AWARD OF BID

III. AWARD OF BID

A. Basis for Bid Award.

Minn. Stat. § 375.21 provides that, when a county is required to competitively bid by the dollar limitations of Minn. Stat. § 471.345, the bid award must be to the "lowest, responsible bidder."

1. However, this is not always the bidder with the lowest unit price.

a. Quality, suitability and adaptability are factors a county may consider in addition to price in determining to whom a contract should be awarded.  Otter Tail Power Co. v Village of Elbow Lake, 42 N.W.2d 197 (Minn.1951); O.A.G. 707a-15, October 25, 1966.

b. Similarly, the fitness, responsibility or capacity of the bidder to perform is legitimate consideration. State v. Snively, 221 N.W. 535 (Minn.1928); Duffy v. Village of Princeton, 60 N.W.2d 27 (Minn. 1953).

2. However, in considering these factors, the award must be based upon a substantial difference between bidders, particularly where a higher bid is selected over a lower one. O.A.G. 707a-15, October 25, 1966.

a. The availability of local repair service may be an essential consideration in determining the adaptability or suitability of an emergency vehicle particularly where the absence of the vehicle at a repair station some distance from the town would seriously impede the provision of service.  O.A.G. 707a-15, October 25, 1966.

b. NOTE: In the above case it probably would not have been permissible to draft specifications that excluded all but the make of vehicle carried by the local dealer.

B. Examination of Bids.

1. Bids are opened and examined at the time and place indicated in the advertisement.  Close examination of bids may be reserved for a later date, although at the opening, it is appropriate to read the proposals out loud.  The bidders should be advised that final award will be make by the county commissioners at their next meeting.  (This assumes the time for opening bids is not the same time as the board meeting).

 

2. Bids are examined to determine if they substantially comply with the bid specifications.  Particular attention should be paid to the bid bond, if required, to ensure that the bond is properly executed and that it binds the insurance company.  O.A.G. 707a-7, August 10, 1949.  The purpose of the "substantial compliance" rule is to enable the taxpayers upon the opening of bds and the letting of the contract to know the exact amount of work to be performed and the total sum to be paid to the lowest, responsible bidder.  Coller v. City of St. Paul, 26 N.W. 835 (Minn. 1947).  [See also Section V. Bonds.]

C. Changes and Mistakes.

1. No material changes in bid proposals may be made after bids have been opened and the contract awarded.  O.A.G. 707b 10, April 12, 1974.

2. Insubstantial changes or variances are possible, however.  The test is whether the change would give a substantial benefit or advantage to a bidder which would not be enjoyed by others.  Carl Bolander & Sons Co. v. City of Minneapolis, et al, 451 N.W. 2d 204 (Minn. 1990); Duffy v. City of Princeton, 60 N.W. 2d 27 (Minn. 1953); City of Bemidji v Ervin, 282 N.W. 683 (Minn. 1938); LeTourneau v. Hugo, 97 N.W. 115 (Minn. 1903).

a. An escalator clause for price of milk bid that was not in the original specifications is material change and not a valid addition to a contract.  Such change is a substantial benefit to the successful bidder not enjoyed by others.  O.A.G. 707-13-7, May 21, 1945.

b. The increased cost of performance by a bidder is no justification for modification or non-payment of a contract let according to bidding procedure.  Village of Minneota v. Fairbanks Morse Co., 31 N.W. 2d 920 (Minn. 1948); Consolidated Laboratories, Inc. v Shordon Scientific Co., 413 F.2d 208 (7th Cir. 1966).

c. Price increases are reasonably anticipated and a bidder should have considered this possibility in preparing his bid proposal. Blaschka, Inc. v Frazer, 302 NYS 2d 443 (1969); Montauk Corp. v. Seeds, 215 Md 491, 138 A2d 907 (1958); O.A.G. 707b-7, November 14, 1947, July 22, 1947, January 15, 1946.

d. Provision for price increases or decreases can be included in bid specifications provided there is a measurable or determinable basis for such changes.  (i.e. consumer price index, etc.) Minn. Stat. § 375.21.

 

3. Mistake is generally insufficient grounds for amendment of a bid proposal after the opening of bids.

a. A bid proposal must respond in all material respects to the specifications or it is not a bid but a new proposition.  Sutton v City of St Paul, 48 N.W.2d 436 (Minn. 1951). 

b. An alleged clerical error was the cause of a bidder filling in the wrong blank spaces on a bid proposal thereby leaving the space for the base bid empty.  The base bid figure had been placed in the space for an alternate bid.  The Attorney General found the proposal to be insufficient in one of the most fundamental aspects -- price.  The proposal as written left doubt as to the contract price and permitted the bidder the advantage of negotiating price by interpretation of the bidder's intent subsequent to the opening of bids.  O.A.G. 707a, October 18, 1963.  Had the bidder discovered the error before bid opening and had the specifications permitted modification before the bid opening, the error could have been corrected.  Even a mistake by a bidder which is in the financial interests of the county invalidates a proposal if the mistake constitutes a material deviation in the specifications.  O.A.G. 707-A7, March 2, 1954; Coller v. City of St. Paul, 26 N.W.2d 835 (Minn. 1947).

c. The existence of a minor technical defect in a bid does not render a bid invalid.  For instance, the omission of a Affidavit of Non-collusion, which was subsequently submitted, is a technical defect which does not invalidate a bid.  Foley Bros. v. Marshall, 123 N.W.2d 387 (Minn. 1963). Another example is the submission of a bid shortly after the time for submission but prior to the opening of bids; this would not prohibit consideration and award of the bid to that bidder if found to be the lowest responsible bidder.  Nielsen v. City of St. Paul, 88 N.W.2d 853 (Minn. 1958).  Another illustration is the omission of a bid bond, which does not invalidate a bid.  Johnson v. City of Jordan, 352 N.W. 2d 500 (Minn. App. 1984).

d. The distinction between the existence of a minor technical defect and a nonconforming bid is that when there is a defect in a procedural requirement which may grant an advantage in the ease of entry into competition rather than an advantage in the competition itself, the error in the bidding can be overlooked.  However, should a bid materially vary from the bidding procedure, a challenge can be raised.  Johnson, supra.

e. "It is the duty of public officers charged with the responsibility of letting contracts...to adopt in advance of calling for bids, reasonably definite plans, or specifications as a basis on which bids may be received.  Such officers...are without power to reserve in the plans or specifications...the power to make exceptions, releases or modifications in the contract after it has been let, which will afford opportunities

 

for favoritism, whether [it] is actually practiced or not.  Neither can they include other reservations which by their necessary effect will render it impossible to make an exact comparison of bids."  Webster v. Belote, 103 Fla. 976, 138 So. 721, 724 (1932).

IV. CHALLENGES TO THE AWARD OF BID

A. Statutory Provisions

1. Minn. Stat. § 375.09:

No county commissioner shall receive any money or other valuable thing as a condition of voting or inducement to vote for any contract.  Every contract made contrary to this section is void. (See exceptions in Minn. Stat. § 471.88)

2. Minn. Stat. § 375.21:

Any contract made without compliance with the advertisement and competitive bidding requirements is void:

3. Minn. Stat. § 382.18 and § 471.87:

It is a gross misdemeanor for any county official or deputy clerk or employee of such official to be financially interested, directly or indirectly, in any contract.

4. Minn. Stat. § 471.35:

It is a gross misdemeanor to prepare bid specifications so as to exclude all but one type or kind of supplies or equipment.

B. Timing

1. Bid protests must be initiated promptly before the process becomes unalterable.

2. A bid protest can be made prior to the bid opening.  Protests may be resolved through clarification, addenda or a bid conference.  Pre-bid resolution of protests is beneficial to the bidding agency so that errors or omissions may be clarified or corrected.

3. Most bid challenges are initiated after the opening of bids.