Posts Tagged ‘sub-contractor’

DOT Forced to Play by the Rules

Thursday, September 4th, 2008
Two weeks ago the South Carolina Supreme Court decided a case that forced a state agency to play by its own procurement rules. Edward D. Sloan, Jr. frequently brings suits where he believes that governmental agencies are disregarding their responsibilities to follow the rules to the public’s detriment. In this case Sloan challenged an emergency procurement on a road construction project.

The contractor was consistently behind and was terminated for default which meant that its performance bond surety needed to step in and finish the project at no cost to the DOT. DOT received great pressure from the local populace to get the project completed. Turning the project over to the surety would likely cause a 6 month delay and following the standard procurement policy would cause a 4 month delay.

In response to the pressure, DOT changed the termination for default to a termination for convenience and invoked emergency procurement procedures. DOT gave the contract to a subcontractor which was already on the job and was able to start almost immediately. The effect was 6 months saved but an extra cost of $4 million.

Mr. Sloan sued to have the decision set aside arguing there was no emergency which justified DOT’s use of a negotiated contract.

The case was decided under a statute particular to highway procurement rather than the SC Consolidated Procurement Code (SCCPC). DOT argued that it had the power as long as the DOT Director agreed and road safety conditions created the emergency. Sloan argued there was no emergency either as the word is usually understood or under the SCCPC definition of emergency. The Court found that emergency means a sudden, unexpected onset of a serious condition. The road safety concerns existed from the beginning. The court held there was no emergency.

For the full opinion see Sloan v. DOT Op. No. 26534 filed 8/25/2008

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S C Bid Protests

Thursday, August 21st, 2008
Changes to bids after the bids have been opened

The state of South Carolina launched into uncharted territory when it disallowed the protest of the second low bidder in the case of Martin Engineering, Inc. v. Lexington School District One, 365 S.C. 1, 615 S.E. 2d 110 (2005).

The school District put a school renovation project out for bid. Sharpe was the low bidder and Martin was second. When the bids were opened Sharpe asked to add $613,000 to its $16MM bid saying it had forgotten to include the built up roofing.

Martin protested saying that the School District procurement policy only allowed bid correction when the mistake was clearly evident from the face of the bid, the correction does not cause the bidder to have the low bid and it would not be prejudicial to fair competition.

The Supreme court found that the mistake was not apparent from the face of the bid but said “the mistake is clear, and the amount Sharpe intended to bid for the roof is evident, by examining the roofing sub’s sub-bid….” Furthermore, the Court found that allowing the upward correction was not prejudicial to fair competition.

The contrary view is that allowing the after the fact upward correction encourages unscrupulous contractors to play games with the bidding process. A contractor can deliberately leave out 10% of his price, as was the case in Martin Engineering, become the low bidder and then ask to correct saying that it is obvious he made a mistake. Then he can have his cake and eat it too. Such gamesmanship is almost impossible to prevent in the bid protest arena where there is no discovery and the case must usually be made in ten days or less.

Bryan Barnes
barnes@rtt-law.com

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