This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its January 1978 decision in Harry Pepper & Associates, Inc. v. City of Cape Coral, the Florida Second District Court of Appeal found that the City of Cape Coral improperly accepted a non-compliant bid. The case dealt with a tendering process to award a contract for the construction of a water treatment facility. The Court of Appeal summarized the background to the dispute, in which the City allowed a low bidder to amend its non-compliant bid after the bid deadline, as follows:
Each bid required the bidder to specify the manufacturer of the pumps that he proposed to supply under his bid. After receipt of the bids, it was determined that the lowest bidder was appellee Gulf Contracting (Gulf), and the next lowest bidder was appellant Pepper & Associates (Pepper). However, Gulf’s bid listed a brand of pumps, Aurora, which all parties agree would not be acceptable to the City. After the discovery of this nonconformity Smallwood, an engineer in the engineering firm retained by the City, contacted an officer of Gulf and asked him to write a letter amending Gulf’s bid so it would conform to the bid specifications. A short time later Gulf submitted a letter saying that it would comply with the bid specifications as to the pumps. Smallwood then recommended that Gulf’s bid be accepted. At a city council meeting on May 28, 1976, appellant Pepper’s representatives appeared before the city council and contended that the proposed award on Gulf’s amended bid was unlawful. The city council then directed the city attorney to report to it on June 3 as to its legal rights with respect to this matter. At the meeting on June 3, the City, acting on the recommendation of its project engineer and the advice of its attorney, accepted the lower bid of Gulf.
The Court of Appeal then summarized the following governing principles for the administration of a public tendering process and the prohibition against allowing bidders to correct defects in their bids after a public opening:
The purpose of the bidding process, as asserted in the early landmark case of Wester v. Belote, 103 Fla. 976, 138 So. 721, 723-24 (1931), is: [T]o protect the public against collusive contracts; to secure fair competition upon equal terms to all bidders; to remove not only collusion but temptation for collusion and opportunity for gain at public expense; to close all avenues to favoritism and fraud in its various forms; to secure the best values for the county at the lowest possible expense; and to afford an equal advantage to all desiring to do business with the county, by affording an opportunity for an exact comparison of bids. See also, 26 Fla. Jur., Public Works and Contracts, Section 14 (1959). From the above quote it is apparent that the entire scheme of bidding on public projects is to insure the sanctity of the competitive atmosphere prior to and after the actual letting of the contract. In order to insure this desired competitiveness, a bidder cannot be permitted to change his bid after the bids have been opened, except to cure minor irregularities. 10 E. McQuillin, Municipal Corporations, Section 29.68 (Rev. Ed. 1966); 64 Am. Jur.2d, Public Works and Contracts, Section 59 (1972); Annot., 65 A.L.R. 835 (1930).
The Court of Appeal then concluded that the City engaged in an unlawful deviation for the bidding process rules and gave the low bidder an unfair advantage by allowing it to repair its non-compliant bid after the public opening:
Looking to the specific facts in this case it is clear that prior to the awarding of the contract on June 3 the City was aware of the nonconforming nature of Gulf’s bid. The test for measuring whether a deviation in a bid is sufficiently material to destroy its competitive character is whether the variation affects the amount of the bid by giving the bidder an advantage or benefit not enjoyed by the other bidders. 64 Am. Jur.2d, Public Works and Contracts, Section 59 (1972). Here, there is no doubt that the difference between the conforming and nonconforming pumps was material, yet Gulf was permitted to modify its bid. Further, the inclusion of the nonconforming pumps was an advantage not enjoyed by other bidders, who were required to specify only approved equipment. No one suggests that Gulf could have been required to perform the contract with conforming pumps, as its bid specifically stated that it would use Aurora, the nonconforming pumps. Therefore, Gulf had everything to gain and nothing to lose. After everyone else’s bids were opened, Gulf was in a position to decide whether it wanted the job bad enough to incur the additional expense of supplying conforming pumps.
The Court of Appeal therefore concluded that the “City exceeded its authority by allowing Gulf to bring its bid into conformity with the specifications and then accepting it.”
As this case illustrates, purchasing institutions should be careful in how they establish and enforce their tender compliance requirements, since allowing post-bid repairs to non-compliant bids is tightly restricted after a public opening in a government tendering process.
