United States: Local Government Procurement Laws – What Does It Take To Be A "Responsive Bidder"?

In a previous article we discussed the requirement that, if it awards a public works contract, a public entity in the State of Georgia must award the contract to the "lowest responsible and responsive bidder," unless an exception to this requirement applies.

This article addresses what it means to be a "responsive bidder."  While responsibleness focuses on the bidder or proposer, responsiveness focuses on the bid or proposal.  Specifically, responsiveness requires that a bid or proposal respond and conform to the requirements of the invitation for bids or request for proposals (the "Bid Documents").

Any deviation from the requirements of the Bid Documents may be considered non-responsive.  But public entities have the discretion to waive minor deviations from the requirements of the Bid Documents.  Minor deviations are a matter of form and not of substance, or they pertain to some immaterial or inconsequential defect or variation from the exact requirement of the Bid Documents.  For example, a minor deviation may occur where a bidder fails to initial a price change, or to write the solicitation number, date, and time of bid opening on its bid envelope, or to provide incidental information requested in the bid documents, such as information about its affiliates, or to include a unit price where the unit price can be calculated by dividing the line item total by the estimated quantity.

A public entity does not have discretion, however, to waive material deviations from the requirements in the Bid Documents. Indeed, O.C.G.A. § 36-91-2(14) defines a "responsive bidder" or "responsive offeror" as "a person or entity that has submitted a bid or proposal that conforms in all material respects to the requirements set forth in the invitation for bids or requests for proposals." (emphasis added).  A deviation from the Bid Documents is considered "material" if the deviation: (1) gives the bidder a substantial competitive advantage or (2) prejudices other bidders.  Some examples of material deviations include:

  • Limiting or changing the terms of the proposed contract through the bid (g., the bidder offers to supply oranges when the invitation is for the supply apples);
  • Including reservations or conditions in the bid that were not in the proposed contract (g., bidder offers to supply apples, so long as the wholesale price of apples remains less than $2.00/lb.1);
  • Making a bid contingent upon also receiving award on other bids currently under consideration; and
  • Failing to acknowledge addenda or amendments to the proposed contract.

If a public entity determines a bid is non-responsive, it must inform the contractor in writing as to the basis for its determination that the bid was non-responsive.  Failure to do so constitutes a procedural violation of due process.

The determination of what constitutes a material versus a minor deviation is generally left to the discretion of the public entity or agency awarding the contract.  In R.D. Brown Contractors v. Board of Educ. of Columbia County2, for example, the invitation for bids stated that "[a]long with the bid a list of all major subcontractors . . . must be provided. No changes may be made to the list post-bid without prior approval from the Board." Based on this requirement, the second lowest bidder filed suit seeking an order from the court compelling the county board of education to award a school construction contract to the second lowest bidder because the lowest bidder did not include a list of subcontractors with its bid.  The Court held that the lowest bidder's failure to include a list of subcontractors was a minor deviation and recognized that a governmental entity, such as the Board, retains a statutorily granted power to waive technicalities, explaining that:

[U]nder the statutory scheme of public bidding, the Board has the power to determine, within the parameters of that scheme, what constitutes material conformity with the invitation for bids.  Brown points to no statute, regulation or ordinance that requires that subcontractors be listed on bids; the only place such a provision appears is on the invitation for bids produced by the Board.  The invitation does not state, or suggest, that a list of subcontractors is a material requirement; in fact, the subcontractors provision specifies that the list of subcontractors may change with the Board's approval, suggesting that any list is not to be considered fixed.  The invitation also reserved the right to waive technicalities, as authorized by State law.  As the genesis of the specification concerning a list of subcontractors is solely by the Board, we see no reason why the Board could not determine that it was not a material requirement, but rather a technicality that could be waived.

Some seemingly minor deviations can be deemed material if they prejudice other bidders.  At first blush, submitting a bid a few minutes late may seem like a minor deviation.  Indeed, some states have allowed late bids upon a showing of no actual prejudice to other bidders.  Not in Georgia, where bids submitted after the time set for bid opening in the invitation for bids, even though prior to actual commencement of bid opening, have been rejected as nonresponsive in the interest of protecting the integrity of sealed bidding.

For example, in City of Atlanta v. J.A. Jones3, the Georgia Court of Appeals rejected the City's argument that it could accept a late bid if the other bids had yet to be opened, and ruled that submission of a late bid was a material deviation under Georgia law that was beyond the City's discretion to waive.

The Bid Documents in the J.A. Jones case stated that bids had to be submitted "... no later than 2:00 pm, April 10, 1985."  J.A. Jones submitted its bid before the 2:00 p.m. deadline; two other bidders did not.  The apparent low bid was submitted at 2:03 pm, three minutes late. J.A. Jones' bid was the second lowest bid, approximately $10,500 more than the bid by the apparent low bidder for a contract in which all bids received exceeded $13 million.

Initially, the City rejected the apparent low bid as untimely, but the bidder asked the City to check the accuracy of the bid clocks.  The City determined that, at 5:00 p.m. on April 10, the bid clock was 3 minutes fast and awarded the contract to the apparent low bidder. The record, however, showed the clock was never found fast in the years before or after 5:00 p. m., April 10, 1985, and no one could say that the clock was three minutes fast at 2:00 p. m. that day.

J.A. Jones protested the City's consideration of the late bid in three separate letters to the City on April 10, 23, and 25th.  A City ordinance authorized frustrated bidders, like J.A. Jones, to submit protests by letter, and obligated the City to reply within 10 days with its reasoned decision.  Rather than respond to J.A. Jones' letters, the City engaged in an internal debate over whether ICC's bid was timely.  The City ultimately determined that the bid was late, but that a bid three minutes late was a minor deviation that could be waived in its discretion if it saved taxpayer money.

On appeal, the Georgia Court of Appeals held that a late bid was a material deviation from the requirements of the Bid Documents and that the City did not have discretion to waive the requirement because the late submission of a bid gives the late bidder an unfair advantage over other bidders.  The Court reasoned that time is critical to bidders, who often synchronize their watches to the bid clock so they can make significant last minute price changes.  "Indeed, Jones lowered its bid by over $4,000,000 in the last hours and by an additional $200,000 in the minutes before the bid was submitted. Thus, even without [the late bidder] knowing the amounts of the other bids, a late bidder gained an important advantage by gaining additional time to revise its bid."

The Court of Appeals also held that the City's failure to timely respond to J.A. Jones' protest letters was a violation of due process that denied Jones the right to be heard in a meaningful time and manner, and to provide an adequate remedy to redress the wrong, which entitled J.A. Jones to damages of $375,000, in addition to $522,125.05 for anticipated profits. The Georgia Supreme Court reversed the damages award, explaining that "when, as here, a governmental entity has frustrated the bid process and awarded the contract to an unqualified bidder, the injured low bidder may bring an action for appropriate relief. [] However, a low bidder whose bid is unfairly rejected is only entitled to an award of reasonable costs of bid preparation," which for Jones was $22,125.05.

Bid protests are often asserted to determine whether a bidder's failure to follow the Bid Documents makes its bid non-responsive. But these protests are rarely successful because courts generally defer to the public entity's decision about whether a deviation was material or not, unless the public entity failed to follow the legal procedure for making such a decision.

Footnotes

1 See, e.g., Lift Power, Inc., Comp Gen. Dec. B-182604, 75-1 CPD ¶ 13 (finding a bid nonresponsive where a contractor reserved the right in the bid to change the price if costs should increase).

2 280 Ga. 210, 626 S.E.2d 471 (2006).

3 195 Ga. App. 72, 392 S.E.2d 564 (1990) cert. granted, (May 3, 1990) and judgment rev'd, 260 Ga. 658, 398 S.E.2d 369 (1990), on remand to, 198 Ga. App. 345, 402 S.E.2d 554 (1991)

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