GIBSON
LAW OF F I C E OF
PUBLIC CONTRACT LA W
CLARE M.
c/l.altare@c/l.altaregibson/l.altaw.com
Via Email to [email protected] August 2, 2023 Chase Tinsley, Director, Bids and Project Management Resource Environmental, Inc. 13100 Alondra Blvd., Suite 108 Cerritos, CA 90703 Re: City of San Pablo 2600 Moraga Road Abatement & Demolition Project Response to Bid Protest Dear Mr. Tinsley: On behalf of my client, the City of San Pablo (“City”), this letter responds to your bid protest dated July 28, 2023, submitted on behalf of Resource Environmental, Inc. (“REI”), following public bidding on the City’s above-referenced project (“Project”). REI was the third low bidder for the Project, and has submitted its protest seeking invalidation of the bid submitted by the second low bidder, Professional Asbestos Removal Corporation, dba PARC Environmental (“PARC”). The protest alleges that PARC’s bid must be invalidated because the Bid Proposal and Non-Collusion Declaration submitted with PARC’s bid packet do not include signatures from corporate officers pursuant to Section 3 of the Instructions to Bidders. PARC has provided a timely response to the protest in the form of a letter from its legal counsel, a copy of which is enclosed herewith. REI’s protest lacks merit for the reasons set forth herein, and as further stated in the enclosed response from PARC’s legal counsel. 1. Section 3 of the Instructions to Bidders does not apply to the Non-Collusion Declaration.
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To begin with, Section 3 of the Instructions to Bidders applies solely to the Bid Proposal form. It does not apply to the Non-Collusion Declaration. There is no basis under law or under the terms of the bid documents for objecting to the Non-Collusion Declaration submitted by PARC, which was signed under penalty of perjury, as required by law. 2. Failure to provide a second corporate signature on the Bid Proposal form is a minor irregularity that may be waived by the City. The primary requirement in Section 3 of the Instructions to Bidders, is that each “Bid Proposal must be signed by the bidder’s authorized representative.” The City has no reason to doubt that PARC’s bid was signed by an authorized representative of PARC, particularly since it was submitted with the requisite bid security, binding PARC to the terms of the bid.1 As a secondary requirement, Section 3 also requires that Bid Proposals submitted by a corporation must be signed by two officers of the corporation, consistent with the terms of Corporations Code § 313, which states: “Subject to the provisions of subdivision (a) of Section 208, any note, mortgage, evidence of indebtedness, contract, share certificate, initial transaction statement or written statement, conveyance, or other instrument in writing, and any assignment or endorsement thereof, executed or entered into between any corporation and any other person, when signed by the chairperson of the board, the president or any vice president and the secretary, any assistant secretary, the chief financial officer or any assistant treasurer of such corporation, is not invalidated as to the corporation by any lack of authority of the signing officers in the absence of actual knowledge on the part of the other person that the signing officers had no authority to execute the same.” Contrary to the statements made in the protest, Corporations Code § 313 does not “require that all bid documents must be signed by two authorized officers of the bidding company.” In fact, Corporations Code § 313 does not even address bidding. Rather, Corporations Code § 313 merely establishes a conclusive, but conditional, presumption of the authority of the signing officers to enter into a binding agreement. See, Snukal v. Flightways Mfg., Inc. (2000) 23 Cal.4th 1 The evidence provided by PARC’s legal counsel that PARC’s bid was signed by an authorized representative is informative, but entirely unnecessary to establish responsiveness, since that is generally determined on the face of the bid without further outside investigation. See, Great West Contractors Inc. v. Irvine Unified Sch. Dist. (2010) 187 Cal.App.4th 1425, 1453 (holding that the public agency improperly rejected a responsive low bid and awarded the bid to a higher bidder in contravention of established public bidding law).
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754, 782-783. In a bidding context such as this, where the bid is already secured by a valid bid bond, this is arguably a superfluous requirement. While the City agrees that failure to comply with the secondary requirement in Section 3 of the Instructions to Bidders regarding corporate signatures constitutes a bidding irregularity with respect to the Bid Proposal form, the City disagrees with the protest’s contention that this requires the City to disqualify PARC’s bid in order to award the Project to REI. It is well-established under California law that a city may waive a bidding irregularity that is inconsequential because it neither changes the amount of the bid nor gives the bidder and “unfair competitive advantage.” See, e.g., Bay Cities Paving & Grading, Inc. v. City of San Leandro (2014) 223 Cal.App.4th 1181, 1189. Here, PARC’s failure to comply with the corporate signature requirements on the Bid Proposal did not change the amount of PARC’s bid. Neither did it afford PARC an “unfair competitive advantage.” The protest incorrectly asserts that PARC has the opportunity to withdraw its bid without forfeiting its bid security. That’s not true. Pursuant to Public Contract Code section 5103, a bid may only be withdrawn for a “mistake” that makes the bid “materially different” than intended, i.e., for an inadvertent error that significantly affects the amount of the bid. No such material mistake is alleged nor evident. There is no basis here for PARC to withdraw its bid without forfeiting its bid security, and the irregularity on PARC’s Bid Proposal form does not afford PARC an unfair competitive advantage. This conclusion is consistent with the analysis and holding in the seminal case of Menefee v. County of Fresno (1985) 163 Cal.App.3d 1175, in which a bidder’s complete failure to sign the bid form was an irregularity that could be waived by the awarding agency. It is also consistent with the analysis and holding in Bay Cities, supra, which held that a city acted within its discretion by waiving the omission of the first page of the bid bond form. Bay Cities also cautions that such analysis “must also be viewed in light of the public interest, rather than the private interest of the disappointed bidder” (emphasis added): “It certainly would amount to a disservice to the public if a losing bidder were permitted to comb through the bid proposal…after the fact, [and] cancel the low bid on minor technicalities, with the hope of securing acceptance of his, a higher bid. Such construction would be adverse to the best interests of the public and contrary to public policy.” (Bay Cities, supra, at 1189.) Chase Tinsley, Resource Environmental, Inc. August 2, 2023 Page 4
The result urged by REI’s proposal is clearly against the best interest of the public since it proposes that that City pay a substantial premium over the amount of PARC’s bid for performing the identical work, solely based on a signature irregularity that did not affect the amount of the bid nor afford PARC with an unfair competitive advantage. 3. The protest improperly relies on a fictitious case. The protest cites to the purported case of “California Transit Construction, Inc. v. California of General Services (2004) 114 Al.App.4th 169” in support of the allegation each bid must be signed by corporate officers. This case, however, does not appear to exist as either a published or unpublished decision. Moreover, the alleged analysis and reasoning in this apparently fictitious case is entirely inconsistent with a well-developed body of California case law, including the Menefee and Bay Cities cases referenced above. It is beyond the purview of this bid protest response to address whether a fictitious citation in a bid protest is actionable under the California False Claims Act (Government Code §§ 12650 et seq.). At a minimum, however, use of this apparent deception in order to unfairly secure a public contract at a higher price is problematic. Conclusion The City is satisfied that PARC’s bid is fully responsive on its face with the exception of the partial non-compliance with Section 3 of the Instructions to Bidders. Based on the foregoing, the City, acting in its sole discretion, may lawfully elect to waive that irregularity in PARC’s bid proposal as inconsequential and award the contract for the Project to PARC as the apparent lowest responsible bidder. Very truly yours, LAW OFFICE OF CLARE M. GIBSON Clare M. Gibson Enclosure: Letter from Patrick J. Gorman, Esq. (8/1/23)
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c: via email only: Daniel Sanchez, PARC Patrick J. Gorman, Esq. Matt Rodriguez, City Manager Allan Panganiban, City Engineer/Public Works Director Matt Brown, Senior Civil Engineer Leticia Miguel, Assistant City Clerk Teresa Stricker, City Attorney