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Public Entities May Not Waive Defects in Bids, Louisiana Supreme Court Rules
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November 27, 2006
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(A revised version of this article appears in The Construction Lawyer, Volume 26, No. 4, Fall 2006, published by the American Bar Association's Forum on the Construction Industry.)
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Howrey LLP
Louisiana's public bid statute, 38:2212A (1) (b), prohibits any public entity from waiving the statute's provisions or requirements, as well as those in the entity's advertisement for bids and those required on the bid form. Before enactment of the statute in 1984, Louisiana courts routinely held that the public entity could waive deviations of form but not substance. Since 1984, the Louisiana legislature has amended the statute several times in response to the courts' continued use of the form-substance distinction. A recent decision by the Louisiana Supreme Court should put the matter to rest.
In 2003, New Orleans issued an invitation to bid for a demolition project. It stated that the city would award the contract “in conformity with the [city's] purchasing policy and the additional requirements of the State [Public Bid] Statute, title 38:2212A.” The invitation to bid included a bid form that stated: “General Contractors submitting a bid must complete this form and attach. a copy of the City's invitation to bid issued for this project,. in order to constitute a complete bid proposal.” The invitation to bid also stated that “[t]he Department of Finance, Bureau of Purchasing, reserves the right to reject any and all bids and to waive any informalities.”
The city awarded the contract to the low bidder, which had failed to include a copy of the invitation to bid with its bid. The trial court held that despite this omission, the low bidder “complied with the substantive formalities as set forth in the bid requirement, and was the lowest responsible bidder to which the job should have been awarded.” The Court of Appeal reversed, holding that the failure to attach the invitation to bid made the low bidder's submission non-responsive.
The statute has been refined several times in an effort to dispense with the distinction between waivable defects of form and non-waivable defects of substance. Last amended in 2001, the statute, Louisiana Revised Statute 38:2212A (1) (b), reads:
The provisions and requirements of this Section, those stated in the advertisement for bids, and those required on the bid form shall not be waived by any public entity.
After reciting the well-known, laudable policies underlying the public bidding statutes, the Louisiana Supreme Court held that the clear and unambiguous statute does not permit a public entity to exercise its discretion to determine whether a defect in a bidder's submission is waivable:
In accordance with the express and unambiguous language of La. R.S. 38:2212A (1) (b), any requirements of the Public Bid Law, any requirements stated in the advertisement for bid, and any requirements required on the bid form shall not be waived by the public entity. The public entity does not have the discretion to determine, after bids have been submitted, whether a requirement is substantive or non-substantive, waivable or non-waivable. Once the public entity establishes a requirement, that requirement must be uniformly followed by all bidders.
Hamp's Construction, LLC v. City of New Orleans, 924 So. 2d 104 (La. 2006).
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©2006 Howrey LLP
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