Companies that bid on public contracts may find it necessary from time to time to challenge specifications, the responses submitted by other bidders, or the award of the contract itself. However, bidding challenges are subject to definite time limitations, which are routinely enforced by courts. Thus, the key to success in public bidding disputes is twofold: the vendor must be able to quickly spot issues and irregularities that may give rise to a protest and must immediately take action in the correct venue to preserve the challenge. Only by so doing, will a company that regularly bids on public work be able to fully protect its business interests and to maximize its revenue from government contracts.
Specifications Issued in Connection with an RFP
Typically, governmental units seek services from vendors through the issuance of a “Request for Proposals,” or “RFP,” which invites qualified companies to submit responses, or bids, for the services or products sought. In most cases, the RFPs provide a set of specifications that describes what the government is seeking to purchase, detail with specificity what features a particular product or service must have, and set forth the technical requirements that must be met.
Challenges to specifications generally concern whether the language employed is clear and understandable and whether the technical requirements are rationally and reasonably related to the goods and services sought. Other challenges concern whether the specifications are written to favor one bidder such that only that bidder, and no other, is capable of performance or whether the specifications are capable of performance by any vendor at all.
A bidder should not submit a response to the RFP with the belief that any issues or concerns with the specifications can be raised later if in fact another vendor is awarded the contract. In New Jersey, all challenges to bid specifications must be brought prior to bid opening; otherwise, such challenges are forever lost. In other words, a disappointed bidder will not be heard to complain about specifications, as the law presumes that a bidder who responds to an RFP understood and was able to respond to the specifications.
How Challenges to Specifications Are Brought
Challenges to specifications are typically brought within the governmental unit that issued the RFP. State agencies often have specific regulations governing the challenging of bid specifications. For example, the Purchase Bureau within the State Department of Treasury (which issues RFPs for a variety of state purchases) requires that protests of specifications be submitted in writing “in sufficient time to permit a review of the merits of the protest and to take action as may be necessary prior to the scheduled date and time of bid opening”. The State may disregard any protest not containing specific information required by the applicable regulations and also if the protest is “filed less than 72 hours before the scheduled bid opening.” Although a protest filed after the deadline may still be heard, experience teaches that such untimely challenges are routinely ignored, leaving the bidder without recourse.
Under the Local Public Contracts Law, which governs the purchase of almost all goods and services by county and municipal governments, the deadline for protests of the specifications is rigid. A bidder wishing to challenge a bid specification must file such challenge in writing with the contracting agent no less than three business days prior to the opening of bids. “Challenges filed after that time shall be considered void and having no impact on the contracting unit or the award of the contract.”
The Local Public Contracts Law does not address what happens when the contracting unit does not respond to a protest challenging specifications. As a practical matter, the governmental body may halt the bidding process, thereby having the result of granting the protest without a formal decision to that effect. Should the governmental body go forward despite the protest, the challenging bidder may request that a court intervene. Where the court cannot or will not act, the challenging bidder can raise the issue in a later lawsuit, arguing that the bidder did all it could to protect its rights before bid opening, but the governmental unit failed to respond.
By contrast, the regulations governing purchases by the Department of Treasury mandate that all such protests be heard and that a written decision on the protest be made prior to bid opening. The regulations detail how the protest process is to proceed and who will be heard. Decisions of the Department are “final” for appellate purposes, leaving a bidder who loses in front of the Department the option of taking the case to the state intermediate appellate court.
Challenges to Awards and to Bid Responses
In addition to challenging the specifications, public contract protests typically concern the bid responses submitted by other vendors and the award of the contract itself.
Challenges to a vendor’s response run the spectrum from questioning whether a bidder has submitted all the necessary forms and paperwork (such as insurance information, performance bonds, subcontractor lists, and antidiscrimination/affirmative action plans), to whether the vendor is capable and/or qualified to perform the contract, to whether there was collusion between bidders to submit “rigged” bids, and/or to whether there was undue influence exerted by a bidder or some other facts establish fraud or corruption on the part of a bidder.
Protests of awards often challenge the criteria used to evaluate bid responses, the implementation of such criteria in the award decision, the calculation of scores pursuant to the criteria, the sufficiency of any testing done on the sample equipment or products, the impartiality and qualifications of the individuals who evaluated the bid responses, and whether the reviewers disregarded any material omissions in the response or any deviations from the specifications in the winning bid.
How to Challenge a Bid Response or Award
Challenges to bid responses and awards in county and local contracts are brought in state trial court. Such actions must be commenced no later than 45 days after the accrual of the right to the review, hearing, or relief claimed. Determining when the right to file such an action “accrues” is often difficult and has been the subject of much litigation over the years — the governmental unit and the other bidders (who inevitably are the defendants in any lawsuit brought) will almost always take the most restrictive view of the phrase and argue that the protest is out of time whenever and wherever possible. To avoid such a challenge, and to preserve potential claims from dismissal, the prudent bidder will file an action immediately once a ground for challenge is identified.
The applicable court rules provide a “safe harbor” of sorts for those bidders that do not act within the requisite 45-day time period — the court is allowed to “enlarge” the 45- day period “where it is manifest that the interest of justice so requires.” Although the “interest of justice standard” is incapable of precise definition, courts have generally relaxed the 45- day requirement only in certain limited circumstances, such as where the challenge raises a substantial and novel question of constitutional law or where the protest advances significant public rather that private interests.
In one recent case, the New Jersey Supreme Court allowed a challenge to a contract award to be heard many years after the right accrued, citing various reasons for its decision, such as the important statewide policy issues raised by the complaint as well as the glaring violation of the Local Public Contracts Law presented on the papers. Decisions such as this are the rare exception. In reality, for every case allowing a late claim to go forward, there are many more where an untimely claim is dismissed outright, and thus, bidders should not delay in acting with the belief that an exception will be granted as a matter of course.
Under the regulations promulgated by the Department of Treasury, a vendor that has submitted a response to an advertised RFP may submit a written protest challenging either the rejection of its bid or the award of the contract itself. Such challenges must be brought within “10 business days following the vendor’s receipt of written notification that its bid has not been accepted or of the award decision.” The Department has the discretion to disregard any protest filed after the 10-day period and to proceed with the award of the contract.
The protest must specify the grounds for the challenge and attach all documents relevant to the claim, as well as include a statement as to whether an oral presentation is required. Generally, in cases where the lowest bid was not accepted, all bidders are notified of the award and the Department is obligated to wait 10 days before awarding the contract, so as to allow for the filing of protests. In cases where the award is challenged, the contract is not to be awarded until the protest is resolved — except where the failure to award shall result in substantial cost to the State or if public exigency so requires. In any case where such concerns exist, the Department can modify or amend any deadline in the regulations upon adequate notice to the parties involved.
The Department has the sole discretion to allow oral presentations and can request by way of discovery from the protesting bidder any documents deemed relevant to the issues. The Department can also consider documents requested and received by other bidders. Unless oral testimony is received, the record on the case consists of the protest filed by the bidder; the RFP at issue; the bids submitted by the other vendors; the evaluation report; the award document; and relevant cases, regulations, and documents. A bidder dissatisfied with the outcome of the protest does not file a case with the trial court but, rather, with the state intermediate appellate court, which can decide the case or take other action as it deems appropriate.