The legal pendulum continues to swing further towards public owners in Ohio. In Triton Services, Inc. v. Talawanda City School District, 2011 Ohio 667 (Ohio App. 12th. Dist. Feb. 14, 2011) the Court held that a school district can reject an apparent low bid if the bidder is perceived by the public entity as litigious.
Triton bid on for the HVAC work on a new high school. Triton was the low bidder but the school district expressed concern over certain work not being included in the contractor’s bid. The district was also concerned because the contractor sued the district in 2007 for disputes relating to its contractual scope of work on another project. As a result, the district found Triton to be “non-responsible” and rejected its bid.
Triton filed an action for injunctive relief arguing that the district abused its discretion in finding it to be not responsible. Triton noted the previous dispute was settled before trial and the contractor presented evidence that it received about ninety percent of the amount claimed through the settlement. Based on these facts, the contractor argued that the previous litigation was a justified exercise of its rights under the contract to compel the district to comply with its contractual obligations. Accordingly, the contractor claimed this could not be a basis to find it was not responsible. Moreover, Triton pointed out the construction manager for the high school project had previously recommended Triton as responsible on another public project in the same county.
Both the trial and appellate courts rejected this argument. The Twelfth District Court opined, “The term “responsible” is not limited to a bidder's financial condition, but pertains to many other characteristics of the bidder, such as its general ability and capacity to carry on the work, its equipment and facilities, its promptness, conduct and performance on previous contracts, its suitability to the particular task, and other qualities that would help determine whether or not it could execute the contract properly.” Triton Services 2011 Ohio 667. “Determining “responsibility” will necessarily differ for any given project, and it is “important that it be subject to a fluid, abuse-of-discretion standard.” Triton Services 2011 Ohio 667, citations omitted.
This case continues Ohio courts’ tendencies to give wide latitude to public entities in making procurement decisions. In that respect, the result is not unexpected. What may be somewhat troubling for contractors, however, is the implication that it may be found to be “not responsible” merely because a contractor employs dispute resolution procedures available to it under its agreements. As Triton pointed out in its arguments, litigation is sometimes a necessary evil of contracting should the parties not be able to work out their differences. Of course, there is little doubt that there are companies that may be more litigious than others which may justifiably give public entities some pause in entering into contracts with such companies. This case does not make that distinction, however. Contractors may, therefore, want to take into account the future impact on its ability to participate in public contracting when deciding whether and how to litigate with public entities.