Opinion ID: 1208304
Heading Depth: 1
Heading Rank: 2

Heading: Submission of the Lowest Bid

Text: We begin by addressing the issue of whether a contract was formed between Wadsworth and the City when Wadsworth submitted the lowest responsive bid. Wadsworth contends that case law which holds that advertisements for bids are not offers and cannot be accepted by submitting the lowest bid does not preclude this court from finding a contract. The City, Wadsworth asserts, went beyond simply soliciting for offers by requiring the bids to remain open for forty-five days and by requiring the bidder to furnish a bid bond. A municipality's advertisement for bids is a solicitation for offers, and the responsive bids are offers which the city may then accept. Rapp v. Salt Lake City, 527 P.2d 651, 654 (Utah 1974). In deciding which bid to accept, the city may consider a variety of factors other than the amount of the bid, including the experience, skill, ability, and honesty of the bidders. Schulte v. Salt Lake City, 79 Utah 292, 300, 10 P.2d 625, 628 (1932). Thus, a municipality is not bound to accept a bid simply because it is the lowest. This is true even when the advertisement indicates that the municipality will contract with the lowest bidder. Thatcher Chem. Co. v. Salt Lake City Corp., 21 Utah 2d 355, 358, 445 P.2d 769, 771 (1968). Because the local decision makers are in the best position to decide which bid is best for the municipality, courts will not interfere with their judgment unless fraud, dishonesty, collusion, or lack of good faith is involved. Clayton v. Salt Lake City, 15 Utah 2d 57, 59, 387 P.2d 93, 94 (1963); Schulte, 10 P.2d at 628. In light of these principles, we cannot find that the City's advertisement rose to the level of an offer. Although the City required the bidders to leave their bids open for forty-five days and furnish a bond, these requirements are common to municipal bid solicitations and do not constitute an offer. See, e.g., Concrete Prods. Co. v. Salt Lake County, 734 P.2d 910, 911 (Utah 1987); Breitling Bros. Constr. Inc. v. Utah Golden Spikers, Inc., 597 P.2d 869, 871 (Utah 1979); Jaye Smith Constr. Co. v. Board of Educ., 560 P.2d 320, 321-22 (Utah 1977). In addition, as the City points out, its advertisement specifically reserved the right to reject any and all bids. When an advertisement reserves this right, no bidder may claim any contractual rights until the municipality awards him or her the contract. John J. Brennan Constr. Corp. v. City of Shelton, 187 Conn. 695, 702, 448 A.2d 180, 184 (1982); see Clayton, 387 P.2d at 94. Wadsworth also argues that St. George City ordinance 9-5-4(5), which required the City to award contracts to the lowest responsive bidder, placed a mandatory duty on the City Council to award it the contract. It maintains that this duty was also implicit in ordinance 9-5-4(3), which allowed the City to reject a bid only if the bid exceeded the available funds by five percent or otherwise defeated the public interest. Wadsworth notes that the total budget for the project was $896,582 and its bid of $910,980 was less than five percent over this budget. These city ordinances do not aid Wadsworth's position. Even when a city is governed by state or municipal laws that require it to award contracts to the lowest responsible bidders, the city has broad discretion to reject any or all bids. Utah Code Ann. § 10-7-20(2) (1992) (The governing body has the right to reject any or all bids presented....); Clayton, 387 P.2d at 94; Schulte, 10 P.2d at 628. Additionally, Wadsworth misinterprets ordinance 9-5-4(3), which gives the City Council authority to reject all bids [or] parts of all bids ... when the lowest responsible bid exceeds available funds ... by more than 5%, or when the public interest will be served thereby and when permitted by law to do so. Although the ordinance specifies two circumstances under which the City Council may reject bids, section 10-7-20 reserves the City's power to evaluate the bids unilaterally. This reservation prevented a contract from forming when any bid, including the lowest bid, was received, because there was no mutuality of consideration. Cf. Resource Management Co. v. Weston Ranch & Livestock Co., 706 P.2d 1028, 1037 (Utah 1985) (holding that reservation of an absolute and unconditional power to terminate an executory contract renders the contract unenforceable for lack of mutual consideration).