On August 16, 2018, the Mississippi Supreme Court laid to rest any confusion regarding how public authorities are to address the situation where the apparent low bidder’s bid exceeds the “allocated funds” by more than ten percent (10%). [Click here to see Decision]. The procurement in question involved bids for a construction project in the City of Clarksdale (“the City”). The bids received exceeded the “allocated funds” by more than ten percent (10%). Hemphill Construction Company, Inc. was the second low bidder and protested the award to the apparent low bidder and demanded the City reject all bids and re-advertise. Rather than reject the bids, the City increased its budget to provide the necessary funds to award the contract to the apparent low bidder. The Mississippi Supreme Court found that the City’s action to increase the “allocated funds” after bids were opened violated the procurement laws and remanded the case back to the trial court for further proceedings.

This decision makes clear that public authorities cannot change the “allocated funds” for a Project after bids are opened and then discovers the apparent low bidder’s price exceeds the “allocated funds” by more than ten percent (10%). However, if the apparent low bidder’s price is within ten percent (10%) the public authority can utilize Miss. Code Ann. § 31-7-13(d)(iv) to negotiate with the low bidder.