Page 16 - October2019_BarJournal

FEATURE REAL ESTATE LAW

MAY PARTIES NEGOTIATE

PUBLIC CONSTRUCTION CONTRACTS

AFTER THE AWARD?

BY TERESA G. SANTIN

hat is a public doing, does the public entity violate the law? as Ohio courts analyze bid defects and a public
entity to do if, upon Does the public entity have any discretion? entity’s discretion to waive them in the same or
awarding a contract What if the contractor was by far the best similar way as they analyze negotiations after
through the public among the competition in an area where there bids are opened or after a contract is awarded.
W bidding process, are few options? What if the public entity The courts have analyzed modifications made
the contractor asks to negotiate some of that faces a deadline that would be put at risk by prior to bid opening, after bid opening, and
contract’s terms? Should it take a hard line, continued negotiations? after an award.
refuse to negotiate, and risk damaging its On the flip side, what if a contractor believes With these principles in mind, a
relationship with the contractor? Should it that it absolutely must ask for modifications “substantial” deviation or modification of a
take the path of least resistance and agree to after the award? What if it identified some contract post-award impermissibly affords
some or all of the contractor’s requests? In so major risks only after it submitted its bid? the winning bidder a competitive advantage.
What if it found a mistake that, absent a A modification is substantial if it affects the
correction, immediately renders the project amount of the bid and affords a bidder an
unprofitable? What if it learned that the advantage not allowed to the other bidders.
Numerous Ohio courts, but not all, have
Niki Z. Schwartz supplier of the critical equipment has gone permitted insubstantial modifications in the
out of business? Will it put itself in jeopardy
Mediator/Arbitrator by asking for a change? context of a variety of topics.
Competitive bidding laws seek to create • A contractor’s request for permission to
an honest and fair mechanism for awarding switch to a subcontractor different from
public contracts. Through a sealed bid process, the one identified in its bid, so long as that
a public entity should select the winning bidder change did not alter any legal obligations
based on merit and price alone. Competing within the public contract, has been found
bidders all base their bids on the same designs, to constitute an insubstantial modification.
specifications, and contract documents. Once In that case, the change occurred after bid
bids are opened, each bidder’s qualifications opening, but prior to an award.
and prices are sealed no more and become • In another Ohio case, the court construed a
public knowledge. Thus, the general legal view winning bidder’s failure to include the price
in Ohio is that modifying contract terms after of one line item to mean that the bidder
bid opening could impair the sanctity of the would do that work at no cost and that this
“If he can settle sealed bid process and otherwise undermine failure did not afford the winning bidder
a competitive advantage. Thus, that court
open and honest competition, which protects
a prison riot, the public and other bidders from favoritism found that the public entity at issue could
waive this bid irregularity after bid opening.
and fraud.
he can settle Not much case law exists in Ohio analyzing • Another court determined that an
anything!” the propriety of post-award negotiations. Ohio insubstantial modification, post-award,
may include allowing additional time to
case law concerning the selection of the lowest
and best bidder, or lowest responsive and complete various stages of the work, such as
responsible bidder, in the competitive bidding more time to assume control of operations
on a project.
216-696-7100 process is analogous and instructive, as is • Likewise, the same Ohio court found that
case law involving negotiations following the
nzs.adr@gmail.com opening of bids, but prior to an award. This case permitting a contractor, post-award, to park
law appears to be somewhat interchangeable, vehicles on publicly owned property free of
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