Court Opinion

ID: 7824260
Source: CourtListenerOpinion
Date Created: 2022-09-07 18:03:16.313047+00
Date Added: 2024-06-11T16:30:49.081321
License: Public Domain

John I. Purtle, Justice, dissenting. There are two things on which I agree with the majority: first, the integrity of the bidding process of the Arkansas Highway and Transportation Department (AHTD) must be upheld; second, the appellee’s bid was the lowest bid opened by the AHTD. It is my opinion that Rust was the lowest responsible bidder and that the Commission should have awarded the bid to it. The technical error, which was to the disadvantage of the bidder, is so small as to fall within the de minimis rule. See Lawrence County v. Townsend, 202 Ark. 887, 154 S.W.2d 4 (1941). Moreover, I believe the action by the Commission was arbitrary under the circumstances of this case. Clearly, the AHTD would have saved more than $100,000 by accepting the bid of Rust. The error in the bid was the failure to include either a unit or aggregate price for the 20 cattle gates. This error was on page 16 of the bid invitation. On the bottom of that same page the aggregate bid of $7,484,992.31 appeared. Obviously, Rust did not overlook this page, because the total bid was $7,854,992.31. The page listing the gates is an integral part of the invitation and the bid. The bidder did not obtain an advantage over any other bidder nor was the state disadvantaged in any manner by this technical oversight. The total bid was for all work listed in the bid invitation, including the cattle gates. The bidder was obligated to do the work for the amount he had bid and for which he was bonded. There is no dispute that Rust was the lowest responsible bidder. The failure to include a specific or aggregate bid on the gates did not alter the fact that the Rust Company would still have been the lowest bidder even if the price of the gates had been inserted in an amount equal to the highest bid on that unit. It was not necessary, however, for the AHTD to insert any speculative figure because Rust offered to fulfill his bid without making any charge for the omitted gates. The integrity of the bidding process had already been upheld when these bids were opened. At that time the bids became public knowledge and could not be changed. There was no need to go outside the bid itself to determine its amount or the items included. Rust was bound to perform the contract for his bid of $7,854,922.31. In Chick’s Const. Co. v. Wachusett Regional High School District School Committee, 175 N.E.2d 502 (Mass. 1961), the Massachusetts Supreme Court found “inconsequential” any “deviation from bid requirements” resulting from a contract failure to make an entry in the bid form concerning the cost of rock excavation as required by statute. The Chick’s opinion stated: Granger’s bid was a complete bid for the complete work as specified. It was a bid to do the whole job at a fixed price. Under the terms of the contract awarded pursuant to the bid, Granger became bound to do the complete work as specified, including rock excavation. The bid as submitted is subject to the construction that Granger would do such rock excavation as might be encountered without extra charge therefor. This is the construction which Granger asserts in its brief. To the same effect, see Chris Berg, Inc. v. State Dept. of Transportation and Public Facilities, 680 P.2d 93 (Alaska 1984), where the Alaska Supreme Court stated that the failure of the low bidder to enter price information for one line item was not a material variance and that “any rejection of Chris Berg’s bid on the basis of the bid error would constitute an abuse of discretion as a matter of law.” The Chris Berg case went on to hold that a variance may be said to be material “if it gives the bidder a substantial advantage over other bidders and thereby restricts or stifles competition. Under this standard, the bid variance in the present case does not compel rejection since Chris Berg did not and could not gain any competitive advantage as a result of it.” I agree with the majority opinion that this issue must be resolved by determining whether the AHTD had a rational basis for its action. However, I reach a different conclusion. The unsupported recitation of the talismanic phrases “public policy” and “integrity of the bidding process” cannot form the basis for a proper decision in this case. A primary purpose of the bidding process is to obtain the best possible price on behalf of the AHTD and the taxpayer. I realize that $100,000 may not mean much to the AHTD, but when you apply this figure to every major project bid, you reach a substantially higher amount. I think the Highway Commission was unduly alarmed that its integrity was somehow in question. It cannot fairly be said that the bid could not be understood; after all, it is there in black and white on paper. Since no other bidder could conceivably have been harmed by the silent correction of this minor error, I am persuaded that the Commission acted arbitrarily in rejecting the bid. In the 1988 edition of Standard Specifications for Highway Construction, the AHTD exhibit 12-14-88, paragraph 104.02 states: The Commission shall have the right to increase or decrease the extent of the work, to change the location or gradient, or the dimensions of any part of the work, provided that the length of the improvement is not increased or decreased in excess of 25% of the contract length, or that the quantities of work to be done or the materials to be furnished are not increased or decreased in money value in excess of 25 % of the total contract. Such changes shall not be considered as a waiver of any conditions of the contract or invalidate any of the provisions thereof. The Contractor shall perform the work as increased or decreased within the qualifying limits named and no allowance will be made for anticipated profits on increases or decreases so incurred. Whenever an alteration in character of work involves any substantial change in the nature of the design or in the type of construction which materially increases or decreases the cost of performance of any contract item, the work shall be performed in accordance with the specifications and as directed but consideration may be given to appropriate adjustment in compensation based on documented evidence of changed cost. The standard specifications book also states at paragraph 104.03 that: The Contractor, when directed, shall perform unforeseen work for which there is no quantity in price included in the contract, or where increases or decreases in quantities are made in excess of the amounts set out in subsection 104.02, or whenever it is deemed necessary or desirable to further complete the work as contemplated. Such extra work shall be performed in accordance with the specifications and as directed. The foregoing provisions are made expressly for such purposes as the subject matter of this lawsuit. After admitting previous deviations through the waiving of similar specifications, the AHTD has apparently now decided it has no discretion in the bidding process. It has, however, discretion to reject any and all bids as stated in the bid invitation. Had there been any real uncertainty about the amount of this bid, it would have been proper for the Commission to reject any and all bids. The provision in the Standard Specifications which should govern the present situation is paragraph 102.08, concerning irregular proposals. This paragraph provides that irregular proposals “may” be rejected “(d) if the proposal does not contain a unit price for each pay item listed except in the case of authorized alternate pay items.” The AHTD and the majority of this court have changed the plain meaning of the word “may” to “shall.” I fear the result of this case will be more litigation rather than less. Hereafter, if there is the slightest irregularity it will constitute an invitation to file suit and delay the bidding process and the contract work. To eliminate uncertainty, perhaps the department should adopt a policy that any deviation invalidates the bid. However, so long as it retains the discretion to act on bids, it must do so under objective standards which are reasonable and fair. Perhaps no administrative body in the United States is regarded with greater reverence than the Arkansas State Highway Commission. They need not, therefore, become paranoid about the integrity of the bidding process. The overreaction of the Commission is understandable, but it is still arbitrary. Apparently the fear underlying the Commission’s decision is that lawsuits will proliferate if discretion is exercised. Nevertheless, by human nature, disputes are ever present, and litigation will continue so long as we have lawyers and judges. In my opinion, Rust was the lowest responsible bidder and should have been awarded the contract — a decision that would have saved the taxpayers of the state more than $100,000. Hickman, J., joins dissent.