Challenging Public Project Bid Awards

Often, construction jobs are funded by public money. In such cases, the law requires that the public entity obtain competing bids for the work. Unfortunately, the safeguards built into public bid procedures do not always result in the lowest responsible bidder receiving the contract. In such a case, a disappointed bidder may wish to contest the bid award. Federal, State, County, and Local bid procedures vary widely. Challenges to bid awards must be made promptly for all public projects or the bidder may lose its rights.

Federal Projects

In federal projects, a bid challenge is likely to succeed only in cases where the party challenging the award can demonstrate that the government violated its regulations, unduly restricted competition, or abused its discretion, and the time limits for filing a challenge are very short. In most cases, protests must be filed with the awarding agency not later than 10 calendar days after the basis of the protest is known or should have been known, whichever is earlier.

State Projects

Prospective bidders who wish to challenge the state's award of a bid must do so with the state through certain procedures set forth in 62 Pa. C.S.A. Secs. 1701-1726. This procedure requires that any prospective bidder's protest:

... be filed with the head of the purchasing agency within seven days after the aggrieved bidder or offeror or prospective contractor knew or should have known of the facts giving rise to the protest except that in no event may a protest be filed late than seven days after the contract was awarded

In short, a protest must be filed with the relevant state agency within 7 days of the bidder learning the facts giving rise to his protest, and in no case later than 7 days after the contract is awarded.

Local, County, and Municipal Projects

If a project is not a Federal or State funded (including PennDOT) project, a bidder cannot challenge an award in its own name. Under Pennsylvania law, a disappointed bidder does not have "standing" to challenge the award. Rather, case law requires that, because the purpose of competitive bidding is the protection of taxpayers, only a taxpayer in the jurisdiction where the project is located has standing to contest an award. Therefore, in order to challenge an award, a disappointed bidder must locate a taxpayer in the jurisdiction where the project is located to file the challenge. Challenges to these types of awards are done by filing a legal action in court, either by filing suit in Common Pleas Court asking the Court to issue an injunction preventing the contract from being awarded or if the contract award has already been made, by asking that the Court to void the award. Although time limits for these types of challenges are not fixed, they must nonetheless be prompt.

In determining whether to file a bid challenge, a disappointed bidder should consider several factors:

First, Pennsylvania law requires public contracts be awarded to the lowest responsive, responsible bidder.

In order to qualify to receive an award, a bidder must comply with all material terms of the bid specifications and instructions. Bidder responsiveness is based upon a bidder's satisfaction of the required terms, conditions and instructions of the bid request. Prior to submitting a bid, therefore, contractors must be sure to pay particular attention to the requirements of the bid requests. Areas where bidders do not comply with the bid requests are called "bid defects." Where there is a "material bid defect," a bid is non-responsive.

A bidder also must be qualified to perform the work. In order to determine if a bidder is "qualified", awarding entities look to several factors including whether the bidder has worked on similar projects, whether the bidder is financially sound, and whether the bidder is otherwise able to handle the work. Responsibility is generally interpreted as a contractor's ability to complete the job, including fiscal responsibility and experience, among other things. Agencies cannot, however, reject a bidder as unqualified without conducting an investigation into qualifications.

Second, even if the winning bid was not entirely compliant, a local authority legally may waive "Non-Material" bid defects.

The Pennsylvania Supreme Court set forth a two part test to determine whether a bid defect is material or non-material. First, the Court must decide whether the defect would impact the government's assurance that the contract would be performed. Second, the Court must decide if waiving the bid defect would give a competitive advantage to any bidder.

"Material" defects include, missing signatures, missing bid bonds, or missing or unbalanced prices. "Non-material" defects include missing forms or the inclusion of bid bonds with improper ratings.

For more information, call 412-288-4000 or send our PSMN ® Pittsburgh construction attorneys an e-mail by completing the contact form on this website.