Recent Decisions Underscore Difficulty of Bid Protests; Quick Action, Including Request for Immediate Injunction, Is Likely Required

Recent decisions of the Wisconsin Supreme Court, as well as similar Circuit Court decisions, underscore the difficulty that nonwinning bidders face in protesting an award to the lowest responsible bidder. In PRN Associates LLC v. State of Wisconsin, 2009 WI 53, a unanimous Wisconsin Supreme Court determined that action by a contractor, protesting an award it lost, was moot because the contract had already been awarded to the winning bidder and the protesting contractor had not moved for an injunction. Though in a slightly different context, a recent bid protest injunction action in Dane County, arising out of the I-94 expansion project, underscored the heavy burden that protesting contractors must still face in those injunction hearings.

In the PRN case, the protesting contractor submitted a bid for a University of Wisconsin – Milwaukee building project, which was selected by an evaluation committee but also required State Building Commission approval; however, that approval did not come after another contractor complained. The State then went through a second RFP, at which the protesting contractor again was not successful. Prior to that determination, the protesting contractor filed a notice of intent to protest the decision to withdraw from the consideration of the first RFP, but that appeal was denied by the Secretary of Administration as being untimely. The protesting contractor also appealed the lack of its selection in the second process. Prior to that time, however, the State had signed a contract with the successful bidder. In response, the protesting contractor brought two actions: a petition for review under Chapter 227 and a declaratory judgment action under § 806.04. Nevertheless, the unanimous Wisconsin Supreme Court found both actions to be moot since the Department of Administration had already entered into a contract with the winning bidder.

In a recent case handled by Quarles & Brady, a challenge by an unsuccessful bidder seeking an injunction was rejected by Dane County Judge William Foust. The petitioning contractor alleged that the winning contractor, Walsh Construction, had submitted an “unbalanced bid” and brought suit against the Department of Transportation (“WisDOT”), seeking an injunction barring WisDOT from entering into a contract with Walsh. The claim alleged that the bid was “mathematically unbalanced,” meaning the bid included either a lump sum or unit price bid item that did not reflect the reasonably anticipated actual costs of that item. However, a “mathematically unbalanced” bid is not inappropriate and in fact is relatively common. When WisDOT reviews a bid that is “mathematically unbalanced,” it undertakes a process to determine if the bid is “materially unbalanced,” meaning essentially that the imbalance results in the bid no longer being the best deal for WisDOT (or the taxpayers).

In the Walsh matter, WisDOT’s material balance test confirmed that the Walsh bid was still the best bid for the State. The protesting bidder then appealed the award to Dane County Circuit Court and moved for an injunction barring WisDOT from entering into a contract with Walsh. After a four-hour injunction hearing, Judge Foust determined that WisDOT’s actions were neither arbitrary nor capricious, affirmed the award of the contract to Walsh and dismissed the action of the protesting bidder. Judge Foust was not persuaded, however, that WisDOT’s “awarding” of the contract was equivalent to actually signing the contract; accordingly, he did not find the bid protest to be moot.

Both cases demonstrate the tough road that those protesting bid awards face. One thing for certain is that if a contractor wants to protest a bid, it needs to act quickly and move for injunction at the earliest possible date. Under no scenario, however, will courts make the State pay twice — once to the bidder awarded the contract and once to a wronged protesting bidder.