This post is another in a continuing series on the basic tenets of public bidding in Pennsylvania. The subject of today’s post concerns the rejection of all bids by the public entity.
There are many times that a public entity solicits bids, only to reject all of the bids and conduct a re-bidding. The reasons for a rejection of all bids may be due to the bid prices exceeding a preliminary construction estimate, or due to a non-responsive, but extremely attractive, low bid that can be easily corrected on a re-bidding, thereby ensuring that the pubic entity gets the best price available. Clients often ask me whether this is allowed and what they can do to challenge this type of conduct. Their concerns stem, in part, from the exposure of their bids and their prices which many fear leads to a competitive disadvantage on the re-bidding. Unfortunately, there is little to stop such conduct.
First, bidders themselves have no standing to complain of such conduct. Only a taxpayer can complain and sue to stop such conduct. Second, there is really no legal basis to stop such conduct. If a statute allows it, or if the bidding instructions permit it, which is almost always the case, a public entity is free to reject any and all bids, for good reason or for no reason.
In Weber v. City of Philadelphia, 437 Pa. 179, 262 A.2d 297 (1970), a seminal case in the area of public bidding, the Pennsylvania Supreme Court noted:
“…if a municipality, in connection with competitive bidding, is empowered to do so, it may reject any and all bids in the absence of fraud, collusion, bad faith or arbitrary action…”
As the Supreme Court noted in Weber, the only limitation on the public entity’s power is where such decision is influenced by fraud, collusion, or is committed in bad faith, or constitutes arbitrary action. But these are high hurdles to surpass and I have never encountered a situation where a court has enjoined the rejection of all bids.
So, if a public entity decides to reject all bids, there is very little that anyone can do about it. For additional enlightenment on this topic, the Weber case can be found here.