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A. What is a Bid?

A bid is an offer submitted by a contractor to perform certain work at a certain price. The bid may then be accepted by the owner, resulting in a binding contract. The same is true of bids by a subcontractor to a contractor.

A bid can be written or oral; oral bids may have the same legal effect as written bids under some circumstances. However, it is best to follow up an oral bid with a written confirmation. A bid may also be called a “proposal” or a “quotation”.

B. Private Bids.

The general rule in private jobs (as opposed to jobs for governmental units) is that an owner can pick and choose among the bids, is not bound to take the low bid, can negotiate with one or more bidders. However, many bidders will not waste their time preparing a bid where there are no “rules of the game”.

In order to attract competent bidders, private owners will frequently publish “rules” and bind themselves to certain procedures, much like public entities (see below). In this manner, bidders are assured that they will be treated fairly.

C. Bids on Public Contracts.

Bids for public projects are governed by statutes and ordinances. State law requires Florida counties and municipalities to “competitively award” projects in excess of $200,000.00 (electrical projects in excess of $50,000.00). Section 255.20, Florida Statutes. This generally means submission of sealed bids in response to requests for bids (IFB) (see below). Construction contracts with the state or any public agency are usually secured in this manner.

The purpose of competitive bidding is to place all bidders on the same “playing field” and to secure the lowest “responsible” offer for the public (see below). The public entity may not be “arbitrary or capricious” in selecting the low bid, that is, commit acts for improper motive, without reason, or for a reason that is merely a pretext.

The first step when submitting a bid at the local level is to obtain copies of the local ordinance or procedure for bidding. Many county and city charters contain bidding requirements. Unfortunately, some localities have “home grown” rules that may not be written down anywhere. Do your best to determine what these might be. The procurement office is a good starting place. Be sure to determine if the locality believes that the contract must be “competitively awarded.”

Next, find out if there is a “prequalification” of bidders; if so, get “prequalified”. Public agencies are given power by statutes to “prequalify” bidders. This is usually done by a “request for qualifications.” Get this request and respond to it. Otherwise, you may be wasting your time. Some agencies do not go through this process until after the bids are opened, and then only for the three (3) low bidders, for example. Find out how this is handled by the agency.

Finally, some localities have a published preference for “local” contractors or suppliers. Determine in advance how such a preference is administered. There may be a percentage requirement among the subcontractors and suppliers being used.

D. Invitation for Bids (IFB).

Often, there is a bid package containing instructions for the bidder to follow and even a contract form which will be used. This package is often referred to as an “invitation for bid” or IFB. The bid must conform with the IFB to be a valid bid.

Study the IFB and make sure your bid conforms with the IFB. If the IFB says that you must list subcontractors, list all subcontractors you intend to use. If the IFB has local preference and/or minority contractor participation requirements, you must comply with those. If the IFB requires alternate bids on different proposals, those must be filled in. If the IFB requires a bid bond or bid security, attach the bid bond or security to your bid. Do not ignore any request in the IFB.

Many IFBs will inquire into the relative strength of each bidder and its ability to perform the work on time, i.e., current workload, quality of past performances and references, financial strength, ability to meet time requirements, licensing (all contractors and subcontractors must have appropriate state and/or local certifications and licenses, see Chapter 489, Fla. Stat.).

The IFB may state that the owner reserves the right to reject all bids and start the process over again. This is a valid provision.

E. Preparation and Submission of the Bid.

After careful review of the IFB, the plans and specifications and the accompanying contract form, the bidder may undertake these steps, where appropriate:

1. Transmit or arrange for pick up of all documents by the subcontractors and suppliers bidding the job. Ask them to convey any questions about the documents to you within a certain time.
2. Make a master list of questions to the owners seeking clarification and/or information.
3. Make a site visit. Compare subsurface data provided with the locations of subsurface structures to be constructed. The IFB may place the burden on the contractor to do its own subsurface investigation.
4. Attend all pre-bid meetings and ask questions. Take your subcontractors with you so that they may get their questions answered.
5. Carefully and thoroughly prepare your bid. Then have some high official (i.e., the president) review the bid.
6. Verify all figures from subcontractors and suppliers. Get these numbers in writing (fax or e-mail) signed by someone in authority.
7. Submit your bid on time. Do not take a chance on being late.

F. Evaluation of Bids and Award of Contract.

A public entity has wide discretion in determining the best bid. Courts have said that the public entity’s actions must be taken in good faith and without fraud. Honest discretion will not be reversed. However, no bid submitted after the bid opening may be considered, although one court said the agency could waive lateness by a few minutes (but before bids were opened).

Many lawsuits have resulted concerning the issue of what “deviations” or “variances” may be excused by the agency. Courts have said that “minor” or “non-material” variances may be excused, but that “material deviations” require rejection. Courts have developed the following tests:

G. Mistake: Reformation or Rescission of Bids.

What if the bidder discovers a material mistake? If it is detrimental to the bidder, can he rescind his bid? Can he reform his bid by adding the missing element?

The RFI always requires the bid to be open for a period of time to give the public entity an opportunity to evaluate the bids and make the award. The bid bond or letter is security for this. If a bidder unilaterally withdraws its bid, the public entity can make a claim against the bid bond for its damages. But can the bidder withdraw his bid without being liable on its bid bond?

Courts have developed criteria for answering this question:

No court has allowed reformation of a bid so as to increase the price to the public entity.

A public entity accepts a bid by vote of the Board plus issuance of a Notice of Award. Courts have held that governing bodies may rescind their action before the contractor has received the Notice of Award. If the successful bidder is in the audience when the affirmative vote is taken, it should immediately request the Notice of Award.

As stated earlier, the public entity has wide discretion to reject all bids and not award the contract.

H. Bid Protests.

State agencies are governed by the Administrative Procedure Act which has specific procedures for protesting a bid. See generally, Section 120.57, Florida Statutes. A notice of protest must be filed within 72 hours after the bidder receives notice of the facts which give rise to the protest. A formal written protest containing all grounds of the protest and all authority for overturning the bid must be filed within 10 days thereafter. Section 120.57(3)(b), Florida Statutes. Filing of the formal protest requires a stay of the contract award process. This protest is heard by an Administrative Law Judge (ALJ), not in court by a Circuit Judge. The appeal of the ALJ’s decision is to the First District Court of Appeals.

The protesting bidders must have standing to bring the protest. Generally, this means that the protester must be the next lowest bidder. The third low bidder has no standing unless it has grounds for setting aside both bids below it. Generally, only the bidder, not a subcontractor or supplier, has standing. A bond must be posted by the protesting bidder.

When the APA does not apply, the procedures promulgated or followed by the local entity must be followed, for example, to the County Attorney and then to the County Board. Appeal of the Board’s decision is to the Circuit Court. An injunction is required to stop the award process.

References:
Florida Construction Law and Practice (4th Ed., 2002, The Florida Bar), Chapter 7, John W. Bakas, Jr.
Florida Construction Law Manual, (2006 Edition), Chapter 5, Bids, Larry R. Leiby (Thompson/West 2005)
Florida Administrative Practice (6th Ed. 2001, The Florida Bar), Chapter 4, Administration Adjudication, G. Steven Pfeiffer and Katherine Castor, and Chapter 11, Bid Dispute Resolution, Mary M. Piccard

William G. Christopher heads the Maglio Christopher & Toale Law Firm Construction Law and Litigation Department. He is certified by The Florida Bar in both Construction Law and Business Litigation Law. He is also certified by the National Board of Trial Advocacy in Civil Trial Advocacy. He is an arbitrator with the American Arbitration Association and certified by the Florida Supreme Court as a Circuit/Civil Mediator. Prior to becoming an attorney Mr. Christopher achieved the rank of Captain during his service in the U.S. Army Corps of Engineers from 1962 to 1967.