In a recent decision, a California court found that a city may waive a bidding irregularity when it is inconsequential to the City’s decision. Here, the City of San Leandro (the “City”) selected the lowest bidder, Oliver DeSilva, Inc., even though one page was missing from its bid package. A copy of Bay Cities Paving & Grading, Inc. v. City of San Leandro can be found here.
On September 24, 2012, the City called for bids to construct the “BART-Downtown Pedestrian Interface Project Along San Leandro Boulevard.” Prospective bidders were required to submit a standard form proposal to the City along with a big deposit to secure the bidder’s proposal in the form of cash, cashier’s or certified check, or a bidder’s bond executed by an authorized surety company. The City required that a bidder’s package be filled out in its entirety.
Oliver DeSilva (“Lowest Bidder”) was the lowest bidder in the amount of $4,846,700. The Plaintiff in this action, Bay Cities Paving & Grading, Inc. (“Plaintiff”) was the second lowest bidder in the amount of $5,359,725. The Lowest Bidder’s bid package was missing one page, the first page of its bidder’s bond; however, it contained the second page of the bid bond that contained the notarized signatures of the surety’s attorney-in-fact and the President of the Lowest Bidder. After the City opened the bid responses, the Lowest Bidder supplied the missing page.
Three days later, the Plaintiff filed a bid protest arguing that the Lowest Bidder’s bid should be rejected because it was unresponsive. The City responded that the missing page was minor and that the City waived the error to select the Lowest Bidder. Additional follow-up found that the missing page in the bid bond did not change any of rights and obligations under the bond.
In response, Plaintiff filed a writ of mandate and a complaint. The trial court denied Plaintiff’s request contesting the City’s award to the Lowest Bidder.
On appeal, the Court found that although a bid bond was required under the bid, as well as State and local law, substantial evidence supports the City’s decision to waive the irregularity of one missing page from the Lowest Bidder’s bid. The second page of the bid bond contained all the relevant information to determine the Lowest Bidder had received a bid bond for its bid. The first page merely would have contained the name of the contractor, the name of the surety, and the date of the submission of the bid.
Under California law, a bid defect cannot be waived if it gives a bidder an unfair competitive advantage. However, the Court found that the City’s waiver did not create an unfair competitive advantage because the waiver was of something inconsequential to the bid. The Court agreed with the City and found that the City did not abuse its discretion in waiving the mistake from the Lowest Bidder.