Rejection of Bids

_banners92When awarded a public contract, the invitation to bid (IFB) requires the contractor’s bid to be responsive to the material requirements of the bid. An article recently published by Better Roads magazine examines the issues associated with the Federal Highway Administration’s (FHWA) position on rejecting a contractor’s bid for what might appear to be a “minor” deviation from the requirements of the IFB.

As the article states, minor deviations may be waived, though material deviations may not. The failure to properly complete a bid form is a material deviation justifying rejection of a bid as non-responsive. Similarly, the failure to acknowledge amendments to an IFB, or submit a complete and unqualified bid form, is considered nonresponsive.

However, minor informalities (of form and not substance) can be corrected without prejudice to other bidders and can be waived at the owner’s discretion.  The key test is whether the bidder can be held to perform after taking into consideration all bid deviations so there would not be a competitive advantage over the bidders.

In the example of Massillon Construction and Supply, Inc., the Comptroller General (CG) denied and the protest of road contractor, Massillon (MCSI), finding its bid was non-responsive because it failed to submit a separate price for optional work as required by the IFB.

The FHWA solicited bids to rehabilitate approximately six miles of New Found Gap Road in the Great Smoky Mountains National Park, Tennessee, divided into three schedules of work. Bidders were required to submit prices for each contract line item. Prior to the bid opening, the FHWA amended the IFB to add a third option for intelligent compaction (IC), coring and coordination with respect to a portion of the first part of scheduled work. In addition, the amendment included new a new pricing page, requiring entry of a lump sum price for the added option, therefore requiring a new summary page that added a line for all of the schedules and the sum total.

Because MCSI did not receive the amendment in its entirety due to fax machine issues, the contractor’s total bid price was the lowest received by bid opening, and the bid ended up being rejected as non-responsive because it did not include prices for all of the scheduled of work.

MCSI filed a protest with FHWA asserting its bid was in fact responsive because it merely acknowledged the amendment. MCSI argued its price for the first schedule included pricing for the last and additional schedule of work, and further argued FHWA could waive the omission of the specific schedule price for the last item’s price as minor informality.  After submitting a revised bid schedule, FHWA denied its protest and MCSI protected to the CG.

In sum, the CG found the mere acknowledgement without a price is insufficient to constitute a bid since doubt exists as to the amount of the bid and the bidder’s obligation to perform the increased work. The CG also found that MCSI’s explanation that its price was included in a different line item was inadequate since nothing established the price for the last schedule added. The CG stated that MCSI’s nonresponsive bid could not be made responsive by explanations after bid opening, since doing so would effectively allow the bidder to elect whether to accept or reject the additional work.

In the end, MCSI’s failure to include a specific price for the last schedule resulted in their bid protest to be denied. Moving forward, it’s important to distinguish minor deviations versus material deviation when receiving invitations to bid to ensure issues such as these do not occur. The full article can be read here.