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.

 

If you are bidding on projects awarded through the Mississippi Department of Finance and Administration, Bureau of Building, Grounds and Real Property Management ("the Bureau"), you might not be awarded the contract, even if you are the apparent low bidder.

The Bureau is very particular about with whom it does business. Effective May 18, 2009, the Bureau has expanded the grounds for disqualifying a bidder from competition. (Link to rules.) These recent changes are highlighted below.

1.04 DISQUALIFICATION OF BIDDER: A Bidder may be disqualified for any of the following reasons:

A.  Failure to comply with the bid requirements.  (This provision was in 600.53 but missing in 1.04 of the Instructions to Bidders.

B.  Bidder is in arrears on existing Contract with the Bureau or another state agency.

C.  Bidder is, or anticipates being, in litigation or arbitration with the Bureau or another state agency.

D.  Bidder has defaulted on a previous Contract.

     

    BOB Manual, Instructions to Bidders, Section 00100, Part 1, General, Paragraph 1.04.

Mississippi’s Public Procurement Statute requires award to the "lowest and best bidder". However, the Mississippi Courts have recognized that the lowest bid may not necessarily be the best bid. Thus, state agencies have been afforded considerable deference when deciding which contractor has submitted the "lowest and best bid". One of the areas the Mississippi Supreme Court has recognized may be considered in the evaluation of bids is a contractor’s past performance record. However, in my opinion, the Bureau’s grounds for disqualification impermissibly expand the area of inquiry by seeking to penalize a contractor for exercising its contractual right to pursue a claim against the Bureau or another state agency with which the contractor has a contract.

The Bureau’s new grounds for disqualification gives it the authority to now reject a bid if the contractor "anticipates" being in litigation or arbitration. Hypothetically, this means that if a contractor has a contract with the Bureau or another state agency, writes a "claim" letter stating the contractor believes it has a right to an equitable adjustment in the contract price and/or time and subsequently submits a bid on another Bureau project, the contractor’s bid may be rejected because the letter could be construed as a sign the contractor "anticipates" being in litigation or arbitration with the Bureau. The Bureau may even require a certification as part of its bid requirements wherein the contractor must represent it does not anticipate being in litigation or arbitration with the Bureau or another state agency. The obvious intent of this provision is to discourage contractors from asserting claims against the Bureau or another state agency on construction projects. It appears the Bureau has made the decision that such draconian tactics are more effective then dealing with legitimate claims which the contractor has a right to assert under the Bureau’s contract documents.

If you have ever been the apparent low bidder on a public construction project and had your bid rejected because of an irregularity in the bid documents, you are not alone.  What is even more frustrating, and will make you fighting mad, is when the public agency decides to waive the same irregularity of a competitor when you are the second low bidder.  Perhaps the best way to avoid this situation is to make sure that you have completed your bid in strict accordance with the instructions to bidders.  I know it is difficult to focus on all the particulars when less than an hour before the bid is to be submitted subcontractors and suppliers are sending in prices or changing the ones previously provided.  Here is a simple bid checklist that may help you avoid those last minute mistakes.

  • Read the "Instruction to Bidders" when you obtain a copy of the solicitation to make sure that there are no unusual or different bid requirements. 
    • Pre-Bid Conference
    • Bid Bond
    • Site Visit
    • Listing of Subcontractors
  • Prepare the bid envelope in advance, identifying (1) the project, (2) the person to whom the bid is to be submitted, (3) the location where the bid is to be submitted and (4) the date and time for the submission of the bid.  ALWAYS PLACE CERTIFICATE OF RESPONSIBILITY NUMBER ON THE OUTSIDE OF THE ENVELOPE.
  • Complete the bid form and check to determine whether all the blank spaces for prices are completed with a dollar amount or a "—" or "-0-".
  • Check your addition and multiplication for unit prices and total bid price.
  • Acknowledge all Amendments/Addenda to the solicitation.
  • List subcontractors, if required.
  • Sign and date the bid documents.
  • Check the bid bond, if required, to make sure that it is in the correct amount and proper form.
  • Place bid documents and bid bond, if required, into envelope and submit.

In the event you are determined to be the apparent low bidder, and your bid is not more than ten percent (10%) above the amount of funds allocated for the project, it is likely that you will be awarded the contract.