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Thelen Reid Brown Raysman & Steiner LLP
A contractor's failure to actually click "submit" caused its bid to be rejected, even though the information actually had been received by the public agency.
Glasgow, Inc., the contractor, submitted a bid of $10,335,645.80 to the Pennsylvania Department of Transportation to perform a road construction project. The bid was submitted in accordance with the department's bidding instructions via the department's Internet bidding system, known as the Electronics Contract Management System (ECMS).
The department's specification for the project included a provision entitled "Disadvantaged Business Enterprise Requirements." It provided that when the goal established by the department was met or exceeded, the apparent low bidder was required to electronically submit evidence of compliance within seven calendar days after the bid opening. The specifications also provided that when the required DBE documentation was not provided by the apparent low bidder within the time specified, the bid would be rejected.
On July 17, 2003, Glasgow received an e-mail from the department advising it that it was the low bidder for the project. The e-mail further advised Glasgow to submit its DBE participation information via ECMS by July 24, 2003.
On July 23, 2003, Glasgow placed all relevant DBE information on the department's Web site. The information indicated that DBE participation in Glasgow's bid was 7.1 percent, which exceeded the 7 percent goal required by the department for the project. However, Glasgow's estimator neglected to take the next step and press the "submit" button on the screen.
Taking this failure to hit the "submit" button as a failure to submit the information, the department rejected Glasgow's bid because the information had not been "submitted" by the required time. Even though the department had received all of Glasgow's DBE information on its Web site, the department found that until Glasgow hit the submit button, no information actually had been provided; there were just "screens" that were filled, with no formal commitment to the DBE goals. The contract was awarded to the next lowest bidder, whose bid was $432,626 higher than Glasgow's.
The Secretary of Transportation denied Glasgow's bid protest, Glasgow petitioned for relief on grounds that the secretary abused his discretion and the Pennsylvania Commonwealth Court affirmed. Glasgow, Inc. v. Pennsylvania Department of Transportation, 851 A.2d 1014 (Pa. Commw. Ct. 2004).
The secretary noted the department's longstanding practice, before implementation of ECMS, of rejecting bids when a bidder forget to fax or attach information regarding DBE participation. The secretary determined that a bidder's failure to hit the submit button is no different than a bidder's failure, under prior procedure, to timely mail or fax the information.
The court held:
While a governmental body has the discretion to waive non-material bid defects where the non-compliance (1) does not deprive the agency of the assurance that the contract will be entered into and performed and (2) does not confer a competitive advantage on the bidder., the failure to submit the information in this case is not a waivable defect. Where specifications set forth in a bidding document are mandatory, they must be strictly followed for the bid to be valid, and a violation of those mandatory bidding instructions constitutes a legally disqualifying error for which a public agency may reject a bid.
By specifically providing in the bid instructions that the bid would be rejected if the information was not provided within the time specified, the court held that the department removed any discretion it had to waive the time to submit information. However, even if the failure to submit the information were a waivable defect, the court held the department did not abuse its discretion in rejecting Glasgow's bid. When governmental entities are at the beginning stages of implementing electronic bidding, determining the requisites for a proper bid should be left to the discretion of the agency, especially at the early stages, the court concluded. The court analogized the "submit" requirement to similar requirements when making online purchases and charges.
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For more information about the issues covered in this report, please contact Paul Berning in our San Francisco office at 415-369-7229 or at pwberning@thelen.com or contact your Thelen attorney. For more information about Thelen's Construction and Government Contracts Department, click here.
©2006 Thelen Reid Brown Raysman & Steiner LLP
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