Public Contract Code Bid Violations

Law Talk

Sam K. Abdulaziz & Bruce D. Rudman
Attorney at Law

The Regents of the University of California solicited bids for mechanical, electrical and plumbing work for a project that included the design and possible construction of the UCSF Medical Center at Mission Bay. There were six bid packages in all and bidders were to submit prequalification materials, a best value questionnaire, a lump sum preconstruction bid, and an option percentage fee for future construction. The idea was that the final evaluation of the best value contractor was to be done in a manner that prevented the cost or price information from being revealed to the committee evaluating the qualifications of the bidders to make sure the process was fair.

All of the bids received were rejected because The Regents of the University of California felt that it was in the best interest of UCSF to conduct a rebid. The amended bidding was only open to those that bid in the first round of bids and the bidders could only bid on the projects that they had bid on during that first round. In addition, there were alternative packages to bid on which were combination packages that combined a few of the six projects together.

University representatives selected the bid packages, awarding Southland Industries the subcontract based on the alternate package. Schram Construction, Inc. (SCI), who was one of the bidders, petitioned for a writ of mandate compelling the University to award it a contract, contending the University did not comply with the competitive bidding requirements governing the award of a public contract. The trial court denied the petition, and SCI appealed.

The appellate court reversed the case and remanded it with instructions that a Writ of Mandate should be issued rescinding the contract issued to Southland and putting the project out for bid. The reasoning is that when the University relies on a best value method to award contracts (the bidders offering the best combination of price and qualification), Public Contract Code Section 10506.4(c) requires the University to adopt and publish procedures and required criteria that ensure that all selections are conducted in a fair and impartial manner that is known to all bidders. This did not happen with the University in that it failed to inform prospective bidders of the primary criteria it relied on in selecting the winning bid package, or how the alternative and individual bid packages would be compared in considering the bids. This lack of information was said to have caused SCI to bid in a different manner, to its detriment.

In short, in order not to violate the Public Contract Code, it is imperative for the public entity obtaining the bids to completely outline the procedure and criteria of the bid and selection process so that the same can be conducted in a fair and impartial manner. If this is not done, the contract can be rescinded, or bids thrown out, so the bidding procedures protect the public.