Challenging a Bid (Bid Protest) on Public Construction Projects

When a contractor is awarded a bid or a bid is rejected, a bidder or even a taxpayer may file a claim pursuant to Article 78 of New York’s CPLR requesting that the bid award be set aside. However, the untimely filing of the Article 78 notice of claim will require the dismissal of the petition. See Matter of Kernan Lib. Off. Group v. Board of Educ. of the City School Dist. of the City of Schenectady, et al., 187 A.D.2d 861 (3rd Dep’t 1992). The standard for awarding a bid is not whether a bidder is more qualified than others, but whether the chosen bidder is the lowest responsible bidder. Seacoast Construction Corp. v. Lockport Urban Renewal Agency, 72 Misc.2d 372 (Sup. Ct. 1972).

Even where it is found that the bid was improperly awarded, the wrongly rejected bidder will not necessarily recover damages. In Stride Contracting Corp. v. Board of Contract & Supply of the City of Yonkers, et al., 191 A.D.2d 876 (2nd Dep’t 1992), it was held that General Municipal law § 103, which was enacted to prescribe when and the manner in which a municipality shall request bids and bid awards, was intended to protect municipalities and its taxpayers, not to benefit bidders. Thus, the unsuccessful bidder is not entitled to recover damages based upon profits it might have made.

In Matter of Fischbach & Moore v. New York City Transit Authority, 182 A.D.2d 533 (1st Dep’t 1992), procedural unfairness of the bidding process was called in to question after it was discovered that the initial bids became known to bidders through a “leak”. Although the initial lowest bidder was not awarded the contract, and one member of the public entity’s selection committee had previously worked for the winning bidder, the Appellate Division held that where all of the bidders had an opportunity to submit better proposals after negotiating with the public entity, no procedural unfairness exists.

Rejection of bids generally will not be disturbed absent a showing of “actual impropriety or unfair dealing” or violation of statutory requirements. See Conduit and Foundation Corp. v. Metropolitan Transportation Authority, 66 N.Y.2d 144 (1985). However, the rejection of a qualified, responsible lowest bidder, without an investigation and hearing is subject to review by the courts. Warran Bros. Co., Division of Ashland Oil & Refining Co. v. Craner, 30 A.D.2d 437 (4th Dep’t 1968).

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