Wednesday, December 1, 2010
Disappointed Bidders on Public Projects
Recently, the Michigan Court of Appeals released its decision in Cedroni Associates, Inc. v Tombilson, Harburn Associates Architects & Planners, Inc. (docket # 287024, released 11/16/10) which provides new avenues for the disappointed low bidder to challenge the bid process on governmental projects.
The case involved a construction project within the Davison Community Schools. An architectural firm (Defendants “THA”) assisted the school by reviewing, evaluating, and investigating the bids and bidders. Based on THA’s advice, the school district bypassed the Plaintiff contractor’s low bid and instead awarded the contract to the second lowest bidder.
The disappointed contractor brought a tortuous interference claim against THA claiming that THA had been untruthful and inaccurate in its negative portrayal of the contractor’s capabilities to do the project. The key finding in the case was that the objective criteria within the school district’s policies and project manual could be sufficient to create a valid business expectancy on the part of the contractor. This was true even though the policies and manuals gave the school discretion to reject “any and all bids.”
I think the potential impact of this decision could be very significant. At minimum, governmental entities and those involved in the approval process will need to look very closely at bid awards and should have compelling reasons to reject low bids.
Labels: Construction Law