CHALLENGES TO THE AWARD OF BID

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.

 

C. Forum

1. Administrative Challenges

a. Formal procedures do not exist at the state or local level for administrative challenges to county bid procedures.

b. Informal challenges must be tailored to the specific procurement and brought to the attention of everyone involved in the process.

2. Judicial Challenges

a. Standing:  Standing must be established.  The most frequent challenges to the bid process or contract awards are taxpayer suits, Unsuccessful bidders may also bring a cause of action.

b. Scope of Review:  The scope of review by the court is limited to determining whether there has been fraud, collusion, favoritism or abuse of discretion.  Duffy v. Village of Princeton, 60 N.W.2d 27 (Minn. 1953). Abuse of discretion relates to such things as material deviation of bid proposals, insufficiency of bid specifications and failure to follow statutory bidding procedures.  The court will not attempt to substitute its judgment for that of the county.  McQuillin, Municipal Corporations, (3rd ed.) § 29.83.

D. Remedies

1. Injunctive Relief

a. Suits may be brought: (i) to set aside contracts entered into without competitive bidding; (ii) to set aside awards when bid specifications are too indefinite or are invalid for any other reason; (iii) or when a bid deviates substantially from specifications.  See Carl Bolander & Sons Co. v. City of Minneapolis, et al, 451 N.W. 2d 204, (Minn. 1990); Griswold v. Ramsey County, 65 N.W.2d 647 (Minn. 1954); Duffy, supra; Coller v. City of St. Paul, 26 N.W.2d 835 (Minn. 1947); Nielson v. City of Albert Lea, 86 N.W. 83 (Minn. 1904); Otter Tail Power Co. v. Village of Elbow Lake, 49 N.W.2d 197 (Minn. 1951); LeTourneau v. Hugo, 97 N.W. 115 (Minn. 1959); Arpin v. Thief River Falls, 141 N.W. 833 (Minn. 1913).

b. Generally, a bidder is not entitled to injunctive relief.  McQuillin, Municipal Corporations, (3rd ed.) § 29.83.  Leskinen v. Pucelj, 115 N.W. 2d 346 (1962).

 

2. Damages

a. The general rule is that the actual lowest responsible bidder is not entitled to damages when the contract is awarded to a higher bidder.  Telephone Associations, Inc. v. St. Louis County Board, 364, N.W.2d 378 (Minn. 1985). The power of letting contracts is for the benefit of the public and not of individual bidders.  An award to one other than the lowest responsible bidder does not entitle the bidder to recover damages or lost profits.  McQuillin, Municipal Corporations, (3rd ed.) § 29.86.

b. Some recent cases have awarded unsuccessful bidders who have been wrongly denied the contract, recovery of bid preparation costs and expenses, including reasonable attorneys fees, from the time it first intervened at the County Board to prevent the award of the contract.  Carl Bolander & Sons Co. v. City of Minneapolis, 451 N.W.2d 204 (Minn. 1990).

E. Effect of Void Contracts on Contractors who have Performed

1. A declaration of a contract as void does not necessarily preclude a contractor who has performed from recovering monies.

2. A contractor may recover under quasi-contractual theory when:

a. the county receives money or property

b. pursuant to a contract

c. within the contracting powers of the county

d. and the contract is made in good faith

e. and is carried out without intent to violate or evade the law

f. but which contract is invalid for failure to follow statutory requirements

g. AND IF the money or property is retained and devoted to legitimate county purposes thereby resulting in a benefit to the county.  Kotschevar v. Township of North Fork, 39 N.W.2d 104 (Minn. 1949); Buffalo BituminousInc. v. Maple Holl Estate, Inc., 250 N.W. 2d 183 (Minn. 1977).