In any competitive bidding situation, there are winners and there are losers. Losers sometimes challenge the award to another contractor, usually in state court under the state statutes. But sometimes they decide to go to federal court with a claim based on the U.S. Constitution. Such a claim generally argues that the award to another contractor deprives them of their property without due process of law, which would be a violation of 42 U.S.C. § 1983.

A decision earlier this month generally precludes such an attempt to base a constitutional due process claim on the award of a competitively bid contract. Although Winton Transportation, Inc. v. South, 2007 U.S. Dist. LEXIS 65947 (S.D. Ohio Sept. 6, 2007), dealt with a county transportation contract rather than a construction contract, it merits our attention because the court looked to a leading construction case for precedent, and the court’s decision about the discretion involved in public bidding should have wide application

For nine years, Winton had provided bus service for Warren County, Ohio, under a Rural Transit System Contract. The County rebid the contract in 2004, and Winton lost the job to another transportation provider, MV Transportation. After making several complaints, Winton filed a series of lawsuits against the County Commissioners, which the federal court consolidated. Both parties moved for judgment in their favor, based on applying the law to undisputed facts that did not require a trial

The court’s lengthy opinion discussed the history of the dispute and the contractor’s claims in great detail, but the part of most interest to us dealt with the due process challenge. The court explained what the contractor needed to prove in order make its claim under 42 U.S.C. § 1983: “(1) the existence of a protected property interest, (2) a deprivation of that property interest, and (3) that state remedies for redress of the alleged deprivation were inadequate.”

Winton had problems with the very first element of proof. Did it have a protected property interest in the transportation contract? Looking at what the Sixth Circuit had said in an earlier opinion, Enertech Electrical, Inc. v. Mahoning County Commissioners, 85 F.3d 257, 260 (6th Cir. 1996), the court noted two ways in which a bidder might establish such a property right:

  • It could show that the contract had actually been awarded to it at some stage in the procedure, and then that award had been revoked; or
  • It could show that the official making the award had limited discretion and had abused that discretion.

Because Winton had never been awarded the new transportation contract, it had to try to prove that the Commissioners had abused what the court called their “substantial discretion” in awarding the contract to MV. It tried to do this by showing (1) that the award was not based on objective criteria, (2) that the winning bidder had not complied with the requirements in the Request for Proposals, (3) that negotiations with MV after the award had somehow tainted the process, and (4) that the Warren County Grants Coordinator, who opened and evaluated the bids, had distorted the competitive bidding process. All of these attempts proved fruitless; the court granted summary judgment to the Commissioners.

Under Section 307.90 of the Revised Code, the County was required to follow the “lowest and best” standard in selecting from the competitive bidders for the contract. The court evaluated the detailed process the County laid out in its Request for Proposals and found that it complied with the statute. Under “Technical Criteria and personnel experience,” the RFP listed eight factors to be evaluated, assigning each points (either 10 or 20), for a total of 100. “Cost” was the final factor, and it weighed in at 20 points, equal to “reliability and financial stability of company” and to “Operations Manager.” The RFP also specified that “interviews and/or negotiations may be conducted with each or any of the respondents. As illustrated, cost will be considered, but is not the determining factor for a contract award.” Using these criteria, the selection committee awarded 87 points to Winton and 87 points to MV—a tie. So it interviewed representatives of both companies and quickly selected MV. Was this an abuse of discretion? The court did not think so. It pointed out that MV had submitted the lowest bid—lower than Winton’s bid—and that there was no evidence the County had based its decision on any criteria other than those listed in the RFP. The committee members had indeed “attempted to discern the ‘lowest and best’ proposal.” So Winton’s first argument lost.

But had MV complied with the requirements of the RFP? Winton argued that there were irregularities in MV’s bid that should have led to its rejection. Primarily, MV’s bid was based on 33,000 total vehicle hours of service, rather than the requested 33,422. In evaluating the bids, however, the Grants Coordinator had re-calculated them, figuring an hourly rate and then multiplying by 33,422. So the final comparison was apples to apples.

Again, Winton’s argument proved unsuccessful, as the court found that the County’s RFP expressly reserved the right to waive informalities and technicalities. Turning to a leading Ohio Supreme Court case, Cedar Bay Construction, Inc. v. City of Fremont (Ohio 1990), 50 Ohio St.3d 19, the federal court noted that “where a local government expressly reserves such rights it does not abuse its discretion in waiving initial irregularities.” Furthermore, the irregularities the County had waived in this case “were not material.” So it had not been an abuse of discretion to waive them.

Finally, neither the post-award negotiations nor the actions of the Grants Coordinator had tainted the process. The court noted that post-award negotiations are often necessary and that nothing the Grants Coordinator did amounted to an abuse of discretion. He was, admittedly, not a policymaker. So Winton’s third and fourth arguments also failed.

The court therefore concluded that Winton had failed to demonstrate any constitutionally protected property right in the award of the contract. There was no evidence that the Commissioners had abused their discretion. In fact, their award “was neither arbitrary nor irrational, but rather was based on a careful consideration of proposals submitted by each bidder based upon the factors set forth in the RFP.”

In clearly delineating what a disappointed bidder must prove to establish a constitutional violation, the Winton court has written what will likely be an oft-cited opinion in the context of bid challenges.