Redefining What Is Waivable

In theory, contractors bidding on public work face a level playing field, with the underlying assumption being that the lowest, responsible, responsive bidder will be awarded the job. But, in reality, this rule is often unevenly applied. Low bids are often rejected for what seem to be inconsequential deficiencies in the bid, and conversely, nonconforming bids are found acceptable, despite bid defects. In a recent West Virginia Supreme Court decision, Wiseman Construction Company Inc. v. Maynard C. Smith Construction Company Inc. et al. (2015), Maynard (MCS) was the low bidder on a government construction contract for the renovation of the Lottery’s headquarters building in Charleston, West Virginia. The purchasing division of the Department of Administration and the Lottery Commission (the Agency) awarded the contract to the second-lowest bidder (Wiseman) when it was discovered that MCS did not include references described in the bid documents with its bid. At first glance, this sounds like a straightforward rejection of a noncompliant bid. But MCS’s omission was due to errors in the Agency’s own forms. Specifically, even though a qualification statement seeking references was described in the bid specifications, the actual approved bid form did not include any section in which to list those references. When the bids were opened, MCS was the low bidder and the initial recommendation made to award MCS the contract. Wiseman took issue with this when it found that MCS had omitted the qualification statement, and the Agency then decided that it had no discretion to waive what it deemed to be a material and mandatory requirement. The contract was awarded to Wiseman. MCS filed a bid protest disputing the Agency decision. The Agency denied the protest. MCS then petitioned the circuit court for an order mandating that the contract to be awarded to MCS.

The Circuit Court Decision

The circuit court agreed with MCS and granted its petition, finding that the Agency’s decision was not “rational” because the references requirement was ambiguous and without purpose. While the Agency argued that the references requirement was material and nonwaivable, the testimony of the Agency’s witnesses contradicted this argument. Agency witnesses admitted that they had never contacted Wiseman’s references, and admitted that the architect on the project found both MCS and Wiseman to be qualified. Agency witnesses also did not know who had requested the list of references or for what purpose. In its decision, the circuit court noted first that West Virginia law permits waiver of “minor irregularities in bids or specifications when the director determines such action to be appropriate” before finding that the Agency’s conduct to be “shocking to the conscience of the [c]ourt.”

The West Virginia Supreme Court’s Decision

The West Virginia Supreme Court affirmed the circuit court’s ruling, finding the Agency’s action was not rational, and that “the public interest of ensuring that tax dollars for public works are spent wisely predominates over the Agency’s stringent adherence to faulty bid specifications.” The court noted that “MCS’s failure to attach a separate sheet of references to the bid form was fatally dispositive yet, at the same time, utterly meaningless,” which the court deemed “nonsensical,” offensive to “one’s sense of fair play” and an arbitrary abuse of discretion. As this case teaches, while bid protests are typically challenging, they are not unwinnable.

Courts are willing take a close look and reverse agency action that elevates form over function and the public interest—especially where, as in Wiseman, the error originates with the agency itself. This principle holds true, regardless of jurisdiction. As a result, builders and contractors bidding on public projects in every state and region should not be afraid to look critically at agency awards of public contracts. Contractors should consult with counsel at the first suspicion that discretion has been stretched beyond acceptable limits. It is critical to act quickly, as failure to act timely will waive the right to protest. Thus, in addition to all of the usual considerations in deciding whether to file a bid protest, the following should be considered:

• Did the defect arise from mistakes or ambiguities in the agency’s own bid documents, or was the bid itself noncompliant?
• If the agency chose to forgive a defect in the winning bid to the detriment of your bid, was the forgiven “defect” material to the contract? If not, agency discretion will likely win the day, and a bid protest will likely fail. If it is material, a bid protest may be worth pursuing.
• If the agency chose to reject your low, responsive bid for a minor defect, do the same analysis. Was the defect in your bid a material one?

At the end of the day, common sense should govern. If a decision seems inequitable or illogical, trust your instincts and act swiftly.