760, 770-71, 14 So.2d 627, 631 (1943).
Historically, public entities had discretion to determine the low bidder subject to judicial review under an abuse of discretion (arbitrary and capricious) standard. Louisiana appellate courts have often said that a public entity “has the right to be wrong, dead wrong; but not unfairly, arbitrarily wrong.” Housing Authority of the City of Opelousas v. Pittman Construction Company, Inc., 264 F.2d 695, 703 (5th Cir. 1959); Williams v. Board of Supervisors, 388 So.2d 438 (La.App. 2 Cir. 1980); Tide Equipment Co. v. Pointe Coupee Parish Police Jury, 312 So.2d 154 (La.App. 1 Cir.), writ denied, 315 So.2d 38 (1975); Toye Bros. Yellow Cab Company v. City of New Orleans, 264 So.2d 768 (La. App. 4 Cir.), writ refused, 263 La. 102, 267 So.2d 210 (1972).
Through a series of amendments to the Public Bid Law, the Louisiana Legislature has virtually eliminated any discretion previously afforded public entities by instituting a bright line rule forbidding waiver of bidding errors as mere informalities, but recent decisions by the Louisiana First Circuit Court of Appeal still allow the public entity considerable discretion in dealing with bidder errors. This article will discuss these recent decisions interpreting the amendments to the Public Bid Law and holding, in effect, that public entities continue to have discretion to determine the low bidder.
The provisions and requirements of this Section, those stated in the advertisement or bids, and those required on the bid form shall not be considered as informalities and shall not be waived by any public entity.
When the variance in the bid does not affect the integrity of the contract; does not result in favoritism or prejudice to the bidders or to the taxpaying public; does not permit circumvention of the Public Bid Law or the rules of open and fair competition and does not discourage public bidding, it is insubstantial, does not constitute “just cause” and the public entity does not have the discretion or right to reject the bid because of that variance.
To deny a public entity the power to waive insignificant deviations in order to select a low bid on every public works project is contrary to the interests of the taxpaying citizens of this state.
The amendments to 2212A(1)(b) were intended as a bright line rule prohibiting waivers in order to reduce the number of bidding disputes and reduce the cost of public work. The Legislature balanced the competing policy interests, as is their role, and found that it is in the best interest of the taxpayers of Louisiana to award contracts in favor of a bidder who had complied with the bidding requirements in all respects. Such a policy prevents fraud and favoritism which is, after all, the ultimate goal of the public bidding system and encourages fair and equal competition.
Furthermore, a contract entered into in violation of the Public Bid Law is null and void ab initio. The court can enjoin further performance of the contract and order that another contractor determined to be the low bidder be awarded the contract. This may occur after work has already begun, and eventually leads to additional disputes and more litigation over payment due one or both contractors, all at the expense of the taxpayer.
The purpose of avoiding bidding disputes would be accomplished by simply applying 2212A(1)(b) as written to require strict compliance with the bidding requirements and prohibiting waiver altogether. The statute is not unclear or unambiguous. Louisiana Civil Code article 9 provides: “When a law is clear and unambiguous and its application does not lead to absurd consequences, the law shall be applied as written and no further interpretation may be made in search of the intent of the legislature.” From the words chosen in 2212A(1)(b), the Legislature could not have been more clear. The First Circuit even acknowledges that the law is clear in subsequent cases by saying: “The Public Bid Law could not be more clear in stating that a bidder’s failure to comply with every detail can invalidate the bid.” Barriere Construction Co., L.L.C. v. Terrebonne Parish Consolidated Government, 99 2271 (La.App. 1 Cir. 2/18/00), 754 So.2d 1123, 1127, writ denied, 00-0801 (La. 5/5/00), 761 So.2d 546. [Emphasis added.] The court in Boh Bros. did not discuss any reason or rationale to interpret 2212A(1)(b) beyond the plain meaning of the words used in the statute.
Other circuits and the Louisiana Attorney General support a bright line interpretation. Donald Clement Contractor, Inc. v. St. Charles Parish, 524 So.2d 86 (La.App. 5 Cir. 1988); V.C. Nora, Jr. Building & Remodeling, Inc. v. State, Department of Transportation and Development, 93-1469 (La.App. 3 Cir. 3/30/94), 635 So.2d 466; La. Atty Gen. Op. No. 90-421(1990). In V.C. Nora, (p. 470), the court, in response to DOTD¿s position at the time, said: “[T]he legislature has . . . admonished us to consider no public contract provision as a mere formality.” Judge Lottinger, dissenting in Boh Bros. (p. 682) quoting the Third Circuit in V.C. Nora said: “Even though DOTD’s rigid specifications as to the bid form may have seemingly harsh results, any interpretation but the most literal would contravene the stricti juris nature of the public contract laws.” Also, in Donald Clement Contractor, Inc. v. St. Charles Parish, supra, the Fifth Circuit held that public entities could no longer waive irregularities of form by virtue of the amendment to La. R.S. 38:2212A(1)(b).
In 1982 and 1983 though a series of amendments, the Public Bid Law was also amended to require just cause for rejection of any or all bids. Prior to 1982, cause was not necessary to reject any or all bids. Milton J. Womack, Inc. v. Legislative Budgetary Control Council, 470 So.2d 460, 463 (La.App. 1 Cir. 1985).
In construing the statute, the First Circuit in Pittman Construction Company, Inc. v. Parish of East Baton Rouge, supra, held that minor or insubstantial deviations of form do not constitute just cause and, in the absence of just cause, the rejection of a bid is reprobated by law. See also, Barriere Construction Co., L.L.C. v. Terrebonne Parish Consolidated Government, supra. Therefore, under that reasoning, if a bidding error or irregularity is waivable, then no just cause exists to reject that bid, and the error or irregularity must be waived. However, in Barriere, the First Circuit has now retreated from that holding.
It would put public entities in a totally untenable situation if this court were to require the waiver of certain irregularities in the face of the statutory prohibition. There could never be any certainty for the public entity during the bid opening procedure if a court could simply second-guess the process and state that a particular kind of defect should have been waived. Barriere Construction Co., L.L.C. v. Terrebonne Parish Consolidated Government, supra at p. 1127-28.
But wouldn’t “certainty for the public entity during the bid opening” be achieved by a bright line interpretation of 2212A(1)(b) denying waiver of all informalities? The uncertainty the court speaks of is only an issue when public entities are allowed discretion to waive informalities in the first place. If the bidder errs in completing the envelope, the bid should be rejected as irregular. In that case, there is no dispute to resolve and no delay to the project – no uncertainty or confusion.
Fair and equal rules of competition which are disregarded in the process of exercising discretion is detrimental to the best interests of our system of contracting. Thus by allowing the awarding authority discretion to waive informalities, the court then must also find that just cause exists to reject, or else create uncertainty and confusion in the bid process. The effect is to allow public entities discretion to determine the low bidder by either waiving the informality or rejecting the bid in favor of the next lowest bidder. Is this consistent with the purpose and policy of the law to guard against fraud and favoritism?
Where the Legislature, through amendments to the Public Bid Law, has clearly eliminated the discretion of the public entity to determine the low bidder, the First Circuit in Boh Bros. and Barriere has construed the amendments so as to protect that discretion. The Supreme Court has in each case denied writs despite conflicting opinions. Despite the clear and unmistakable language, the First Circuit refuses to find that discretion of the public entity has been eliminated in favor of a bright line standard requiring rejection of any bid that deviates from the strict bidding requirements.
In doing so, the court has read into La. R.S. 38:2212A(1)(b) that only substantive requirements not be waived. But, in neither of these cases did the court address whether 2212A(1)(b) was in some way unclear or in need of interpretation beyond the plain meaning of the words used. When a law is clear, and its application does not lead to absurdity, the court must apply the law as written. What else could the Legislature have said to make its intention to eliminate discretion to waive bidder errors more apparent?

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