Thursday
Mar222018

Lowest Responsible Bidder Awarded Bid Preparation Costs

The Fourth Appellate District affirmed a judgment. The court held that the lowest responsible bidder on a public works contract was entitled to its bid preparation costs after the contract was awarded to a different bidder.
West Coast Air Conditioning Company, Inc. was among the bidders on a public works contract by the California Department of Corrections and Rehabilitation (CDCR). CDCR awarded the contract to Hensel Phelps Construction Co. (HP). West Coast filed a petition for writ of mandate challenging that award and seeking to enjoin CDCR from awarding the contract to HP. West Coast alleged myriad defects in HP's bid. In its prayer for relief, West Coast requested general damages in an amount sufficient to reimburse it for its bid preparation costs and interest.
The trial court  rendered judgment in favor of West Coast, finding HP's bid to be illegal and unresponsive as a matter of law. The court issued an injunction barring HP from performing any further work on the project, and awarded West Coast its bid preparation costs of $250,000. The court nonetheless declined to order CDCR to award West Coast the contract for the remaining work, despite having previously found that West Coast was the lowest responsible bidder and should have been awarded the contract. CDCR appealed the award of bid preparation costs.
The court of appeal affirmed, holding that the trial court properly exercised its broad equitable authority when it awarded West Coast its bid preparation costs under a promissory estoppel theory. First, there was overwhelming evidence to support the trial court's finding that West Coast's bid was responsive. Further, that West Coast had already obtained relief in the form of a permanent injunction did not preclude an award of bid preparation costs. The issuance of a permanent injunction in favor of West Coast, the lowest responsible bidder, without either an award of the public works contract to it or an award of damages equal to its bid preparation costs, would result in an inadequate remedy. West Coast prepared its bid and incurred $250,000 in costs in reliance on CDCR's representation that the contract would be awarded to the lowest responsible bidder, which turned out not to be the case.

West Coast Air Conditioning Company v. California Department of Corrections and Rehabilitation, March 20, 2018

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