Public Owners Have Substantial Discretion in Determining the Lowest Responsible Bidder

Construction going on in the city.

In a recent decision, the Appellate Court reminded us that it is the lowest responsible bidder and not merely the bidder that submits the lowest price that shall be awarded the contract for a public project.  In Good Earth Tree Care, Inc. v. Town of Fairfield, 2014 WL 3408914 (Conn.App.), 2 (Conn.App., 2014), the plaintiff brought an action against the Town of Fairfield (the “Town”) because of the Town did not award the plaintiff the contract to operate the Town’s leaf and yard waste facility (the “Facility”) despite the plaintiff having submitted the lowest bid.  The lawsuit was dismissed after the plaintiff presented its evidence because it failed to prove that the Town engaged in “fraud, corruption, or favoritism.”  Based upon the facts of this case, however, it is easy to understand why the plaintiff thought that there might have been an element of favoritism involved.  Specifically, the Town awarded the 5 year contract to the contractor that had operated the Facility for the previous five years at a higher price than the plaintiff had offered.

In the private sector, it is perfectly permissible for an owner to say that it is willing to pay a familiar entity a higher price than a new company if the private company is happy with the existing company’s performance but public owners do not have that type of discretion.  As the plaintiff in Good Earth Tree Care, Inc. pointed out, the Town was obligated under its charter to award the contract to the lowest responsible bidder.  The question then becomes how the Town determined which bidder was the lowest responsible bidder.

In Good Earth Tree Care, Inc., the Town put itself in a very good position to defend itself from any charge of favoritism, fraud, or corruption.  It appeared to the court that the Town conducted a fair bid process that did not provide any bidder with an advantage over the other insofar as the Town’s “evaluation panel adhered strictly to the bidding requirements and to the criteria set forth in the bid documents and made a good faith interpretation of the bidding requirements when applying them to the bidders.”  Id.  “Each panel member filled out scoring matrices—models of which were provided in each bid package—to analyze each bidder’s qualifications and price proposals.”  Id.  Although this procedure may not be perfect, the court noted that “[a]lthough the assessment of the criteria for determining the lowest qualified bidder includes some subjective analysis, that subjective analysis does not carry with it that imprint of favoritism, but rather is a wholly permissible exercise of the municipality’s discretion unless favoritism otherwise is illustrated.”  Id.

The Appellate Court’s decision in Good Earth Tree Care, Inc. provides a valuable lesson for practitioners that represent disappointed bidders.  For example, the Town’s process argument was powerful evidence.  Specifically, the Town argued that the process was fair because the Town used an evaluation panel that evaluated each bidder using scoring matrixes that considered a number of factors in addition to the bidder’s overall price.  To overcome the Town’s argument, the disappointed bidder’s counsel would have to demonstrate that the process was still able to be manipulated unfairly.  In an action brought by a disappointed bidder, the disappointed bidder’s counsel would have to question each member of the public owner’s evaluation panel.  Each panel member should then be asked whether he or she had any idea which bidder should be awarded the contract before their selection matrix was completed; whether the end result matched the panel member’s original idea; whether the panel member completed his or her selection matrix more than once; and/or whether each panel member’s determination of the lowest responsible bidder changed by completing a selection matrix more than once.  It is through this kind of questioning that evidence of favoritism may emerge.

If you should have any questions about whether to challenge a public owner’s determination of the lowest responsible bidder, please give me a call at (860) 760-3317.

Scott Orenstein