LAW: The Contractor's Side

By: Cordell Parvin

However, what happens when there is no formal agreement to extend the bid acceptance period? That was an issue in Prime Contractors Inc. vs. City of Girard (655 N.E. 2d 411 [Ohio App. 1995]), where a disappointed low bidder contested an award to the second bidder.

In 1993, the city of Girard, Ohio, sought bids for repavement of a road. The bid documents included the city's right to determine if the bidder had the ability to perform the work at the bid price, and they also contained a provision requiring bidders to attach materials showing they had complied with the state's Equal Employment Opportunity Commission (EEOC) requirements.

When the bids were opened, Prime Contractors' bid was substantially lower than the bid submitted by Gennaro Pavers. In trying to comply with the EEOC requirements, Prime Contractors attached a copy of a Conditional Certificate of Compliance that had expired two days before the bid's submission.

On Oct. 12, 1993, the city council met to determine which of the bids to accept. Before voting, the council was advised by the city's law director and safety service director that, in their opinion, the amount of Prime Contractrors' bid was not sufficient to complete the project in the proper manner. Based on that opinion, the council authorized the safety service director to award the contract to Gennaro Pavers.

Prime Contractors filed a lawsuit seeking an injunction against the municipality prohibiting it from entering into the contract with Gennaro Pavers. In addition, Prime Contractors argued the bidding process had to be redone because the city and Gennaro Pavers had never entered into a written contract predicated upon the acceptance of Prime Contractors' bid.

After a two-day trial, the court held that the city had not abused its discretion in rejecting Prime Contractors' bid and awarding the contract to Gennaro Pavers. In its decision, the trial court held that the failure to enter into a written contract would only be a basis to verify if either the city or Gennaro Pavers had objected.

On appeal, Prime Contractors relied on an Ohio statute that requires the award and execution of a contract to be done within 60 days. The failure to award and execute a written contract within that time frame invalidates the entire bid proceedings and all bids submitted, unless the time for awarding and executing the contract is extended by mutual consent of the owner and bidder.
The court found the 60-day limit could be extended by "mutual consent." As to this point, the court emphasized that the parties to the proposed contract need not "agree" to extend the 60-day period. Instead, mutual consent could be reasonably inferred by conduct.

Under this interpretation, the court concluded the bid does not automatically become invalid at the end of 60 days: It continues to be valid until one party indicates to the other that it is withdrawing its consent.

In this case, the court found no evidence that either the city or Gennaro Pavers had revoked their consent to extending the 60-day period. In fact, the evidence showed that Gennaro Pavers had already begun to perform the work on the project even though a written contract had not been executed. On that basis, the court refused to grant the injunction sought by Prime Contractors.

In most cases, public owners specifically request extensions of the bid-acceptance period when some problem holds up an award. Suppose a public owner did not seek an extension and the low bidder did not revoke its bid. Could the public owner require the bidder to perform by a notice of award several months later?

Obviously, the answer to that question depends on the wording of the statute or bid proposal. Interestingly, the Ohio Court of Appeals found a consent to extend that did not require a formal agreement. m

Editor's note: Effective Feb. 1, Cordell Parvin is a partner in the law firm of Leonard, Hurt & Parvin, a professional corporation with offices in Austin, Texas; Dallas; Houston; Richmond, Va.; and Washington, D.C. He will work out of the firm's Richmond and Dallas offices. You may write to him in care of the editor.