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Are you Prequalified to be Awarded Small Public Projects not Subject to Formal Bidding Requirements?
Posted by: Jonathan Bowne
January 03, 2012

As contractors know, public works projects must be awarded via a public, competitive bidding process (excepting those where expenditures will be $5,000 or less). But in 1983 California legislators passed the California Uniform Public Construction Cost Accounting Act ("Act"), allowing some smaller projects to bypass the formal bidding process and be awarded either by negotiated contract, or via an informal bidding process. The Act also allows some particularly small projects to be self-performed by public agency forces.

The size of projects subject to the Act was recently increased. Until recently, the Act provided that projects anticipated to cost $30,000 or less could be self-performed by public agency forces, and projects anticipated to cost $125,000 or less could be awarded via a negotiated contract or informal bidding process.

In April 2011, pursuant to the terms of the Act, California State Controller John Chaing directed that the negotiated contract/informal bidding threshold be raised from $125,000 to $175,000, effective July 1, 2011. Two assembly bills were forwarded to modify the Act to conform to the Controller's modification (AB 720 and 943), one of which also proposed raising the self-performed work threshold from $30,000 to $45,000. Both of the bills passed, the latter of which was approved by Governor Brown in October 2011.

Accordingly, now projects anticipated to cost $175,000 or less may be awarded by negotiated contract or informal bid.

Contractors must be prequalified to seek these contracts. Interested contractors should inquire with public agencies in their market area for opportunities. Many agencies post applications at their website.

See a more thorough article on this subject at our website, here.

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Low bidder denied project after listed DVBE subcontractor found lacking a "commercially useful function"
Posted by: Jonathan Bowne
September 19, 2011

General contractor C.C. Meyers, Inc. was awarded a Caltrans project to improve a highway in Glendale. Meyers was given a credit in its bid for listing a Disabled Veteran Business Enterprise ("DVBE"), Sam's Equipment and Supplies ("Sam's"). Sam's was to furnish concrete base material. Without the credit, Meyers would not have been the low bidder.

The DVBE program is designed to benefit qualified disabled veterans and their businesses by giving them preferences in state contracting. It works, partly, by offering incentives for prime contract bidders to list and use DVBE certified business. To ensure the listing of a DVBE is in good faith, the bidder and DVBE business must show the veteran owned business will serve a "commercially useful function" on the project

Sam's completed a Caltran's "Commercially Useful Function Questionnaire", which revealed Sam's limited role on the project. With respect to what material or services it intended to provide, Sam's answered, "We will provide base rock material delivered to the jobsite." In describing the process it intended to use to provide the aggregate base material, Sam's wrote that "We will order, purchase, set up quantities, time and dates of deliveries. Once delivered we will invoice [appellant] for materials delivered." With respect to invoices, Sam's stated that it would be invoiced from its supplier and would, in turn, invoice Meyers.

Addressing questions related to the delivery of the aggregate base material, Sam's responded: "Based on the contractor's schedule of the material, we will schedule and coordinate the quantity, date, time and location of delivery with our supplier. We will track the progress throughout the delivery." Sam's further stated that its supplier would select, supervise, manage and pay its own trucking operators to deliver the material.

Based on this information Caltrans determined that Sam's was not going to provide a commercially useful function on the project, and rescinded the DBVE credit to Meyers and award the project to the second-low bidder. Caltrans' decision focused on the fact that Sam's was not to perform any of the trucking services, thereby limiting its role - essentially - to an unnecessary middle-man relative to the purchase of the base material itself.

Meyers protested this decision (the protest was denied), and then sought a court order to get back the project. The trial court denied Meyers' requests, and it appealed.

The Second District of Court of Appeal recently rendered its decision on the case, affirming the trial court's decision that Meyers had no remedy. The court held that,

"Sam's owned none of the materials that would be used on the Project and did not intend to select, pay for, supervise or manage the trucking operators that would be delivering the aggregate base to the Project site. Substantial evidence supported Caltrans' conclusion that Sam's was not performing a commercially useful function on this Project."

This decision affirms that public owners and courts will scrutinize the activities of DVBE businesses (and their prime contractor partners) to ensure the credibility of such programs.

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If proposed law passes successful bid protestors may be able to recovery attorney's fees
Posted by: Jonathan Bowne
April 04, 2011

Today contractors who have bid on a public works project and are protesting its award to another bidder may not recover their attorney's fees even if they prevail in establishing a wrongful award.

This fact may soon change. Rep. Donald P. Wagner (R-Irvine) has proposed AB 457, which would entitle a bidder who successfully challenges the award of a contract determined to be invalid due to errors or omissions of the public entity to recover costs and attorneys fees incurred in pursuing the challenge. In other words, if a contractor protests an award in court and wins, it would be awarded its attorney's fees in addition to any other damages.

In a press release issued on May 23, 2011, Mr. Wagner's office stated,

This bill will force public agencies to take more seriously their obligations to comply with ... read moreexisting bidding laws. Under current law, the lowest responsible bidder is to be awarded a government contract. However, a low bidder who erroneously is not awarded the contract and spends its own money in court vindicating the public's right not to overpay for public works can only recover its costs for bidding on the project. This removes any incentive for a wronged business owner to challenge a public agency since the expense of that challenge comes directly from the business's bottom line. Consequently, public agencies, knowing that there are no significant repercussions to flagrantly violating the existing competitive bidding laws, can do so with virtual impunity. But under AB 457, attorneys' fees can be recovered by a deserving bidder. This will encourage public agencies to guard tax dollars through appropriate bid awards, promote government transparency, and encourage contractors to keep local politicians honest.

Interested parties may check here for the ongoing status of AB 457.

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Withdrawing a Mistaken Bid
Posted by: William Last
May 08, 2008

In the fast paced process of gathering information for a bid and then submitting it to another party, it is not uncommon for errors to be made. If a contractor does act comply with the rules for withdrawing a faulty bid before it is accepted he or she may incur substantial losses on the project. This article will discuss the bidders right to withdraw a bid and the rights of the party who received the defective bid to enforce it

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