August 2003
By ALEXANDER A. MIUCCIO, CIC Legal Counsel
Competitive bidding statutes are designed to promote competition by removing the opportunity for fraud, collusion, dishonesty or competitive advantage. Municipal agencies are ordinarily required to accept the lowest bid by a responsible bidder, whose bid complies with the bid specifications. If a bid is late, the agency is well within its rights to reject the bid as untimely. The late submission may easily have given the late bidder a competitive advantage, particularly if it knows the other bids before submitting its own bid.
A municipal agency also has the discretion to accept a late bid if the noncompliance with the bid specifications is a mere irregularity and it is within the best interest of the agency to do so. The right to accept a late bid was affirmed in the recent case of Hamlin Construction Company, Inc. v. County of Ulster.
Background
The County of Ulster issued an invitation to bid regarding the "Rip-Rap Installation for Yagerville Road." The notice and bid specifications provided that bids were to be opened at 2 p.m. on Sept. 12, 2001 and that "all bids received after the time stated for the opening ... may not be considered and will be returned unopened to the bidder."
The bid of Hamlin Construction Company, Inc., hand delivered to the county in a timely fashion, was the low bid at the bid opening, held in accordance with the notice, at 2 p.m. on Sept. 12, 2001. Approximately one hour after the bid opening, a representative of Bombard Excavating Corporation contacted the county's purchasing agent to inquire as to the results of the bid. When asked why Bombard had failed to bid on the project, the representative stated that Bombard had submitted its bid via Federal Express on Sept. 11, 2001 for delivery by noon on Sept. 12, 2001.
The terrorist attacks that occurred on Sept. 11, 2001 temporarily halted all of the mail. The county did not receive Bombard's bid until Sept. 14, 2001. The county verified that Bombard's bid had been in the exclusive possession of Federal Express from the time it was picked up on Sept. 11, 2001 until it was delivered on Sept. 14, 2001. Bombard's bid was then opened and found to be approximately $107,000 less than Hamlin's bid.
The county awarded the contract to Bombard and Hamlin commenced an Article 78 proceeding seeking to annul the award to Bombard on the ground that the bid should have been rejected because it was late. The lower court dismissed the petition and Hamlin appealed.
Decision
The appellate court affirmed the dismissal of the petition. According to the court, the county had the discretion to reject the bid submitted by Bombard as untimely, but also possessed the authority to waive the noncompliance with the bid specifications if the noncompliance constituted a mere irregularity and if it was in the county's best interest to do so.
On the question of whether the late bid was a mere irregularity, the court sought to determine whether waiver of the untimeliness of the bid would adversely affect competitive bidding by placing the bidder in an advantageous position over other bidders or otherwise undermine "the necessary common standard of competition." The court concluded that the halt of the mail on Sept. 11, 2001 was unforeseeable and that the county was justified in opening Bombard's bid after it had ascertained that the bid had been delivered to Federal Express on Sept. 11, 2001 and had been in the exclusive possession and control of Federal Express until its delivery to the county. There was no opportunity for Bombard to gain a competitive advantage because it had no knowledge of Hamlin's bid prior to submitting its own bid.
The court also determined that the savings to the taxpayers of approximately $107,000 was in the county's best interest. The court held that the county's decision to award the contract to Bombard was rational. Since there was no evidence of any fraud, collusion, dishonesty or competitive advantage, the county was justified in waiving the untimeliness of Bombard's bid and awarding the contract to it.
Conclusion
The time deadline for the submission of bids is extremely important. As a general rule, if a bid reaches the place where the bids are to be opened later than the prescribed deadline, the bid will be rejected as non-responsive. The rule may be relaxed when the circumstances are unusual and there is no suggestion of fraud or collusion, as in this case, in which the bid was delayed while in transit because of the tragic events of Sept. 11, 2001. This case, however, is the exception to the rule and a contractor who files a late bid runs a very substantial risk that its bid will be rejected out of hand.
About the author: Mr. Miuccio is a partner in the New York City- based law firm Altieri, Kushner & Miuccio, P.C. and legal counsel to the Construction Industry Council of Westchester and Hudson Valley, Inc. Robert Mark Wasko, senior associate with the firm, assisted in the preparation of this article.