June 30, 2012
Previously published on Summer 2012
Increasingly, public bidding requirements include provisions mandating that bidders submit their bids electronically to aid in the effective processing and analysis of those bids. Examples include website bidding portals such as PennBid.net used by many Pennsylvania municipalities and public school districts, the Electronics Contract Management System ("ECMS") used by the Pennsylvania Department of Transportation ("PennDOT"), and Bid Express used by the New Jersey Department of Transportation ("NJDOT"). There is also bidding software such as Expedite used by the Delaware Department of Transportation ("DelDOT"). In the federal arena, the Federal Acquisition Regulation, at 48 CFR 4.502, provides that the "Federal Government shall use electronic commerce whenever practicable or cost-effective." However, as with any computer-based program or website, technical problems can arise during the electronic bidding process. Under Pennsylvania law, instructions to bidders that are identified as mandatory must be strictly followed for the bid to be valid. Otherwise, a non-conforming bid is subject to mandatory rejection. These strict bidding requirements can pose a problem in the context of electronic bidding, where issues with electronic bid irregularities easily can occur without any fault or knowledge of the bidding contractor. In such cases, questions arise as to whether a bid is still valid even if a glitch occurs when submitting an online bid. The Pennsylvania Commonwealth Court case of Glasgow, Inc. v. Pennsylvania Department of Transportation highlights this very issue. In Glasgow, a contractor's bid for a PennDOT road reconstruction project was submitted via the ECMS. The bidding instructions stated that "[w]hen . . . required documentation is not provided by the apparent low bidder within the time specified, the bid will be rejected." After bids were opened, PennDOT informed the contractor via e-mail that it was the apparent low bidder and instructed the contractor to submit certain required documents relating to Disadvantaged Business Enterprise ("DBE") participation by a certain time via the ECMS. Unfortunately, although the contractor uploaded all of the required documents identifying its DBE subcontractors on the website (and the DBE subcontractors acknowledged their selection via the website), the contractor failed to press the "submit" button that officially submitted the information to PennDOT. Accordingly, PennDOT rejected the bid because the information had not been submitted by the required time and the bid was awarded to the next lowest responsible bidder. The apparent lowest bidding contractor protested PennDOT's rejection of its bid. The Pennsylvania Commonwealth Court upheld PennDOT's rejection of the bid and found that until the contractor hit the submit button, no information had been provided. In fact, the court likened the situation to that of having to "click on a submit button" when concluding an internet purchase. The Court relied upon PennDOT's argument that until officially submitted, the contractor's documents were not readily accessible and that the contractor retained "a great deal of flexibility regarding the use of particular subcontractors." In addition, the Court noted that the contractor had no responsibility to commit to the information it provided "until it actually clicked on the submit button." Ultimately, the court held that the contractor's failure to submit DBE subcontractor information via PennDOT's internet bidding website was a material defect warranting rejection of the contractor's bid and award to the next lowest bidder. Similar issues have been addressed by federal courts in protests addressing electronic commerce and submissions by e-mail. In Watterson Construction Co. v. United States, the Court of Federal Claims considered a case involving a negotiated procurement where the government rejected an e-mail proposal as untimely. There, the government's e-mail server received plaintiff's revised proposal at least a half-hour before the deadline but the proposal was not delivered to the contracting officer's "inbox" until four minutes after the deadline. Relying on the federal regulations and court precedent from before the "electronic age," the Court of Federal Claims held that the proposal received by the contracting officer after the solicitation deadline may be accepted if "[t]here is acceptable evidence to establish that it was received at the Government installation designated for receipt of offers and was under the Government's control prior to the time set for receipt of offers" and would not unduly delay the acquisition. In reaching this decision, the Court analogized electronic commerce requirements with traditional procurement requirements and found that the plaintiff's proposal was not late and a contractor should not be responsible for the risk of late delivery after relinquishing control of an e-mail bid that reached the government office in time. However, because the contract had already been awarded to another bidder, the plaintiff could not be awarded the contract, but could only recover its bid preparation costs. The Glasgow decision serves as a stark warning to contractors: be careful when submitting bids electronically. Your bid will only be considered valid if you follow every online direction and satisfy each bid package requirement. In federal procurements, the Watterson decision demonstrates that when the problem is in the government's system, the government and not the contractor is responsible, just as in the days of snail mail. Similar results should prevail in state and local electronic bidding environments. Contractors, both federal and local, when faced with procurements that use electronic commerce can best protect themselves by taking the following precautions when submitting bids electronically: (a) read and re-read the entire bid package and instructions to bidders; (b) provide all required documents and information solicited in the bid instructions and on the bidding website; (c) follow all directions relating to use of the website so that your bid is not only complete but also correctly uploaded or submitted to the website and public entity; (d) prepare for the submission of your bid well in advance of the deadline to avoid electronic errors and keep accurate and detailed records of your online bid submissions; (e) take advantage of bid submission training seminars provided by many third-party electronic-bidding website providers so you can become more comfortable with the bidding website systems in advance of the bid submission date; and (f) transmit bids in PDF format and "scrub" all meta-data associated with e-mails and files before transmitting. By following these guidelines, you can minimize the risk of having your bid rejected or having to file costly bid protests. If you have questions regarding bid requirements, contact an attorney prior to submitting a bid.
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