This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its July 2018 decision in Best Climate Control Corp., the Office of the New York State Comptroller overruled the rejection of a bidder after the State University of New York at Stony Brook University Hospital (referred to in the decision as SBUH) disqualified the bidder for using an SBUH contact as a reference for its bid. The case dealt with an Invitation for Bids (IFB) for HVAC maintenance services, which called on bidders to provide references for their past work. The complainant included a contact at SBUH as a reference and was disqualified for doing so. It brought a bid protest challenging that decision since the IFB rules did not prohibit the use of SBUH contacts as references. The Comptroller agreed, finding that the IFB rules did not prohibit the use of SBUH references and that SBUH only made the decision to reject those references after the submission of bids:
The applicable IFB requirement does not expressly preclude the use of SBUH as a reference (see IFB, at pg. 19) and our review of the procurement record confirms SBUH made the decision to not consider itself as an acceptable reference after the bid due date. The procurement record further indicates SBUH provided Best and the other bidder that used SBUH as a reference an opportunity to submit an alternate reference (see Protest, Exhibit F). While SBUH reserved ‘’the right to make all decisions regarding this IFB, including, without limitation, the right to decide whether a response does or does not comply with the requirements set forth [in the IFB]” (IFB, at pg. 7), we must now address whether this particular change to the reference requirement of the IFB was a permissible change.
The Comptroller determined that the post-bid restriction against using its own contacts as references was an improper rule change that was prejudicial to bidders who relied on SBUH references in their bids. It found that the disqualification of the complainant was therefore invalid:
SBUH’s change to the reference specification after bid submission clearly could have disadvantaged any bidder relying on using SBUH ·as a reference to satisfy the IFB requirement. In this case, two of the four bidders submitted bids using SBUH as a reference. While Commercial was able to substitute another reference, Best, to the extent SBUH determined its remaining references were unacceptable, was placed at a disadvantage. Accordingly, SBUH’s change to the reference requirement was not permissible. Therefore, SBUH’s finding that the bid submitted by Best was non-responsive based on Best’s use of SBUH as a reference cannot stand.
The Comptroller concluded that the flawed bidding process could not stand and struck down the resulting contract award.
As this case illustrates, since mid-process improvisations can compromise the validity of any downstream evaluation and award decisions, purchasing institutions should clearly define the rules around the use of references in their bidding process so that bidders understand the ground rules ahead of time.
