This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its September 1992 decision in Intercontinental Properties, Inc. v. Department of Health and Rehabilitative Services, Florida’s Third District Court of Appeal found a bid non-compliant because it was signed by an agent who lacked the authority to bind the bidder at the time of the bid. The case involved an Invitation to Bid (ITB) for a nine-year lease for 30,000 square feet of office space. The low bid was $1.2 million lower than the next best bid but, as the Court of Appeal noted, it was signed by an agent who was not authorized to make the offer at the time of the bid:
The hearing officer also found that Intercontinental’s bid was unresponsive. The office building in question is owned by Royal Trust Tower, Ltd., a Florida limited partnership. The bid was submitted by Intercontinental (a property management company), as agent for Royal Trust Tower, Ltd. Intercontinental’s bid was signed by Ms. Caroline Weiss in her capacity as President of Intercontinental Properties, Inc. It is undisputed that Intercontinental was acting in an agency capacity when it submitted the bid on behalf of Royal Trust Tower, Ltd. Ms. Weiss attached the property management agreement to the bid, and relied on that document as proof of her authority to act on behalf of the limited partnership. The hearing officer found that on its face the property management agreement did not contain sufficient authorization to allow Intercontinental to act as Royal Trust Tower’s agent for purposes of entering into this particular lease. There were two specific insufficiencies.
First, the hearing officer found that this particular lease was going to require the landlord to perform $450,000 in building modifications at the Royal Trust Tower property. (R. 114). The hearing officer found that “the Management Agreement prohibits Intercontinental Properties, Inc., from incurring expenses in excess of $500 for structural changes and major alterations without the prior written consent of the owner [Royal Trust Tower, Ltd.]…. Weiss did not include, as part of her bid submittal, written authorization from the owner to incur such expenses on behalf of the owner related to this bid submittal, and no evidence was offered that any such prior written consent exists.” (R. 114) (emphasis added).
Second, the hearing officer went on to find that the Management Agreement gave Intercontinental authority to execute “only the specific lease form previously approved by the owner. Yet, the [State’s] Invitation to Bid requires that the bidder will execute a lease form utilized by the Department, which will also incorporate the bid submittal form. No prior written approval of the owner authorizing Intercontinental Properties, Inc. to execute the Department’s required lease or to change the terms of the lease approved by Royal Trust Tower, Ltd., was submitted by Weiss as part of her bid submittal package.” (R. 114-15) (emphasis added). The relevant portions of the Management Agreement are set out in the margin.
Thus, although a document was attached to the bid which indicated that Intercontinental had the power to act as the rental agent for Royal Trust Tower, Ltd., the document showed on its face that Intercontinental did not have the authority to bind the owner in two critical respects. On that basis, the hearing officer found that the Intercontinental bid was unresponsive.
The Court of Appeal ruled that the authority could not be retroactively granted to the agent after the bid submission deadline and that the bid was therefore invalid.
