By: Amy Anderson Partner, Jones Walker LLP.
Across the United States, state and local agencies often use competitive bidding to award contracts for various types of work. Generally speaking, a bid protest is when an unsuccessful bidder challenges the award by the state or local agency to another competitive bidder. Procurement at this level is entirely distinct from federal procurement.
The details of any bid protest will be specific to the locality. However, a question that very often comes up when a state or local agency uses competitive bidding: what happens when I lose the bid? More specifically, if I should not have lost because my bid was the lowest or best value, can I make the state or local agency award the bid to me?
As with almost anything, the answer depends on a lot of things. Most directly, the right to protest will depend on the specific state’s governing statutes or administrative regulations related to competitive procurement. Each locality will have specific requirements for almost every stage of a protest:
- administrative exhaustion (is there an administrative filing or hearing that you have to do before a lawsuit),
- timing (how quickly you must file your protest), and
- other central questions as to how you protest a bid (do you need to be the second-lowest bidder? Have submitted an accepted bid?).
All pre-requisites are incredibly important and cannot be ignored.
Putting aside the logistics of how, when, and where to protest, the next central question is what effect a bid protest will have. In almost all circumstances, it is nearly impossible to force an award on a particular entity (you!).
You may be able to require that the agency resolicit bids or reverse course in its original award, although the merits are likely to depend heavily on the regulations in your specific state or municipality. You are unlikely to force the award in your favor. In trying to do so, you may put at risk current or future business from the agency and will almost certainly incur significant cost. Whether that trade-off is worth it is incredibly situation and business-specific.
Local Law Governs.
State and local agency procurement is not federal procurement. Any entity engaging in competitive bidding on the state and local level must be aware of the specific statutory or regulatory requirements that apply to the entity soliciting bids. This will guide both the contents of any given solicitation, bid, response, or protest. Failure to correctly comply with requirements for a response to a bid, for example, may doom any protest before it begins.
Additionally, the basis of any protest will be governed by local law. For example, is the agency required to award the project to the lowest bidder or can it take into account other factors and make a decision on which entity will provide the “best value?” If it is the latter and you protest the award because you were the lowest bidder, it is important to know on the front-end that the local agency may have used other factors to determine the winning bid provided the best value to the community.
Another important aspect to local law: assuming another entity is awarded the project and you want to protest the bid, you need to know how quickly you must do so. Failure to comply with the deadline for a protest will almost certainly be a death knell to your protest. In some jurisdictions and for certain agencies, the deadline to file may be as short as 72 hours after the award announcement (e.g., protests related to the Texas Lottery Commission and the deadline to file a notice of protest in Florida). In others, like certain administrative agencies in New York, the deadline is ten days from the date the bid is awarded. For many protests in Texas, the deadline is fifteen calendar days following the bid award.
The importance of being well-versed in the statutes and regulations governing both the bid award and any bid protest cannot be overstated.
Practical Considerations
If we assume you checked all the boxes: you have the right to protest the award; you are going to timely file your protest in the right place (administrative agency, expedited court action?); and you have considered the merits of your protest. The next, perhaps most important consideration is: what does a protest get you, and is it worth it?
We all understand the investment in the first competitive bid. The sting of the loss is real. However, if the bid protest grows out of an emotional reaction to the sting or the idea that you already sunk costs into the competitive bid and need to recover them, you may be surprised by the ultimate results of a protest when you are likely still left without the award. Understanding the implications of a “win” at the bid protest level will allow you to consider whether the potentially significant cost (both of money and time) in filing a bid protest is worth the ultimate reward.
As one overarching example in Texas: if a local government agency announces the bid award to your competitor, you have no more than 15 business days to evaluate your options and file a request for emergency relief with a court in the correct Texas county with the power over that agency. You will likely need to request emergency relief (for example, a temporary restraining order) prohibiting the agency from proceeding with the award until the court can determine its validity.
If the court determines the award was improper for any reason, the most likely outcome is that the agency must resolicit the bid. In other words, the agency starts from scratch and everyone re-submits the responses. The agency of course should not use the lawsuit against you when considering your responsive proposal. But, the agency also is not required to award it to you.
In that event, you spent the time and effort to submit responses twice and you filed a lawsuit. In the end, you have the same amount of income-producing projects as you did before the first bid submission. Of course, the agency could have a second look, based on your protest, and determine you were the best value, most responsive bid, or some other metric. It is not guaranteed.
Final Thoughts
There is no question that bid protests are a complex area fraught with potential pitfalls for the unwary. Because the issue is nuanced from start to finish and so highly dependent on both state, local, and administrative laws and regulations, it is imperative to understand the framework before jumping in to either respond to a competitive bid or protest a bid award. Although it is easy to get caught up in wanting justice or the ‘win’ of the award, perhaps the most important consideration is what happens when you win? Because of the tight timeline for most protests, you will be well-served to have thought through in advance: is the juice worth the squeeze?
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