Recent Commonwealth Court Decision Affirms Core Bidding Principles

A recent decision concerning a bid protest filed on a PennDOT contract re-affirmed core principles of public bidding and bid protests on Commonwealth contracts.

In Sidelines Tree Service, LLC v. Department of Transportation, the Commonwealth Court considered an appeal from a denial of a bid protest filed on a contract for line-clearance tree-trimming services. The hearing officer determined that the disappointed bidder was non-responsible due to its poor performance on prior PennDOT contracts, and denied the protest. On appeal, the Commonwealth Court affirmed. Read more

Posted on February 3, 2022 by Christopher I. McCabe, Esq. in Bid Protests, Bidder Responsibility, Com. of Pa., Court Decisions, PennDOT, Public Bidding 101, Responsibility Comments Off

Public Bidding 101: Emergency Bidding

Emergency contracting for repairs, maintenance, and public safety are a routine occurrence with public owners across the Commonwealth. A building in danger of collapse needs to be torn down on an immediate basis to ensure public safety. A system fails in a public building requiring an emergency repair to restore the system to proper working order. A roadway or bridge is washed out during a storm mandating immediate action to restore access for the public and emergency vehicles. In such dire situations, can a public owner bypass the normal rules of competitive bidding and award a contract an expedited basis? The answer is yes, with some caveats.

Where an emergency threatens the health, welfare, or safety of the citizenry, and does not permit a delay in response, a public owner can dispense with the formal rules of public bidding such as timing of award and public notice. On the other hand, even in an emergency, the public owner cannot simply award a contract without competition. An emergency may relax the requirement for notice and advertising, but it doesn’t eliminate competition. After all, if a public owner can invite pricing from one contractor in an emergency, there is usually no good reason why it can’t also invite pricing from other contractors at the same time. Read more

Posted on January 12, 2017 by Christopher I. McCabe, Esq. in Procurement Code, Public Bidding 101, Public School Code Comments Off

Public Bidding And The Level Playing Field

Recently I was asked, what rules govern competitive bidding? There are many different rules that govern public bidding in Pennsylvania, many of which can be found in the Commonwealth Procurement Code. Some govern the timing of bid awards and withdrawal of bids.

The primary “unwritten” rule of public bidding is the “level playing field” rule. This rule means that all bidders are treated the same, and are judged by a common standard that governs all bids that are received. A common standard implies universal specifications, freely accessible to all bidders, and not written in favor of a single bidder. The level playing field is violated where the public owner applies a different standard to the bids it receives, or awards a contract based upon unpublished or unadvertised standards, or otherwise deviates from the published bid instructions and bidding requirements. Read more

Posted on September 27, 2016 by Christopher I. McCabe, Esq. in Public Bidding 101 Comments Off

Public Bidding 101: Are Proprietary Specifications Permissible?

On a public bid can a public entity direct a contractor to furnish and install equipment made by only one manufacturer? This question is raised often by clients who complain when the specifications they are bidding against are viewed as “proprietary” in nature. Is this legal, they ask? Can the public entity really limit the specified equipment to a sole manufacturer? As always, the answer is, “it depends,” although it is safe to say that all proprietary specifications should be viewed initially as inherently suspect and contrary to the spirit of public and competitive bidding.

The rare, but easy to justify case is where the equipment specified is intended to complement or replace existing unique equipment. Thus, in Silsby Mfg. Co. v. City of Allentown, 153 Pa. 319, 26 A. 646 (1893), the Supreme Court of Pennsylvania held that the purchase of replacement flues for a patented engine, which could not be bought from any other supplier, was not subject to competitive bidding. In the same vein, if the public entity could buy such unique equipment without competitive bidding, the public entity will likely be permitted to specify the same equipment in the specifications for a contract to furnish and install the same equipment. Read more

Posted on July 10, 2014 by Christopher I. McCabe, Esq. in Bid Specifications, Court Decisions, Public Bidding 101 Comments Off

Public Bidding 101: Bid Bonds

This post is one in a continuing series on the basic tenets of public bidding in Pennsylvania. The subject of today’s post is the bid bond.

A bid bond is a form of bid security and is typically required to be submitted with all bids for public contracts in Pennsylvania. The instructions on public bids will ordinarily describe the bid bond requirements for the bid in question. These instructions should be followed lest the bid security is insufficient and the bid is rejected for that reason. A bid bond is essentially a guarantee, backed by a surety company, that the bidder will execute the contract if it is awarded to the bidder.

The failure of a bidder to execute an awarded contract will expose the surety on the bid bond to liability. That liability is typically 10% of the bid price. The bidder’s failure to execute an awarded contract may also subject the bidder itself to additional liability if the bid bond amount does not cover the spread between the bidder’s price and the next lowest price. Of course, the public entity must strictly adhere to the bidding requirements and award requirements before it can seek to enforce the bid bond. The failure to do so will likely invalidate any attempt to forfeit the bid bond.

Thus, the Commonwealth Court held in Travelers Indem. Co. v. Susquehanna County Comm’rs, 17 Pa.Cmwlth. 209, 331 A.2d 918, 920 (1975), that where a public entity failed to give written notice of its acceptance and provide the contract documents for execution there could be no forfeiture of the bid bond. Likewise, in Hanover Area School District v. Sarkisian Brothers, Inc., 514 F.Supp. 697 (M.D.Pa.1981), the federal district court held that a public entity’s failure to provide the lowest bidder with all the documents necessary to finalize the transaction as required by the bid instructions precluded recovery on the bid bond.

If you are bidder faced with a forfeiture of a bid bond for failure to execute a public contract you may have an out if the award was not made in accordance with the bidding instructions. As always, you should consult with an experienced attorney for assistance.

Posted on April 26, 2013 by Christopher I. McCabe, Esq. in Public Bidding 101, Surety and Bonding Comments Off

Public Bidding 101: Rejection of All Bids

This post is another in a continuing series on the basic tenets of public bidding in Pennsylvania. The subject of today’s post concerns the rejection of all bids by the public entity.

There are many times that a public entity solicits bids, only to reject all of the bids and conduct a re-bidding. The reasons for a rejection of all bids may be due to the bid prices exceeding a preliminary construction estimate, or due to a non-responsive, but extremely attractive, low bid that can be easily corrected on a re-bidding, thereby ensuring that the pubic entity gets the best price available. Clients often ask me whether this is allowed and what they can do to challenge this type of conduct. Their concerns stem, in part, from the exposure of their bids and their prices which many fear leads to a competitive disadvantage on the re-bidding. Unfortunately, there is little to stop such conduct.

First, bidders themselves have no standing to complain of such conduct. Only a taxpayer can complain and sue to stop such conduct. Second, there is really no legal basis to stop such conduct. If a statute allows it, or if the bidding instructions permit it, which is almost always the case, a public entity is free to reject any and all bids, for good reason or for no reason.

In Weber v. City of Philadelphia, 437 Pa. 179, 262 A.2d 297 (1970), a seminal case in the area of public bidding, the Pennsylvania Supreme Court noted:

“…if a municipality, in connection with competitive bidding, is empowered to do so, it may reject any and all bids in the absence of fraud, collusion, bad faith or arbitrary action…”

As the Supreme Court noted in Weber, the only limitation on the public entity’s power is where such decision is influenced by fraud, collusion, or is committed in bad faith, or constitutes arbitrary action. But these are high hurdles to surpass and I have never encountered a situation where a court has enjoined the rejection of all bids.

So, if a public entity decides to reject all bids, there is very little that anyone can do about it. For additional enlightenment on this topic, the Weber case can be found here.

Posted on December 11, 2012 by Christopher I. McCabe, Esq. in Public Bidding 101 Comments Off

Public Bidding 101: The RFP

This post is another in my continuing series on the basic tenets of public bidding in Pennsylvania. The subject of today’s post is the Request for Proposal (RFP) and whether, and to what extent, the general rules of sealed, competitive bidding apply to RFPs.

An RFP is a type of invitation to bid. It is typically used where the public entity seeks to enter into a contract in the area of professional services – such as architectural, engineering or legal services. This is because contracts for those services are not governed by the rule of lowest responsive, responsible bidder, and in fact can be awarded, in many instances, without any competition whatsoever and to a bidder whose bid is not the lowest in price.

In Malloy v. Boyertown Area School Bd., 540 Pa. 308, 657 A.2d 915 (1995), a seminal case in this area, the Pennsylvania Supreme Court described the reasons why the “low bid” rule does not apply to professional services contracts:

For those contracts for which the distinctiveness and quality of service is the paramount concern, there exists a special relationship between the property owner and the contractor. In these types of contracts, the contractor owes a special duty of loyalty to the property owner because the contractor in essence becomes the property owner’s agent and, therefore, must act in good faith and always in the furtherance of the property owner’s interests vis-à-vis the other contractors on the project.

The Supreme Court’s statement nicely summarizes why professional services contracts are not subject to the low bid rule. There is an element of trust in such contracts, and this element is not necessarily assumed by the bidder whose bid is the lowest. So, the public entity has discretion in the award of such contracts and can seek to enter into such contract through an RFP process.

However, once the public entity embarks on a course of bidding, even via a more informal RFP process which does allow for negotiation, it is bound to “adhere to that procedure throughout the procurement process.” In Lasday v. Allegheny County, 499 Pa. 434, 453 A.2d 949 (1982), another seminal case in this area, Allegheny County solicited proposals under an RFP for operation of a newstand and gift shop concession. The RFP stated that separate proposals to operate only the newstand would not be accepted. Nonetheless, Allegheny County then allowed one proposer to make such a proposal and to grant the concession to that proposer on the basis of its proposal, without also allowing the existing operator an opportunity to submit such a proposal. The Supreme Court held that this was improper and held that, once an RFP process is undertaken, it must be adhered to in all respects in accordance with its instructions and guidelines.

If you are a respondent to a public RFP, consider these rules carefully, and remember that the public entity cannot act contrary to the instructions of its own RFP.

Posted on November 20, 2012 by Christopher I. McCabe, Esq. in Court Decisions, Public Bidding 101 Comments Off

Public Bidding 101: Contract Award

This post is one in a continuing series on the basic tenets of public bidding in Pennsylvania. The subject of today’s post is the contract award – when it must be made and who is entitled to the award.

Under the Pa. Procurement Code, 62 Pa.C.S. § 3911, the award of a public contract must occur within 60 days of the bid opening. This deadline can be extended by written consent signed by the bidder and the public entity. Thereafter, under 62 Pa.C.S. § 3912, once the contract is awarded, it must be executed by the public entity within 60 days of the award. The failure of the public entity to meet these deadlines, absent a written waiver by the successful bidder, will release the successful bidder from any liability on its bid and will entitle all bidders to the return of any posted bid security.

Who is entitled to the contract award? Ordinarily, the lowest responsive and responsible bidder is entitled to the award of the contract. For my post on bid responsiveness, click here. For my post on bidder responsibility, click here. Where the lowest bidder is either non-responsive or non-qualified, the contract may be awarded to a bidder whose price is not the lowest. In Pearlman v. City of Pittsburgh, 304 Pa. 24, 155 A. 118 (1931), the Supreme Court of Pennsylvania observed that, once the pubic entity has determined the lowest responsible bidder, discretion ends, and the contract, if it is to be awarded, must be given to that bidder.

Posted on September 20, 2012 by Christopher I. McCabe, Esq. in Procurement Code, Public Bidding 101 Comments Off

Public Bidding 101: Bidder Responsibility

This is one in a continuing series of posts on the basic tenets of public bidding in Pennsylvania. The subject of today’s post is bidder responsibility.

“Responsibilty” refers to the qualifications, including competence and experience, of a bidder to perform a public contract. Whether a bidder is responsible or qualified to receive a contract award is ordinarily left up to the discretion of the government officials in charge of awarding the contract. The courts are extremely reluctant to overrule government decisions to disqualify a bidder as non-responsible.

The standards for bidder responsibility have been established for many years. The criteria include financial responsibility, integrity, efficiency, industry, experience, promptness, and ability to successfully perform and complete the contract. While some may believe that the ability to secure and post a bond is proof of their responsibility, a bond is not a substitute for the failure of a bidder to satisfy qualification criteria. Furthermore, a bidder cannot be rejected as non-qualified unless the government officials have also first conducted an investigation into all bidders’ respective qualifications.

Bidder responsibility can be determined before bids are received, via a pre-qualificaiton process, or after the bids are received. All bidders must be judged according to the same criteria. A pre-qualification process may be used only if one is mandated or allowed by statute or ordinance. Where there is no prescribed pre-qualification process, a municipal official may not exclude certain persons from bidding under the guise of a pre-qualification program.

In Harris v. City of Philadelphia, 299 Pa. 473, 149 A. 722 (1930), the Supreme Court of Pennsylvania had this to say about responsibilty determinations:

We again lay down the rule that all bidders on a municipal contract must be accorded the same treatment, for not otherwise can the requirements of the statute be complied with. The city may … accept and schedule all bids, and then, if acting in good faith, refuse to award the contract to one who is the lowest bidder, because he is not the ‘lowest responsible bidder.’ Or she may … determine in advance who are responsible bidders, and refuse to receive bids from those who, after treating all alike, she determines are not in that class. But she may not impose conditions on one prospective bidder, which are not imposed upon all; nor may she enforce a method by which, through favoritism, one person may be conclusively authorized to bid on a pending contract, while another, equally as responsible and perhaps more so, is wholly excluded from even submitting a bid.

This rule of public bidding is as applicable today as it was in 1930.

Posted on June 26, 2012 by Christopher I. McCabe, Esq. in Bidder Responsibility, Public Bidding 101 Comments Off

Public Bidding 101: Bid Mistakes and Bid Withdrawals

This post is one in a continuing series on the basic tenets of public bidding in Pennsylvania. The subject of today’s post is bid mistakes and withdrawal of bids. I am often asked whether a bidder can withdraw its bid due to a mistake in price. The answer is not so simple.

Typically, public bids are binding on the bidder for 60 days after bid opening, unless the bidder and the public entity execute a written consent for a longer period. If the bids are not accepted within that time frame, or if a contract is not executed within 60 days of the contract award, the bidder is permitted to withdraw its bid and escape liability on its bid and its bid security or bid bond. Otherwise, the bidder is legally bound by its bid, and cannot withdraw its bid, unless it can satisfy the stringent requirements for a bid withdrawal. Read more