- Posted by John P. Ahlers
- On December 28, 2012
In February 2010, Spokane Housing Authority issued an Invitation for Bids (“IFB”) for a federally funded project to furnish and install windows in 75 homes or duplexes. The IFB included, as a quality assurance specification that the installer of the windows specialize in performing such work with a “minimum five years documented experience.” Bidders were required to submit with their bids a “Bidder’s Qualification and Contractor’s List” in which the bidder was to identify which portions of the work the bidder would self-perform and the portions of the work that would be performed by subcontractors. The bidder was also required to provide the names of those subcontractors with the bid and certify the information as accurate and current.
Skyline Contractors Inc. (Skyline) submitted a timely bid and disclosed in the Bidder’s Qualification and Contractor’s List that it had only been in business for three years, but its key personnel had 20 years of experience and, in addition, 30% to 70% of the work would be performed by one subcontractor, McVay Brothers, who had 21 years of experience in window and door installation. Though Skyline submitted the low bid, the Housing Authority determined that Skyline was not the responsible bidder because it had less than five year’s experience in window installation (i.e., did not meet the quality assurance specification).
Skyline protested the award the next day on grounds that its subcontractor (McVay) had 20+ years of experience. Skyline requested that the Housing Authority reevaluate the bids. After reconsidering, the Housing Authority determined Skyline’s bid was responsive and notified Skyline that it “shall be awarded the contract” and that the preconstruction meeting would be held two weeks later.
The IFB contained a provision that stated “written award shall be furnished to the successful bidder within the period of acceptance specified in the bid and shall result in a binding contract without further action by either party.”
After the preconstruction meeting, however, Skyline and the Housing Authority had different version of events characterizing what occurred. The Housing Authority asserted that Skyline had not finalized its subcontractors at that time and indicated that it may not be using the listed subcontractors. The Housing Authority demanded that Skyline produce a copy of its subcontract with the McVay Brothers as a condition precedent to formation of the contract (inconsistent with the fact that it had already awarded to Skyline).
A month later, a second preconstruction meeting was held, and at this meeting, Skyline was still not able to produce the subcontract with McVay Brothers, indicating the parties were still in the process of finalizing that subcontract. The Housing Authority, impatient with Skyline’s lack of progress, determined that Skyline “is not a responsible bidder for this project and that its bid was not responsive to the IFB.” The Housing Authority then “reject[ed] Skyline’s bid for the project.”
In response, Skyline commenced a lawsuit and filed a motion for a temporary restraining order, which was heard ex parte and granted subject to Skyline posting an appropriate bond. Skyline, for reasons unknown, chose not to post the bond, did not seek to enjoin the execution of the agreement between WRS (the replacement contractor) and the Housing Authority, and the case proceeded to trial.
The trial court dismissed Skyline’s claims and Skyline appealed. Skyline, on appeal, asserted it had a contract with the Housing Authority, and it was therefore entitled to damages. Pursuant to the Subcontract provision above, the Appellate Court agreed that the Housing Authority and Skyline had entered into an enforceable and binding contract when the Housing Authority made its written award accepting Skyline’s bid.[i] The Court also held that the Housing Authority’s reason for terminating Skyline (Skyline’s inability to produce a subcontract with McVay Brothers) did not excuse the Housing Authority from executing its owner/contractor agreement with Skyline.
The issue then became what damages, if any, Skyline is entitled to as a result of the Housing Authority unilaterally backing out of the contract. The Court held that had this not been a public contract, Skyline would have been entitled to damages for breach of contract, but because this was a public contract, a “bidder” on a public contract who feels aggrieved by the actions of the government has a single recourse: an injunction. The remedy of monetary damages is not available. Thus, because Skyline, the disappointed bidder, did not follow up on the injunction by failing to post a bond and preventing the Housing Authority from awarding the contract to another contractor, Skyline had no recourse for monetary damages.
Comment: It appears that the court confuses the remedies available to a “bidder” from those available to a “contractor that has been awarded the contract.” In this instance, the court agrees that Skyline was awarded the contract. Therefore, at that point (after the award), Skyline is no longer subject to the limitations that a “bidder” has in pursuing bid protest remedies; it has been awarded the contract and has breach of contract remedies available to it. Although this is a Court of Appeals decision and may yet be subject to further review by the Washington Supreme Court, as it stands, this decision is confusing. For example, it remains puzzling (not explained in the decision) as to why Skyline did not post a bond and enjoin the award.
Additionally, the case does not explain why the Housing Authority considered Skyline to be “non-responsible.” The documents required a minimum of five years of experience. Although the firm itself did not have five years of experience, the Skyline employees had over 20 years of experience. This is an immaterial distinction, and the Housing Authority’s position to pass on the low bidder under the circumstances does not appear to be in the best interest of the taxpayers who are funding the project.
[i] Skyline Contractors, Inc. v. Spokane Housing Authority, 2012 WL 6057471 (Dec. 6, 2012).