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Where a county government rejected an electrical contractor’s low bid for the sole reason that it believed the contractor had violated the prevailing-wage law, despite no administrative or legal rulings to that effect, the court held the county abused its discretion and must terminate the contract it awarded to another contractor, and review the low Bidder’s bid based only on the criteria properly included in the bid invitation.   Since the Bidder had not included a request in its complaint that the county be ordered to award it the contract, the court declined to require the county to make the award to this Bidder, but nevertheless made it as clear as it could that the county would have to evaluate the bid on the bases of criteria other than prevailing wage issues.   State ex rel. Gaylor v. Goodenow, 928 N.E. 728 (Ohio 2010).

In this case, Franklin County, Ohio was constructing a new animal shelter.  It issued an invitation for bid (IFB) for the electrical-systems package for the project.  The IFB listed 25 criteria that would be used in evaluating the low responsible bid.  One of the criteria was “that the Bidder has not been debarred from public contracts or found by the state (after all appeals) to have violated prevailing wage laws more than three times in a two-year period in the last ten years.”   As explained by the court, the county actually treats the issue of prevailing wage violations as dispositive such that if it is determined that the Bidder has violated the prevailing wage laws more than three times the county will ignore the other factors and simply reject the Bidder.

The Bidder in question had never been found to have violated the prevailing wage laws.  It had, however, apparently, unintentionally underpaid some individuals and had settled without admitting liability and without any administrative or judicial finding of liability.   When the county rejected its low bid, the Bidder brought legal action seeking a “Writ of Mandamus” to compel the county to fully and fairly consider whether its low bid was the best bid, without reliance on prevailing wage issues.   Courts generally recognize mandamus as the appropriate remedy to correct an abuse of discretion by a public board in a decision that is not appealable, and is particularly appropriate, say the court, in matters of competitively bid public works contracts.

Citing a previous case precedent, the court said that “A board’s use of unannounced criteria to reject a bid on public-works contract constitutes an abuse of discretion that is remediable in mandamus.”  Moreover, the court cited another case holding that the county’s practice of misapplying the prevailing wage criteria of the IFB to reject Bidders that had not been found by the state, after all appeals, to have violated prevailing-wage laws, constituted an abuse of discretion.

Although the county sought to argue that the electrical contractor had already begun its work and that it was too late for the contract to be stopped and potentially awarded to the protester, the court held that based on the affidavits submitted, it appeared to the court that work under the contract did not begin before the court had issued its stay on construction, and the other contractor had not filed to intervene in the case.

For these reasons, the court granted the Bidder a writ of mandamus to compel the county to reinstate its bid and to determine whether it should be awarded the contract solely on the basis of the published evaluation criteria.

About the author: Article written by J. Kent Holland, Jr.,  a construction lawyer located in Tysons Corner, Virginia,  with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners.  He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects.  He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  This article is published in ConstructionRisk.com Report, Vol. 13, No.5 (May 2011).

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