What the Courts Are Saying: Ohio Public Owner’s Discretion in Determining Responsible Bidder Upheld . . . Again

Reprinted from the Winter 2012 BrickerConstructionLaw.com Newsletter
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Just this month, the Court of Appeals for Franklin County, Ohio reinforced already-strong Ohio precedent regarding the broad discretion of an Ohio public owner in determining to whom to award a construction contract. See State of Ohio ex rel. Glidepath, LLC v. Columbus Regional Airport Auth., 10th Dist. No. 10 AP-783, 2012 Ohio 20. The owner was the Columbus Regional Airport Authority, which has a statutorily imposed “lowest responsive and responsible” bid award standard. (Contrast that to what is generally considered the even more broad standard of “lowest and best,” enjoyed by many other Ohio public owners.)

The project, valued at approximately $14 million, was for furnishing and installing a new automated baggage handling system. There were six bids. The disappointed bidder-plaintiff was read low by nearly $700,000 and its bid was deemed responsive.

An eleven member committee recommended to the airport’s CEO that the disappointed bidder be deemed “not responsible” and that the airport award the contract to the second lowest bidder. The committee’s reasons were numerous, including:

• The director of finance and audit services at the airport was dissatisfied with the bidder’s income statement and balance sheet, and even suspected that some information was misrepresented;
• There was concern about a nearly $3 million unbilled receivable;
• The committee was also concerned with information on the bidder’s financial position as reported by Dun & Bradstreet;
• The bidder’s project manager lacked the minimum experience identified in the bidding documents; and
• The bidder’s references were not positive.

A bid protest meeting was held, wherein the disappointed bidder attempted to persuade the selection committee to change its recommendation. The attempt failed. Another protest meeting was held, and this too was unsuccessful, bringing the total number of times the disappointed bidder was rejected to three.
The disappointed bidder unsuccessfully sued for a temporary restraining order, preliminary and permanent injunctive relief, a writ of mandamus (presumably for an order directing the airport to award the contract to the disappointed bidder), and an award of bid preparation costs.

The disappointed bidder then appealed, presenting two main arguments: 1) there was a lack of specificity in the announced bid evaluation criteria; and 2) the airport misapplied the criteria it did announce.

Specificity

The airport applied the same bid evaluation criteria set forth in Ohio Revised Code 9.312, namely “the experience of the bidder, the bidder’s financial condition, conduct and performance on previous contracts, facilities, management skills, and ability to execute the contract properly.” The disappointed bidder argued that the airport was required to announce even more specific standards demonstrating how the responsibility criteria of R.C. 9.312 would be analyzed. The court of appeals gave the argument short shrift, noting that several years earlier it had rejected an allegation that R.C. 9.312 was unconstitutionally vague when it, in fact, held that the statutory criteria were “clear and reasonable.”

Application

The court noted that the disappointed bidder mounted a spirited defense of its reputation and ability to perform the contract. But the court held that the responsibility analysis was an inherently subjective process and that it was precluded from substituting its own judgment for that of the airport. The court went on to determine that the airport had not abused its broad discretion in making the determination that the disappointed bidder was “not responsible” for purposes of the contract in question. The trial court’s decision was upheld in all respects and the bidder remained disappointed.