Opinion ID: 2613977
Heading Depth: 3
Heading Rank: 2

Heading: Reliance damages

Text: Judicial relief is available to the disappointed bidder when a municipality acts in an arbitrary and capricious manner and violates the integrity of the Code. Spiniello, 456 A.2d at 1202; 10 McQuillin, supra, § 29.86, at 549; see also Educational Assessments, 115 N.M. at 200-01, 848 P.2d at 1127-28 (discussing federal laws that provide remedies for disappointed bidders). It is not reasonable at this point to enforce the City's promise to award the contract to the top-ranked bidder. See Swinerton, 114 Cal.Rptr. at 838. Also, under the circumstances, injunctive relief is pointless. Nielsen, 103 Idaho at 319, 647 P.2d at 775. We believe the appropriate remedy is reliance damages. These damages compensate the bidder's interest in being reimbursed for loss caused by reliance on the contract by being put in as good a position as he would have been in had the contract not been made. Restatement (Second) of Contracts § 344(b) (1981). We therefore join other jurisdictions that in similar situations have awarded to the disappointed bidder the expenses incurred in preparing and submitting a bid. Nielsen, 103 Idaho at 319-20, 647 P.2d at 775-76 (allowing damages for time expended, overhead, and attorney fees on trial, but denying lost profit damages and attorney fees on appeal); State Mechanical Contractors, Inc. v. Village of Pleasant Hill, 132 Ill.App.3d 1027, 87 Ill.Dec. 532, 536, 477 N.E.2d 509, 513 (denying lowest responsive bidder damages for lost profits but permitting recovery of expenses incurred in preparing proposal when contract was awarded to nonresponsive bidder), appeal denied, 108 Ill.2d 590, 91 Ill.Dec. 401, 483 N.E.2d 887 (1985); Swinerton, 114 Cal.Rptr. at 838 (limiting bidder's damages to the expenses it incurred in its fruitless participation in the competitive bidding process); Sardella, 329 N.E.2d at 767 (proper measure of recovery is the reasonable cost of preparing the bid). The public has both economic and moral interests in assuring that government entities strictly adhere to the Code as well as their own published regulations. Swinerton, 114 Cal.Rptr. at 838. An award of money damages serves these interests. Future misconduct will be deterred by holding public entities accountable for their violations. Id.; see also Sardella, 329 N.E.2d at 767. Also, if bidders sense that the procurement process is inherently unfairthat the cards are stacked against themthey might forgo the bidding process and look to other sources of business. This would reduce the number of quality bidders and limit the choices available to the government entity. Sardella, 329 N.E.2d at 767-68 (quoting Heyer Products Co. v. United States, 135 Ct.Cl. 63, 140 F.Supp. 409, 412 (1956) ( Heyer I ), modified, 177 F.Supp. at 251 (1959)); See also Richard E. Speidel, Judicial and Administrative Review of Government Contract Awards, 37 Law & Contemp. Probs. 63, 67-68 (1972) ([I]f a pattern of award decisions exists which seem to deviate from the `rules of the game' and there is no effective way to improve or reverse the pattern, a realistic cost-benefit analysis might induce many firms to stop or cut back competition for government business and reallocate resources to other commercial markets.). Strict enforcement of procurement laws and penalties for their violation will serve the public interest in the widest competition among the greatest number of responsible bidders. Sardella, 329 N.E.2d at 767 (bidder whose award was rescinded in violation of statutory requirements).