TO:                  Chair Doyle, Board Members & General Manager

 

FROM:            David C. Laredo                                             

                                                                                                           

RE:                   Analysis of Bid Protest

                                                                                                                                                           

This memo addresses an issue arising from construction bids received for the Santa Margarita ASR project control building.

 

Issues

 

May the Monterey Peninsula Water Management District waive a defect in the William A. Thayer Construction, Inc.’s bid on the Santa Margarita ASR project control building?

 

And, if the Monterey Peninsula Water Management District cannot waive the defect in the Thayer bid, can the District waive the defect in the DMC Construction Inc.’s bid?

 

Conclusion

 

The Monterey Peninsula Water Management District may waive the defect in the William A. Thayer Construction, Inc.’s bid for the Santa Margarita ASR project facility building as the deviation from the bid requirements was inconsequential and William A. Thayer Construction, Inc. received no competitive advantage as a result of the deviation. The question of whether the District may waive the defect in DMC Construction Inc.’s bid therefore does not arise.

 

Analysis

 

Background

 

On January 27, 2010, the Monterey Peninsula Water Management District (District) held a bid opening for the Santa Margarita Aquifer Storage Recovery project facility building. In response, the District received six bids. The lowest competitive bid came from William A. Thayer Construction, Inc. (Thayer). The second lowest bid was from DMC Construction Inc. (DMC), followed by Avila Construction Company, Inc. (Avila).

 

Subsequent to the bid deadline, Avila sent a bid protest letter, dated January 29, 2010, to the District contesting the validity of the Thayer and DMC bids.  Avila claimed that the Thayer and DMC bids were non-responsive and as such, must be rejected. This bid protest was reasserted in a February 5, 2010 letter from Ottone, Leach, Olsen and Ray, representing Avila. These assertions regarding the non-responsiveness of the Thayer and DMC bids were also included in a February 4, 2010 bid protest letter from the United Brotherhood of Carpenters and Joiners. [1]

 

Thayer Bid

 

Avila’s protest of the Thayer bid is two-fold. First, Avila claims that the Thayer bid, at the time the bids were due, failed to contain any affirmative acknowledgement[2] or copies of all addenda, and RFI Answers and Clarifications, as required by the bid documents. Secondly, Avila claims that Thayer did not submit pages 13 (Security for Compensation Certificate) and 14 (Fair Employment Practices Certification) of the bid documents with their bid package.

 

DMC Bid

 

Avila claims that DMC did not include an appropriate list of subcontractors as required by the Bid Requirements and Conditions for this Project. Specifically, Avila claims that the Bid Requirements and Conditions obligated DMC to provide the address and portion of the work the subcontractors were to perform, and that the DMC bid did not include this information. Further, Avila claims that the subsequent email (pursuant to Public Contract Code §4104(a)(2)(A))[3] sent by DMC to the District the day following the closing of bids, purporting to cure DMC’s defective subcontractor list, did not cure the defects in DMC’s subcontractor list.[4]       

 

            Regarding Thayer’s failure to include copies of all addenda and bid question responses, Thayer sent the District a letter, dated February 3, 2010, in which Thayer acknowledged all addenda and question responses and indicated that Thayer “fully intends to complete this project per the plans and specifications including revisions through January 27, 2010.” (the day the bid closed).

 

Regarding the omission of pages 13 and 14 of the bid package, Thayer maintains that they did not submit pages 13 and 14 of the packet because of an ambiguity caused by a parenthetical statement at the bottom of the document. In parenthesis at the bottom of both documents was the following language: “This certificate must be executed by the successful bidder prior to the award of Contract.” (Emphasis added) Thayer took this statement to mean that these certifications were to be submitted once the District had selected the successful bidder.

Legal Standard

 

When the expenditure required for a public project exceeds five thousand dollars ($5,000), it shall be contracted for and let to the lowest responsible bidder after notice. (Cal.Pub.Con.Code § 20162)

 

In a review of a competitive bid protest, the courts will look to see if the bid was awarded to the lowest “responsible” bidder. [5] However, “[t]he rule of strict compliance with bidding requirements does not preclude the contracting entity from waiving inconsequential deviations.” Ghilotti Construction Company v. City of Richmond (1996) 45 Cal.App.4th 897, 907, 53 Cal. Rptr. 2d 389, 393.

 

A basic rule of competitive bidding is that bids must conform to specifications, and that if a bid does not so conform, it may not be accepted. However, it is further well established that a bid which substantially conforms to a call for bids may, though it is not strictly responsive, be accepted if the variance cannot have affected the amount of the bid or given a bidder an advantage or benefit not allowed other bidders or, in other words, if the variance is inconsequential. Ghilotti Construction Company v. City of Richmond (1996) 45 Cal.App.4th 897, 53 Cal. Rptr. 2d 389, 393.

 

In  Konica Business Machines U.S.A., Inc. v. Regents of the University of California (1988) 206 Cal. App. 3d 449, 253 Cal. Rptr. 591, the Court considered four factors to determine whether a deviation in a bid to provide the University of California systems with photo copy machines was material or inconsequential. In considering whether a deviation was a minor irregularity or a material change, the Court considered 1) whether deviation could be vehicle for favoritism, 2) whether the deviation affects the amount of the bid, 3) whether the deviation influences potential bidders to refrain from bidding, and 4) whether the deviation affects the ability to make bid comparisons.

 

Discussion

 

Applying the Konica factors to the issue of Thayer’s lack of inclusion of all addenda and bid question responses suggests that the deviation was inconsequential in light of the fact that Thayer has demonstrated that they fully intend to comply with all addenda and question responses.

 

1.                   Favoritism and Collusion. Thayer has stated that they fully plan to complete the project per the plans and specifications including revisions through January 27, 2010.

As such, it cannot be said that the District is showing Thayer any favoritism as Thayer will have to comply with the same requirements all other bidder would have had to comply with had they been the successful bidder.

 

2.                   Price Advantage. The question under this factor is to establish whether or not Thayer obtained a price advantage by its deviation from this requirement. Thayer cannot be said to gain a price advantage because Thayer will be required to comply with all addenda and question answers, including revision made through January 27, 2010.

 

3.                   Influence Others to Refrain from Bidding. Likely, the deviation would not influence other contractors to refrain from bidding. The failure to include certain addenda and bid question responses was not known to other bidders at the time, therefore they were not likely to refrain from bidding because of the deviation.

 

4.                   Bid Comparisons. The omission of addenda and bid question responses would not cause the District uncertainty in the bid process. The substantive portions of the bid were in place, and the deviation did not leave other bidders in the unfair position of having to guess what would satisfy the District’s needs as the other bidders were unaware of the contents of Thayer’s bid at the time of submission.

 

Similarly, under the Konica factors, Avila’s demand that the Thayer bid be rejected as non-responsive for failure to include pages 13 and 14 of the bid documents falls short.

 

1.                   Favoritism and Collusion. The omission by Thayer of pages 13 and 14 of the bid package would not lead to the conclusion that this deviation in the bid would confer favoritism, or indicate collusion, on behalf of Thayer because pages 13 and 14 were omitted due to the ambiguity of the requirements, based on the parenthetical statements on the documents.  That the District will require the two documents from Thayer prior to award of contract indicates that the District is not favoring Thayer by allowing a material deviation.  By allowing Thayer to sign and submit the documents, the District is ensuring Thayer, and all other bidders, have met all the requirements.

 

2.                   Price Advantage. The question under this factor is to establish whether or not Thayer obtained a price advantage by its deviation from this requirement. The failure to include a Fair Employment Practices Certification and a Security for Compensation Certification would not give Thayer a price advantage because Thayer acknowledged they were aware of these requirements and they will be required to complete, and abide by, the requirements of the omitted forms.

 

3.                   Influence Others to Refrain from Bidding. Likely, the deviation would not influence other contractors to refrain from bidding. The omission of pages 13 and 14 was not known to other bidders when Thayer submitted their bid package.

 

4.                   Bid Comparisons. The omission of pages 13 and 14 would not prevent the District from comparing bids because the District had all of the substantive information from Thayer.

 

Konica, when read together with Ghilotti, provide clear guidance in determining when an agency can waive a defect in a bid. Thayer did not receive any competitive advantage from its deviations from the bid requirements. Thayer has committed to complying with all addenda and bid question responses through the bid closing date. With respect to pages 13 and 14 of the bid package, it is understandable that Thayer read the documents as not having to be submitted until after they were deemed the successful bidder.

 

Conclusion

 

Because Thayer’s technical non-compliance with the bid requirements did not confer a competitive advantage, and was in part due to ambiguity in the bid documents, the District Board may waive the defects and award the Santa Margarita ASR facility building contract to William A. Thayer Construction, Inc. Additionally, Thayer has acknowledged that they accounted for all addenda and bid question responses in the preparation of their bid, and therefore has committed to abiding by those requirements.

 

Notes:

1)                  Should the District Board not waive the deviations of the Thayer bid, further analysis into Avila’s claims of non-compliance by DMC would be required.

 

2)                  On February 11, 2010, BCI Construction submitted a bid protest, dated February 9, 2010. The protest claims that the other five bidders were not responsive.  Specifically, the protest claims that Thayer failed to submit the Security for Compensation, the Fair Employment Practices Certification or the Certificate of Workers Compensation.  Only the Certificate of Worker Compensation was not addressed above, however it must fail for the same reasons as stated for the Security for Compensation and the Fair Employment Practices Certification omissions, namely that Thayer received no competitive advantage from its omission and has committed to abide by all requirements.  Should the District not waive the deviation in the Thayer bid, further analysis into BCI Construction’s claims would be required.

 

 

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[1] These statements have been added for background completeness purposes, and to partially address notes 2 and 3.

[2] This wording is not in either the 1/29 protest from Avila, or the 2/5 protest from Ottone, et al on behalf of Avila. But it is in the 2/4 protest letter from United Brotherhood.

[3] Allowing for information, other than a subcontractor’s name and location to be supplemented “up to 24 hours after the deadline…”

[4] This claim was not made in the 1/29 bid protest from Avila, but rather was made in the 2/5 bid protest letter from Ottone, et al on behalf of Avila (pg. 2).

[5] California Public Contract Code § 1103 defines “responsible” as a “bidder who has demonstrated the attribute of trustworthiness, as well as quality, fitness, capacity, and experience to satisfactorily perform the public work contract.”