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What's Inconsequential in a Bid for a Public Contract?

A recent California decision, Bay Cities Paving & Grading, Inc. v. City of San Leandro, 2014 DJDAR 1809 (Cal. App. 1st Dist., Feb. 13, 2014), determined that the City of San Leandro ("City) did not abuse its discretion by accepting an immaterial deviation in the low bidder's bid bond.

The City sought competitive bids for the construction of the BART-Downtown Pedestrian Interface Project along San Leandro Boulevard on September 4, 2012. Oliver DeSilva, Inc. dba Gallagher & Burk, Inc. ("G&B") submitted the lowest bid on the contract, in the amount of $4,846,700. Appellant, Bay Cities Paving & Grading, Inc. ("Bay Cities") submitted the next lowest bid in the amount of $5,359,725, $500,000 more than the G&B bid.

G&B submitted a bid bond that was missing the first page. The bid bond was a form document in in the City's specification book. G&B's bid did include the second page of the bond, which contained the signatures of the surety's attorney-in-fact, G&B's president, as well as notary certificates for both signatures.

Bay Cities submitted a bid protest, challenging G&B's omission, claiming the error rendered G&B's bid non-responsive. Bay Cities argued that prospective contractors were required to submit bid security in the form a bidder's bond executed by an authorized surety company.

Eventually, this matter went before an appellate court. The court agreed with the City's determination that the second page of the bid bond formed an enforceable contract since it had the bonding company's signature and referred to the City's project. Because G&B submitted an enforceable bond, the bid package was complete even if the bid bond's first page was missing.

This case reaffirms that a public entity maintains the discretion to waive inconsequential deviations in bid packages but businesses and individuals should not rely on the discretion of a public entity to save them from bidding mistakes in public contracts.

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