Opinion ID: 1351389
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Heading: The Competitive Bidding Statute.

Text: Under Iowa law, [w]hen the estimated cost of a public improvement ... exceeds [$50,000] the [county board of supervisors] shall follow the contract letting procedures provided for cities in sections 384.95 to 384.103. Iowa Code § 331.341. Sections 384.95 to 384.103 include a number of factors and steps to be considered in the contract letting process. Id. §§ 384.95-.103. The focus here is on section 384.99, which provides in part, [t]he contract for the public improvement must be awarded to the lowest responsible bidder.  Id. § 384.99 (emphasis added). Both parties agree that the inclusion of the word responsible in the standard for awarding contracts implies a measure of discretion on the part of a political subdivision in its consideration of what bid to ultimately accept for a project. Where the parties differ is in their interpretation of the point at which such discretion may be exercised. Master Builders argues that the Board's power arises only after bidding has concluded and then exists to give the Board the discretion to balance considerations of cost as well as the ability of a bidding party to complete the work in a responsible manner before choosing the successful bidder. The Board argues that the language of the statute implies discretion throughout the bidding process, including discretion to define what constitutes a responsible bidder. Under this theory, the Board asserts, the adoption of the PLA is an appropriate exercise of discretion given its effect of defining a responsible bidder as one who will work under the conditions set forth in the PLA. Although we have not had the opportunity to fully consider the appropriate timing for the exercise of the discretion accorded a county in operating under the lowest responsible bidder standard, we have had a number of opportunities to consider the standard generally. [5] See City of Des Moines v. Master Builders of Iowa, 498 N.W.2d 702, 704 (Iowa 1993); Istari Constr., Inc. v. City of Muscatine, 330 N.W.2d 798, 800-01 (Iowa 1983); Dunphy v. City Council, 256 N.W.2d 913, 921 (Iowa 1977); Everds Bros. v. Gillespie, 256 Iowa 317, 320-22, 126 N.W.2d 274, 276-77 (1964); Horrabin Paving Co. v. City of Creston, 221 Iowa 1237, 1243, 262 N.W. 480, 484 (1935); Wigodsky v. Town of Holstein, 195 Iowa 910, 916-17, 192 N.W. 916, 919 (1923); Urbany v. City of Carroll, 176 Iowa 217, 221-22, 157 N.W. 852, 854 (1916); Miller v. City of Des Moines, 143 Iowa 409, 418-23, 122 N.W. 226, 230-31 (1909). The paramount purpose of the competitive bidding statute is to protect the public as taxpayers, and that purpose must not be impaired in interpreting the statute. See Garling Constr., Inc. v. City of Shellsburg, 641 N.W.2d 522, 523 (Iowa 2002); Elview Constr. Co. v. North Scott Cmty. Sch. Dist., 373 N.W.2d 138, 141 (Iowa 1985); Kunkle Water & Elec., Inc. v. City of Prescott, 347 N.W.2d 648, 655 (Iowa 1984); Wigodsky, 195 Iowa at 917, 192 N.W. at 919; Miller, 143 Iowa at 420, 122 N.W. at 230. We believe the approach advanced by Master Builders would impair the statute's purpose. We have determined previously that the competitive bidding statute operates to provide a [county] with the best results at the lowest possible price. [6] City of Des Moines, 498 N.W.2d at 704 (emphasis added). Finding the lowest possible price between bids is a simplistic and mechanical process limited to unsealing and comparing submitted bids. Determining the bid that will provide the best results requires greater discretion. It would be a waste of public resources  and thus a harm to the public as taxpayers  to require an entity such as the Board to simply react to whatever bids are produced in deciding what contractor is the most responsible and is most likely to produce the best results. See Assoc. Builders & Contractors, Inc. v. San Francisco Airports Comm'n, 21 Cal.4th 352, 87 Cal. Rptr.2d 654, 981 P.2d 499, 507 (1999); Queen City Constr., Inc. v. City of Rochester, 604 N.W.2d 368, 374 (Minn.Ct.App. 1999); A. Pickett Constr., Inc. v. Luzerne County Convention Ctr. Auth., 738 A.2d 20, 24 (Pa.Cmwlth.Ct.1999). The Events Center PLA pre-defines the universe of responsible bidders as those that can and will operate under its terms thus allowing the Board to peremptorily designate the contractors it has determined will produce the best results. This does not mean that the Board is later constrained in choosing what contractor is the lowest responsible bidder. It simply means that the discretion to determine what constitutes the best results for a public contract exists throughout the contract letting process. Although we make our own interpretation of Iowa's competitive bidding statute, our approach is consistent with the approaches taken by other state courts that have considered and upheld a PLA under their state's competitive bidding statute. See San Francisco Airports Comm'n, 87 Cal.Rptr.2d 654, 981 P.2d at 506-07; John T. Callahan & Sons, Inc. v. City of Malden, 430 Mass. 124, 713 N.E.2d 955, 961-62 (1999); Queen City Constr., Inc., 604 N.W.2d at 378; Assoc. Builders & Contractors, Inc. v. S. Nev. Water Auth., 115 Nev. 151, 979 P.2d 224, 228-29 (1999); N.Y. State Chapter, Inc., 643 N.Y.S.2d at 485-87, 666 N.E.2d 185 (upholding one of two challenged PLAs under the state law); State ex rel. Assoc. Builders & Contractors, 665 N.E.2d at 727; A. Pickett Constr., Inc., 738 A.2d at 24; Assoc. Builders & Contractors of Rhode Island, Inc. v. Department of Admin., 787 A.2d 1179, 1189-90 (R.I.2002). Only two courts have invalidated PLAs for violating the state's competitive bidding law. See Tormee Constr., Inc. v. Mercer County Improvement Auth., 143 N.J. 143, 669 A.2d 1369, 1372 (1995); George Harms Constr. Co. v. N.J. Tpk. Auth., 137 N.J. 8, 644 A.2d 76, 95 (1994); N.Y. State Chapter, Inc., 643 N.Y.S.2d at 488-89, 666 N.E.2d 185 (striking one of two challenged PLAs under the state law). Both of these jurisdictions applied competitive bid standards that placed greater emphasis on competition or the actions of the political subdivision in the bidding process as compared to Iowa's statute. Tormee Constr., Inc., 669 A.2d at 1371; George Harms Constr. Co., 644 A.2d at 90-91; N.Y. State Thruway Auth., 643 N.Y.S.2d at 485, 666 N.E.2d 185; see also San Francisco Airports Comm'n, 87 Cal. Rptr.2d 654, 981 P.2d at 509. Iowa law places greater emphasis on protecting the public as taxpayers. See Garling Constr., Inc., 641 N.W.2d at 523; Wigodsky, 195 Iowa at 917, 192 N.W. at 919. Although this protection could include emphasizing competition in an effort to produce the absolute lowest cost for a project, the choice in prioritization is in the discretion of the political subdivision letting the contract. In this situation, the choices made by the Board do not violate the competitive bidding law.