There are two Public Contract Code sections (20161 and 20162) according to which California public works projects should be competitively bid. The public works competitive bidding laws are intended to eliminate fraud, favoritism, and corruption in the awarding of public contracts. Works exempted from competitive bidding include emergency work, small contracts and specialized personal services.
There are requirements that must be met before the bid is awarded. They are:
Contents and Requirements for an Invitation for Bids
An invitation for bids (IFB), or bid package comprises of a variety of documents and information for the prospective bidder to consider in making its proposal. The request for public bids should be properly detailed, definite and precise to provide a basis for full and fair competitive bidding upon a common standard and it must be devoid of any restrictions leading to improper competition. The specific contents and requirements for an Invitation for bids (IFB) include:
As per Pub. Cont. Code §20170 a bid security payable to the awarding authority should be obtained and included with the bid by the bidder. Bid security is utilized as a guarantee that if the bid is accepted by the public entity, the bidder will enter into the proposed construction contract in accordance with its bid. A bidder’s security includes cash, certified check, a cashier’s check, or a bid bond in an amount equal to at least 10% of the amount the bid. In absence of a proper bid security, a bid may not be accepted. Usually, bidders submit a bid bond.
If the bidder fails to execute a contract as per its bid, the amount of the bidder’s security is forfeited to the public entity as per Pub Cont. Code §20172. In such instances, the public entity awards the contract to the second lowest bidder and the forfeited amount of the security is applied to the difference between the two contract prices.
A public entity should follow all bidding statutes and laws and if it fails to do so, the contract entered into by the public agency is considered as illegal. Besides, the contractor cannot be paid. Contractors should review the bidding process carefully to ensure that the public entity is complying with the competitive bidding statutes.
If the contractor who does not win the bid wants to protest the award it should notify the awarding entity immediately, in writing, as to the nature of the protest. The contractor who decides to protest requires meeting the public entity where the governing body plans to vote on awarding or rejecting the bid. The unsuccessful bidder may seek court intervention. The court intervention should be asked for within a few days of the public entity voting to award the contract to another bidder.
It is important to know that a public entity has the power and discretion to decline all bids and to re-advertise for bids. A public entity can reject all the bids to avoid a bid protest. A public entity has the right to waive minor irregularities relative to the responsiveness of the bid. But if the entity ignores the reliability it cannot result in the bid process being unfair or give the low bidder an undue benefit over the other bidders.