1. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Click here to add title Click here to add subtitle APRIL 3-6, 2013, LONG BEACH, CA Bid Responsiveness & Bidder Responsibility Presented by: Trevin E. Sims, Esq. These materials have been prepared by Lozano Smith. They have not been reviewed by State CASBO for approval, so therefore are not an official statement of CASBO.

2. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Hypothetical Stillwater School District published a request for bids. The instructions to bidders require that subcontractors must be licensed at time of bid submission. The facilities director checks the Contractor’s State License Board website and learns that the low bidder listed a subcontractor that is not licensed. Is the bid not responsive? Is the bidder not responsible?

3. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Bidding 101 The Basic Rule “The governing board shall let any contract for a public project … to the lowest responsible bidder or else reject all bids.” (Public Contract Code § 20111(b).)

4. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Bidding 101 What is “Responsiveness”? Bid is responsive if it promises to do what the bidding instructions demand and conforms to the bidding specifications. Responsiveness can usually be determined from the face of the bid. In most cases, it will not depend on outside investigation or information. A determination of non-responsiveness will not affect the reputation of the bidder.

5. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Bidding 101 Examples of responsiveness issues: Bid listed insurance different than that required in instructions (i.e., insurance “trust” vs. “policy”). Bid proposed a lease arrangement rather than the sale required in the instructions. Bid did not include required outreach program documentation. Bid listed B and C licenses when instructions required an A license.

6. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Bidding 101 “Responsible bidder” means a bidder who has demonstrated the attribute of trustworthiness, as well as quality, fitness, capacity, and experience to satisfactorily perform the public works contract. (Public Contract Code §1103)

7. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Bidding 101 Examples of non-responsibility: Prior poor work for the district. Submission of an unrealistic pro forma with admitted errors.

8. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Bidding – Advanced Placement Determining responsiveness and responsibility after the Williams and Great West Cases.

9. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Bidding - AP “De facto” Responsibility A district cannot reject the low bid on the theory that the bid is “nonresponsive” when, in substance, the real reason for the rejection is that the district thinks the low bidder is “not responsible.” (D.H. Williams Const., Inc. v. Clovis U.S.D. (2007) 146 Cal.App.4 th 757)

10. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Bidding – AP The Great Unknown

11. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Bidding-AP If not clear from the face of the bid, then must apply five factors to determine whether issue is responsiveness or responsibility. (Williams v. Clovis U.S.D.)

12. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Bidding - AP “[The five factors] are for situations where, as in D.H. Williams, there is literal compliance, but the public entity still claims the bid was nonresponsive.” (Emphasis added.) (Great Western Contractors, Inc. v. Irvine U.S.D (2010) 187 Cal.App.4th 1425)

13. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Bidding – AP Factor Number 1 The complexity of the problem and the ensuing need for subtle administrative judgment.

14. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Bidding – AP Factor Number 2 The need for information received outside the bidding process.

15. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Bidding – AP Factor Number 3 Whether the problem is the sort that is susceptible to categorical hard and fast lines, or whether it is better handled on a “case-by-case basis.”

16. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Bidding – AP Factor Number 4 The potential for adverse impact on the professional or business reputation of the bidder.

17. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Bidding – AP Factor Number 5 The potential that innocent bidders are subject to arbitrary or erroneous disqualification from public works contracting.

18. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Bidding – AP Bid Evaluation After Williams and Great West: Determine the potential problem(s) with the bid and categorize them. For unclear problems, apply the five factors. Make determination based on five factors and make a record of basis for determination.

19. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Bidding – AP What to do if you determine bid is not responsive? Give the bidder written notice that the bid is not responsive and the reason(s) why. Give the bidder a deadline to submit a response to staff’s determination. No hearing or findings are required.

20. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Bidding - AP What to do if bidder is determined not responsible? Notify the bidder of the evidence reflecting upon its responsibility. Give the bidder an opportunity to rebut the evidence and present evidence that it is qualified to perform the contract. Give bidder opportunity for a hearing and make findings.

21. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Bidding – AP Extra Credit What, if anything, should you do differently if you applied the five factors and concluded that the basis for rejection was a responsiveness, rather than a responsibility, issue?

22. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Bidding – AP What can rejected bidder do? Try to stop project by filing court action. Recover bid preparation costs but not lost profits. Invalidate award of contract to another bidder.

23. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Bidding – AP What will a court do? District’s decision cannot be “arbitrary, capricious, entirely lacking in evidentiary support or procedurally deficient.” Apply “substantial evidence test.” “Relevant evidence that a reasonable mind might accept as adequate support for a conclusion.” Presumption in favor of district. Bidder has the burden of showing there is no substantial evidence whatsoever to support the district’s decision.

24. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Closing Thoughts Try to give yourself time to deal with bid issues. Make initial award conditional. If reject on responsiveness, make some sort of record of District reasons. If reject on responsibility, hold hearing and make specific findings. If five factors applied, make record of determination.

25. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013

26. Thank you.

27. CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO 2013 Disclaimer: These materials and all discussions of these materials are for instructional purposes only and do not constitute legal advice. If you need legal advice, you should contact your local counsel or an attorney at Lozano Smith. If you are interested in having other in- service programs presented, please contact clientservices@lozanosmith.com or call (559) 431-5600. clientservices@lozanosmith.com Copyright © 2013 Lozano Smith All rights reserved. No portion of this work may be copied, or sold or used for any commercial advantage or private gain, nor any derivative work prepared there from, without the express prior written permission of Lozano Smith through its Managing Shareholder. The Managing Shareholder of Lozano Smith hereby grants permission to any client of Lozano Smith to whom Lozano Smith provides a copy to use such copy intact and solely for the internal purposes of such client.