Corruption in Municipal Procurement: Foreclosing Challenges of Disappointed Bidders Augusta
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CORRUPTION IN MUNICIPAL PROCUREMENT: FORECLOSING CHALLENGES OF DISAPPOINTED BIDDERS – AUGUSTA, GEORGIA AND THE NEED FOR REFORM
Robert A. Mullins*
*
1 1450 Greene Street Suite 3600 Augusta, Georgia 30901 (706) 724-1357 [email protected] of Contents
I. Introduction...... 3 II.Public Procurement...... 6 III...... Augusta’s Procurement Code and Policy 10
2 A. Mandated State Procurement Requirements in Georgia...... 11 B. Augusta’s Unassailable Materiality Provision...... 15 1. Immigration Forms...... 21 2. Non-Collusion Forms...... 25 3. LSBOP Forms...... 26 4. Discriminatory Enforcement of Business License Information 27 IV. Challenging Improper Procurement Awards...... 30 A. Protesting a Bid Rejection in Augusta...... 30 1. Augusta’s Former Bid Protest Provision...... 30 2. Augusta’s New Protest Provision...... 36 3. Disparate Treatment Cases and the Government Accountability Office (GAO)...... 40 B. Georgia Limits Disappointed Bidders To Bid Preparation Costs 44 C. Federal § 1983 Actions...... 48 D. Due Process...... 50 1. Procedural Due Process...... 51 2. Substantive Due Process...... 54 3. Constitutionally Protected Property Interest...... 56 E. EQUAL PROTECTION...... 71 F. INJUNCTIVE RELIEF...... 79 V. NEED FOR REFORM...... 80 VI. CONCLUSION...... 90
3 I. Introduction
Procurement of goods and services by governmental entities constitutes a significant sector of the U.S. economy.1 It is estimated that government procurement of goods and services will reach $2.99 trillion in 2012.2 State and local government procurement is estimated to constitute approximately 60% of that amount or $1.77 trillion.3 Even though government assumes the role of a contracting party in the procurement process, it still, nevertheless, maintains its sovereignty.4 The dual role of the government as a sovereign entity and its role as a contracting party must be kept in balance by regulations and judicial action. Government should not be allowed to use its sovereign position to take advantage of other contracting parties, but should be held to equal standards of good faith and fair dealing.5 Consequently, there is considerable regulation of federal and state procurement; however, such is not always the case for municipal or county procurement.6
1 It is estimated that 10% to 15% of GDP in developed countries an d up to 20% of GDP in developing countries is comprised of gover nment procurement. Global Trade Negotiations Home Page at Harva rd University, accessed 18 December 2006. 2 Michael Keating, 2012 Keating Report on Government Budgets and Spending (Jan. 30, 2012). 3 4 5 Michael T. Jank and Margaret C. Rhodes, Gould, Inc. v. United S tates: Contractor Claims for Relief under Illegal Contracts with the Government, 45 AM. U.L. REV. 1949, 1951 (August, 1996). 6
4 The procurement code and policy of the consolidated government of Augusta-Richmond County, Georgia7 provides a case in point and emphasizes the need for reform and more meaningful judicial oversight. Political favoritism and discriminatory enforcement of procurement regulations run rampant in Augusta.8
Unfortunately, due to the state of the law governing bid disputes, there is little that can be done to prevent its continuation.9
Augusta utilizes a strict materiality provision to determine compliance with bid specifications requiring a virtually unattainable standard of perfection in bid submissions.10 The unfortunate result is that, more often than not, it allows discriminatory compliance determinations between noncompliant bidders and encourages bid rigging and favoritism in the award process.11 Moreover, until recently, Augusta required a bidder to protest its bid submission before it
7 Note, by its very nature, the consolidated government of Augusta-Richmond County (“Augusta”) combines features of both a county and municipality. Need Cite. Augusta-Richmond County is located in eastern Georgia on the Savannah River. Need cite. . As of the 2010 census, the population was 200,549. United States Census Bureau. "2010 Census Data". United States Census Bureau. Retrieved 17 February 2012. Following an election in 1995, the city of Augusta consolidated governments with Richmond County. Need Cite. The consolidated entity is known as Augusta-Richmond County, or Augusta. Need Cite. 8 9 10 11
5 submitted its bid; thus not providing a disappointed bidder with a meaningful administrative protest opportunity.12 Given discriminatory selection and the lack of meaningful protest, disappointed bidders often look to the courts for a remedy.13
The judicial avenue, however, is rarely worth the effort, as
Georgia courts have limited recovery by disappointed bidders to recovery of bid preparation costs.14 Thus, bidders also look to the due process and equal protection clauses of the U.S.
Constitution for meaningful recovery.15 However, as discussed herein, the current state of judicial interpretation and procedures adopted by Augusta effectively prevent the application of the due process and equal protection clauses to bid challenges.16
This article examines these issues, by first looking briefly at public procurement and the underlying policy in
Section II. Next, in Section III, the procurement code and policy of Augusta are examined in light of mandated state procurement requirements. The inconsistent and discriminatory application of Augusta’s materiality provision is illustrated through a review of noncompliance determinations by Augusta’s
12 13 14 Amdahl Corp. v. Ga. Dept. of Admin. Serv.s, 260 Ga. 690, 695-96 (1990); City of Atlanta v. J.A. Jones Constr. Co., 260 Ga. 658, 659 (1990). 15 16
6 Procurement Department. Section IV presents a brief review of
Augusta’s protest provision and discusses the foremost remedies available to disappointed bidders to challenge wrongful rejection of their bids and the difficulty of a viable due process and/or equal protection claim. Section V describes the need for meaningful reform by exploring public policy and the unconscionable consequences resulting to bidders due to their wrongful rejections.
II. Public Procurement
Simply stated, public procurement is the process by which governmental or public entities acquire goods and services.17
Generally, public procurement seeks to acquire quality goods and services in a timely manner at the lowest reasonable cost.18 By the very nature of government politics, there is significant potential for corruption, fraud, protectionism and waste.
Therefore, public procurement policy seeks to promote transparency, fairness, and competitiveness in state and local government procurement.19 Competitive bidding statutes are enacted to guard against favoritism, improvidence, extravagance and corruption and aims to secure for the public the benefits of
17 18 See generally 41 U.S.C. § 401 (1982). 19 ABA Section of Public Contract Law, State and Local Model Procu rement Code; see "best practices" embodied in the ABA 2000 Model Procurement Code for State and Local Governments (and companion 2002 Model Procurement Regulations).
7 unfettered competition.20 This policy of impartiality is set forth in both federal and state policy.21
Numerous federal provisions have been implemented to overse e the fairness of federal procurement.22 The Office of Federal P rocurement Policy (“OFPP”) serves as the central procurement off ice of the federal government.23 The OFPP is part of the Office of Management and Budget within the executive branch of the U.S. government.24 OFPP is responsible for establishing procurement p olicies and regulations for federal agencies and contractors doi ng business with the federal government.25 Congress provided OFP
P with specific policy guidelines on how to promote its goals of economy, efficiency, and effectiveness in government procurement s.26 These guidelines include promoting use of full and open com
20 21 22 23 Exec. Order No. 12,352, 47 Fed. Reg. 12,125, reprinted in 41 U. S.C. § 401 (1982) requires OFPP to work with executive agencies to provide procurement policy guidance. 24 25 The purposes of the Office of Federal Procurement Policy are to: (1) provide overall direction of Government-wide procurement policies, regulations, procedures, and forms for executive agencies; and (2) promote economy, efficiency, and effectiveness in the procurement of property and services by the executive branch of the Federal Government. 41 U.S.C. § 1101 (b). 26 Office of Federal Procurement Policy Act, Pub. L. No. 93-400, § 5, 88 Stat. 797 (1974) (codified at 41 U.S.C. § 404(a) (1982)).
8 petition in procurement and fair dealing with government contrac tors.27
Federal procurement policy and regulations are largely set forth through the Federal Acquisition Regulations System
(“FAR”).28 The FAR regulations provide regulation and control of the federal procurement process.29 For example, subpart 3.1 of the FAR requires that “[g]overnment business shall be conducted in a manner above reproach and, except as authorized by statute or regulation, with complete impartiality and with preferential treatment for none.”30
The Office of Federal Contract Compliance Programs (OFCCP) is also a major player in federal procurement, especially in the regulation of affirmative action and equal employment opportunity requirements of bidders involved in procurement by the federal government.31 According to its mission statement, the purpose of the OFCCP is to enforce, for the benefit of job seekers and wage earners, the contractual promise of affirmative action and equal employment opportunity required of those who do business with the Federal government.32
27 41 U.S.C. § 401 (1982). 28 See generally, FAR, 48 C.F.R. § 1.101 (1985). 29 30 48 C.F.R. § 3.101-1.
31 32
9 The U.S. Government Accountability Office (GAO), an independent, nonpartisan agency that works for Congress, supports congressional oversight by issuing bid protest rulings regarding the award of federal contracts.33 The GAO has historically provided an objective, independent and impartial forum for the resolution of bid disputes regarding the awards of federal contracts.34 Over the years, GAO has developed a substantial body of law and standard procedures for considering bid protests.35
State procurement policy, such as Georgia, largely mirrors federal policy.36 The Georgia legislature has not only set forth procurement policies and mandatory regulations applicable to state procurement, but also for its counties and municipalities.37 Georgia’s policy is principled on openness and accessibility by all qualified vendors to the state’s purchasing processes, so as to achieve the lowest possible costs to the state through effective competition among such vendors.38 It promotes the utilization of safeguards to ensure the integrity
33 34 Bid Protests at GAO: A Descriptive Guide, pp. 3, 5 (9th Ed. 200 9). Applicable regulations are found at 4 C.F.R. §§ 21.0, et. s eq. Need Cite. 35 36 37 38 O.C.G.A. § 50-5-50.
10 of fair and equitable treatment of all persons in the procurement process.39
In accordance with legislative policy, federal and state courts recognize that competitive bidding statutes are enacted for the protection of the public.40 Acknowledging that competitive bidding seeks to impose a system by which goods or services required by public authorities may be acquired at the lowest possible costs, courts must also address the dual roles of the government acting as a sovereign entity and as a contracting party.41 Public procurement should confer upon both the contractor and the public authority reciprocal benefits and obligations. Safeguards should prevent arbitrary and capricious discrimination between bidders by the procuring entity and ensure that bidders are assured fair consideration of their offers and appropriately awarded contracts if their bids are the lowest and best received.42 The underlying principale is to ensure a process of impartiality.
III. Augusta’s Procurement Code and Policy
Augusta’s procurement code is shaped by federal, state and local law.43 Requirements of federal laws and regulations are
39 Id.O.C.G.A. § 50-5-50. 40 41 Hotel China & Glassware Co. v. Bd. of Public Instruction of Alachua Cnty., 130 So. 2d 78, 71 (Fla. Dist. Ct. App. 1961). 42 Id.; see also, City of Atlanta v. J.A. Jones Constr. Co., 260 Ga. 658, 659 (1990). 43
11 largely applicable were the procurement involves federal funds, as well as compliance with equal employment opportunities and discrimination laws.44 The underlying bid process, however, is governed predominantly by state and local law and regulations.45
A. Mandated State Procurement Requirements in Georgia
As previously mentioned, Georgia mandates basic procurement provisions applicable to county and municipal governments.46
These requirements are found in the Georgia Local Government
Public Works Construction Law (“Public Works Act”).47 The Public
Works Act mandates competitive bid requirements for all public construction projects with a value of $100,000 or more.48 This includes the building, altering, repairing, improving, or demolishing of any public structure or building or improvements to any public real property.49 The Public Works Act provides two methods of procurement: competitive sealed bidding and competitive sealed proposals.50 Pursuant to competitive sealed
44 45 46 47 See O.C.G.A. §§ 36-91-1 et seq. (mandating procurement requirem ents for counties, municipal corporations, and other governmenta l entities). 48 O.C.G.A. § 36-91-22 (a). It is unlawful to let out any applica ble contract without complying with the competitive award requir ements contained within the Act. O.C.G.A. § 36-91-21 (a). 49 Projects covered by Chapter 4 of Title 32 and the routine opera tion, repair, or maintenance of existing structures, buildings o r real property. O.C.G.A. § 36-91-2(12). 50 O.C.G.A. § 36-91-21 (b), (c). Although a governmental entity may also adopt a process for mandatory pre qualification of prospective bidders, or offerers, the resulting contract must be
12 bidding,51 the governmental entity opens the bids publicly and evaluates such bids without discussions with the bidders.52
Award should be made to the lowest responsive, responsible bid in conformance with the criteria set forth in such invitation.53
On the other hand, pursuant to the competitive sealed proposal method,54 the governmental entity may enter discussions, negotiations, and revisions after submission of proposals and prior to award for the purpose of obtaining best and final offers.55 Award is based upon a determination by the governmental entity, taking into consideration the evaluation factors set forth in the request for proposals, as to whose proposal is the most advantageous to the governmental entity.56
If a contract is awarded without complying with competitive award requirements, it is invalid.57
The competitive sealed bidding requirements of the Public
Works Act and Augusta are analogous.58 Both require the contract be awarded to the lowest responsible and responsive bidder whose bid meets the requirements and criteria set forth in the
let by competitive sealed bidding or competitive sealed proposals. O.C.G.A. § 36-91-20 (f); O.C.G.A. § 36-91-21. 51 O.C.G.A. § 36-91-2(5). 52 O.C.G.A. § 36-91-21(b)(3). 53 O.C.G.A. § 36-91-21(b). 54 O.C.G.A. § 36-91-2(6). 55 O.C.G.A. § 36-91-21(c)(2). 56 O.C.G.A. § 36-91-21(c). 57 O.C.G.A. §36-91-21(g). 58
13 invitation for bids.59 A “responsible bidder” is defined as a person or entity that has the capability in all respects to perform fully and reliably the contract requirements.60 A
“responsive bidder” is “a person or entity that has submitted a bid … that conforms in all material respects to the requirements set forth in the invitation for bids . . . .”61
The definition of “responsive bidder” and the meaning of
“materiality” were recently addressed by the Georgia Supreme
Court Iin R.D. Brown Contractors, Inc. v. Bd. of Educ. of
Columbia Cnty.62 In R.D. Brown, the Georgia Supreme Court upheld the trial court’s determination that the county did not err in concluding that the failure of a bidder to submit a list of subcontractors was immaterial and could be waived.63 The court specifically interpreted the interaction of the requirement that the contract be awarded to the “lowest responsive bidder” and the definition of “responsive bidder.”64 The court explained that the requirement that the bid be awarded to the lowest responsible bidder who meets the requirements and criteria set forth in the invitation for bids65 cannot mean that every
59 O.C.G.A. § 36-91-21(b)(4); Augusta Code § 1-10-43(i). 60 O.C.G.A. § 36-91-2(13). 61 O.C.G.A. § 36-91-2(14); Augusta Code § 1-10-9(bbbb) (emphasis a dded). 62 R.D. Brown Contractors, Inc. v. Bd. of Educ. of Columbia Cnty., 280 Ga. 210, 212-213, 626 S.E.2d 471 (2006). 63 64 Id. at 212-213. 65 O.C.G.A. § 36-91-21(b)(4).
14 statement in the invitation to bid must be met precisely and without deviation; as such would render meaningless the definition of a “responsive bidder” as one whose bid conforms in all “material respects” to the requirements set forth in the invitation for bids.66 Given the definition of a “responsive bidder” as one whose bid conforms to the invitation for bids “in all material respects,” the court explained, “[c]learly, some provisions of a bid may be considered immaterial, and constitute the sort of “technicalities and informalities” that the governmental entity can waive . . . .”67 The court underscored that reference to “material respects” must be honored.68
As is discussed in the next section, although Georgia’s
Supreme Court limited the scope of the materiality assessment, the city of Augusta designates more emphasis on a bidder’s compliance with the procedural requirements of submissions than on a bidder’s responsibility or the bidder’s capability and reliability to perform the work by instituting a much stricter interpretation of the phrase “material respects.”69
B. Augusta’s Unassailable Materiality Provision
Contrary to the mandate of Georgia law and the meaning of
“responsive” and “material,” established by the Georgia Supreme
Court, the city of Augusta has incorporated a “Materiality 66 Id. at 212-13. 67 R.D. Brown, 280 Ga. at 213. 68 Id. 69
15 Provision” in its Procurement Code which makes all bid requirements material to the determination of whether a bidder is responsive.70 Specifically, Augusta’s Procurement Code contains the following language:
All specific requirements contained in the invitation to bid including, but not limited to, the number of copies needed, the timing of the submission, the required financial data, and any other requirements designated by the Procurement Department are considered material condition of the bid which are not waiveable or modifiable by the Procurement Director.71
(“Materiality Provision”). Accordingly, the number of copies requested, the timing of the submission and the required financial data are deemed material.72 Additionally, any other requirement designated by the Procurement Department is considered material.73 The Materiality Provision74 is incorporated in all bids,75 making each and every requirement of a bid submission material.76
70 71 Augusta Code § 1-10-50(b) (amended Jun. 21, 2011), previously § 1-10-43(b). 72 73 74 “Bidders will please note that the number of copies requested; all supporting documents including financial statements and references and such other attachments that may be required by the bid invitation are material conditions of the bid. Any package found incomplete or submitted late shall be rejected by the Procurement Office.” 75 As used herein the term “bid” also collectively includes invita tions to bid (ITBs), requests for proposals (RFPs) and requests for qualifications (RFQs). 76
16 Originally developed by Augusta’s legal counsel, the
Materiality Provision was first inserted into the September 1997 version of the Augusta Code.77 Augusta began incorporating the
Materiality Provision into bid solicitations beginning on
October 28, 2004.78 Initially, Augusta interpreted the
Materiality Provision to allow minor or non-material deviations in determining whether a bidder was “responsive,” i.e., a bid which conforms in all material respects to the bid specifications.79 According to Augusta’s 1997 Purchasing
Department Policies and Procedures Manual, a bidder was “non- responsive” only if its deviation from the bid specifications or requirements was “material.”80 Furthermore, Augusta defined a
“material deviation” as one that goes to the substance of the bid, such as price, quality or delivery of the materials or service.81 Immaterial or minor deviations were defined as those that would not after the bidder’s position in receiving the award, such as failure to file a non-collusion affidavit with its bid.82
77 Sams Dep. at 18:5-22, Dec. 9, 2010, Thompson Bldg. Wrecking Co., Inc. et al. v. Augusta, Ga., No. 1:07-CV-019, 2007 WL 926153 (S. D. Ga. Mar. 14, 2007). 78 Id. 79 80 1997 Purchasing Department Policies and Procedures Manual, Augu sta, Ga., p. 30. 81 82
17 In 2007, however, Augusta altered its interpretation of the
Materiality Provision to allow absolute and virtually unfettered discretion in determining compliance to its Procurement
Director.83 Through its Procurement Director, Augusta began to strictly interpret the Materiality Provision.84 Thus, any violation, such as a failure to date a form or submit a business 83Interestingly, this time period correlates to the injunction of Augusta’s disadvantaged business enterprise program in Thompson Bldg. Wrecking Co., Inc., et al. v. Augusta, Ga., No. 1:07-CV- 019, 2007 WL 926153. Insert Cite(S.D. Ga. Mar. 14, 2007) (Augusta’s disadvantaged business enterprises program held unconstitutionally discriminatory and in violation of the Equal Protection Clause of the Fourteenth Amendment). As a result of litigation, on February 2, 2007, this Court issued a Temporary Restraining Order on February 14, 2007, ordering Augusta to immediately cease “applying its Disadvantaged Business Enterprise Program, AUGUSTA CODE §§ 1-10-58 to -62, to award any ‘projects or classifications of expenditures.’ Id. § 1-10-60.” (Doc. No. 6, 2). Subsequently, this Court issued an Order on March 14, 2007, continuing the preliminary injunction. The Court ordered:
“ The City of Augusta is hereby ENJOINED, for the pendency of this action, from favoring contract bids that contain “minority DBE” or “minority business enterprise” (or any other entity that qualifies as a DBE based on the racial composition of its ownership) participation over other bids.
Furthermore, the City is ENJOINED, for the pendency of this action, from distributing bid solicitation material, or otherwise publishing information in any manner, that would lead a bidder to believe that his bid would benefit from including “minority DBE” or “minority business enterprise” (or any other entity that qualifies as a DBE based on the racial composition of its ownership) participation. The City shall, within 3 days of the date of this Order, post a copy of the Order in portable document format (pdf) on the City’s procurement department homepage (http://www.augustaga.gov/departments/purchasing/home.
18 license number, is ground for deeming a bidder noncompliant.85
It requires perfection, which by human standards cannot be met.
Not only can the bidder not comply, but it is impossible for the individuals responsible for determining bid compliance to consistently and fairly apply the Materiality Provision.
Analogous with the explanation provided by the Georgia Supreme
Court in R.D. Brown, strict interpretation of the Materiality
Provision makes the term “material” in the definition of
“responsive bidder” superfluous and without meaning.86 Augusta even went so far as to begin rejecting bidders for failing to submit a non-collusion affidavit with their bid, which had
asp) via a reasonably visible hyperlink entitled “Court Order Enjoining Race-based Portion of DBE Program.
Finally, this injunction is binding upon the City, its officers, agents, servants, employees and attorneys, and upon those persons in active concert or participation with it who receive actual notice of this injunction by personal service or otherwise. See F.R.Civ.P.65(d).”
(“2007 Order”) (Doc. no. 19; Doc. No. 10. The preliminary injunction was made permanent by this Court on November 13, 2007 (“2007 Order). Augusta is enjoined by the 2007 Order from showing any preference to bids that contain minority participation over other bids and from distributing bid solicitation material, or publishing information that would lead a bidder to believe that his bid would benefit from including minority participation. Need Cite. 84 85 86
19 previously been defined as an immaterial or minor deviation that should be waived.87
Although seemingly an objective standard, the Materiality
Provision is an extremely powerful tool used by Augusta to selectively award its bids and, which over the years, has resulted in the disparate treatment of bidders.88 There are no restrictions to prevent Augusta from discriminating against a low bidder by strictly applying the Materiality Provision to its bid, while more leniently applying it to a preferred bidder.89
Augusta has utilized at least ninety-two (92) different reasons that it deemed bidders noncompliant between 2007 and 2010,90 the
87 88 89 90 For example, Augusta has determined bidders noncompliant pursuant to the Materiality Provision, for: failure to sign the Bid Form, failure to sign the Contractor Affidavit and Agreement, failure to sign the Subcontractor Affidavit and Agreement, failure to sign the LSBOP Efforts form, failure to sign the LSBOP Utilization form, failure to sign the Non- Discrimination Statement, failure to sign the Non-Collusion Affidavit of Contractor, failure to sign the Non-Collusion Affidavit of Subcontractor, failure to identify a signature as a company representative, failure to date the Contractor Affidavit and Agreement, failure to date the Subcontractor Affidavit and Agreement, failure to date the LSBOP Efforts form, failure to date the LSBOP Utilization form, failure to date the Non- Discrimination Statement, failure to date the Non-Collusion Affidavit of Contractor, failure to date the Non-Collusion Affidavit of Subcontractor, failure to provide business license information, failure to include an Augusta business license, failure to put “N/A” on the Subcontractor Affidavit and Agreement (if there are no subcontracting opportunities), failure to put “N/A” on the LSBOP Efforts form (if there are no subcontracting opportunities), failure to put “N/A” on the LSBOP Utilization form (if there are no subcontracting opportunities),
20 majority of which are based on the execution of bid forms.91 For example, bidders have been rejected for failing to date forms, failing to place “N/A” on inapplicable bid forms, failing to include their corporate seal, and notarizing and signing a bid form on different dates.92
An examination of Augusta’s bid forms and compliance determinations candidly exhibits Augusta’s inconsistent and discriminatory application of its Materiality Provision.93 failure to put “N/A” on the Non-Collusion Affidavit of Subcontractor (if there are no subcontracting opportunities), writing “N/A” only on the Subcontractor Affidavit and Agreement, writing “N/A” only on the LSBOP Efforts form, writing “N/A” only on the LSBOP Utilization form, writing “N/A” only on the Non- Collusion Affidavit of Subcontractor, writing “N/A” only on the Contractor Affidavit and Agreement, failure to provide an occupational license, failure to fill out a form, failure to properly execute a form, putting an incorrect date on a form, failure to identify legal ownership of the bidder, failure to provide company information, providing incorrect company information, failure to return the Non-Discrimination Statement, failure to notarize the Contractor Affidavit and Agreement, failure to notarize the Subcontractor Affidavit and Agreement, failure to notarize the Non-Discrimination Statement, failure to notarize the Non-Collusion Affidavit of Contractor, failure to notarize the Non-Collusion Affidavit of Subcontractor, notarizing and signing the Contractor Affidavit and Agreement on different dates, notarizing and signing the Subcontractor Affidavit and Agreement on different dates, failure of the notary to provide his/her notary commission expiration date, failure of the notary to include his/her notary seal, notary commission expired, failure to submit a Conflict of Interest form, writing “N/A” only on the Conflict of Interest form, failing to submit the correct number of copies, the notary notarizing his/her own signature, failure of the notary to include his/her signature, failure of the notary to date the notarization 91 92 93
21 Augusta’s bid solicitations have historically contained a number of forms to be executed by a bidder and/or a bidder’s subcontractors.94 These forms include immigration related forms, non-collusion forms, local small business utilization forms and non-discrimination forms.95 During litigation in Thompson Bldg.
Wrecking Co., Inc. et al. v. Augusta, Georgia,96 bids submitted for 339 bids were evaluated from 2007 through 2010.97 During this period, over 800 bidders were deemed noncompliant by
Augusta.98 The following summary is derived from this extensive inspection.
1. Immigration Forms
Augusta’s immigration forms were created by its Procurement
Department to comply with the Georgia Security and Immigration
Act and the Immigration Reform and Control Act of 1986.99 The forms initially consisted of a Contractor Affidavit and
94 95 These nine bid forms were typically being used by Augusta betwe en 2007 and 2010. Need Cite. 96 Thompson Bldg. Wrecking Co., Inc. et al. v. Augusta, Ga., No. 1: 07-CV-019, 2007 WL 926153 (S.D. Ga. Mar. 14, 2007) (action enjoi ning city’s disadvantaged business enterprise program as unconst itutional). Note, most of the research discussed herein was con ducted after the Plaintiff filed a contempt motion alleging that Augusta was in violation of the court’s order prohibiting August a from utilizing minority preferences. 97 98 99 Def. Augusta, et al. Responses to Pl. CSRA Testing and Engineer ing Co., P.C.’s First Interrogatories and Requests for Productio n of Documents, ¶ 14, Thompson Bldg. Wrecking Co., Inc., et al. v. Augusta, Ga., et al., No. CV 108-019, 2010 WL 1286029 (S.D. G a. Mar. 31, 2010).
22 Agreement (“Contractor Affidavit”) and a Subcontractor Affidavit and Agreement (“Subcontractor Affidavit”).100
a. Discriminatory Enforcement of the Contractor Affidavit Requirements
Augusta requires a bidder to provide its E-Verify number, sign,
100 Although Augusta’s immigration forms initially required a bidder to falsely certify contracting with the Georgia Department of Natural Resources, instead of Augusta, Augusta still rejected bidders for failing to execute the immigration forms. Need Cite. The original forms provided:
By executing this affidavit, the undersigned contractor verifies its compliance with O.C.G.A. § 13- 10-91 and Georgia Department of Labor Rule 300-10- 1-.02, stating affirmatively that the individual, firm, or corporation which is contracting with the, Georgia Department of Natural Resources has registered with and is participating in a federal work authorization program* in accordance with the applicability provisions and deadlines established in O.C.G.A. § 13-10-91 and Georgia Department of Labor Rule 300-10-1-.02.
Need Cite.
The undersigned contractor further agrees that, should it employ or contract with any subcontractor(s) in connection with the physical performance of services pursuant to the contract with the Georgia Department of Natural Resources of which this affidavit is a part, the undersigned contractor will secure from such subcontractor(s) similar verification of compliance with O.C.G.A. § 13-10-91 and Georgia Department of Labor Rule 300-10-1-.02 through the subcontractor's execution of the subcontractor affidavit required by Georgia Department of Labor Rule 300-10-1-.08 or a substantially similar subcontractor affidavit. The undersigned contractor further agrees to maintain records of such compliance and provide a copy of each such verification to the Georgia Department of Natural Resources at the time the subcontractor(s) is retained
23 date, and notarize the Contractor Affidavit.101 Augusta deemed
192 bidders noncompliant, at least in part, for failing to properly execute their Contractor Affidavit.102 At least 26 bidders103 were deemed noncompliant and rejected for the sole reason that they failed to properly notarize their Contractor
Affidavit.104 These bidders were rejected for minute details,
to perform such service.
Need Cite.
The Subcontractor Affidavit provided:
By executing this affidavit, the undersigned subcontractor verifies its compliance with 0.0 G A. § 13-10-91 and Georgia Department of Labor Rule 300-10- 1-.02, stating affirmatively that the individual, firm, or corporation which is engaged in the physical performance of services under a contract with ______(name of contractor) on behalf of the Georgia Department of Natural Resources has registered with performance of services under a contract with (name and is participating in a federal work authorization program* in accordance with the applicability provisions and deadlines established in O.C.G.A. § 1310-91 and Georgia Department of Labor Rule 300-10-1-.02.
Need Cite.
Subsequently, due to legal action, Augusta acknowledged the forms were incorrect and revised the forms on February 11, 2008. Need Cite. Augusta acknowledged that requiring a bidder to certify to the “Georgia Department of Natural Resources,” instead of “Augusta, Georgia” was an error made by Augusta. Def. Augusta, et al. Responses to Pl. CSRA Testing and Engineering Co., P.C.’s First Interrogatories and Requests for Production of Documents, ¶ 14. 101 102 103 These bids were submitted by non-minorities. Need cite. 104
24 such as: failure of the notary to include its notary commission expiration date;105 failure of the notary to include its seal;106 failure of the notary to sign the notarization;107 failure of the notary to date the notarization;108 and the notarization date being different than the signature date.109
On the other hand, Augusta awarded at least six bids110 to bidders that completely failed to notarize their Contractor
Affidavit, instead leaving the notarization area on the form blank.111
Upon closer examination these inconsistencies become glaringly discriminatory. As stated in the previous paragraph,
Augusta requires that the date the Contractor Affidavit is signed by the bidder and notarized are the same.112 If the two dates are different, bidders are deemed noncompliant and rejected.113 Contrary to these requirements, Augusta awarded at least 17 bids114 to bidders that submitted Contractor Affidavits which were signed and notarized on different dates.115
105 106 107 108 109 110 These bids were awarded to minority owned and/or operated busi nesses. Need cite. 111 112 113 114 These bids were awarded to minority owned and/or operated busi nesses. 115
25 b. Discriminatory Enforcement of Subcontractor Affidavit Requirements
A bidder is required to submit a Subcontractor Affidavit for any subcontractors it intends to utilize.116 The subcontractor must provide its E-Verify number, sign, date, and notarize this form.117 If the bidder does not intend to utilize a subcontractor, the bidder must write “N/A,” sign, date, and notarize the form.118 Failure to properly execute their
Subcontractor Affidavit was cited by Augusta for determination of noncompliance in bids submitted by 150 bidders.119 On the other hand, 21 bids were awarded to noncompliant bidders120 that submitted a blank or improperly executed Subcontractor
Affidavit.121
2. Non-Collusion Forms
a. Discriminatory Enforcement of the Non-Collus ion Affidavit of Contractor
Augusta requires a bidder to submit a Non-Collusion
Affidavit form.122 The bidder must sign, date, and notarize the
116 117 118 119 These bidders were identified as non-minority businesses. Nee d Cite. 120 These bidders were identified as minority owned and/or operate d businesses. Need Cite. 121 Note, in eight of these bids, other bidders were rejected for failing to file out or improperly completing the Subcontractor A ffidavit. Need Cite. 122
26 Affidavit.123 Augusta rejected 66 bidders for failing to properly execute their Non-Collusion Affidavit.124 On the other hand,
Augusta awarded bids to two bidders who failed to properly execute their Non-Collusion Affidavit.125
b. Discriminatory Enforcement of the Non-Collus ion Affidavit of Subcontractor
Augusta requires a bidder to submit a Non-Collusion
Affidavit of Subcontractor form for any subcontractors it intends to utilize.126 The subcontractor must sign, date, and notarize this form.127 If the bidder does not intend to utilize a subcontractor, the bidder must write “N/A,” sign, date, and notarize the form.128 Augusta rejected 76 bidders for failing to properly execute their Non-Collusion Affidavit of
Subcontractor.129 On the other hand, Augusta awarded bids to at least two bidders who failed to properly execute their Non-
Collusion Affidavit of Subcontractor.130
3. LSBOP Forms
Augusta requires bidders to submit two Local Small Business
Opportunity Program (“LSBOP”) forms: one form is to demonstrate good faith efforts to utilize local small businesses and the
123 124 125 126 127 128 129 130
27 other form demonstrates the bidder’s utilization plan to utilize local small businesses.131
a. LSBOP Good Faith Efforts Form
Augusta requires a bidder to submit a LSBOP this form and list all subcontractors or suppliers that the bidder contacted regarding this project.132 The contractor must sign, date, and notarize this form.133 If there are no subcontracting opportunities, the bidder must write “N/A,” sign and date the form.134 Augusta deemed 151 bidders noncompliant for failing to properly execute their LSBOP Good Faith Efforts Form.135 On the other hand, Augusta awarded bids to at least four bidders who failed to properly execute their LSBOP Good Faith Efforts Form.136
b. LSBOP Subcontractor/Supplier Utilization Pla n Form
Augusta requires a bidder to submit this form and list all
Augusta-Richmond County Registered Local Small Business subcontractors/suppliers to be used in the project.137 The contractor must sign, date, and notarize this form.138 If there are no subcontracting opportunities, the bidder must write “N/A,
131 132 133 134 135 136 These bidders were identified as minority owned and/or operate d businesses. Need Cite. 137 138
28 sign, and date the form.139 Augusta deemed 141 bidders noncompliant for failing to properly execute their LSBOP
Subcontractor/Supplier Utilization Plan Form.140 On the other hand, Augusta has awarded bids to at least six bidders who failed to properly execute their LSBOP Subcontractor/Supplier
Utilization Plan Form.141
4. Discriminatory Enforcement of Business License In formation
Augusta requires a bidder to provide its business license information.142 Augusta rejected 68 bidders that failed to include their business license information.143 On the other hand,
Augusta awarded at least eight bids to bidders that failed to provide their business license information. 144
How does this inconsistent and discriminatory enforcement of the Materiality Provision occur? Augusta’s Procurement
Department has the sole authority and responsibility for enforcement of the Materiality Provision.145 After bids are opened, the Procurement Department applies the Materiality
139 140 141 These bidders were identified as minority owned and/or operate d businesses. Need Cite. 142 Thompson Bldg. Wrecking Co., Inc., et al. v. Augusta, Ga., et al., No. 08-CV-019, 2007 WL 926153 (S.D. Ga. Mar. 14, 2007), doc. no. 133-5 at 7. 143 144 These eight bidders were identified as minority owned and/or c ontrolled businesses. Need Cite. 145 See infra notes 146-147 and accompanying text.
29 Provision to determine whether a bid is compliant or non- compliant.146
“ As the Procurement Director Ms. Sams is the only one that gets to make that determination and that’s made when she opens these bid packages and she decides that these folks are responsible and responsive.”147
If a bid is deemed noncompliant, no one else sees it.148
Noncompliant bids are not sent to the user department.149
Procurement Manuals and Standard Operating Procedures (“SOP”s) are not even subject to commission approval.150 Augusta’s
Procurement Director, Geri Sams, therefore has total discretion in applying the Materiality Provision.151
The Materiality Provision ostensibly prohibits Augusta from waiving minor technicalities that would save Augusta and its taxpayers millions of dollars.152 In reviewing 23 procurement 146 Sams Dep. at 50:4-12, Aug. 14, 2008, Thompson Bldg. Wrecking C o., Inc., et al. v. Augusta, Ga., et al., No. CV 108-019, 2010 W L 1286029 (S.D. Ga. Mar. 31, 2010), doc. no. 116, 14; Sams Dep. at 35:9-15, Dec. 9, 2010, Thompson Bldg. Wrecking Co., Inc. et a l. v. Augusta, Ga., No. 1:07-CV-019, 2007 WL 926153 (S.D. Ga. Ma r. 14, 2007). 147 Statement by Chiquita Johnson, formerly of Augusta’s Legal Dep artment, before Augusta’s Administrative Services Committee (Jan. 12, 2009); see also, BLECCS, Inc. v. Augusta, Ga., No. CV 109-0 19, 2010 WL 1285470 (S.D. Ga. Mar. 31, 2010), doc. no. 30-10. 148 See id. 149 Sams Dep. at 50:16-19, Aug. 14, 2008, Thompson Bldg. Wrecking Co., Inc. et al. v. Augusta, Ga., No. 1:08-CV-019, doc. no. 116, 14; Sams Dep. at 36:5-8, Dec. 9, 2010, Thompson Bldg. Wrecking C o., Inc. et al. v. Augusta, Ga., No. 1:07-CV-019, 2007 WL 926153 (S.D. Ga. Mar. 14, 2007). 150 Sams Dep. at 63:16-20, Aug. 15, 2008, Thompson Bldg. Wrecking Co., Inc. et al. v. Augusta, Ga., No. 1:08-CV-019, 2010 WL 1286 029 (S.D. Ga. Mar. 31, 2010), doc. no. 117, 17. 151 See supra notes 145-50 and accompanying text. 152 See infra notes 153-56 and accompanying text.
30 projects awarded by Augusta from 2006 and 2007, the Augusta
Chronicle found that, if Augusta had not rejected the lowest bidder on minor technicalities, it would have saved taxpayers
$2,087,860.153 For example, Augusta awarded RFQ 07-102, Soils and
Materials Testing Services for Highland Avenue Water Treatment
Plant for Augusta Utilities, to MC Squared for $241,130.154
Augusta rejected the low bidder, CSRA Testing & Engineering Co.,
P.C., a local business that submitted a bid for $122,000, because it allegedly submitted six copies of its bid, instead of seven.155 The Augusta Chronicle documented the additional loss of
$528,000 to taxpayers based on the rejection of low bidders for minor technicalities in 2010.156
IVII. Challenging Improper Procurement Awards
Disappointed bidders must look to protest provisions provided in the government’s procurement regulations or, more often than not, federal and/or state constitutional provisions to challenge improper rejections. Legal challenges are thwarted by the current state of federal and state law that only provide 153Sandy Hodson, City often passes on lowest bid, Augusta Chron., Jan. 27, 2008, http://chronicle.augusta.com/stories/2008/01/27/m et_185137.shtml. 154 Id. 155 Id.; see also Thompson Bldg. Wrecking Co., Inc., et al. v. Aug usta, Ga., et al., No. 07-CV-019, 2007 WL 926153 (S.D. Ga. Mar. 14, 2007), doc. no. 1 at ¶¶ 15-20. Note, MC Squared is a minori ty owned and/or operated business; CSRA is not. Need Cite. 156 Johnny Edwards and Sandy Hodson, Augusta procurement departmen t’s history shows focus on paperwork ahead of contractors’ price, Augusta Chron., Nov. 6, 2010, http://chronicle.augusta.com/news /government/2010-11-06/augusta-procurement-department.
31 a cause of action for the lowest compliant bidder.157
A. Protesting a Bid Rejection in Augusta
1. Augusta’s Former Bid Protest Provision
The impact of Augusta’s Materiality Provision is heightened by the fact that it is virtually impossible to meaningfully protest a determination of noncompliance. 158 Until June 2011,
Augusta utilized a futile protest provision requiring bidders to protest their wrongful rejection prior to their rejection.159 The protest provision provided:
(a) Right to protest. Any actual or prospective bidder, offeror, or contractor who is aggrieved in connection with the solicitation or award of a contract may protest to Augusta-Richmond County. Protestors shall seek resolution of their complaints initially with the Procurement Director. All protests must be submitted in writing to the Procurement Director.
(b) Protests concerning invitations to bid. A protest with respect to an invitation for bids or request for proposals shall be submitted in writing prior to the opening of bids or the closing date of proposals. If not done by that time, the complaint or protest is lost. 160
Augusta construed the language in subsection (b) as controlling on bidders rejected after the bid opening.161 Even Augusta’s 157 See infra generally. 158 See infra notes 159-67 and accompanying text. 159 Augusta Code § 1-10-67. 160 Augusta Code § 1-10-67Id. (emphasis added). The language was approved when the code was recodified and readopted by the Augusta-Richmond County Commission on September 2, 1997. Doc. no. 75-9, 14, Thompson Bldg. Wrecking Co., Inc., et al. v. Augusta, Ga., et al., No. CV 108-019, 2010 WL 1286029 (S.D. Ga. Mar. 31, 2010) 161 Augusta’s Procurement Director, Geri Sams, testified that to
32 Procurement Director testified that bid protests had to be submitted prior to the opening date of the bid162 and the rejection letter sent to bidders specifically refers the bidder to Augusta Code § 1-10-67(b) as it relates to protests.163
Unfortunately, this provided no hearing whatsoever, as it is impossible to protest after the bids have been opened.164 A correlation would be to require a baseball player to protest a called strike before he/she enters the batter box. On the other hand, Augusta has allowed some bid protests to proceed that were not filed until after the bid opening.165 During 2009 and 2010,
13 protests were submitted to the Procurement Director.166 All were denied except one, which protested the lack of needed information.167
be timely, a protest related to an invitation to bid, must be filed prior to the bid opening, and as to a proposal, before the closing date of the request. Sams Dep. at 41-43, Aug. 15, 2008, doc. no. 117, Thompson Bldg. Wrecking Co., Inc., et al. v. Augusta, Ga., et al., No. CV 108-019, 2010 WL 1286029 (S.D. Ga. Mar. 31, 2010); see also, doc. no. 133-2, 23-25, ¶¶ 87, 95; doc. no. 150, 37, 42, ¶¶ 87, 95. 162 Sams Dep. at 42-43, Aug. 15, 2008, doc. no. 117, Thompson Bldg. Wrecking Co., Inc., et al. v. Augusta, Ga., et al., No. CV 108-019, 2010 WL 1286029 (S.D. Ga. Mar. 31, 2010) 163 Doc. no. 133-2, 12, 23, ¶¶ 43, 86; doc. no. 150, 21, 37; see also, doc. no. 118-5. Thompson Bldg. Wrecking Co., Inc., et al. v. Augusta, Ga., et al., No. CV 108-019, 2010 WL 1286029 (S.D. Ga. Mar. 31, 2010). 164 165 166 167
33 Only due to extensive state and federal litigation, did
Augusta revise its defective protest provision.168 Between 2008 and 2011, there were numerous legal challenges to Augusta’s former protest provision.169 For example, in Thompson Bldg.
Wrecking Co., Inc., et al. v. Augusta, Ga., et al.,170 the plaintiffs challenged the protest provision on grounds that it violated a bidder’s right to procedural due process.171 More specifically, plaintiff, CSRA Testing & Engineering Co., P.C.
(“CSRA”), protested its rejection from RFQ 07-196, Soils and
Materials Testing Services for the J.B. Messerly WPCP for
Augusta Utilities.172 CSRA submitted the low proposal in the amount of $140,401.00 (alternate bid of $263,976.00).173 MC 168 See Thompson Bldg. Wrecking Co., Inc., et al. v. Augusta, Ga., No. CV 107-019, 2007 WL 926153 (S.D. Ga. Mar. 14, 2007) (action enjoining city’s disadvantaged business enterprise program as unconstitutional); Thompson Bldg. Wrecking Co., Inc., et al. v. Augusta, Ga., et al., No. CV 108-019, 2010 WL 1286029 (S.D. Ga. Mar. 31, 2010) (action challenging inconsistent procurement awards); BLECCS, Inc. v. Augusta, Ga., No. CV 109-019, 2010 WL 1285470 (S.D. Ga. Mar. 31, 2010) (action challenging inconsistent procurement award); Holmes Monument Co., LLC v. Augusta, Georgia, CA No. 2009-RCCV-160, Superior Court, Richmond County, Georgia (due process challenge to Augusta’s protest provision). See doc. no. 77, pp. 11-13 Thompson Bldg. Wrecking Co., Inc. et al. v. Augusta, Ga., No. 1:07-CV-019, 2007 WL 926153 (S.D. Ga. Mar. 14, 2007) (procurement code revised due to litigation). 169 170 Thompson Bldg. Wrecking Co., Inc., et al. v. Augusta, Ga., et al., No. CV 108-019, 2010 WL 1286029 (S.D. Ga. Mar. 31, 2010) 171 172 Augusta broadcast RFQ 07-196 on October 18, 2007. Two vendors submitted proposals. Need cite. 173 Jeff Pope Dep. Ex. D1, Jul. 16, 2008, Thompson Bldg. Wrecking Co., Inc., et al. v. Augusta, Ga., et al., No. CV 108-019, 2010 WL 1286029 (S.D. Ga. Mar. 31, 2010).
34 Squared submitted a proposal in the amount of $371,394.00.174
CSRA, however, was deemed noncompliant for failure to comply with the Georgia Security & Immigration Compliance Act of 2006.175
Augusta’s rejection letter specifically referred CSRA to Article
9, § 1-10-67(b) of the Augusta Richmond County Code as it relates to protests, “I wish to call your attention to Article
9, 1-10-67(b) of our Augusta Richmond County Code as it relates to handling claims.”176
CSRA filed a protest on the grounds that the Georgia
Security & Immigration Compliance Act of 2006 did not apply to it and moreover, the forms incorrectly required it to notarize and affirmatively state that it was contracting with the Georgia
Department of Natural Resources, not Augusta.177 Its protest was denied.178 On the other hand, MC Squared falsely certified it was a local vendor entitled to Augusta’s local vendor preference and failed to have the required Augusta business license.179
174 Doc. no. 37, ¶ 32; doc. no 44, ¶ 32, Thompson Bldg. Wrecking Co., Inc., et al. v. Augusta, Ga., et al., No. CV 108-019, 2010 WL 1286029 (S.D. Ga. Mar. 31, 2010). 175 176 Doc. no. 37-2, 15-16. 177See footnote Error: Reference source not found, supra. Augusta subsequently revised the immigration forms to reference the owner as “Augusta-Richmond County” and not the “Department of Natural Resources.” Doc. no. 133-2, 14, ¶ 49, doc. no. 150, 24, ¶ 49, Thompson Bldg. Wrecking Co., Inc., et al. v. Augusta, Ga., et al., No. CV 108-019, 2010 WL 1286029 (S.D. Ga. Mar. 31, 2010). 178 179
35 In BLECCS, Inc. v. Augusta, Ga.,180 commercial contractor,
Stewart-Corbitt, also challenged Augusta’s protest provision on procedural due process grounds.181 In October 2008, Augusta broadcast ITB #08-167A, Fire Administration Building for Augusta
Fire Department.182 Although Stewart-Corbitt submitted the low bid in the amount of $1,095,000.00,183 it was deemed non-compliant due to the failure of its notary public to put the date on several notarizations.184 On November 25, 2008, Stewart-Corbitt sent a letter of protest to Augusta’s Procurement Director.185
The Procurement Director responded in a letter dated December
19, 2008, informing Stewart-Corbitt that it was scheduled to appear before the Administrative Services Committee
(“Committee”) on January 12, 2009.186 During the Committee meeting, the Committee was informed by Augusta’s Legal
Department that they could not waive Stewart-Corbitt’s noncompliance.187 Stewart-Corbitt’s protest was denied and the contract awarded to RCN Contracting, Inc. (“RCN”).188
180 BLECCS, Inc. v. Augusta, Ga., No. CV 109-019, 2010 WL 1285470 (S.D. Ga. Mar. 31, 2010). 181 182 183 BLECCS, Inc. v. Augusta, Ga., No. CV 109-019, 2010 WL 1285470 (S.D. Ga. Mar. 31, 2010). 184 Id., doc. no. 13, ¶ 4. 185 Id., doc. no. 13, ¶ 9; Ex. B. 186 Id. at ¶ 10; Ex C. 187 Doc. no. 30-10, BLECCS, Inc. v. Augusta, Ga., No. CV 109-019, 2010 WL 1285470 (S.D. Ga. Mar. 31, 2010). 188
36 Ironically, RCN’s bid contained the same problem for which
Stewart-Corbitt was deemed noncompliant—improperly notarized documents.189
In Holmes Monument Co., LLC v. Augusta, Georgia,190 the plaintiff filed suit in state court to challenge Augusta’s bid protest provision under the due process clause of the
Constitution of the State of Georgia.191 At the bid opening for
ITB 09-019A, Grave Opening and Closing, on October 29, 2008,
Augusta deemed Holmes’ bid complaint and Lowe’s bid noncompliant.192 Augusta subsequently told Holmes that it did not need an Augusta business license until the contract began in
January 2009. However, in a letter dated December 17, 2008, forty-seven (47) days after the bid opening, Augusta informed
Holmes that it had been deemed noncompliant for failure to provide its business license information.193 189 RCN’s Contractor Qualification Statement was improperly notari zed. The notary did not provide the date when the documents wer e notarized (although the notary provided the day and month it d id not provide the year). RCN’s Non-Collusion Affidavit was als o improperly notarized, as the notary did not include his notary seal on the document. Moreover, RCN’s bid for ITB 08-167A did n ot contain page four (4) of the Contractor Qualification Stateme nt which includes trade references and bank references among num erous additional requested information. Doc. no. 29-2, ¶ 18, Ex hibit “H;” doc. no. 29-3, ¶ 18; doc. no. 38, 2, ¶ 10. 190 Holmes Monument Co., LLC v. Augusta, Georgia, CA No. 2009-RCC V-160, Super. Ct., Richmond Cnty., Ga. 191 192 193 Augusta defended its position in litigation asserting that subsection (a) applies to an aggrieved bidder. Therefore, 1-10- 67(a) provides for a protest after a bidder is aggrieved in either the solicitation or an award of a contract and allows a
37 2. Augusta’s New Protest Provision
On June 21, 2011, the Augusta Commission adopted a new protest procedure.194 Any actual or prospective bidder who is aggrieved in connection with the solicitation or award of a contract may protest to the Procurement Director.195 The
Procurement Director and the Augusta Administrator have the authority, prior to a final decision by the Commission, to settle and resolve the protest.196 If the protest is not resolved, the protestor may appeal to the Augusta Commission.197
Initially, the appeal must be heard by the Administrative
Services Committee, which shall vote to grant or deny the protest or to send the item to the full Augusta Commission without recommendation.198 The Commission, however, may, at its discretion, dispose of the protest via the Consent Agenda.199 If the protest is still unresolved the parties have thirty days to file a judicial appeal by writ of certiorari to the Superior
Court of Richmond County.200
protest at that time. Def.’s Brief, p. 22, Holmes Monument Co., LLC v. Augusta, Georgia, CA No. 2009-RCCV-160, Superior Court, Richmond County, Georgia. 194 195 Augusta Code § 1-10-81(a). 196 Augusta Code § 1-10-81(b). 197 Augusta Code § 1-10-85. 198 Augusta Code §§ 1-10-87; 1-10-88(b). 199 Augusta Code § 1-10-88(b). All items contained in the consent agenda may be voted on en gross. Augusta Code § 1-2-13, 1.08 (r eadopted Jul. 10, 2007). 200 Augusta Code § 1-10-91.
38 In comments made by the Augusta Administrator before the
Commission during discussion regarding the revised procurement code, he stated:
“ Okay, for the past or approximately year or so there have been issues with our procurement process that we’ve attempted to address in many different shapes and forms . . . . For an example, if somebody does not have a piece of paper notarized and that’s an issue that we run into on more than one occasion where individuals have failed to meet the entire process by the simple things of notification or notarization of a piece of paper they’re thrown out. We have been roundly criticized by the Commission for being nitpicking in that particular area. And unfortunately the rules say that you’ve got to do it all right. This gives us the go ahead or the ability to look at the merits of the bid and not look at some of the details that have been involved in throwing some of those things out which have gathered us additional cost in some cases and/or law suits and/or much discussion by the Commission. [We,] [sic] this attempts to fix those issues in a manner that we feel was fair to both the department heads who have to work with it, the people who have to work with the process, the bidders and the people that benefit from that process, the citizens there.”201
Thus, according to the Administrator, the revised procurement code was intended to fix previous issues of inconsistencies.202
Interestingly, although the protest provision was enhanced, the
Materiality Provision was not changed.203
Only one protest under the new procedure has gone beyond the decision of the Procurement Director.204 Berry Smith
201 Commission Minutes, p. 13, Jun. 21, 2011. 202 203 204
39 Sanitation (“Smith”) submitted a protest to the Procurement
Director on July 19, 2011, after its proposal for RFP 11-112,
Solid Waste & Recyclables Collection, was deemed noncompliant for failing to list its E-Verify number on Attachment B of its proposal.205 Prior to being deemed noncompliant, Smith had supplied its E-Verify number to the Procurement Department, at the Department’s request.206 The Procurement Director, however, denied the protest by letter on August 15, 2011, informing Smith that it could request the Administrator to review and settle the protest pursuant to Augusta Code § 1-10-69,207 by making such request in five (5) days.208 Although Smith requested further appeal209 its protest was denied by Augusta’s Deputy
Administrator.210 Smith submitted yet another request of appeal.211 However, instead of following the new protest
205 206 Letter from David Walker, General Manager, Berry Smith Sanitat ion, to Geri Sams, Procurement Director, Augusta, Ga. (Jul. 19, 2011); Letter from Geri Sams, Procurement Director, Augusta, Ga. to David Walker, General Manager, Berry Smith Sanitation (Aug. 1 5, 2011). Sources available at ____. 207 Although repealed on June 21, 2011, Augusta Code § 1-10-69 pro vided that the “Augusta-Richmond County Administrator is authori zed to settle any protest regarding solicitation or award of a C ounty contract . . . prior to an appeal to the Augusta-Richmond County Commission. Augusta Code § 1-10-69. 208 209 Letter from David Walker, General Manager, Berry Smith Sanitat ion to Geri A. Sams, Procurement Director, Augusta, Ga. (Aug. 18, 2011). 210 Letter from William P. Shanahan, Deputy Administrator, Augusta, Ga. to David Walker, Berry Smith Sanitation (Aug. 23, 2011). 211
40 procedure, Smith’s appeal was placed on the Engineering Services
Committee’s September 12, 2011 Agenda as a “Motion to deny a Bid protest by Berry Smith Sanitation,” which included a recommendation to deny.212 The motion was approved by a 4-0 vote.213 The appeal next appeared on the September 20, 2011
Commission Agenda as a motion to deny the protest, approved by the Engineering Services Committee.214 The item was summarily approved on the consent agenda215 and Smith’s protest denied.
Smith did not file a judicial appeal by writ of certiorari to the Superior Court of Richmond County.216
It is questionable at best whether Augusta’s new protest procedure will aid disappointed bidders. Augusta still maintains its Materiality Provision.217 Moreover, the determination of compliance is made by Augusta’s Procurement
Director.218 Under the previous protest procedure, the
Administrative Services Committee was told by its legal department that it could not waive a determination of noncompliance.219 There are no standards provided in the new provision and protests are preceded in the appeal process as a
212 213 Engineering Services Comm., Augusta, Ga. (Sep. 12, 2011). See ____. 214 215 Commission Minutes, pp. 4-7, Sep. 20, 2011. 216 217 218 219
41 motion to deny.220 Although the new provision allows a disappointed bidder to file a writ of certiorari to the Superior
Court,221 there is little hope of meaningful resolution. Instead, it requires more persistence and expense by the disappointed bidder.
3. Disparate Treatment Cases and the Government Acco
untability Office (GAO)
The unreasonableness of Augusta’s disparate treatment of bidders is evidenced by treatment of similar issues by the
Government Accountability Office (“GAO”). Over the years, GAO has developed a substantial body of law and standard procedures for considering bid protests. 222 For example, during 2011, GAO received 2,286 bid protests, 67 of which were sustained.223
Moreover, all recommendations made by the GAO in these bid protests were implemented in full by the respective federal agency.224
A recurrent bid protest is that the agency treated bidders unequally or disparately. GAO insists that an agency treat all bidders and/or offerors equally, using the same criteria, the same procedures and standards.225 It is a fundamental principle
220 221 222 Bid Protests at GAO: A Descriptive Guide, pp. 3, 5, 9th Ed. (2 009). 223 GAO Report, 2011, B-158766, Nov. 15, 2011. 224 225
42 of federal procurement law that a contracting agency must treat all offerors equally and evaluate their proposal evenhandedly against the solicitation’s requirements and evaluation criteria.226 The GAO examines the record to determine whether the agency’s judgment was reasonable, whether it applied the evaluation factors and treated offerors equally and did not disparately evaluate proposals with respect to the same requirements.227 A protester must demonstrate a reasonable possibility of prejudice or that, but for the agency’s actions, the protester would have had a substantial chance of receiving the award.228 “A protest is clearly meritorious where a reasonable agency inquiry into the protester’s allegations would reveal facts showing the absence of a defensible legal position.”229
The GAO will sustain a protest were the agency treats bidders disparately.230 For example, Electronic Design, Inc. protested a Naval Sea Systems Command contract award for integrated ship control system upgrades, contending that the 226 CRA Assocs., Inc., B-282075.2, B-282075.3, Mar. 15, 2000, 2000 CPD ¶ 63 at 5. 227 The Emergence Group, B-404844.5, B-404844.6, Sep. 26, 2011, citing Brican, Inc., B-402602, Jun. 17, 2010, 2010 CPD ¶ 141 at 4; Hanford Envtl. Health Found., B-292858.2, B-292858.5, Apr. 7, 2004, 2004 CPD ¶ 164 at 4. 228 BAE Technical Services, Inc., B-296699, Oct. 5, 2005; Parmatic Filter Corp., B-285228.3, B-285288.4, Mar. 30, 2001, 2001 CPD ¶ 71 at 11. 229 URS Federal Services, Inc., B-406140.4, Jul. 17, 2012 (citations omitted). 230
43 Navy treated bidders unequally by allowing the awardee to submit a proposal that exceeded the stated page limitation.231 GAO agreed and held that the Navy conducted competition on an unequal basis.232 Ultimately, the Navy created an unequal competition and, in essence, allowed the awardee” to leave the starting gate well ahead of the other offerors and never gave the other offerors sufficient information or a comparable opportunity which might have allowed them to catch up and compete under the same conditions as” the awardee.233
Accordingly, the protest was sustained.234
The GAO will sustain a protest where the agency treats bidders unequally, as the followinga number of examples illustrate.235 GAO sustained a protest where the agency credited
231 232 Electronic Design, Inc., B-279662.2, et al. (Comp. Gen. Aug. 31, 1998); see ITT Electron Tech Div., B-242289 (Comp. Gen. Apr. 18, 1991), 91-1 CPD ¶ 383 at 9-10 (agency’s consideration during discussions of an appendix submitted with initial proposal which exceeded the page limitation unfairly prejudiced other offerors, even though other offerors were permitted to submit additional information during discussions). 233 Id. at ____. 234 Electronic Design, Inc., B-279662.2, et al. (Comp. Gen. Aug. 3 1, 1998). 235 See, e.g., Ahtna Support and Training Services, LLC, B-400947.2 (Comp. Gen. May 15, 2009) (sustaining a protest where the agency credited the awardee with the experience of its subcontractor, but the protester did not receive the same credit, even though the agency viewed both subcontractors as having relevant experience); Ashbury Int’l Group., Inc., B01123; B-401123.2 (sustaining a protest that the agency misevaluated awardee’s proposal where the solicitation provided that the agency would conduct extensive testing on submitted product samples, but it failed to conduct testing on awardee’s product and accepted
44 the awardee with the experience of its subcontractor, but the protester did not receive the same credit, even though the agency viewed both subcontractors as having relevant experience.236
GAO will sustain a protest that the agency misevaluated awardee’s proposal where the solicitation provided that the agency would conduct extensive testing on submitted product samples, but it failed to conduct testing on awardee’s product and accepted awardee’s unsubstantiated representation that it would provide product that meets solicitation requirements.237 awardee’s unsubstantiated representation that it would provide product that meets solicitation requirements); id.(sustaining a protest where the record shows that agency downgraded protester’s proposal for failure to include information that was not called for in solicitation, the information was not the subject of discussions, and weakness assigned to protestor’s proposal ultimately was the sole technical discriminator between it proposal and the awardee’s proposal); The Emergence Group, B- 404844.5, B-404844.6 (Comp. Gen. Sep. 26, 2011) (sustaining a protest where the RFP did not require the submission of contingency plans in the proposals and none of the awardees provided such a plan, but it was incorrectly assumed that the protester would not be successful without demonstration of its plans, because it did not submit contingency plans with its proposal); Brican Inc., B-402602, Jun. 17, 2010 (sustaining a protest where the RFP required proof that offerors had completed three imaging center construction project, but the awardee’s proposal only identified two and only one was completed at the time of the award); BAE Technical Services, Inc., B-296699, Oct. 5, 2005 (sustaining a protest where an agency applied a more exacting standard in evaluating adequacy of protester’s proposed initiative to reduce staffing, than it did in evaluating awardee’s substantiation). 236 Ahtna Support and Training Services, LLC, B-400947.2 (Comp. Gen. May 15, 2009). 237 Ashbury International Group, Inc., B-401123; B-401123.2
45 GAO will sustain a protest where the record shows that agency downgraded protester’s proposal for failure to include information that was not called for in solicitation, the information was not the subject of discussions, and weakness assigned to protestor’s proposal ultimately was the sole technical discriminator between it proposal and the awardee’s proposal.238
The GAO sustained a protest where the RFP did not require the submission of contingency plans in the proposals and none of the awardees provided such a plan, but it was incorrectly assumed that the protester would not be successful without demonstration of its plans, because it did not submit contingency plans with its proposal.239
GAO sustained a protest where the RFP required proof that offerors had completed three imaging center construction project, but the awardee’s proposal only identified two and only one was completed at the time of the award.240
238 Ashbury International Group, Inc., B-401123; B-401123.2 239 The Emergence Group, B-404844.5, B-404844.6 (Comp. Gen. Sep. 26, 2011). 240 Brican Inc., B-402602, Jun. 17, 2010.
46 GAO will sustain a protest where an agency applied a
more exacting standard in evaluating adequacy of
protester’s proposed initiative to reduce staffing, than it
did in evaluating awardee’s substantiation.241
Contrary to the GAO, Augusta does not find unequal treatment, even when the awardee has the same issues of noncompliance as the disappointed bidder.
B. Georgia Limits Disappointed Bidders To Bid Preparation
Costs
Georgia allows a disappointed bidder to maintain a state law cause of action for a recovery limited to its bid preparation costs.242 When a “governmental entity frustrates the bid process and awards a contract to an unqualified bidder or acts arbitrarily, the injured low bidder may bring an action for appropriate relief.”243 Only the lowest compliant bidder, however, may bring a cause of action.244 Lost profits and other 241 BAE Technical Services, Inc., B-296699, Oct. 5, 2005. 242 See Amdahl Corp. v. Ga. Dept. of Admin. Serv.s, 260 Ga. 690, 6 97 (1990); City of Atlanta v. J.A. Jones Constr. Co., 260 Ga. 65 8, 659 (1990), cert. denied, 500 U.S. 928, 111 S. Ct. 2042, 114 L.Ed.2d 126 (1991). 243 See Jones Constr. Co., 260 Ga.id. at 659. 244 Hilton Constr. Co. v. Bd. of Educ., 245 266 S.E.2d 157, 161 Ga. 533, 538 (1980). In Hilton, the applicable procurement regulations provided that projects using state funds will be awarded “to the responsible bidder submitting the lowest acceptable bid.” State School Board Regulation § 40-3820(3) (L).Id. at 159._ The Board of Education, however, rejected the lowest bidder, because it was “unknown” and had been late on a project at Georgia Tech. NeId. at 160. According to the court, the mere fact that low bidder was late on a project, without any finding by the School Board as to who caused the delay, does not
47 compensatory damages are not available.245
The Georgia Supreme Court described the interest of a disappointed bidder in Amdahl Corp. v. Georgia Dept. of Admin.
Services.246 In Amdahl, the Georgia Department of Administrative
Services (“DOAS”) requested proposals on two computer
show that a bidder was not “responsible.” Id at 161. Likewise, the fact that the plaintiff was “unknown” did not show that it was not responsible. NeedId c The School Board was required to choose the “responsible bidder submitting the lowest acceptable bid.” Id. Thus, the court held “[w]e find it clear beyond peradventure that Hilton has a legally protected interest created by state law which gives it standing to assert this violation.” Id. at 538 161 (citing Ass’on of Data Processing Serv. Org.s, Inc. v. Camp, 397 U.S. 150, 90 S. Ct. 827, 25 L.Ed.2d 184 (1970); Funderburg Builders v. Abbeville CntyCounty. Mem’l. Hosp., 467 F. Supp. 821, 824 (D.S.C. 1979)). 245 Jones Constr. Co., 260 Ga. at 659; Amdahl Corp., 260 Ga. at 695-97. Another avenue for disappointed bidders on state procurement projects is to file an action pursuant to O.C.G.A. § 50-5-79, which allows the court to void a contract made in violation of the State Purchasing Act. Need Cite. O.C.G.A. § 50-5-79 provides:
“Whenever any department, institution, or agency of the state government required by this part and the rules and regulations adopted pursuant to this part applying to the purchase of supplies, materials, or equipment through the Department of Administrative Services shall contract for the purchase of such supplies, materials, or equipment contrary to this part or the rules and regulations made pursuant to this part, such contract shall be void and of no effect. If any official of such department, institution, or agency willfully purchases or causes to be purchased any supplies, materials, or equipment contrary to this part or the rules and regulations made pursuant to this part, such official shall be personally liable for the cost thereof; and, if such supplies, materials, or equipment are so unlawfully purchased and paid for out of the state funds, the amount thereof may be recovered in the name of the state in
48 mainframes.247 The RFP stated that the “basis for final selection” would be determined by a price-performance formula, with performance judged by a “benchmark” test.248 IBM, NAS and
Amdahl submitted responses.249 However, prior to running the benchmark tests, DOAS allowed IBM to modify its test, resulting in IBM having the fastest time.250 Although Amdahl’s bid was the lower, the contract was awarded to IBM based on the faster test time.251
Amdahl filed suit alleging that it would have been entitled to the bid awarded, but for DOAS' arbitrary conduct.252 DOAS countered that it had broad discretion, because this case involved a RFP and was not price driven.253 The court disagreed.254 Likewise, the court did not find persuasive DOAS’ argument that it had absolute discretion because it reserved the
“right to cancel the RFP at any time, or to reject any or all proposals submitted in response hereto.”255 The court concluded that, even in competitive sealed proposals (RFPs), a rejected
an appropriate action instituted therefor.”
O.C.G.A. § 50-5-79. 246 260 Ga. 690 (1990). 247 248 249 250 251 Id. at 691-92. 252 Id. at 692. 253 254 Id. at 695. 255
49 bidder who alleges the proposal was conducted in an arbitrary and unfair manner falls within the zone of interests to be protected by Georgia’s procurement laws.256
In summary, if the disappointed bidder is the lowest compliant bidder, Georgia allows a cause of action for recovery of its bid preparation costs.257 The cause of action, however, does little to help a disappointed bidder wrongfully rejected by
Augusta. Given that only the lowest compliant bidder has a cause of action, Augusta can bias the award through its
Materiality Provision.258 For example, even if a low bidder and the high bidder have identical deficiencies in their bid package, Augusta can deem the low bidder noncompliant and award the bid to the high bidder, although the high bidder is also noncompliant.259 Irrespective that the high bidder is noncompliant, the low bidder cannot challenge the award because it is also noncompliant.260 The low bidder simply has no meaningful legal recourse. Thus, disappointed bidders often look to federal constitutional challenges, which if established, allow a disappointed bidder the potential to recover compensatory damages.261
256 Id. at 697. 257 258 259 260 261 Note, monetary awards for alleged constitutional violations are provided for under 428 U.S.C. § 1983. Need Cite. Section
50 C. Federal § 1983 Actions
Damages for violations of rights guaranteed by the United
States Constitution may be maintained against counties and county officials pursuant to 42 U.S.C. § 1983.262 Although § 1983 creates no substantive rights, it provides remedies for
1983 provides a cause of action for persons (and corporations) who have been deprived of Constitutional rights and laws by a person (including municipalities) acting under the color of any statute, ordinance, regulation, custom or usage. See Primera Iglesia Bautista Hispana of Boca Raton, Inc. v. Broward Cnty.Cnty., 450 F.3d 1295, 1305 (11th Cir. 2006); Pattee v. Ga. Ports Auth., 477 F. Supp. 2d 1253, 1260 (11th Cir.S.D. Ga. 2006). Pursuant to §1983, a plaintiff “must establish two elements: (1) that [it] suffered a deprivation of ‘rights, privileges or immunities secured by the Constitution and laws’ of the United States, and (2) that the act or omission casing the deprivation was committed by a person acting under color of law.” Wideman v. Shallowford Cmty. Hosp., Inc., 826 F.2d 1030, 1032 (11th Cir. 1987) (quoting Dollar v. Haralson CntyCnty.., 704 F.2d 1540, 1542-43 (11th Cir. 1983). 262 Title 42 U.S.C. §1983 provides that:
“ [e]very person who, under the color of any statute, ordinance, regulation, custom or usage, of any State or Territory or the District of Columbia, subjects, or causes to be subjected any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress.”
42 U.S.C. §1983 (2006). Municipalities are subject to Section 1983 liability. Municipalities are liable under § 1983, if the plaintiff shows “(1) that his constitutional rights were violated; (2) that the municipality had a custom or policy that constituted deliberate indifference to that constitutional right; and (3) that the policy or custom caused the violation.” McDowell v. Brown, 392 F.3d 1283, 1289 (11th Cir. 2004) (citing City of Canton v.
51 deprivations of rights established elsewhere.263 Section 1983 provides a cause of action for persons who have been deprived of
Constitutional rights and laws by a person (including municipalities) acting under the color of any statute, ordinance, regulation, custom or usage.264 Under § 1983, actions of a state entity's employees are attributed to the state entity itself, if those actions are in furtherance of the entity's policy or custom.265 A plaintiff establishes liability against the municipality by showing: (1) its constitutional rights were violated; (2) the municipality had a custom or policy that constituted deliberate indifference to that constitutional right; and (3) the policy or custom caused violation.266 To Harris, 489 U.S. 378, 388, 109 S. Ct. 1197, 103 L. Ed. 2d 412 (1989). A local government is liable pursuant to § 1983 for its policies that cause constitutional violations. McMillian v. Monroe Cnty., Ala., 520 U.S. 781, 783, 117 S. Ct. 1734, 1736, 138 L. Ed. 2d 1 (1997) (citing Monell v. Department Dept. of Social Soc. ServicesServs., 436 U.S. 658, 694, 98 S. Ct. 2018, 2037-38, 56 L. Ed. 2d 611 (1978)); Webster v. Fulton Cnty., Ga., 44 F. Supp. 2d 1359, 1373 (1999), aff’d in part, vacated in part, 283 F.3d 1254 (11th Cir. 2002). Under § 1983, actions of a state entity’s employees are attributed to the state entity itself if those actions are in furtherance of the entity’s policy or custom. See Bohen v. City of East Chicago, 799 F.2d 1180, 1185 (7th Cir. 1986). 263 Oklahoma City v. Tuttle, 471 U.S. 808, 816-17, 105 S. Ct. 2427, 85 L. Ed. 2d 791 (1985). 264 Primera Iglesia, 450 F.3d at 1305; Pattee, 477 F. Supp. 2d at 1260. See also Gomez v. Toledo, 446 U.S. 635, 640, 100 S. Ct. 1 920, 1923, 64 L. Ed. 2d 572 (1980); Circa Ltd. v. City of Miami, 79 F.3d 1057, 1060 (11th Cir. 1996); United of Omaha Life Ins. Co. v. Solomon, 960 F.2d 31, 33 (6th Cir. 1992) (per curiam); Widem an, 826 F.2d at 1032. 265 Bohen, 799 F.2d at 11875. 266 McDowell, 392 F.3d at 1290; 42 U.S.C.A. § 1983.
52 establish liability against a public official in an individual capacity, “it is enough to show that the official, acting under color of state law, caused the deprivation of a federal right.”267
D. Due Process
The due process clause of the Fourteenth Amendment268 provides that “no State shall…deprive any person of life, liberty, or property, without due process of law.”269 To establish a violation of constitutional due process, a disappointed bidder must show: (1) a protected property or liberty interest, and (2) a deprivation of that interest by government action without due process of law.270 The Due Process clause provides two different causes of action: (1) procedural due process and/or (2) substantive due process.271
A procedural due process claim challenges the sufficiency of the process in which a bidder has been deprived of a constitutionally protected interest in life, liberty or property.272 A procedural due process violation is not complete
267 Kentucky v. Graham, 473 U.S. 159, 166, 105 S. Ct. 3099, 87 L.E d.2d 114 (1985). 268 While the Fourteenth Amendment's Due Process Clause applies to state action, the Due Process Clause set forth in the Fifth Amendment applies only to federal action. U.S. Const. amend. V; Barron v. Baltimore, 32 U.S. 243 (1833); Wynn v. Morgan, 861 F. Supp. 622, 630 (E.D. Tenn. 1994). 269 U.S. Const. amend. XIV, § 1. 270 Paul v. Davis, 424 U.S. 693, 96 S.Ct. 1155, 47 L.Ed.2d 405 (19 76); Callaway v. Block, 763 F.2d 1283, 1290 (11th Cir.1985). 271 272
53 “unless and until the State fails to provide due process.”273
Accordingly, a plaintiff with a procedural due process claim generally seeks equitable relief.274
The substantive due process clause protects “fundamental” rights275 and ensures against “certain government actions regardless of the procedures used to implement them.”276 Unlike a procedural due process claim, the violation is complete when it occurs, irrespective of the adequacy of a post-deprivation state remedy.277 Thus, a plaintiff generally seeks compensatory damages for the value of the deprived right.278
1. Procedural Due Process
a. Elements of a Procedural Due Process Claim
Generally, a person or entity must be provided notice and an opportunity to be heard before it is deprived of a constitutionally protected interest.279 To establish a violation of procedural due process under § 1983, a bidder must show: (1) 273 Zinermon v. Burch, 494 U.S. 113, 123, 110 S. Ct. 975, 108 L.Ed. 2d 100 (1990). 274 See Kantner v. Martin Cnty., 929 F. Supp. 1482, 1486, n.1 (S.D. Fla. 1996). 275 Palko v. Connecticut, 302 U.S. 319, 325, 58 S. Ct. 149, 152, 8 2 L.Ed. 288 (1937). 276 Collins v. City of Harker Heights, Texas, 503 U.S. 115, 125, 112 S. Ct. 1061, 1068, 117 L.Ed.2d 261 (1992) (quoting Daniels v. Williams, 474 U.S. 327, 331, 106 S.Ct. 662, 665, 88 L.Ed.2d 662 (1986). 277 McKinney v. Pate, 20 F.3d 1550, 1557 (11th Cir.1994) (en banc), cert. denied, McKinney v. Osceola Cnty. Bd. Of County Com'rs, 5 13 U.S. 1110, 115 S. Ct. 898, 130 L.Ed.2d 783 (1995). 278 279 Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 542, 105 S. Ct. 1487, 84 L.Ed.2d 494 (1985).
54 a deprivation of a constitutionally protected liberty or property interest; (2) state action; and (3) constitutionally inadequate process.280 It is not the deprivation of a constitutionally protected interest that gives rise to a bidder’s claim, but the sufficiency of the process utilized.281
The fundamental requirement of due process is the opportunity to be heard “which must be granted at a meaningful time and in a meaningful manner.”282
Assuming a plaintiff has established a deprivation of a right protected by the due process clause,283 it must show that the government failed to provide a meaningful post-deprivation remedy.284 The court must examine whether the available state procedures were adequate to correct the alleged procedural
280 Grayden v. Rhodes, 345 F.3d 1225, 1232 (11th Cir. 2003); Arrin gton v. Helms, 438 F.3d 1336 (11th Cir. 2006). 281 282 Armstrong v. Manzo, 380 U.S. 545, 552, 85 S. Ct. 1187, 1191, 14 L.Ed.2d 62 (1965). This right, however, does not require the state to provide a hearing prior to the initial deprivation of property. Mathews v. Eldridge, 424 U.S. 319, 96 S. Ct. 893, 47 L.Ed.2d 18 (1976). 283 The determination as to whether a disappointed bidder has a co nstitutionally protected property right is discussed in Section IV.C.3. 284 Hudson v. Palmer, 468 U.S. 517, 533 (1984); Jackson v. City of Stone Mountain, 232 F. Supp. 2d 1337, 1367 (N.D. Ga. 2002). In Parratt v. Taylor, 451 U.S. 527, 101S. Ct. 1908, 68 L.Ed.2d 420 (1981) (and its progeny, Hudson v. Palmer, 468 U.S. 517, 104 S. Ct. 3194, 82 L.Ed.2d 393 (1984)), the Supreme Court held that due process did not require pre-deprivation hearings where the holding of such a hearing would be impracticable or where the deprivation is the result of either a negligent or an intentional deprivation of property. Need cite.
55 deficiencies.285 To be considered adequate, the procedure need not provide all the relief available under Section 1983,286 but the procedure must be able to correct whatever deficiencies exist and provide plaintiff with whatever process is due.287
Moreover, the plaintiff must show that it has taken advantage of
“whatever post-deprivation state remedies are available….”288 If adequate state remedies were available, the plaintiff cannot establish a claim.289
b. A Procedural Due Process Claim is Not Availa ble to Disappointed Bidders in Georgia
Although some courts have found that a disappointed bidder is entitled to monetary damages where its bid is arbitrarily rejected,290 a federal procedural due process claim is not available to a disappointed bidder in Georgia.291 In Flint
Electric Membership Corp. v. Whitworth,292 the Eleventh Circuit ruled that a disappointed bidder had no federal procedural due
285 Cotton v. Jackson, 216 F.3d 1328, 1331 (11th Cir. 2000) (citati ons omitted). 286 See McKinney v. Pate, 20 F.3d 1550, 1564 (11th Cir.1994) (en b anc), cert. denied, McKinney v. Osceola County Bd. of Cnty. Co m'rs, 513 U.S. 1110, 115 S. Ct. 898, 130 L.Ed.2d 783 (1995). 287 Cotton, 216 F.3d at 1331. 288 McKinney, 20 F.3d at 1560. 289 Id. at 1565. 290 Haughton Elevator Div. v State, 367 So. 2d 1161 (La. 1979) (An elevator contractor was entitled to damages for violation of his Fourteenth Amendment due process rights by a state agency which arbitrarily rejected his nine low bids for service contracts without notice or hearing). 291 292 Flint Elec. Membership Corp. v. Whitworth, 68 F.3d 1309 (11th Cir. 1995), as modified, 77 F.3d 1321 (11th Cir. 1996).
56 process claim.293 In its analysis, the court found that, under
Georgia law, when the government frustrates the bidding process, disappointed bidders may bring an action in state court seeking equitable relief and damages.294 Monetary recovery, however, is limited to reasonable bid preparation costs.295 The Flint court held that because the State of Georgia provides an adequate avenue for redress of a disappointed bidder’s claim, the bidder has no federal procedural due process claim.296
2. Substantive Due Process
a. Elements of a Substantive Due Process Claim
The substantive component of the due process clause prohibits states from engaging in certain activities regardless of the procedures utilized and serves to prevent governmental power from being used for purposes of oppression.297 Substantive due process protects those rights that are “fundamental,” or otherwise “implicit in the concept of ordered liberty.”298 293 Id. at 1313-14. 294 295 Id.; see Amdahl Corp. v. Ga. Dept. of Admin. Serv.s, 260 Ga. 6 90, 695-96 (1990); City of Atlanta v. J.A. Jones Constr. Co., 26 0 Ga. 658, 659 (1990). 296 297 Guntharp v. Cobb Cnty., Ga., 723 F. Supp. 771, 774 (N.D. Ga. 1 989); Bendiburg v. Dempsey, 707 F. Supp. 1318, 1324 (N.D. Ga.198 9) (citing Daniels v. Williams, 474 U.S. 327, 330, 106 S. Ct. 66 2, 664, 88 L.Ed.2d 662 (1985)). 298 Palko v. Connecticut, 302, U.S. 319, 325, 58 S. Ct. 149, 152, 82 L.Ed. 288 (1937). The U.S. Supreme Court has deemed most, bu t not all, of the rights enumerated in the Bill of Rights as fun damental. Planned Parenthood v. Casey, 505 U.S. 833, 851, 120 L. Ed. 2d 674, 112 S. Ct. 2791, 2807 (1992)); see Skinner v. City o f Miami, Fla., 62 F.3d 344, 347 (11th Cir.1995) (certain un-enum
57 Substantive due process rights are created only by the
Constitution and do not encompass substantive rights created by state law, such as tort law and employment law.299 If a right merits substantive due process protection, the right is protected “against ‘certain government actions regardless of the fairness of the procedures used to implement them.’”300
To establish a violation of substantive due process a bidder must show: (1) a deprivation of a constitutionally protected interest in property, and that the (2) deprivation occurred due to arbitrary and capricious actions by the government which have no substantial relation to the public health, safety, morals, or general welfare.301 While state law governs as to whether a plaintiff has a protectable property interest, the mere existence of an enforceable contract does not give rise to a constitutionally protected property interest.302 erated rights, such as the right to privacy, merit substantive d ue process protection). 299 Regents of Univ. of Mich. v. Ewing, 474 U.S. 214, 229, 106 S. Ct. 507, 515, 88 L.Ed.2d 523 (1985) (Powell, J., concurring). 300 Collins v. City of Harker Heights, 112 S. Ct.1061, 1068, 117 L. Ed. 2d. 261 (1992) (quoting Daniels v. Williams, 474 U.S. 327, 3 31, 106 S. Ct. 662, 665, 88 L.Ed. 2d. 662); TriHealth, Inc. v. B d. of Comm'rs, 430 F.3d 783, 793 (6th Cir. 2005); see also Olim v. Wakinekona, 461 U.S. 238, 250, 103 S. Ct. 1741, 75 L.Ed.2d 813 (1983). 301 Burch v. Apalachee Cmty. Health Serv.s, Inc., 840 F.2d 797, 801 (11th Cir. 1988), cert. granted, Zinerman v. Burch, 489 U.S. 1064, 109 S. Ct. 1337, 103 L. Ed. 2d 807 (1989), aff’d, 494 U.S. 113, 110 S. Ct. 975, 108 L. Ed. 2d 100 (1990); Sameric Corp. of Delaware, Inc. v. City of Philadelphia, 142 F.3d 582, 591 (3rd Cir. 1998). 302 Am. Recycling Co., Inc. v. Co. of Manatee, 963 F. Supp. 1572, 1583 (M.D. Fla. 1997). Although bidder was “awarded” position o
58 If a bidder is found to have a constitutionally protected property interest, such interest cannot be deprived for an improper motive or by means that are arbitrary and capricious without any rational basis.303
3. Constitutionally Protected Property Interest
Without a protected liberty or property interest, there can be no federal due process claim.304 The threshold issue is whether a plaintiff has a constitutionally protected property interest within the Fourteenth Amendment.305 This is often referred to as the “entitlement doctrine.”306 Property interests, however, are not created by the Constitution;, thus, the sufficiency of a claim of entitlement must be decided by f lowest proposer in response to county's request for proposals (RFP), bidders were not awarded a contract, and RFP indicated di stinction between being ranked lowest proposer and being awarded contract and provided that proposals would be ranked and that lo west proposer would be determined, but that county was under “no obligation ... to award contract to lowest proposer” and that co ntract would only be awarded to proposer whose “resulting negoti ated agreement ... is in the best interest of the County.” Id. at 1581. Bidders' unilateral expectation of contract with count y was never transformed into legitimate claim of entitlement pro tected by due process. Id. at 1583. Need Cit 303 Anthony v. Franklin Cnty., 799 F.2d 681, 684 (11th Cir. 1986). 304 Bd. of Regents of State Colleges v. Roth, 408 U.S. 564, 579, 9 2 S. Ct. 2701, 33 L.Ed.2d 548 (1972); Experimental Holdings, Inc. v. Farris, 503 F.3d 514, 519 (6thth Cir. 2007). 305 Id., 408 U.S. at 569-570; Am. Recycling Co., 963 F. Supp. at 1 583. 306 Three Rivers Cablevision, Inc. v. City of Pittsburgh, 502 F. Supp. 1118, 1127 (W.D. Pa. 1980); see also Kendrick v. City Council of Augusta, Ga., 516 F. Supp. 1134, 1138 (S.D. Ga. 1981). Prior to the articulation of the “entitlement doctrine” in Roth, 408 U.S. 564, procedural due process analysis was based on a more rigid, “rights/privileges” concept. Three Rivers, 502 F. Supp. at 1127.
59 reference to state law.307 As explained by the United States
Supreme Court:
Property interests . . . are not created by the Constitution. Rather they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law-rules or understandings that secure certain benefits and that support claims of entitlement to those benefits.308
State statutes or rules may create an entitlement for the lowest responsible bidder when objective standards confine discretion.309
A person must have more than an abstract desire or need for, or a unilateral expectation, of the particular benefit.310 A legitimate claim of entitlement must be established.311
There is significant disagreement in the federal courts on the question of whether an unsuccessful bidder on a state contract possesses a constitutionally protected property interest.312 The majority holds that a disappointed bidder generally does not possess a property interest when the contract is not actually awarded to him.313 The minority, led by Three 307 Circa Ltd. v. City of Miami, 79 F.3d 1057, 1060 (11thth Cir. 19 96); Bishop v. Wood, 426 U.S. 341, 344, 96 S. Ct. 2074, 48 L.Ed. 2d 684 (1976). 308 Roth, 408 U.S. at 577. 309 Pataula Elec. Membership Corp. v. Whitworth, 951 F.2d 1238, 1242 (11th Cir. 1992); Haughton Elevator Div. v State, 367 So. 2d 1161 (La. 1979). 310 Roth, 408 U.S. at 577. 311 Id.; Logan v. Zimmerman Brush Co., 455 U.S. 422, 430-432, 102 S. Ct. 1148, 71 L.Ed.2d 265, 274-75 (1982). 312 See infra notes 313, 314 and accompanying text. 313 See, e.g., Sowell's Meats & Servs., Inc. v. McSwain, 788 F.2d 226, 228 (4th Cir.1986); Coyne-Delany Co. v. Capital Dev. Bd., 616 F.2d 341, 343 (7th Cir.1980); Buckley Const., Inc. v.
60 Rivers Cablevision, Inc. v. City of Pittsburgh,314 recognizes the potential for a property interest, but “of relatively narrow dimension.”315 The determination is guided by (1) the discretion provided the decision maker, and (2) whether the government action is “legislative” or “non-legislative.”316
a. Discretion of Decision Maker
Courts have held that a disappointed bidder may have a constitutionally protected property interest in the award of a contract, if that interest is acknowledged by “existing rules or understandings that stem from an independent source such as state law.”317 The determinative issue, as to whether a Shawnee Civic & Cultural Development Auth., 933 F.2d 853 (10th Cir. 1991) (lowest bidder on public construction contract did not have any “property interest” in being awarded bid, such as might support procedural due process claim when municipality awarded contract to next lowest bidder, where state statutes specifically authorized municipality to reject lowest bid on finding that lowest bidder was not responsible bidder); J.P. Mascaro & Sons, Inc. v. Bristol, 497 F. Supp. 625 (D.C. Pa. 1980); Estey Corp. v. Matzke, 431 F. Supp. 468, 470 (N.D.Ill.1976) (disappointed bidder has no constitutionally protected property interest “until such time as the contract is actually awarded to him). 314 Three Rivers Cablevision, Inc. v. City of Pittsburgh, 502 F. S upp. 1118, 1131 (W.D. Pa. 1980) 315 Id. at 1131; see also L & H Sanitation, Inc. v. Lake City Sani tation, Inc., 769 F.2d 517, 524 (8th Cir.1985) (acknowledging po tential property interest under Arkansas law); Teleprompter of E rie, Inc. v. City of Erie, 537 F. Supp. 6 (W.D. Pa.1981); Kendri ck v. City Council of Augusta, Ga., 516 F. Supp. 1134 (S.D.Ga.19 81). 316 Three Rivers, 502 F. Supp. at 1135. 317 Roth, 408 U.S. at 577; see also, Pataula Elec. Membership Corp. v. Whitworth, 951 F.2d 1238, 1242 (11th Cir. 1992); Metric Constructors, Inc. v. Gwinnett Cnty., Ga., 729 F. Supp. 101 (N.D. Ga.1990); see United of Omaha Life Ins. Co. v. Solomon, 960 F.2d 31, 34 (6th Cir. 1992) (per curiam) (“A ‘disappointed
61 disappointed bidder has a constitutionally protected property interest, is the level of discretion afforded to the governmental body by the statutes, ordinances, policies or rules.318 The more discretionary authority afforded the governmental body, the less likely a constitutional protected property right exists.319
The seminal case upholding a disappointed bidder’s substantive due process claim is Three Rivers Cablevision v.
City of Pittsburgh.320 In Three Rivers, the U.S. District Court for the Western District of Pennsylvania held that a bidder had a property right to have a cable television franchise to be awarded in accordance with the governing ordinance and request for bids.321 In July of 1979, Pittsburgh's Department of Public
Works solicited bids by issuing a Request for Proposals (RFP) for the construction and maintenance of a cable television system.322 The RFP provided that any bidder which failed to bidder’” to a government contract may establish a legitimate claim of entitlement protected by due process by showing either that it was actually awarded the contract at any procedural stage or that local rules limited the discretion of state officials as to whom the contract should be awarded.”); Peterson Enter., Inc. v. Ohio Dep't of Mental Retardation and Developmental Disabilities, 890 F.2d 416 (6th Cir.1989) (unpublished opinion)); Haughton Elevator Div. v State, 367 So. 2d 1161 (La. 1979). 318 Id. 319 See Circa Ltd. v. City of Miami, 79 F.3d 1057, 1061 (11th Cir.1996); Key West Harbour v. City of Key West, 987 F.2d 723 (11th Cir.1993); Pataula, 951 F.2d at 1243. 320Three Rivers, 502 F. Supp. 1118. 321 Id. at 1131-32. 322 Id. at 1120.
62 furnish any information required thereunder would be rejected without further consideration.323 Although the city received bids from four companies, all bids were rejected for failing to comply with stated requirements.324 The companies were then given additional time to submit new proposals.325 The bidders were admonished that no amendments would be permitted.326 Although
Three Rivers’ bid complied with the RFP, the city awarded the contract to Warner, whose bid contained several material deficiencies, which the city subsequently allowed Warner to correct by amendment.327
The Three Rivers’ court found that Three Rivers had a valid substantive due process claim where the city’s awarded the contract to a bidder that submitted a “materially deficient” proposal on “arbitrary, capricious, unlawful and irrelevant” considerations.328 The court emphasized that “the due process to which one possessing the protected interest was entitled was the non-arbitrary exercise by the city of its discretion in making the award.”329 As stated by Judge Diamond, the protected property interest:
323 Id. 324 Id. 325 Id. 326 Id. at 1120-21. 327 Id. at 1121. 328 Id. at 1127. 329 Id. at 1131. (an eligible bidder has a constitutionally protected property interest in not having its bid arbitrarily rejected in favor of another bidder).
63 “was the right of the lowest responsible bidder in full compliance with the specifications to be awarded the contract once the city in fact decided to make an award. The due process to which one possessing the protected interest was entitled was the non-arbitrary exercise by the city of its discretion in making the award. And it follows that a deprivation of the substantive benefit (the protected property interest) without due process is an actionable wrong.”330
Thus, the Three Rivers’ court held that one who possesses a protected interest is entitled to the non-arbitrary exercise of discretion by the city in making the award.331
In Kendrick v. City Council of Augusta, Ga.,332 the U.S.
District Court for the Southern District of Georgia interpreted
Three Rivers in holding that a low bidder must show material noncompliance by the successful bidder to establish a constitutionally protected interest.333
“ In contrast to Three Rivers Cablevision, there is no showing in the present case that plaintiff's competitor, Terry's Paint & Body Works, Inc., failed to conform fully with the “rules or understandings” of the bidding procedure. The bid submitted by Terry's Paint & Body Works, Inc., complied with the specifications set forth in the published legal notice
330 Id. 331 Id. 332 Kendrick v. City Council of Augusta, Ga., 516 F. Supp. 1134, 1139 (S.D. Ga. 1981). 333 Id. at 1139.
64 soliciting bids; there is no evidence of any material deviation from the prescribed bidding procedure.”334
As there was no material deviation in the submission of the awardee, Kendrick did not have a constitutionally protected property interest.335 A low bidder must show a material deviation in the submission by the awardee to establish a constitutionally protected property interest.336
The Eleventh Circuit upheld a substantive due process cause of action on behalf of a disappointed bidder in Pataula Electric
Membership Corp. v. Whitworth.337 In Pataula, the Georgia
Department of Corrections (“DOC”) invited bids for electric service to two new prisons.338 A consultant for the DOC analyzed the proposals and recommended Pataula on the basis of probable savings in cost.339 Nonetheless, the DOC chose Georgia Power to service the prison.340 Pataula sued alleging that DOC denied it of a protected property interest without due process.341
The Pataula court examined state law and determined that the degree of discretion enjoyed by the DOC in choosing the lowest responsible bidder was insufficient to preclude bidders
334 Id. 335 Id. 336 Id. 337 Pataula Elec. Membership Corp. V. Whitworth, 951 F.2d 1238, 12 40 (11thth Cir. 1992). 338 Id. 339 Id. 340 Id. 341 Id.
65 from forming an expectation of an award.342 The court analyzed the language of the Georgia State Purchasing Act (“Purchasing
Act”), the act governing vendor contracts in the state; the
Georgia Vendor Manual (“Manual”); and the Agency Purchasing
Manual in determining that a protected property interest existed.343 Given that all three sources required competitive bidding and the Manual344 mandated that “[c]ontracts or open- market purchases will in all cases be awarded to the lowest responsible bidder,” the court reasoned that these objective standards confined the decision maker’s discretion sufficiently to allow formation of a property interest.345 Even if the agency had discretion to reject “any and all bids,”346 it is not allowed 342 Id. at 1243 (citing Amdahl Corp. v. Ga. Dept. of Admin. Serv., 260 Ga. 690, 398 S.E.2d 540 (1990); Hilton Constr. Co. v. Rockda le Cnty. Bd. of Educ., 245 Ga. 533, 266 S.E.2d 157 (1980)). 343 Id. at 1240-41. 344 Pursuant to the Manual, competitive bidding was required. The Manual defined the “lowest responsible bidder” as:
“ that bidder who submits a responsive bid which meets the specifications set out in the Invitation to Bid and which is most advantageous to the State, taking into account price, performance, and capacity to perform of the bidder; quality of the merchandise offered; transportation charges; and date of delivery.”
Id. at 1242. 345 Id. at 1243. 346 O.C.G.A. § 50-5-67(b) provides:
“ Except as otherwise provided for in this part, all contracts for the purchases of supplies, materials, equipment, or services other than professional and personal employment services made under this part shall, wherever possible, be based upon competitive
66 to act in an arbitrary manner.347 The failure to award the contract to the “lowest responsible bidder” constituted a deprivation of due process.348 Other courts have similarly found such a property interest to exist.349
bids and shall be awarded to the lowest responsible bidder, taking into consideration the quality of the articles to be supplied and conformity with the specifications which have been established and prescribed, the purposes for which the articles are required, the discount allowed for prompt payment, the transportation charges, and the date or dates of delivery specified in the bid and any other cost affecting the total cost of ownership during the life cycle of the supplies, materials, equipment, or services as specified in the solicitation document. Competitive bids on such contracts shall be received in accordance with rules and regulations to be adopted by the commissioner of administrative services, which rules and regulations shall prescribe, among other things, the manner, time, and places for proper advertisement for the bids, indicating the time and place when the bids will be received; the article for which the bid shall be submitted and the specification prescribed for the article; the amount or number of the articles desired and for which the bids are to be made; and the amount, if any, of bonds or certified checks to accompany the bids. Any and all bids so received may be rejected.”
O.C.G.A. § 50-5-67(b). 347 Id.; see,(citing Konigsberg v. State Bar, 353 U.S. 252, 273, 77 S. Ct. 722, 1 L. Ed. 2d 810 (1957) (although a state is free to select its own members of its legal bar, a state cannot exercise such power in an arbitrary or discriminatory manner)). 348 Id. at 1244. 349 See United of Omaha Life Ins. Co. v. Solomon, 960 F.2d 31, 34 (6th Cir.1992) (per curiam) (“A (the Sixth Circuit Court of Appeals has held that a “‘disappointed bidder’ to a government contract may establish a legitimate claim of entitlement protected by due process by showing either that it was actually
67 The Eleventh Circuit, however, subsequently refined the
Pataula “property interest” in Circa Ltd. v. City of Miami,350 bringing its finding in line with numerous other cases which have held that a disappointed bidder does not have a constitutionally protected property interest.351 The plaintiff in
Circa submitted a redevelopment plan to the City of Miami that awarded the contract at any procedural stage or that local rules limited the discretion of state officials as to whom the contract should be awarded.”); Metric Constructors, Inc. v. Gwinnett Cnty., Ga., 729 F. Supp. 101 (N.D. Ga.1990) (unsuccessful bidder on county public works project did not have viable § 1983 claim because, although state law acknowledged protected property interest in certain disappointed bidders, there was no allegation in complaint that county arbitrarily denied contract at issue); North Cent. Utilities, Inc. v Walker Cmty. Water System, Inc., 437 So. 2d 922 (La. App. 2d Cir. 1983), later proceeding, 506 So. 2d 1325 (La. App. 2d Cir.) (A cause of action for damages, bid expenses, lost profits, and possible future indemnity against subcontractors' claims was stated by a contractor who alleged that his low bid for construction of a water distribution system was rejected by a water authority in violation of the procedural due process guaranties of the Fourteenth amendment). 350 Circa Ltd. v. City of Miami, 79 F.3d 1057, 1062 (11th Cir. 199 6). 351 See, Kim Constr. Co. v. Board of Trustees of the Village of Mundelein, 14 F.3d 1243 (7th Cir.1994) (a disappointed bidder for a sewer contract had no property interest in the contract because the contracting agency retained discretion to reject the lowest bid) (citations omitted); Solomon, 960 F.2d 31, 34-35 (6th Cir. 1992) (Government contractor which had submitted low bid, before contracting officer decided to consider untimely challenge to bid specifications and reopened bidding process, had no “property interest” recognized by Michigan law in being awarded contract, such as might support federal due process claim); Cunningham v. Adams, 808 F.2d 815, 820-21 (11th Cir. 1987) (Apparent low bidder for airport food concession had a unilateral expectation, not a property right regarding prospective concessions although he was ranked first by the selection process where County Board of Commissioners evaluation committee, as County's instructions to bidders stated that evaluation committee would make a “recommendation” to board, not
68 was initially approved, but subsequently terminated.352 The plaintiff filed suit, alleging that it acquired a property right as soon as the City approved its development plan and that the subsequent termination violated its right to procedural and substantive due process.353 The Eleventh Circuit, however, found that the City Commission had full discretion over redevelopment projects; therefore, the plaintiff did not have a cause of action.354 In conclusion, the court stated it would follow
Pataula where it applied, but noted “[w]e are not persuaded that a party can easily raise a constitutional claim by making the simple allegation that, in the breakdown of a government contract negotiations, rights were revoked ‘without proper notice and hearing’ or ‘arbitrarily and capriciously.’”355 a selection, but that responsibility for making award resided with Board by statute and the invitation to bid stated Board would consider other factors which best served highest public interest); Sowell's Meats & Servs., Inc. v. McSwain, 618 F.Supp. 140, 146, aff’d, 788 F.2d 226, 228 (4th Cir. 1986); Urban Sanitation Corp. v. City of Pell City, Ala., 662 F. Supp. 1041 (N.D. Ala. 1986) (Under Alabama law requiring that expenditures of funds must be made in compliance with statute, disappointed bidder on city contract did not have constitutionally protected property interest in being awarded contract, for which it could bring action against city. City's decision not to award contract to bidder based on perceived concern that bidder was not responsible bidder had rational basis under Alabama law, and thus did not violate equal protection clause). 352 Circa, 79 F.3d at 1059. 353 Id. 354 Id. at 1061.1062-63 (“We are not persuaded that a party can easily raise a constitutional claim by making the simple allegation that, in the breakdown of a government contract negotiation, rights were revoked ‘without proper notice and hearing’ or ‘arbitrarily and capriciously.’”). 355 Id. at 1062-63.
69 b. Legislative versus Non-Legislative Decisions
A subsequent test and refinement of the due process claim was provided by the Eleventh Circuit in McKinney v. Pate,356 and
Flint Electric Membership Corp. v. Whitworth.357 In McKinney, the plaintiff commenced an action alleging that his termination as a county employee was an arbitrary and capricious deprivation of his state-created property interest in his employment.358 In overturning prior Eleventh Circuit law, the McKinney court held that “areas in which substantive rights are created only by state law (as is the case with tort law and employment law) are not subject to substantive due process protection under the Due
Process Clause because substantive due process rights are created only by the Constitution.”359 The McKinney court, however, noted that its holding applied only to “executive” or
“non-legislative” acts.360
Irrespective of its analysis, the court acknowledged the difficulty that could arise in determining whether actions made by county commissioners were legislative or executive, as commissioners often act in both capacities.
356 McKinney v. Pate, 20 F.3d 1550 (11th Cir.1994) (en banc), cert. denied, McKinney v. Osceola County Bd. of Cnty. Com'rs, 513 U.S. 1110, 115 S. Ct. 898, 130 L.Ed.2d 783 (1995). 357 Flint Elec. Membership Corp. v. Whitworth, 68 F.3d 1309 (11th Cir. 1995), as modified, 77 F.3d 1321 (11th Cir. 1996). 358 359 McKinney, 20 F.3d at 1556 (quoting Ewing, 474 U.S. at 229, 106 S. Ct. at 515 (Powell, J., concurring)). 360 Id. at 1557, 1560.
70 “ While the actions of some government officials can easily be categorized as legislative or executive, for others, like county commissioners who act in both a legislative and executive capacity, sorting out which hat they were wearing when they made a decision can be difficult.”361
The court further explained:
“ Executive acts characteristically apply to a limited number of persons (and often to only one person); executive acts typically arise from the ministerial or administrative activities of members of the executive branch. The most common examples are employment termination…
Legislative acts, on the other hand, generally apply to a larger segment of-if not all of- society; laws and broad-ranging executive regulations are the most common examples.”362
Executive acts, unlike a law or regulation, do not apply to society at large.363 Legislative acts, on the other hand, apply to society at large.364
Flint Electric Membership Corp. v. Whitworth,365 involved an appeal originating from the Pataula case concerning the agency’s
361 Lewis v. Brown, 409 F.3d 1271, 1273 (11th Cir. 2005). 362 20 F.3d at 1557 n 9 (citation omitted). 363 See Lewis, 409 F.3d at 1273 (finding executive action a limited number of persons, namely, the plaintiff); Flint, 68 F.3d at 1313 n. 4 (finding executive action in selection of a bidder for state contract according to state procurement law); Bass v. City of Forsyth Georgia, No. 5:06-cv-278, 2007 WL 4117778, at *3-4 (M.D. Ga. Nov. 16, 2007) (finding executive action in city council’s vote to apply zoning law because “crucial distinction” between executive and legislative acts is the impact the government act has on public, and the act did not affect a large segment of society). 364 365 Flint Elec. Membership Corp. v. Whitworth, 68 F.3d 1309 (11th Cir. 1995), as modified 77 F.3d 1321 (11th Cir. 1996).
71 entitlement to qualified immunity.366 Although the Eleventh
Circuit initially held that their earlier decision that plaintiffs were vested with property rights in the award of the contracts remained the law of the case and could not be disturbed,367 the court went further to determine that pursuant to its decision in McKinney, § 1983 substantive due process claims arising from non-legislative deprivations of state-created property interests were no longer cognizable in the Eleventh
Circuit.”368 Due Process claims stemming from non-legislative, as opposed to executive or administrative, deprivations of state- created property rights are not cognizable in the context of a disappointed bidder of a government contract.369
Augusta’s procurement process has been held to be non- legislative conduct.370 In Thompson Bldg. Wrecking Co., Inc. v.
Augusta, Ga.,371 the district court explained the typical procurement process in Augusta.372 After bids are submitted to
Augusta’s Procurement Department, the initial decision as to compliance is made by the Procurement Department.373 If the bidders are deemed compliant, they then proceeded through an
366 367 Id. at 1312-1313. 368 Id. 369 Id. 370 371 Thompson Bldg. Wrecking Co., Inc. v. Augusta, Ga., Slip Copy, 2010 WL 1286029 (S.D. Ga. 2010). 372 Id. at 15. 373
72 evaluation process by various committees, consisting in part of
City government officials and officers.374 Evaluations are made by individual members of the various committees, and final selections then made by the committee as a whole.375
The court compared Augusta’s procurement process to employment law, noting that the most common example of a non- legislative act is to terminate employment.376 The court found that Augusta’s decision was made to procure the employment of service providers and that the decisions affected a small number of entities, not society at large.377 Therefore, plaintiffs’ substantive due process claims were not cognizable.378 Likewise, although a disappointed bidder’s recovery is limited to reasonable bid preparation costs under Georgia law, the court held that because disappointed bidders may bring an action in state court seeking equitable relief and damages, the plaintiff have no federal procedural due process claim.379
E. EQUAL PROTECTION
A disappointed bidder may also attempt to bring an equal protection claim.380 The Equal Protection Clause of the
374 375 376 Id. at 16. 377 Id.; see also The Alison Group v. Augusta, Ga., 109-CV-105 (S. D. Ga. 2009), doc. no. 24, 7-10. 378 Id. 379 Id. at 17. 380
73 Fourteenth Amendment’s Equal Protection Clause to the U.S.
Constitution states that “[n]o state shall . . . deny to any person within its jurisdiction the equal protection of the laws.”381 At the core of the Equal Protection Clause382 is the
“direction that all persons similarly situated should be treated alike.”383 This applies not just to states, but also to any subdivision thereof, including municipalities.384 The presence or absence of a constitutionally protected property interest is wholly irrelevant to an equal protection claim385 and is not limited to legislative acts, but extends to all official state actions.386 To establish an equal protection violation a plaintiff ordinarily establishes that the state treated him or her differently from a similarly situated person in violation of a constitutionally protected interest.”387
In deciding whether the equal protection clause has been violated, a court must initially determine the appropriate legal 381 U.S. Const. amend. XIV, § 1. 382 No state shall … deny to any person within its jurisdiction th e equal protection of the laws. U.S. Const. .V. § 1. 383 Plyler v. Doe, 457 U.S. 202, 216, 102 S. Ct. 2382, 2394, 72 L. Ed. 2d 786 (1982); Campbell v. Rainbow City, Ala., 434 F.3d 1306, 1313 (11th Cir. 2006). 384 Avery v. Midland County, Tex., 390 U.S. 474, 479, 88 S. Ct. 11 14, 1117-18, 20 L. Ed. 2d 45 (1968). 385 Haves v. City of Miami, 52 F.3d 918, 921 (11th Cir. 1997); Res erve Ltd. v. Town of Longboat Key, 17 F.3d 1374, 1381 (11th Cir. 1994)., cert. denied 513 U.S. 1080, 115 S. Ct. 729, 130 L.Ed.2d 633 (1995). 386 Id.; Columbus Bd. of Educ. v. Penick, 443 U.S. 449, 458 n.5, 9 9 S. Ct. 2941, 2947 n.5, 61 L.Ed.2d 666 (1972). 387 Holloman v. Jacksonville Hous. Auth., 2007 WL 245555, *3 (11th Cir. 2007).
74 test to be applied, a determination which turns on the nature of the fundamental right or classification at issue.388
Classifications based on race or national origin389 and classifications affecting fundamental rights390 are subject to strict scrutiny.391 All racial classifications, imposed by federal, state or local government are subject to strict judicial scrutiny. Such classifications are constitutional only if they are “narrowly tailored” measures that further
“compe[l]ling governmental interests.”392 An intermediate test applies exists when a quasi-suspect classification is involved,393 such as sex or illegitimacy.394 Under the intermediate test, “a statutory classification must be substantially related to an 388 See City of Cleburne v. Cleburne Living Ctr., 473 U.S. 432, 439-41 (1985) 389 e.g., Loving v. Virginia, 388 U.S. 1, 11, 87 S.Ct. 1817, 1823, 18 L.Ed.2d 1010 (1967). 390 Harper v. Va. Bd. of Elections, 383 U.S. 663, 672, 86 S.Ct. 10 79, 1084-85, 16 L.Ed.2d 169 (1966). 391 City of Cleborne, Tex. v. Cleborne Living CenterCtr., 473 U.S. 432, 440, 105 S. Ct. 3249, 3254, 87 L. Ed. 2d 313 (1985). 392 Adarand Constructors, Inc. v. Pena, 515 U.S. 200, 227, 115 S. Ct. 2097, 2113 (1995); City of Richmond v. J.A. Croson Co., 488 U.S. 469, 493 , 109 S. Ct. 706, 720 (1989); Webster v. Fulton Cnty., Ga., 51 F. Supp. 2d 1354, 1362-631375 (N.D. Ga. 1999) aff’d in part, vacated in part, 283 F.3d 1254 (11th Cir. 2002) (“Eexplicit racial preferences may not be used except as a “last resort.”). 393 Save Palisade FruitLands v. Todd, 279 F.3d 1204, 1210 (10th Ci r. 2002). 394 See, e.g., Miss. Univ. for Women v. Hogan, 458 U.S. 718, 723- 724, and n. 9, 102 S. Ct. 3331, 3336, and n. 9, 73 L.Ed.2d 1090 (1982); Mills v. Habluetzel, 456 U.S. 91, 99, 102 S. Ct. 1549, 1554-55, 71 L.Ed.2d 770 (1982); Craig v. Boren, 429 U.S. 190, 197, 97 S. Ct. 451, 456-57, 50 L.Ed.2d 397 (1976); Mathews v. Lucas, 427 U.S. 495, 505-506, 96 S. Ct. 2755, 2762-2763, 49 L.Ed.2d 651 (1976).
75 important governmental objective.”395 If a fundamental right, suspect class, or quasi-suspect class is not affected, the least stringent legal test or “rational basis” test will be utilized.396
Legislation is presumed valid and will be sustained if the classification drawn by the statute is rationally related to a legitimate state interest.397 A disappointed bidder must show
“that the bidding procedure, although neutral on its face, was applied unequally.”398 The only inquiry is whether the state's action is “rationally related” to the state's objective.399 395 Clark v. Jeter, 486 U.S. 456, 461, 108 S. Ct. 1910, 100 L.Ed.2 d 465 (1988). 396 San Antonio Indep. School Dist. v. Rodriguez, 411 U.S. 1, 17, 93 S. Ct. 1278, 1288, 36 L.Ed.2d 16 (1973) (at a minimum, a stat utory classification must be rationally related to a legitimate governmental purpose); Smith Setzer & Sons, Inc. v. S. C. Procur ement Review Panel, 20 F.3d 1311 (4th Cir. 1994). See also, Rest igouche v. Town of Jupiter, 59 F.3d 1208, 1214, n.6 (11th Cir.19 95); Haves v. City of Miami, 52 F.3d 918, 921-22 (1997) (the rat ional basis test is the same as that utilized in a substantive d ue process claim). 397 City of Cleburne, Tex. v. Cleburne Living CenterCtr., 473 U.S. 432, 440, 105 S. Ct. 3249, 3254, 87 L. Ed. 2d 313 (1985). 398 Kendrick v. City Council of Augusta, Ga., 516 F. Supp. 1134, 1 139 (S.D. Ga. 1981). 399 See Harrah Indep. Sch. Dist. v. Martin, 440 U.S. 194, 199–201, 99 S. Ct. 1062, 1065, 59 L.Ed.2d 248 (1979) (citations omitted);. Thompson Bldg. Wrecking Co., Inc. v. Augusta, Ga., et al., No. CV 108-019, 2010 WL 1286029 (S.D. Ga. Mar. 31, 2010), citing Ga. Manufactured Hous. Ass'n v. Spalding Cnty., Ga., 148 F.3d 1304, 1307 (11th Cir.1998) (relying on Hayes v. City of Miami, 52 F.3d 918, 921-22 (11th Cir.1995)). Whether a rational basis exists is determined by identifying, first, whether there could be a legitimate reason for the action in awarding or not awarding the procurement contract, and, second, by identifying whether the acts are rationally related to the articulated purpose. The question is whether there is a conceivable legitimate governmental purpose for the action, not whether that purpose was actually considered, and whether the City's challenged actions were rationally related to the purpose. Smith Setzer &
76 It is well settled that unequal application of a facially neutral statute may violate the Equal Protection Clause.400 In order to prevail on an equal protection claim based upon the application of a facially neutral statute, such as Augusta’s
Materiality Provision, the plaintiff must establish that: (1) the plaintiff was treated differently than similarly situated persons; and (2) the defendant unequally applied the statute for the purpose of discriminating against the plaintiff.401 If the plaintiff is not a member of a protected class, he or she must prove intentional discrimination.402 The plaintiff must demonstrate that the unequal treatment it received was motivated by a discriminatory purpose.403 Proving that discriminatory purpose was a motivating factor can be accomplished by circumstantial evidence, direct evidence, or a combination
Sons, Inc. v. S.C. Procurement Review Panel, 20 F.3d 1311, 1320 (4th Cir. 1994). 400 Mackenzie v. City of Rockledge, 920 F.2d 1554, 1559 (11th Cir. 1991). 401 E & T Realty v. Strickland, 830 F.2d 1107, 1109-10 (11th Cir. 1987), cert. denied, 485 U.S. 961, 108 S. Ct. 1225, 99 L. Ed. 2d 425 (1988). 402 City of Cuyahoga Falls, Oh. v. Buckeye Cmty. Hope Found., 538 U.S. 188, 194, 123 S. Ct. 1389 (2003); Reno v. Bossier Parish Sc h. Bd., 520 U.S. 471, 481 (1997); Village of Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S. 252, 265 (1977); Washington v. Davis, 426 U.S. 229, 241-42 (1976); Rozar v. Mullis, 85 F.3d 55 6, 564-65 (11th Cir. 1996); E & T Realty, 830 F.2d 1107, 1112 (1 1th Cir. 1987). 403 Strickland v. Alderman, 74 F.3d 260, 264 (11th Cir. 1996); E & T Realty, 830 F.2d at 1112-13; McClesky v. Kemp, 481 U.S. 279, 2 92, 107 S. Ct. 1756, 1767, 95 L. Ed. 2d 262 (1987); Washington v. Davis, 426 U.S. 229, 241-42 (1976); Village of Arlington Height s, 429 U.S. at 265.
77 thereof.404 Evidence of disparate treatment alone is insufficient.405 A plaintiff must show that the discrimination was intentional.406
A disappointed bidder may also attempt to establish a
“class of one” equal protection claim.407 To establish a “class of one” equal protection claim, a plaintiff must show that it has been intentionally treated differently from others similarly situated and that there is no rational basis for the difference in treatment.408 Although such claims are improper when decision
404 Village of Arlington Heights, 429 U.S. at 266 ( (citations omi tted) (Sometimes a clear pattern, unexplainable on grounds other than race, emerges from the effect of the state action even when the governing legislation appears neutral on its face); Young A pts.art.s, Inc. v. Town of Jupiter, Fla., 529 F.3d 1027, 1045 (1 1th Cir. 2008). 405 McCleskey v. Kemp, 481 U.S. 279, 292, 107 S. Ct. 1756 (1987). 406 Washington v. Davis, 426 U.S. 229, 241-42, 96 S. Ct. 2040, 48 L.Ed.2d 597 (1976). 407 Vill. of Willowbrook v. Olech, 528 U.S. 562, 564 (2000) (citin g Sioux City Bridge Co. v. Dakota Cnty., 260 U.S. 441 (1923); Al legheny Pittsburgh Coal Co. v. Comm’n of Webster Cnty., 488 U.S. 336 (1989)). 408 Village of Willowbrook v. Olech, 528 U.S. 562, 120 S. Ct. 1073, 145 L. Ed. 2d 1060 (2000) (citing Sioux City Bridge Co. v. Dakota Cnty., 260 U.S. 441, 43 S. Ct. 190, 67 L. Ed. 340 (1923)); Allegheny Pittsburgh Coal Co. v. Commission of Webster Cnty., 488 U.S. 336, 109 S. Ct. 633, 102 L. Ed. 2d 688 (1989); ) Id.; see also Griffin IndustriesIndus., Inc. v. Irvin, 496 F.3d 1189, 1204-1205 (11th Cir. 2007) (“We see no reason that a plaintiff in a ‘class of one’ case should be subjected to a more lenient ‘similarly situated’ requirement than we have imposed in other contexts. Adjudging equality necessarily requires comparison, and ‘class of one’ plaintiffs may (just like other plaintiffs) fairly be required to show that their professed comparison is sufficiently apt. Accordingly, when plaintiffs in ‘class of one’ cases challenge the outcome of complex, multi- factored government decision making processes, similarly situated entities must be very similar indeed”).
78 making is “subjective and individualized, resting on a wide array of factors that are difficult to articulate and quantify,” they are proper if there is a “clear standard against which departures, even for a single plaintiff, c[an] be readily assessed.”409 Courts, however, have imposed exacting burdens on plaintiffs to demonstrate similarity in class-of-one cases.410 In order to be successful, a plaintiff must demonstrate an extremely high level of similarity between the plaintiff and the allegedly similarly situated comparators.411
Class of one claims are an unlikely avenue for disappointed bidders in the Eleventh Circuit.412 In Engquist v. Oregon
Department of Agriculture,413 the Supreme Court held that “the class-of-one theory of equal protection has no application in
409 Engquist v. Or.egon Dep’t. of Agric.ulture, 553 U.S. 591, 602- 043, 128 S. Ct. 2146, 2153-54, 170 L. Ed. 2d 975 (2008); see also Douglas Asphalt Co. v. Qore, Inc., 541 F.3d 1269, 1274 (11t h Cir. 2008) (failing to recognize a cognizable right to equal p rotection in the absence of a restricting contract or statute). 410 Neilson v. D'Anaelis, 409 F.3d 100, 105 (2nd Cir. 2005) (requiring a class-of-one plaintiff to show that “no rational person could regard the circumstances of the plaintiff to differ from those of a comparator to a degree that would justify the differential treatment on the basis of a legitimate government policy”); McDonald v. Vill.age of Winnetka, 371 F.3d 992, 1002 (7th Cir. 2004) (requiring that the other parties be “very similar indeed”); Purze v. Village of Winthrop Harbor, 286 F.3d 452, 455 (7th Cir. 2002) (insisting that a plaintiff demonstrate that the compared properties are “prima facie identical in all relevant respects”). 411 Campbell v. Rainbow City, Ala., 434 F.3d 1306, 1314 (11th Cir. 2006). 412 Engquist v. Or. Dep’t of Agric., 553 U.S. 591, 605 (2008). 413 Engquist, 553 U.S. at 607-608.
79 the public employment context.”414 The Supreme Court reasoned that decision making in the employment context is “often subjective and individualized, resting on a wide array of factors that are difficult to articulate and quantify.”415 The
Eleventh Circuit extended Engquist to “class of one” claims involving government contractors in Douglas Asphalt Co. v. Qore,
Inc.416 In Douglas Asphalt, a highway paving contractor brought suit alleging that it was wrongly singled out and treated differently than other paving contractors in violation of the equal protection clause.417 The Eleventh Circuit held that the plaintiff “must do more than assert that other, unidentified contractors were given better treatment.”418
Although equal protection claims may apply to Augusta’s procurement process, such claims are undermined where both the winning bidder and the disappointed bidder are noncompliant.419
Once Augusta issues a bid, all bid proponents who meet the minimum qualification requirements should have a right to have
414 Id. at 607 415 Id. at 6043. 416 Douglas Asphalt Co. v. Qore, Inc., 541 F.3d 1269 (11th Cir. 2008). 417 Id. at 1269. 418 Id. at 1275; See GJR Invs., Inc., 132 F.3d at 1367-68 (“Bare allegations that ‘other’ applicants, even ‘all other’ applicants, were treated differently do not state an equal protection claim; a complaint must attempt to show in some fashion that these ‘other’ applicants were situated similarly to the plaintiff.”). 419 See BLECCs Inc. v. Augusta, 2010 U.S. Dist. LEXIS 31602 at *6.
80 the procurement code and policy applied equally.420 If all bidders are noncompliant, however, Augusta is free to award the bid to the bidder of its choice.421 Augusta merely needs to ensure that it finds all lower bids noncompliant. The low bidder must be compliant, as a non-compliant low bidder does not have an expectation of, or entitlement to, a property interest.422
F. INJUNCTIVE RELIEF
Injunctive relief may be available to a disappointed bidder, but the bidder must establish a substantial likelihood of prevailing on the merits.423 Courts may restrain any act which that is illegal or contrary to equity and good conscience and for which there is no adequate remedy at law.424 Moreover, courts are only authorized to grant a temporary and/or interlocutory injunction if it appears from specific facts shown by affidavit or by the verified complaint that immediate and irreparable injury, loss, or damage will result to the applicant.425
The plaintiff must establish: (1) a substantial likelihood of prevailing on the merits; (2) that the plaintiff will suffer 420 Corey Airport Services, Inc. v. City of Atlanta, 632 F.Supp.2d 1246, 1272 et al., No. 1:04-CV-3243-CAP, slip op. at 21, 2008 WL 4452386 (N.D. Ga. Sep. 30, 2008). 421 Need cite 422 BLECCs Inc. v. Augusta, Georgia, 2010 U.S. Dist. LEXIS 31602 at *6 Case No. 1:09-CV-00019, 2010 WL 1285470 (S.D. Ga. March 31, 2010), doc. no. 61, at 6. 423 See e.g., Amoco Prod. Co. v. Vill. of Gambell, 480 U.S. 531, 543 n.12 (1987). 424 E.g., G.C. and K.B. Investments, Inc. v. Wilson, 326 F.3d 1096, 1107 (9th Cir. 2003). 425 Fed. R. Civ. P. 65(b).
81 irreparable injury if injunctive relief is not granted; (3) the threatened injury to the plaintiff outweighs the threatened harm the injunction may cause; and (4) the preliminary injunction is consistent with the public interest.426 Injunctive relief may be the only means of protecting the rights of a wrongfully rejected bidder, the public interest, and the integrity of competitive public procurement.427
V. NEED FOR REFORM
Without reform or legislative action, a municipality, such as Augusta, can thwart the policy of public procurement.428 While this article addresses the Augusta procurement process, the scenario described herein is possible in virtually any municipal or county government. To honor the policy of public procurement, reform is necessary. Competitive bidding statutes are established to guard against favoritism, improvidence, extravagance, and corruption.429 They aim to secure the benefits 426 See, e.g., Warren Pub., Inc. v. Microdas Data Corp., 115 F.3d 1509, 1516 (11th Cir. 1997); United States v. Jefferson Cnty., 7 20 F.2d 1511, 1519 (11th Cir. 1983); Suntrust Bank v. Houghton M ifflin Co., 268 F.3d 1257, 1265 (11th Cir. 2001); Kate Aspen, In c. v. Fashioncraft-Excello, Inc., 370 F. Supp. 2d 1333, 1336 (N. D. Ga. 2005) (recognizing that the elements of proof for obtaini ng a temporary restraining order and preliminary injunction are the same). 427 Funderburg Builders, Inc. v. Abbeville Cnty., 467 F. Supp. 821, 825 (D.S.C. 1979). 428 See supra notes Error: Reference source not found, Error: Reference source not found, and Error: Reference source not found and accompanying text. 429 Jered Contracting Corp. v. New York CityN.Y.C. Transit Auth., 22 N.Y.2d 187, 193, 239 N.E.2d 197, 200, 292 N.Y.S.2d 98, 102-03 (1968).
82 of unfettered competition for the public.430 To the extent that bidding practices are capable of being used to further corrupt ends or are likely to affect adversely the bidding process, they should be prohibited.431 Unfortunately, these aspirations of competitive bidding are not supported by a procurement process such as that found in Augusta.432 Public interest demands reform to prevent corruption and senseless waste of public funds.
Repeatedly, courts examine public interest in determining the rights of disappointed bidders.433 Judicial focus, however, typically emphasizes that competitive bid statutes should be interpreted to protect the public, rather than to provide an action for damages to unsuccessful bidders.434 Competitive bidding is designed to secure competition and protect taxpayers from corruption and favoritism, not to benefit bidders.435 It aims to benefit taxpayers by securing the best product at the
430 431 Teleprompter of Erie, Inc. v. City of Erie, 537 F. Supp. 6, 11 (W.D. Pa. 1981). 432 See supra note Error: Reference source not found. 433 See e.g., Systems Application & Technologies, Inc. v. U.S., 100 Fed.Cl. 687, 721 (2011) (citations omitted) (“This court has repeatedly recognized that there is an important public interest in fair and open competition in the government procurement process.”). 434 See Star of the Sea Concrete Corp. v. Lucas Brothers, Inc. 850 A.2d 559, 566 (N.J. Super. Ct. App. Div. 2004)(citations omitted) (“The purpose of competitive bidding . . . is not the protection of the individual interests of the bidders but rather the advancement of the public interest”). 435 Jered, 22 N.Y.2d at 193; see also Terminal Const. Corp. v. Atl antic City. Sewerage Auth., 67 N.J. 403, 410, 341 A.2d 327, 330, (1975); Malan Constr. Corp. v. Bd. Of Cnty. Road Comm’rs of Wayne Cnty., 187 F. Supp. 937, 939 (E.D. Mich. 1960).
83 lowest price with sole reference to the public interest.436 As explained in City of Atlanta v. J.A. Jones Construction Co.:,437
It appears that, all things being equal, the bid process for public projects was designed to protect the public coffers from waste and to assure that taxpayers receive quality work and goods for the lowest possible price.438
Whatever rights a bidder may have in the procurement process are
“conferred ... to the end that the public will obtain all that is due it in the procurement process, rather than for [the bidder's] individual aggrandizement.”439
Public interest in competitive bidding, however, is not so black or white. Public interest is often consistent with that of a disappointed bidder. For example, public interest demands a system of checks and balances to hold public officials accountable for their acts.440 The South Carolina Supreme Court vividly expressed the policy underlying competitive bidding in
Sloan v. School Dist.rict, 537 S.E.2d 299, 303 (S.C. App. 2000). of Greenville Cnty.441 436 Lawrence Brunoli, Inc. v. Town of Branford, 247 Conn. 407, 41 2-13, 722 A.2d 271, 274 (1999). 437 260 Ga. 658 (1990). 438 Id. at 659. 439 Morie Energy Management., Inc. v. Badame, 241 N.J. Super. 572, 576, 575 A.2d 885, 887 (1990) (quoting Trap Rock Industries v. Kohl, 59 N.J. 471, 480, 284 A.2d 161, 165 (1971)). 440 Sloan v. School Dist. of Greenville Cnty., 342 S.C. 515, 523, 537 S.E.2d 299, 303 (S.C. App. 2000). 441 Id. at 523342 S.C. 515, 523, 537 S.E.2d 299 (S.C. App. 2000)-. eeat 524 (“Th peure f public funds pursuant to a competitive bid ding statute is of immense public importance. Requiring that con tracts only be awarded through the process of competitive sealed bidding demonstrates the lengths to which our government believe
84 The expenditure of public funds pursuant to a competitive bidding statute is of immense public importance. Requiring that contracts only be awarded through the process of competitive sealed bidding demonstrates the lengths to which our government believes it should go to maintain the public's trust and confidence in governmental management of public funds.442
Public trust and confidence in the management of public funds are critical components in competitive bidding.443 In accordance with such policy, numerous states have allowed taxpayers standing to challenge improper procurement awards.444
The basis for taxpayer suits arises from the need to make sure that governmental officials conform to the law.445
Public policy demands protection of disappointed bidders where such interest inevitably protects public interest.446 s it should go to maintain the public's trust and confidence in governmental management of public funds.”). 442 Id. at 524. 443 444 Id. at , 522; Independent Indep. Enters. Inc. v. Pittsburgh Wa ter & Sewer Auth., 103 F.3d 1165, 1178 (3rd Cir. 1997) (competit ive bidding statutes exist solely for the benefit of taxpayers, and only taxpayers); United States v. City of New York, 972 F.2d 464, 470-71 (2nd Cir. 1992); Browning-Ferris, Inc. v. Mancheste r Borough, 936 F. Supp. 241, 244 (M.D. Pa. 1996) (the taxpayer o f a municipality which has created the governmental entity award ing the contract has standing); Lawrence Brunoli, Inc. v. Town o f Branford, 247 Conn. 407, 416, 722 A.2d 271, 274 (1999); Beaver Glass & Mirror Co. v. Board of Educ., 59 Ill. App.3d 880, 884, 1 7 Ill. Dec. 378, 381, 376 N.E.2d 377, 380 (1978) (competitive bi dding statute was enacted for the benefit and protection of taxp ayers); Alliance for Affordable Energy v. Council of New Orleans, 677 So.2d 424 (La. 1996). 445 Eastern E. Missouri Mo. Laborers Dist. Council v. St. Louis Cn ty., 781 S.W.2d 43, 46 (Mo. 1989) 446 See Hayes Int’l Corp. v. McLucas, 509 F.2d 247, 256 (5th Cir. 1975).
85 Unchecked discretion of public procurement officers needs to be curtailed. Public interest and trust are adversely affected when bids are improperly awarded.447 An adequate assessment of the public interest must reflect the overall procurement goals of economy, efficiency, and effectiveness. A system of accountability is needed to ensure compliance, otherwise, disappointed bidders will avoid certain municipalities and/or increase price to compensate for potential disappointment.448
Public interest includes consideration of the competitive effect on contracting, as well as the impact on disappointed bidders and their employees.449
It goes without saying that to ensure a competitive procurement process, bidders must be treated even-handedly. For example, in L. Pucillo & Sons, Inc. v. Mayor and Council of
Borough of New Milford,450 the New Jersey Supreme Court acknowledged the need to curtail the discretion of local authorities by demanding strict compliance with public bidding guidelines.451 447 Id. 448 449 See Donna Morris Duvall, Comment: Moving Toward a Better- Defined Standard of Public Interest in Administrative Decisions to Suspend Government Contractors, 36 AM. U.L. REV. 693, 702, 705 (Spring 1987) (advocating public policy considerations in contractor suspensions under F.A.R.). 450 L. Pucillo & Sons, Inc. v. Mayor and Council of Borough of New Milford, 73 N.J. 349, 375 A.2d 602 (N.J. 1977). 451 Id. at 356; (citing Hillside v. Sternin, 25 N.J. 317, 325-26, 136 A.2d 265 (1957)); A. C. Schultes & Sons v. Haddon Tp., 8 N.J. 103, 108, 83 A.2d 896 (1951); Waszen v. City of Atlantic City,
86 In this field it is better to leave the door tightly closed than to permit it to be ajar, thus necessitating forevermore is such cases speculation as to whether or not it was purposely left that way.452
Although the bid specifications in Pucillo & Sons requested bidders to submit proposals for contracts of varying duration, the municipality improperly waived this requirement by awarding the project to a bidder that failed to submit a proposal for a contract of five years’ duration.453 In voiding the contract, the court reasoned, “[a]warding the contract to one who failed to submit bids on all terms necessarily created an inequality in the bidding and an opportunity for favoritism.454 Waiver of similar conditions for one bidder and not another should be prevented. Otherwise, such waiver “is capable of becoming a vehicle for corruption or favoritism, or capable of encouraging improvidence or extravagance, or likely to affect the amount of
1 N.J. 272, 276, 283, 63 A.2d 255 (1949); J. Turco Paving Con., Inc. v. City Council of Orange, 89 N.J.Super. 93, 103, 218 A.2d 865 (App.Div. 1965); Belousofsky v. Bd. of Educ. of City of Lind en, 54 N.J.Super. 219, 223, 148 A.2d 632 (App.Div.1957); Case v. Trenton, 76 N.J.L. 696, 700, 74 A. 672 (E. & A.1909); Armitage v. Newark, 86 N.J.L. 5, 10, 90 A. 1035 (Sup.Ct. 1914). See also H illside Tp. v. Sternin, 25 N.J. at 326, 136 A.2d at 270 (“In thi s field it is better to leave the door tightly closed than to pe rmit it to be ajar, thus necessitating forevermore is such cases speculation as to whether or not it was purposely left that wa y.”). 452 453 454 Id. at 356.
87 any bid or to influence any potential bidder to refrain from bidding, or which are capable of affecting the ability of the contracting unit to make bid comparisons . . . .”455
This same rationale applies when a bid is awarded to noncompliant bidder without providing any meaningful remedy to a low bidder that is in material compliance. In the case of
Augusta, noncompliant bidders may be awarded contracts, while the low bidder that has the same compliance issue is rejected as noncompliant.456 An equally noncompliant bidder should not be allowed to gain an unfair advantage or an advantage unavailable to the other bidders.457 It adversely affects competitive bidding and undermines competition. Courts must give meaning to the meaning of “materiality” in compliance decisions. As previously discussed, in R.D. Brown,458 the Georgia Supreme Court explicitly upheld the trial court’s determination that the county did not err in concluding that the failure of a bidder to submit a list of subcontractors was immaterial and could be waived.459
Even if all bidders are noncompliant with a minor requirement, public interest may still be served by awarding the
455 Terminal Constr. Corp. v. Atlantic City Sewerage Auth., 67 N.J. 403, 412, 341 A.2d 327 (1975). 456 457 Matter of Fratello Constr. Corp. v Tuxedo Union Free School Di st., 284 A.D.2d 461, 462, 726 N.Y.S.2d 705 (2001). 458 280 Ga. 210, 626 S.E.2d 471 (2006). 459
88 bid to the low bidder.460 In Den Mar Const. Co. v. American Ins.
Co.,461 the Minnesota Supreme Court examined the level of noncompliance by the low bidder and the second lowest bidder.462
The court held there was no violation of competitive bidding where the county awarded a ditch project to the second lowest bidder, who supplied a 50 percent payment bond, instead of the required 100 percent payment bond, after the lowest bidder, who had not supplied a payment bond, defaulted.463 In light of the fact that the low bidder failed to furnish any final bonding whatsoever, the second lowest bidder did not obtain any unfair advantage so as to be a material variance from competitive bidding requirements.464
Taxpayers benefit from competition that maximizes the government’s purchasing power.465 Discriminatory enforcement of procurement regulations diminishes competition and results in higher prices for goods and services.466 If contractors are conscious of improper awards, they may not compete vigorously.467
To account for these inconsistencies, some bidders may inflate
460 461 Den Mar Const. Co. v. Am. Ins. Co., 290 N.W.2d 737 (Minn. 1979). 462 463 464 Id. at 741 (citations omitted). 465 466 467
89 their bid prices. Others may choose not to submit a bid.468 When a contractor decides not to increase its price or chooses not to bid because of the government’s reputation for being unfair, there is a harmful reduction in the field of competition that harms taxpayers.469 Distrust of the procurement process also encourages corruption, as bidders attempt to compensate for the unfairness by applying political pressure.470
Public interest should take into account the potential damage to disappointed bidders. The impact of being wrongfully rejected can be devastating to a bidder and its employees.471
These employees are penalized by government’s arbitrary and capricious actions.472 For example, Ammar Construction Cco., submitted the low bid on an Augusta project and received a contract in the amount of $37,000, but was rejected because they did not twice date a subcontractor’s affidavit.473 Instead, a year later, Augusta awarded the project to an African-American
468 469 Scott A. Livingston and Lydia B. Hoover, Principles of Maryland Procurement Law, 29 U. BALT. L. REV. 1, 54 (Fall 1999). 470 471 See Donna Morris Duvall, Comment,: Moving Toward a Better-Defi ned Standard of Public Interest in Administrative Decisions to S uspend Government Contractors, 36 AM. U. L. REV. 693, 705 (Sprin g 1987). 472 473 Johnny Edwards and Sandy Hodson, Augusta procurement departmen t’s history shows focus on paperwork ahead of contractors’ price, Augusta Chron., Nov. 6, 2010, http://chronicle.augusta.com/news /government/2010-11-06/augusta-procurement-department.
90 business for $65,000.474 Ammar, however, had already spent $1,000 for bonding and lined up a crew, including one man with a wife and two small children in desperate need for a job.475
A contractor must bid on a number of jobs in order to submit the lowest bid on one and must depend on the limited number of jobs it is awarded, not only to earn a profit but also to cover the cost of maintaining its business and keeping it together.476 If a contractor is arbitrarily deprived of a bid on which it is the lowest responsible bidder, it is deprived of not only anticipated profit, but it damages the rest of the contractor's work and may even cause the contractor to lose key field personnel that are difficult to find.477
To encourage the policy of competitive bidding, a disappointed bidder should be entitled to attorney fees and costs of litigation. Limiting recovery to bid preparation costs is largely unsatisfactory and does not provide a meaningful reason for a disappointed bidder to challenge an improper procurement.478 It allows a procurement system, such as Augusta’s discriminatory enforcement, to go virtually unchecked and unchallenged.479 Although the court in City of Atlanta v. J.A.
474 Id. 475 Id. 476 Funderburg Builders, Inc. v. Abbeville Cnty. Memorial Hosp., 4 67 F. Supp. 821, 825 (D.S.C. 1979). 477 Id. 478 479
91 Jones Constr. Co.,480 overturned a jury verdict in the amount of
$522,125.05 on a disappointed bidder’s state law claim and
$375,000.00 on its § 1983 claim, it acknowledged the need to prevent public officials from shirking their duties while, at the same time, preventing unwarranted waste of taxpayers' money.481
The ability to create change and encourage competition is increased where a corrupt procurement system is penalized for its actions.482 Such is not the case when recovery by disappointed bidders is limited to bid preparation costs.483
In other situations, even the Georgia Supreme Court has recognized the need for attorney fees where government officials have neglected their duty in the context of a mandamus action.484
The reasoning stated by the Georgia Court of Appeals in Robinson v. Glass485 is persuasive and should apply to actions by disappointed bidders.
480 260 Ga. 658, 659 (1990). 481 482 Other commentators have also argued that public or governmental entities should be held responsible for unconstitutional racial distinctions and deprivations of property interests, by allowing disappointed bidders a claim for compensatory damages, including lost profits. Ralph W. Kasarda and Robert Luther III, Why Courts Must Subject Municipalities To Constitutional Tort Liability Under § 1983 When Unconstitutional Race-And Sex-Based Preference Statutes Deprive An Otherwise Lowest Qualified Bidder Of A Public Contract, 19 GEO. MASON U. CIV. RTS. L.J. 371 (Spring 2009). 483 484 485 Robinson v. Glass, 302 Ga. App. 742 (2010).
92 In Robinson, the court held that where an appellant brought a mandamus action against the Clerk of Court for failure to prepare the appellate record, he was entitled to attorney fees even though his mandamus action was dismissed as moot because the Clerk submitted the appellate record prior to the mandamus hearing.486 “A public officer that refuses or neglects to obey a plain statutory mandate . . . thereby forcing a citizen to go to the trouble and expense of filing a mandamus petition in order to obtain what the is entitled to by law . . . should not be able to escape responsibility for his or her inaction . . . .”487
Reform is necessary to prevent the useless waste of taxpayer money and the corrupt use of discriminatory compliance determinations.488 Meaningful reform is needed. Public policy squarely supports preventing municipal governments from discriminatory compliance determinations, as such may ultimately cost taxpayers millions of dollars and destroys confidence in the government.489
VI. CONCLUSION
Reform is needed to prevent ongoing discrimination in municipal governments such as Augusta. Georgia limits actions by disappointed bidders to recovery of bid preparation costs.490
486 487 Id. at 746. 488 489 490
93 Additionally, the disappointed bidder must be the lowest compliant bidder to have a cause of action.491 It is clear that in Georgia a disappointed bidder does not have a procedural or substantive due process claim.492 Likewise, a bidder does not have a meaningful action against the award of a bid to a noncompliant bidder, even where the disappointed bidder is the low bidder and has the identical issue of noncompliance.493
Without reform, a municipality may award contracts to noncompliant bidders and thus, “legally” engage in discriminatory compliance determinations and/or bid rigging.494
If all bidders are noncompliant, they are similarly situated.495
Equal protection claims should account for the similarity in nonconformance and allow disappointed bidders a meaningful claim where such deficiencies are not material.
Public policy strongly supports necessary reform.496 It is not only in the interest of the disappointed bidder, but reform is needed to ensure that favoritism and discrimination do not continue.497 In eliminating these unwanted consequences, the
491 492 493 494 Need Cite (I recommend an internal cross-reference here to the Augusta situation). 495 Need Cite (I recommend an internal cross-reference here to the Augusta stituation). 496 497 Need Cite (I recommend an internal cross-reference here to the Augusta stituation).
94 public is served by reducing costs and encouraging bidders to submit bids without fear of wrongful rejection.498 Fair competition benefits the public interest.499
498 499
95