Use It or Lose It
When it comes to the bidding process for a public works project, Louisiana courts are not going to allow a contractor to a hold a “deficiency” card in its back pocket and play it later to that contractor’s benefit. So held the First Circuit Court of Appeal in the recent case of Gilchrist Const. Co. LLC v. E. Feliciana Parish Police Jury, 2013 WL 3483767 (La. App. 1 Cir. 7/11/13).
In Gilchrist, the East Feliciana Parish Policy Jury (“EFPPJ”) published an “Advertisement for Bids” pursuant to the Louisiana Public Bid Law, La. R.S. 38:2211, et. seq., involving the construction of an asphalt overlay for several roads within the parish. Gilchrist Construction Co., L.L.C. (“Gilchrist”) submitted the lowest bid for the project; however, its bid was subsequently rejected as being non-responsive for its failure to comply with one of the advertised requirements. As a result, the contract was awarded to the second lowest bidder, Coastal Bridge Company, L.L.C. (“Coastal”).
However, the EFPPJ had another issue. In letting the bids for the project, EFPPJ failed to comply with La. R.S. 38:2212(A)(1)(f) which requires public entities to provide bidders with the opportunity to submit bids electronically. (“Contractors shall be provided the option to submit bids for public contracts through a uniform and secure electronic interactive system.”) On this basis, Gilchrest filed an action for nullity seeking for the Court to declare any contract entered into in connection with the project as null due to the violation of Louisiana’s Public Bid Law.
As the Court of Appeal pointed out, La. R.S. 38:2220(A) states that “[a]ny purchase of materials or supplies, or any contract entered into for the construction of public works, contrary to the provisions of this Part shall be null and void.” The Court also cited La. R.S. 38:2220(B) which states in part that “[t]he district attorney in whose district a violation of this Part occurs, the attorney general, or any interested party may bring suit in the district court … through ordinary proceeding to seek appropriate remedy to nullify a contract entered into in violation of this Part.” However, the Court further noted that an “interested party” is a party claiming to be the lowest responsible and responsive bidder. Since Gilchrest was found to be a non-responsive bidder, the Court held it did not have a right of action to now contest the award of the contract to another entity.
Notably, the Court of Appeal in its opinion mentioned La. R.S. 38:2212(A)(1)(b)(i) which states that “[t]he provisions and requirement of this Section, those stated in the advertisement for bids, and those required on the bid form shall not be waived by any entity” and further stated that “[a] political entity has no authority to take any action which is inconsistent with the Public Bid Law.” Nevertheless, in affirming the lower court’s opinion, the Court of Appeal quoted the trial court’s ruling that “Gilchrest… failed to timely assert its claim for injunctive relief and, as an unsuccessful bidder, has waived its right to proceed with this nullity action.” While the end result in this case seems equitable in preventing unsuccessful bidders from post-bid challenges which could have been addressed pre-bid, one can only say that in the context of the Public Bid Law sometimes two wrongs do make a right.
The Gilchrest case appears to be another in the line of what could be called “use it or lose it” cases when it comes to Louisiana Public Bid Law. While most would see no reason as to why Gilchrest would have been motivated to challenge the public entity’s violation prior to being deemed a non-responsive bidder in this case, this is not always the situation. In Apolinar v. Prof'l Const. Servs., 95-0746 (La. 11/27/95), 663 So. 2d 17, the Louisiana Supreme Court held that the contractor waived any objections to the terms of the bid specifications (which it alleged violated the Public Bid Law with a requirement for payment of overtime wages) and could not later say that it need not pay the overtime wages that every bidder agreed to pay when the bids were submitted. In Airline Const. Co., Inc. v. Ascension Parish Sch. Bd., 568 So. 2d 1029 (La. 1990), the Court held an unsuccessful bidder on a public contract who fails to resort to the relief granted by statute by attempting to enjoin timely the execution or the performance of the contract, when the facts necessary for injunctive relief are known or readily ascertainable by the bidder, is precluded from recovering damages against the public body.
Timing is obviously critical in the bidding and awarding of public projects. While the Louisiana Public Bid law is prohibitory law which cannot be waived, these cases hold that a contractor does not have an unlimited right to challenge the public entity’s violation of the law for the contractor’s own benefit.