The Most [Fill in the Blank] Bid Dispute, Ever

McDonalds-CoffeeWe’ve all heard of those lawsuits which cause us to scratch our heads wondering, what were they thinking?

Think woman sues fast food restaurant for serving hot coffee, man sues beer company when beautiful women did not appear as in commercials, man sues magicians for defying the laws of physics.

Well, I’ve got one to add to the list, and it’s a construction case (of course).

Bay Cities Paving & Grading, Inc. v. City of San Leandro, Case No. A137971 (January 28, 2014) (changed from unpublished to published on February 13, 2014), involved a bidding dispute between low bidder Oliver DeSilva, Inc. (“Oliver DeSilva”), second lowest bidder Bay Cities Paving & Grading, Inc. (“Bay Cities”) and the City of San Leandro.

The Bid

In 2012, the City of San Leandro issued a request for proposals for the construction of the “BART-Downtown Pedestrian Interface Project.” The bid package stated that the “completed proposal form shall be submitted in its entirety” and “shall be accompanied by a bidder’s bond executed by an admitted surety.”

Oliver DeSilva submitted the low bid ($4.8 million) and Bay Cities submitted the second lowest bid ($5.3 million). However, after the bids were opened, it was discovered that Oliver DeSilva’s bid package was missing a page, namely the first page of its bid bond although the second page of the bond with the required signatures and accompanying notary acknowledgements were included. Oliver DeSilva submitted the missing first page later the same day bids were opened.

The Bid Protest

Bay Cities then filed a bid protest arguing that Oliver DeSilva’s bid was “nonresponsive and must be rejected”  The City engineer, acknowledging receipt of Bay Cities’ bid protest, informed Bay Cities that the City of San Leandro could waive inconsequential bid defects and would be awarding the bid to Oliver DeSilva.

The Court Case

Bay Cities then filed a writ of mandate, filed a complaint, AND applied for a temporary restraining order to prevent the City of San Leandro from awarding the bid. The superior court found in favor of the City of San Leandro on all counts but Bay Cities, not dissuaded, then filed an appeal with the California Court of Appeals.

The Appeal

The Court of Appeal for the First District, rather than writing a two sentence opinion stating “you’re kidding, right?  Denied!,” issued a 21 page opinion. Apparently, appellate court judges have a lot more patience than I do.

The Court of Appeals, while acknowledging the “basic rule of competitive bidding [ ] that bids must conform to specifications,” explained the well recognized exception that “strict compliance with bidding requirements does not preclude the contracting entity from waiving inconsequential deviations.”

The Court of Appeals then went through point by point why the failure to include one page of a multi-page document in a bid package is an inconsequential, rather than a material, deviation. You can read the case for more details.

I’m just wondering why you would want to bring such a case to begin with.






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