By: Alexander A. Miuccio Published: September 2010

Court Rejects Variance From Bid Requirements

A disappointed bidder on a public project can go to court and challenge an award to the lowest bidder if he believes that the successful bidder failed to comply with the bid documents.  Although minor defects or irregularities in a bid may be waived by the contracting authority, a failure to conform to a material or substantial bid requirement cannot be waived or corrected after the bid opening.

In the recent case of Gemstar Constr. Corp. v. County of Nassau, the issue before the court was whether a low bidder’s variance from the bid specifications gave him an unfair advantage or benefit not enjoyed by the other bidders.

Background 

In July 2009 the Nassau County Department of Public works invited bid proposals for two public improvement contracts relating to the removal and replacement of underground storage tanks at the Rockville Centre and Garden City MTA Long Island Bus maintenance depots.  The instructions to bidders required that the bids include a verification that the bidder had an approved State of New York registered Apprenticeship Training Program.  TCM Services, Inc. and Environmental Closures, Inc. were the lowest bidders for the two projects.  However, only the next lowest bidder for each job, Gemstar Construction Corp., had an approved registered New York State apprenticeship program when the bids were opened.  The low bidder, TMC, produced a verification of a New York State apprenticeship program twenty-four days after the bid opening.  The other low bidder, Environmental Closures, submitted its verification of a New York State apprenticeship program fifty-one days after the bid opening. 

Gemstar protested the awarding of the bids to TCM and Environmental Closures on the grounds that they failed to timely comply with the bid specifications.  The County denied Gemstar’s protest and Gemstar petitioned the court to reverse and annul the County’s determination.

Decision

The court reversed and annulled the County’s award and directed that the bidding be reopened.  The court stated that a governmental agency has the right to determine whether a variance from bid specifications is substantial or whether to waive it as a mere irregularity, and that determination must be upheld by the courts if supported by any rational basis.  However, the court also noted that a contracting agency may not allow a bidder to correct its bid after the bid opening in a way that would result in an unfair competitive advantage over the other bidders.  According to the court, TMC and Environmental Closures did not provide verification of the apprentice program mandated by the bid requirements until long after the bid opening and, as a result, “gained a competitive advantage” over Gemstar. 

The responsiveness of a bid must be assessed on the face of the bid at the time the bids are opened.  TMC and Environmental Closures should not have been allowed to submit their apprenticeship information long after the opening of bids.  This material defect in the bid may not be waived and the County must reject the bid so that all bidders may be treated alike and so that the possibility of fraud, corruption or favoritism is avoided.

Comment 

It is rare for courts to overturn governmental agency determinations of responsive bids.  A contracting agency has the right to determine whether a variance from bid specifications is substantial or whether to waive it as a mere irregularity or minor defect.  However, if it can be shown that the successful low bidder’s variance from the bid requirements gave him an unfair advantage over other bidders, courts will reject the lowest bid. 

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