Bay Cities Paving &
Grading v. City of San Leandro
Filed 1/28/14 Bay Cities Paving & Grading v. City of San Leandro CA1/2
OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a),
prohibits courts and parties from citing or relying on opinions not certified
for publication or ordered published, except as specified by rule
8.1115(b). This opinion has not been
certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION TWO
BAY CITIES
PAVING & GRADING, INC.,
Plaintiff and
Appellant,
v.
CITY OF SAN LEANDRO,
Defendant and
Respondent,
OLIVER DESILVA, INC.,
Real Party in Interest, and Respondent.
A137971
(
Super. Ct. No.
RG12657020)
Appellant Bay Cities Paving &
Grading, Inc. (hereafter appellant or Bay Cities)
denying its petition for a writ of mandate.
Pursuant to that petition, Bay Cities challenged the action of the
(hereafter City) in awarding a public works contract
to a competing contractor, real party in interest and respondent Oliver DeSilva,
Inc., dba Gallagher & Burk (hereafter G&B), the lowest bidder on the
project. Bay Cities, the second lowest
bidder, alleged that the City could not properly award the contract to G&B
because a missing page in G&B’s bid was a material deviation from the
contract specifications. We reject this
contention and therefore affirm the judgment.
II. FACTUAL AND PROCEDURAL BACKGROUND
On September 4, 2012,
title="">[1] the City approved plans
and specifications for the construction of a “BART-Downtown
along San Leandro Boulevard†and called for bids on that project. Prospective bidders were notified of the
project requirements which included submitting a proposal, and using a standard
form provided by the City, along with a bid deposit securing the bidder’s
This security could be in the form of cash, a cashier’s or certified
check or a bidder’s bond executed by an authorized surety company.
The City provided prospective
bidders with a “Contract Book†for the project which contained, among other
things, copies of the required proposal form and of the City’s standard form of
bid bond. (JA 141) The proposal form stated that the “completed
proposal form shall be submitted in its entirety,†and “shall be accompanied by
a bidder’s bond executed by an admitted surety insurer, naming the City of San
Leandro as beneficiary. . . . [¶] . . . The form
of Bidder’s Bond to be used [is] included with the proposal form.â€
On October 23, the City opened the bids
it had received for this project. All of
the bidders submitted bid bonds as security for their bids. The lowest bid on the contract was submitted
by G&B in the amount of $4,846,700. Bay Cities submitted the second lowest bid in
the amount of $5,359,725, i.e., over $500,000 more than the G&B bid.
However, the bid package that G&B
had submitted was missing page 33, which was the first page of its bid
bond. G&B’s bid package did include
the second page of the bond (page 34 of the entire bid), which contained the
signatures of both the surety’s attorney-in-fact and G&B’s president, as
well as notary certificates for both signatures. On October 23, G&B submitted the first
page of its bid bond to the City, albeit after the sealed bids had been opened.
On October 26, Bay Cities filed a
bid protest with the City; it argued that G&B’s bid was “nonresponsive and
must be rejected†because of the omitted page of G&B’s bid bond. On October 30, G&B’s attorney wrote the City,
stating that his client’s initial failure to include the first page of the
two-page bid bond “was due to an inadvertent error,†and continued by noting
that the City “may waive this irregularity and award the contract to G&Bâ€
because “the irregularity is minor and waivable by the City . . . .†That letter continued by citing legal
authorities G&B’s counsel contended supported that position.
In an October 31 letter, City
engineer Mark Goralka acknowledged receipt of Bay Cities’ bid protest but
notified it that the City had determined that G&B’s bid was accompanied by
an enforceable bond and that the omission of the cover page of the two-page bid
bond “can be waived as an inconsequential bid defect.†Goralka also advised that the City would
proceed with awarding the contract to G&B.
On November 19, the City received a
letter from G&B’s bid bond surety, Travelers Casualty and Surety Company,
confirming that the bid bond it had issued in connection with the project “was
approved and authorized by†it, and that the omission of the first page of the
bond from G&B’s bid package “did not affect our commitment under the bid
bond.â€
That same day, the City Council of
San Leandro unanimously adopted a resolution which identified G&B’s bid as
the lowest responsible bid for the project, rejected all other proposals or
bids, waived “any irregularities in the proposal or bid of†G&B, and
awarded the contract for the project “to the lowest responsible bidder
therefore, to wit, [G&B] . . . .†The November 19 resolution also established
that if G&B was unable to execute the contract for this project, the City
Manager was authorized to award the project to the next lowest responsible
bidder and to “take all actions necessary to recover any bid security from the
low bidder necessary to make the City whole in its acceptance of the lowest
bid.â€
The following day, November 20,
appellant filed a petition for a writ of mandate and a complaint in the Alameda
County Superior Court. It also filed an
Ex Parte Application for a Temporary Restraining Order contesting the City’s
award of the contract to G&B. The
trial court conducted a hearing on that application on November 26; two days
later it denied appellant’s request for a temporary restraining order.
On January 16, 2013, that court held a hearing on appellant’s petition for a writ of
mandate and, a week later, denied it. In
its January 23, 2013, order, the trial court stated: “The City of San Leandro put out a project to
bid and all prospective bidders were required to submit a bid bond with their
bids. The City provided all prospective
bidders with a form Bid Bond. Gallagher
& Burk submitted a bid that failed to include page 33 (the terms of the form
bid bond) but included page 34 (the signature page for the bid bond). The City staff concluded that the bid bond
was enforceable (Letter of 10/31/12) and the City Council
formally waived the irregularity and accepted the bid (Resolution dated 11/19/12.) [¶] The court finds
substantial evidence to support the City’s decision that Gallagher & Burk’s
failure to submit page 33 with its bid package was a ‘minor irregularity’ not
affecting the amount of the bid that did not give Gallagher & Burk an
advantage or benefit not allowed to other bidders. (Notice to Bidders, para 10, 27.) The bid bond was a form document so that it
was apparent that the signature page 34 referred to the prior text [on] page
33. In addition the signature page
independently identified the project at issue.
The City reasonably concluded that a court would read page 34 in the
context of the form bid bond and enforce the bid bond. (Civil Code 1647.)â€
On January 23, 2013, the trial court filed a judgment denying Bay City’s petition
for writ of mandate. On February 21, 2013, appellant filed a timely notice of appeal.
III. DISCUSSION
“Appellate review of the award of a
public contract is governed by certain well-established principles. In a mandamus action arising under Code of
Civil Procedure section 1085, we limit our review to an examination of the
proceedings before the agency to determine whether its findings and actions are
supported by substantial evidence.
[Citations.] ‘Our review is
limited to an examination of the proceedings to determine whether the City’s
actions were arbitrary, capricious, entirely lacking in evidentiary support or
inconsistent with proper procedure.
There is a presumption that the City’s actions were supported by
substantial evidence, and [petitioner/plaintiff] has the burden of proving
otherwise. We may not reweigh the
evidence and must view it in the light most favorable to the City’s actions,
indulging all reasonable inferences in support of those actions. [Citations.]
Mandamus is an appropriate remedy to compel the exercise of discretion
by a government agency, but does not lie to control the exercise of discretion
unless under the facts, discretion can only be exercised in one way. [Citations.]’ [Citation.]â€
(MCM Construction, Inc. v. City
and County of San Francisco (1998) 66 Cal.App.4th 359, 368 (
897, 900 (Ghilotti).)
In its briefs to us, appellant
argues that the standard of review in this case is primarily the “independent
judgment†test. To the extent our
disposition of this appeal requires us to decide questions of statutory
interpretation or to determine whether the City’s action violated a relevant
law, we exercise our independent judgment.
(Schram Construction, Inc. v.
Regents of the University of California (2010) 187 Cal.App.4th 1040, 1052; see
also Associated Builders and Contractors,
Inc. v. San Francisco Airports Comm. (1999) 21 Cal.4th 352, 361;
(1996) 41 Cal.App.4th 1432, 1437 (Valley
Crest).) However, as we will
explain, the dispositive issue in this case is a factual one which we review
under the substantial evidence standard.
“ ‘Generally, cities, as well
as other public entities, are required to put significant contracts out for
competitive bidding and to award the contract to the lowest responsible
bidder. [Citation.] A bidder is responsible if it can perform the
contract as promised. [Citation.] A bid is responsive if it promises to do what
the bidding instructions require.
[Citation.]’ †(
“ ‘A basic rule of competitive
bidding is that bids must conform to specifications, and that if a bid does not
so conform, it may not be accepted.
[Citations.] However, it is
further well established that a bid which substantially conforms to a call for
bids may, though it is not strictly responsive, be accepted if the variance
cannot have affected the amount of the bid or given a bidder an advantage or
benefit not allowed other bidders or, in other words, if the variance is
inconsequential. [Citations.]’ [Citations.]â€
(Ghilotti, supra, 45 Cal.App.4th
at p. 904.)
“ ‘The importance of
maintaining integrity in government and the ease with which policy goals
underlying the requirement for open competitive bidding may be surreptitiously
undercut, mandate strict compliance with bidding requirements. [Citation.]’
[Citation.]†(
369.) However, the rule that requires “ ‘strict
compliance with bidding requirements does not preclude the contracting entity
from waiving inconsequential deviations.’
[Citation.]†(
deviating bid must be set aside despite the absence of corruption or actual
adverse effect on the bidding process†only if the deviation is “capable of
facilitating corruption or extravagance, or likely to affect the amount of bids
or the response of potential bidders.
[Citations.]†(
908.)
In the present case, appellant does
not dispute the authority summarized above which establishes that the City has
the discretion to “waive inconsequential deviations from contract
specifications in a public contract bid.†(Ghilotti,
supra, 45 Cal.App.4th at p. 900.)
Indeed, in this case, the City’s discretion to waive inconsequential or
nonmaterial defects in the bids submitted for this public contract project was
expressly confirmed in both the San Leandro Municipal Code and in provisions of
the “Notice to Bidders†that was issued for this specific project.
However, appellant does contend that the defect in G&B’s bid was
material and could not be waived. Thus, the
question raised by this appeal is whether the City abused its discretion by
waiving the deviation in the G&B bid as inconsequential. The question “ ‘[w]hether in any given
case a bid varies substantially or only inconsequentially from the call for
bids is a question of fact.’
[Citation.]†(
906.) As reflected in the authority
summarized above, “[t]o be considered inconsequential, a deviation must neither
give the bidder an unfair competitive advantage nor otherwise
and preventing corruption in the public contracting process.†(Id.
at p. 900.)
“These considerations must be
evaluated from a practical rather than a hypothetical standpoint, with
reference to the factual circumstances of the case. They must also be viewed in light of the
public interest, rather than the private interest of a disappointed
bidder. ‘It certainly would amount to a
disservice to the public if a losing bidder were to be permitted to comb
through the bid proposal or license application of the low bidder after the
fact, [and] cancel the low bid on minor technicalities, with the hope of
securing acceptance of his, a higher bid.
Such construction would be adverse to the best interests of the public
and contrary to public policy.’ [Citation.]†(
The only alleged deviation from
competitive bidding requirements that we address in this appeal is that one page
of G&B’s bid bond was missing from the bid it originally submitted in
connection with this project. Appellant
contends the City exceeded or abused its discretion by waiving this bid
irregularity.
Providing a bid security was both a
specification of this project as well as a requirement imposed by law. (See, e.g., San Leandro Mun. Code, § 1-5-220;
Pub. Contract Code, §§ 20170, 20171.)
page of the G&B bond was an inconsequential deviation from the bidding
requirements for this project because the second page of that two-page bid
bond, which was included in G&B’s original sealed bid package, provided
sufficient information to assure the City that G&B had complied with the
bid security requirement. Substantial
evidence supports the City’s determination.
Substantial evidence establishes that
G&B used the City’s standard bid bond form.
The City provided all prospective bidders with this standard form and
the bidders were instructed if not required to use that form if they elected to
provide a bond as their bid security.
Furthermore, the bid package that G&B initially submitted contained
page two of G&B’s two-page bid bond, and the pre-printed text on this form mirrored
the bid-bond form that the City had generated for this specific project. Among other things, that text identified the
document as a “Bid Bond†for the “Bart-Downtown Pedestrian Interface†project,
and it included the City’s project number for the project. From this information, the City was able to
determine that G&B had used the City’s standard form bid bond.
By the same token, the material
provided in G&B’s original bid, which included the second page of its bid
bond, was sufficient to establish that G&B satisfied the bid security
requirement by actually obtaining the required bid bond from an approved surety. The City’s standard bid bond was, as the
trial court phrased it, a “form document†which required only a few insertions
by the specific bidder.
name="_ftnref5" title="">[5] The first page, i.e., the page that was
originally missing, contained only three blank places for the insertion of
additional information: (1) the name of the principal (i.e., the bidder), (2)
the name of the surety, and (3) the date of the submission of the bid.
Regarding item (3), there can be no
dispute that the City had actual notice of the date the G&B bid was
submitted.
provided on the second page of the bid bond, i.e., the page that
the name of the “principal,†i.e., the bidder, a signature, and the “title†of
the signing party. The other open lines
on that page were for the naming of the surety, along with its address, phone
and fax numbers, and the name and title of the attorney-in-fact signing for
that surety. All this information was
provided on the second page of the bid bond which did, in fact, accompany the
G&B bid. All the rest of the written
material on page one of the two-page bid bond form was standard material and
thus well-known to the City. In short,
when the City determined which contractor was the lowest responsible bidder it
had before it the information needed to make clear that G&B had, indeed,
satisfied the requirement of supplying the requisite bid bond.
Appellant does not dispute the
substantial evidence supporting the City’s determination in this case but,
instead, attempts to lessen its impact by characterizing the issue on appeal as
a question of law, subject to de novo judicial review. However we are not persuaded by appellant’s various
legal theories.
Appellant’s first theory is that the
City’s attempted contract with G&B is null and void as a matter of law
because G&B’s failure to provide a bidder’s bond violated a statutory
requirement. (Citing, e.g.,
Thus, it argues: “Because G&B’s bid
did not include the mandatory bid security at bid time, G&B’s bid was
incomplete and materially non-responsive and, consequently, ineligible for
award.†Such was so, appellant argues,
because “there was an utter lack of bid security because there were no terms to
which the surety was agreeing to be bound.â€
Appellant reiterates this argument in its reply brief, contending
numerous times that there was no “valid bid bond†or “no enforceable bid bondâ€
supplied with G&B’s bid.
Appellant’s legal rule is
inapposite, however, because the City found that G&B did secure its bid
with a bid bond. And, as noted above,
that determination is supported by substantial evidence. Thus, the record undermines appellant’s
premise that G&B completely failed to comply with the bid bond requirement.
Appellant next contends that the question
of whether the absence of the face page of G&B’s bid bond from its original
bid package rendered the bond unenforceable was a question of law. To support this argument, appellant relies on
authority reflecting the general principle of contract law that the
interpretation of a contract is a judicial function. (Citing, e.g., Parsons v, Bristol Development Co. (1965) 62 Cal.2d 861, 865; Civ.
Code §§ 1635-1661.) However, this principle
had no bearing on the specific determination by the City which is the subject
of this appeal. At that stage in the
process, the City was not required to interpret any substantive provision in
any of the bonds submitted by the bidders on this project, but only to
determine whether the bidders complied with the bid security requirement. Here, substantial evidence supports the
City’s finding that G&B did substantially comply with that requirement,
notwithstanding that a page of documentation was missing from its original bid
package.
Changing its tack, appellant
contends that the City committed legal error by using its standard bid bond form
to supply information that was missing from G&B’s bid package. As reflected in our factual summary, that
standard form was included in the City’s bid book for this specific project and
was supplied to all of the bidders.
Nevertheless, appellant contends the City committed legal error by
looking at that form when it evaluated the bids. According to appellant, the City’s award
determination had to be based solely and exclusively on information within the
four corners of G&B’s original bid. However,
appellant fails to provide any authority imposing such a strict restriction on
the City in this context.
Specifically, appellant erroneously
relies on Taylor Bus Service, Inc. v.
Bus). That case involved a public contract
for school bus transportation in a San Diego school
district. Appellant was the low bidder
and was conditionally awarded the contract.
However, the district subsequently rescinded the conditional award after
finding that appellant failed to comply with competitive bidding
requirements. Thereafter, the trial
court denied appellant’s petition to compel the district to reverse its
decision and award the contract to appellant.
The Taylor Bus court affirmed
the trial court’s denial of the petition.
The first issue addressed in
1341, was whether the school district violated appellant’s constitutional right
to due process by rescinding the conditional award without first conducting a
hearing. In concluding that no such
hearing was required, the court noted, among other things, that a public
agency’s determination whether a contract bid is responsive is materially less
complex than the question whether a bidder on a public contract is responsible. In this context, the court observed that “[i]n
most cases, the determination of nonresponsiveness will not depend on outside
investigation or information . . . .†(Id.
at p. 1342.) The Taylor Bus court also stated that, notwithstanding a public
agency’s “inherent discretionary power†to disregard minor or insubstantial
variations from bid specifications, the determination whether a bid is
responsive “does not have, in most cases, the complex and external nature of a
determination of nonresponsibility.†(
The Taylor Bus appellant also claimed that, even if it was afforded due
process, the school district abused its discretion by determining that
appellant’s bid was non-responsive and rescinding the conditional award of the
contract to appellant. (
1344.) In addressing this claim, the
court applied a substantial evidence standard of review, noting that the burden
was on the appellant to “show there is no substantial evidence whatsoever to
support the findings of the District.†(
findings of the district were supported by substantial evidence and, therefore,
it did not abuse its discretion. (
Taylor
Bus, supra, 195 Cal.App.3d 1331, does not support any aspect of appellant’s
arguments on appeal. First, by noting
that the responsiveness of a bid can often be determined without “outside
investigation,†(id. at p. 1342) the
court did not hold or in any way imply that a public agency violates the law by
using contract materials generated for the specific project to evaluate whether
a bid is responsive or not. Second,
although Taylor Bus addressed very
different issues, it clearly confirms our conclusion in this case that the substantial
evidence standard of review applies to appellant’s contention that the City
abused its discretion by awarding the BART contract to G&B.
Appellant’s most developed theory on
appeal is that the defect in G&B’s bid could not properly be waived as an inconsequential
or immaterial deviation because it gave G&B an advantage or benefit over
other bidders. As noted at the outset of
our discussion, a bid defect cannot be considered inconsequential if it gives
the bidder an unfair competitive advantage.
(Ghilotti, supra, 45
Cal.App.4th at p. 900.) Here, appellant
contends that, as a matter of law, G&B enjoyed such an advantage. To support this theory, appellant relies
primarily on Valley Crest, supra, 41
Cal.App.4th 1432.
title="">[7]
Valley
Crest, supra, 41 Cal.App.4th 1432, was a mandate proceeding involving a
“park project†for the city of Davis. Specifications for the
project required that the bidder perform at least 50 percent of the work itself
and that it “set forth the percentage of work to be performed by each
subcontractor.†(Id. at p. 1435.) However,
the low bidder on the project, North
Bay, submitted a bid which
indicated that 83 percent of the work would be done by subcontractors. Valley Crest, the second lowest bidder, objected
that North Bay’s bid was nonresponsive. The
city engineer called this point to North Bay’s
attention, and gave it the opportunity to supplement its bid with additional
information, noting that if no other information was provided, he would
recommend that North Bay’s bid be deemed unresponsive and that the contract be awarded to
Valley Crest. (Ibid.) North Bay responded
that the percentages in its bid were not correct and submitted new percentages
totaling 44.65 percent. After the city
awarded the contract to North Bay, Valley Crest filed a petition for a writ of mandate to set aside
the contract which the trial court denied.
(Ibid.)
The Valley Crest court reversed the trial court’s decision, finding
that the North Bay bid contained a material defect that the city could not properly
waive. (Valley Crest, supra, 41 Cal.App.4th 1432.) The court reasoned that the subcontractor
percentage requirement, although not a requirement of Public Contact law, was
nevertheless a material element of the contract specifications for the
project. Furthermore, North Bay’s bid
defect was not a minor variance from that specification; it failed to comply
with that requirement. This mistake was
material, the court found, because it gave North Bay an unfair
advantage in the bidding process by establishing a ground for North Bay to withdraw its bid without having to forfeit its
bond pursuant to the statutory procedure set forth in the Public Contract Code.
As the court explained, “[m]isstating
the correct percentage of work to be done by a subcontractor is in the nature
of a typographical or arithmetical error. It makes the bid materially different and is a
mistake in filling out the bid. As such,
under Public Contract Code section 5103, North Bay could
have sought relief by giving the city notice of the mistake within five days of
the opening of the bid. That North Bay did not
seek such relief is of no moment. The
key point is that such relief was available. Thus, North Bay had a
benefit not available to the other bidders; it could have backed out. Its mistake, therefore, could not be corrected
by waiving an ‘irregularity.’†(
p. 1442.)
Here, appellant contends that
judgment because it establishes that the City erred as a matter of law.
According to appellant, G&B had an unfair advantage in the bidding process because
the defect in its bid would have allowed it to reject the project without
incurring liability under its bidder’s bond.
This claim appears to be based on two distinct factual theories, both of
which are erroneous.
First, appellant argues that the
omitted page of G&B’s bid gave G&B the actual option of deciding after
bid opening whether it wanted to be bound by the bid bond. Under this theory, the
only reason that the City had recourse against the G&B bond in the event
G&B rejected the public contract was because it permitted G&B to
correct its bid after the bid opening by submitting supplemental material, i.e.,
the first page of its bond. As a consequence, appellant contends, G&B’s bid
“improperly was supplemented after the bid deadline.†To appellant, this allegedly improper
supplementation by G&B and the City’s acceptance of it proves that G&B
had an unfair advantage in the bidding process because, after the bids were
submitted and opened, G&B could have elected not to provide the missing
page and thereby avoided liability under its bond.
However, this argument misstates the
basis upon which the City found that it was proper to award the contract to
G&B. Before that award was made,
appellant’s general counsel had addressed a letter to the City arguing that
G&B’s bid was “materially defective.â€
The City responded not by relying
in the slightest on any supplementation theory, but by these statements: “The
central issue is whether the material submitted at bid opening would constitute a legally enforceable bid
bond. It is the City’s belief that the
bid bond information submitted was enforceable, and that the omission of the
bid bond cover page can be waived as an inconsequential bid defect. The
City had the signature of the obligor and the bonding company at bid opening,
which would make the bond enforceable.â€
(Italics added.)
Thus, the record undermines
appellant’s contention that the City allowed any sort of “supplementation†of,
or belated addition to, G&B’s bid.
Rather, the City determined that G&B’s original bid was supported by a valid bid bond. This fact materially distinguishes
As discussed above, in that case, North Bay was
actually permitted to correct the mistake in its bid before the City accepted
it. (Id.
at pp. 1436-1437.) Nothing comparable to
that happened here.
Appellant’s second theory is that the
very act of omitting a page of the bid bond from the original bid package gave
G&B a competitive advantage over other bidders because it created an
validity of its bid bond. Appellant
reasons that, “while a signature page had been submitted, there were no terms
included therewith making any surety liability uncertain and ambiguous at best.â€
Thus, appellant concludes, if G&B
had refused to accept the contract for this project, it had the opportunity to
avoid liability under its bond by contesting its validity in light of the fact
that a page of documentation was missing from the original bid package. This opportunity, appellant contends, gave
G&B a competitive advantage that other bidders did not have.
The flaw in this logic comes from
characterizing any opportunity to dispute the validity of a bond as a
competitive advantage in the bidding process itself. The idea that somebody might attempt to avoid
a contractual obligation is not evidence that he has an actual competitive
advantage. Indeed, any of the bidders
for this project could conceivably have disavowed its contract with the surety
that issued its bidder’s bond by arguing that the bond was unenforceable for
one reason or another. This speculation
aside, the City in this case made a factual determination that the omitted page
from G&B’s original bid package did not create an actual unfair advantage
because the information that was submitted established compliance with the bid
bond requirement. Appellant cannot undermine
that factual determination by relying solely on speculation.
Appellant argues that
relevant is whether a bid deviation provides the bidder the opportunity to
avoid being bound,†regardless whether the bidder attempted or even intended to
withdraw its bid. Thus, appellant
insists that it does not matter whether G&B actually secured a bid bond in
the first instance or whether that bond was actually enforceable because the
mere fact that the defect in G&B’s bid gave it an opportunity to contest the validity of the bond precluded the City
from waiving that defect as a matter of law.
But appellant stretches
create an opportunity to dispute liability under the bond in the event it
withdrew its bid; it established an actual concrete ground for doing so under
Public Contract Code section 5103.
Indeed, the Valley Crest court
emphasized that “the key point is that such relief was available†under that statute. (Valley
Crest, supra, 41 Cal.App.4th at p. 1442, emphasis added.) In the present case, by contrast, there is
nothing in this record to suggest that G&B could have withdrawn its bid and
avoided liability on its bond by invoking Public Contract Code section
5103. That statute applies only when
“[a] mistake was made . . . in filling out the bid,†and the
mistake “made the bid materially different than†the bidder intended. (Pub. Contract Code, § 5103, subds. (a),
(c), and (d).)
Appellant concedes that Public
Contract Code section 5103, does not apply here. However, appellant contends that the fundamental
“rule of law†established by Valley Crest
is not predicated on Section 5103, but rather on the question whether the bid
defect creates an “opportunity†to withdraw a bid without forfeiting the
bidder’s bond. But appellant’s ambiguous
conception of such an “opportunity†simply is not a principle of law. As we have already explained, every bidder
has the opportunity to attempt to avoid liability under a bid bond by denying
its validity. By contrast, an actual
competitive advantage arises only when a bid defect establishes an actual ground
for a successful bidder to withdraw its bid without incurring liability under
its bond. Conceivably, some statute or
legal rule other than section 5103 of the Public Contract Code might establish
that ground, but appellant fails to identify one. Furthermore, and more to the point, appellant
simply ignores the factual component of this inquiry. Here, the City found that the G&B bid
defect did not create an unfair competitive advantage because the bid
documentation that was originally submitted established that the bid security
requirement was satisfied.
that appellant cannot use speculation to undermine the City’s finding.
Ghilotti,
supra, 45 Cal.App.4th 897, helps to illustrate our point. That case involved competing bids on a road
construction project in the city of Richmond. The contract specifications included a
provision that the contractor would itself perform “ ‘contract work
amounting to not less than 50 percent of the original total contract price.’ †However, the lowest bid, by a company called
GBCI, showed that “it would be subcontracting 55.44 percent of the total
contract price.†(Id. at pp. 900-901.) After a
protest by the second lowest bidder, the city decided to “waive the 50% requirement
as ‘nonsubstantive and inconsequential’ â€
and awarded the contract to GBCI. (
denying a petition for writ of mandate to prevent the city from awarding the
contract to GBCI, which the Ghilotti
court affirmed. (Id. at p. 903.)
The Ghilotti court emphasized the factual and individualized nature of
the inquiry as to whether a bid variation results in an unfair competitive advantage
in the bidding process, and ultimately concluded that the appellant had failed
to carry its burden on appeal of proving that GBCI had an actual unfair
competitive advantage. (
906-907.) In reaching its decision, the court
rejected the contention that a bid defect which only potentially impacts the amount of the bid or the bidding
process was sufficient to establish a competitive advantage that would prevent
the city from finding that a bid deviation was inconsequential. (Id.
at pp. 905-908.)
The Ghilotti court also acknowledged that a bid defect cannot be waived
if it would allow the bidder to withdraw his bid without forfeiting its bid
bond, but it found that the appellant in that case had not relied on this
theory in the trial court. (
912.) In any event, the
that “Valley Crest stands for the proposition
that a potential competitive advantage precludes waiver of a bid irregularity,
without the necessity of showing any actual advantage.†(Ghilotti
at p. 912, fn. 6.) Rather, the reason
that the Valley Crest court found
that the bid deviation in that case gave North Bay a competitive advantage was because
North Bay could have obtained relief under the Public Contract Code “as a
matter of law,†and also because the city in that case expressly gave North Bay
the opportunity to withdraw its bid. (
Ghilotti
reinforces our conclusion, and the conclusion of the trial court, that appellant
has failed to carry its burden of proving that the City abused its discretion
by awarding the BART contract to G&B.
The City’s determination that the omitted page of the G&B bid was an
inconsequential deviation from the competitive bidding requirements was a
factual conclusion supported by substantial evidence. Furthermore, appellant’s abstract theory of a
potential competitive advantage does not undermine the City’s determination or
otherwise prove that the City abused its discretion.
A unifying theme running throughout
appellant’s arguments on appeal is that we must disregard the substantial
evidence supporting the City’s determination that the G&B bid deviation was
inconsequential because that deviation was material as a matter of law. However in making these arguments, appellant
repeatedly confuses a rule of law with an issue of law. For example, appellant contends that both
bidder has an unfair advantage over others if it has an opportunity to avoid
its bid without penalty.†By the same
token, however, this authority vividly illustrates that the facts of a given
case dictate whether this legal rule applies; in Valley Crest, the evidence established that the bidder had the
option of withdrawing its bid without penalty, while the evidence in
factual conclusion.
Finally, appellant mistakenly relies
on this court’s decision in MCM, supra, 66
Cal.App.4th 359. That case involved a public
contract for a construction project at the San Francisco Airport. The city rejected as nonresponsive a bid
submitted by MCM and awarded the contract to a company that had submitted a
higher bid. (Id. at p. 366.) MCM filed a
petition for a writ of mandate arguing, among
other things, that the city abused its discretion by refusing to waive
allegedly immaterial defects in its bid.
(Ibid.) The trial court denied the writ petition and
this court affirmed.
In our MCM decision, we provided two independent reasons for concluding
that the city did not abuse its discretion by refusing to waive defects in the
MCM bid. (MCM, supra, 66 Cal.App.4th at p. 373.) First, even if the deviations in that bid
were immaterial, the city was not required to exercise its discretion by
waiving those defects. As we explained,
“[a]n agency has discretion to waive immaterial deviations from bid
specifications and may accept the bid under certain conditions. The point of discretion is that the agency
may properly act in either direction. It
may waive or refuse to waive such deviations.â€
(Id. at p. 374.)
The second independent reason that
the city was not required to waive the defects in the MCM bid was that the city’s
factual determination that those
deviations were material was supported by substantial evidence. (MCM,
supra, 66 Cal.App.4th at pp. 374-375.)
The city had found that the defects in MCM’s bid afforded MCM an actual
competitive advantage by allowing it to withdraw its bid without having to
forfeit its bid bond. (
conclusion showed that “MCM had not only an actual
opportunity to withdraw its bid, but also was entitled to do so under the provisions of Public Contact Code
section 5103.†(Id. at pp. 376.) In light of
this evidence, we affirmed the city’s determination that MCM had a competitive
advantage not available to other bidders which established that the “City was
without power to waive the deviation.†(
Appellant purports to find support
in our opinion in MCM, noting that we
said there that “[t]he City was without power to waive the deviation.†(MCM,
supra, 66 Cal.App.4th at p. 377.) However,
we reached that conclusion only after affirming the city’s factual determination that the bid defect in that case was material
and not inconsequential. Indeed, we cited
Ghilotti, supra 45 Cal.App.4th at page
906, for the proposition that the question whether “ ‘ “a bid varies
substantially or only inconsequentially from the call for bids is a question of
fact.†[Citation.]’ †(MCM,
supra, 66 Cal.App.4th at p. 375.) Here,
we apply precisely the same rules that we applied in MCM, albeit to a very different set of facts.
For all of these reasons, we
conclude that appellant has failed to establish that the City abused its
discretion by waiving the deviation in G&B’s bid as inconsequential.
IV. DISPOSITION
The judgment and order of the
superior court denying appellant’s petition for a writ of mandate are affirmed.
_________________________
Haerle,
J.
We concur:
_________________________
Kline, P.J.
_________________________
Brick, J.*
Judge of the Alameda
County Superior Court, assigned by the Chief Justice pursuant to article VI,
section 6 of the California Constitution.
in 2012.
book also included the following provision:
“The bidder’s bond shall conform to the bond form in the Bid book for
the project and shall be properly filled out and executed. The bidder’s bond form included in that book
may be used.â€
