There may not be a law like it anywhere else in the country. But in Rhode Island, by statute, the second-low bidder can pursue a claim for damages if the low bidder violates the prevailing wage laws. A recent Superior Court decision allows a pending claim by one such disappointed bidder to move forward.
Iron Construction Group was the low bidder for the Salty Brine Bath House project, with a bid of $1,759,000. Maron Construction Company was second-low at $2,229,000. Iron was awarded the job in 2009, but later cited for violation of prevailing wage requirements. In 2011, Iron entered into a consent order with the state Dept. of Labor and Training, admitting prevailing wage violations on the project.
Rhode Island § 9-1-52 states, in its entirety: “Whenever a contractor or subcontractor, having been awarded the contract as the lowest qualified bidder, violates the state's prevailing wage, a cause of action shall be for the next lowest qualified bidder for any and all damages incurred as the result of not being awarded the contract.” Maron sued Iron based on this statute, and Iron filed a motion to dismiss the lawsuit, claiming that Maron had to allege (and later prove) that Iron had submitted its bid with the fraudulent intent to violate the law. Maron, on the other hand, argued that the statute establishes a strict liability standard, and all that Maron has to do is to prove that it was the second-low bidder and the low bidder violated the prevailing wage laws.
The Superior Court did not adopt either extreme. It construed the statutory language to provide that a cause of action only accrues after the low bidder has received an award, and thereafter violates the prevailing wage law. And Maron will still have to prove that it was the next lowest qualified bidder, and that it would have turned a profit (else it would not have any damages).
This is only a trial court decision, which most would consider to have persuasive but not precedential value. The Rhode Island law is interesting, and unique. Perhaps we’ll be writing about the appellate decision in a few years.