Enacted in 2001, Minnesota's best value public bidding law represented a departure from the traditional and exact method of awarding construction contracts to the lowest responsible bidder and was perceived by some as a weakening of the safeguards against fraud and favoritism in public works contracts. Still, desiring a bidding method that allows consideration of the bidder's timeliness, technical capabilities and quality of work, as well as the contract price, the Minnesota Department of Transportation (MnDOT) used the best value bidding process on several contracts over the past eight years, including the I-35W bridge reconstruction contract. Recently, unsuccessful bidders for the I-35W bridge project challenged the best value bid process.
Minnesota's Best Value Procurement Law
Minnesota legislation authorizes MnDOT to use a best value selection process to solicit and award design-build construction contracts under certain circumstances (Minn. Stat. Section 161.3410, et seq.). The best value selection process uses a two-phase procedure involving a Request for Qualifications (RFQ) and Request for Proposals (RFP).
Initially, MnDOT must issue an RFQ containing the following information:
- Minimum qualifications of the design-builders to meet the acceptance requirements.
- Scope of work and schedule.
- Maximum time allowed for the design and construction.
- Documents that define the project requirements.
- Form of contract that will be awarded.
- Estimated cost of design and construction.
- Requirements for construction experience, design experience, financial, personnel and equipment resources, and experience with other design-build projects.
- Description of the RFP requirements.
- Weighted selection criteria used to compile a list of the design-builders to receive an RFP.
- Statement that "past performance" or "experience" doesn't include the assertion or exercise of a design-builder's legal rights.
Based on the criteria described in the RFQ, a selection team evaluates the qualifications of the responding design-builders and compiles a short list of two to five design-builders that will receive an RFP. The RFQ may be re-advertised or canceled if only one design-builder responds to the RFQ.
Next, MnDOT issues an RFP to the selected design-builders, and the RFP must include:
- Copies of the contract documents that must be signed by the successful bidder.
- Maximum time allowed for the design and construction.
- Road authority's estimated cost of design and construction.
- Scope of work, including the performance and technical requirements, conceptual design, specifications and functional and operational elements for the delivery of the project.
- Description of the design-builder's required qualifications.
- Description of the selection criterion and the relative order or weight of the criterion.
- Requirement that any submitted proposal must be segmented into two parts—a technical proposal and price proposal—and that each part must be submitted in a separately sealed, clearly identified package that includes the date and time of the submittal deadline.
- Requirement that the technical proposal includes a critical path method, bar schedule or similar schematic of the work, design plans and specifications, technical reports, calculations, permit requirements, development fees and other data requested in the RFP.
- Requirement that the price proposal contains all design, construction, engineering, inspection and construction costs of the project.
- Date, time and location of the public opening of the sealed price proposals.
Before the price proposals are opened, a Technical Review Committee (TRC) composed of at least five people, including one person nominated by the Minnesota Chapter of the Associated General Contractors, will score the technical proposals using the RFP selection criteria and reject any proposals it deems nonresponsive. The technical scores are then submitted to the commissioner of MnDOT. After the commissioner has announced the design-builders' technical scores, the price proposals are publicly opened.
An adjusted score is determined by dividing the design-builder's time-adjusted price by its technical score. Unless all of the proposals are rejected, the responsive and responsible design-builder with the lowest adjusted score is deemed to have offered the "best value" and must be awarded the contract.
Challenge to the I-35W Bridge Reconstruction Contract
In the aftermath of the I-35W bridge collapse, MnDOT used the best value bidding process to award a contract for the reconstruction of the bridge. Consistent with the best value procedures, MnDOT issued an RFQ and then submitted an RFP to five qualifying contractors. Along with the RFP, MnDOT provided Instructions to Proposers describing the weighted criteria that would be used to assess the proposals.
The technical proposals were evaluated by a TRC, the price proposals were subsequently opened in public and the contract was ultimately awarded to Flatiron-Manson. Flatiron-Manson received the highest technical score from the TRC, earning 95.30 out of 100 possible points. The next highest technical score was 71.40 points. Although Flatiron-Manson had the highest price and tied for the longest delivery time, it still had the lowest adjusted score, or "best value," due to its high technical score.
After Flatiron-Manson started construction on the bridge, unhappy taxpayers sued to challenge the award. The lawsuit alleged, in part, that the award was illegal because Flatiron-Manson's bid didn't comply with two RFP specifications and it was therefore "nonresponsive." Specifically, the taxpayers complained that Flatiron-Manson's proposed design exceeded the designated right of way, contrary to the requirement that bidders not do so. The Ramsey County District Court rejected the unsuccessful bidders' arguments and denied their requests for a temporary restraining order and temporary injunction. Unsatisfied, the bidders appealed.
The Minnesota Court of Appeals affirmed the district court's holding, confirming that the best value bid statute conveys a higher level of discretion to the public authority in evaluating and awarding best value contracts. The unsuccessful bidders argued that the TRC should have applied the definition of a responsive proposal used in traditional lowest bidder contracts. A proposal is responsive if it doesn't vary substantially from advertised specifications. The Court of Appeals disagreed, explaining that the best value legislation expressly granted the authority and responsibility to the TRC to "reject any proposal it deems nonresponsive." Focusing on the word "deems," the Court of Appeals clarified that the TRC was allowed "to consider, think, or judge" the responsiveness of the proposals. As such, the best value legislation "clearly leaves the determination of the responsiveness of a proposal in the hands of the TRC." The TRC's authority, however, is not unfettered. The Court of Appeals assured that a TRC's decision could be reversed if the decision constitutes an error of law or the TRC's findings are arbitrary and capricious, or unsupported by substantial evidence. In this case, the Court of Appeals found no error of law and that the TRC's decision was supported by substantial evidence.
Protesting a Best Value Contract Award
The I-35W bridge court decisions provide the following insights for design-builders submitting proposals under a best value contract:
- Bidders should focus their proposals on the selection criteria with the greatest weight or relative order. The contract award in the I-35W bridge case demonstrates the potentially decisive value of the technical proposals involved in a best value proposal.
- Compared to the traditional lowest bidder contracts, courts may be reluctant to override a TRC's responsiveness decision as long as the decision is supported by substantial evidence.
- Any challenge to a best value contract award should be made immediately. Although the Minnesota Court of Appeals recognized the unsuccessful bidders' right to pursue their claims, the Ramsey County District Court criticized the timing of their legal challenge, noting that the reconstruction of the I-35W bridge was nearly complete by the time the lawsuit was started.
The taxpayers have petitioned the Minnesota Supreme Court to review the decision. The petition is pending.
Best value contracts are likely to increase as public agencies decide to incorporate considerations beyond price into their public works contracts. Contractors and design-builders will be served well by incorporating these considerations in their proposals and protest decisions.