Commonwealth Court Finds Ambiguity In Bid Spec Creates Bidding Defect Requiring A Re-Bid

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Does an ambiguous bid specification create an unlevel playing field?  The answer has almost always been yes, and a recent Pennsylvania Commonwealth Court decision reiterates that long-standing principle of public bidding law.

In 2011, Allegheny County and the City of Pittsburgh sought bids for a contract to process recyclable materials.  Greenstar Pittsburgh, LLC (Greenstar), a disappointed bidder, brought suit, along with an individual taxpayer, to enjoin the contract award to Pittsburgh Recycling Services (PRS) and to compel issuance of a new bid.  Greenstar argued that language in the bidding specifications was open to more than one reasonable interpretation and provided PRS with an unfair advantage in the bidding process.  The trial court agreed, and determined that the following language in the bid specification was ambiguous:

3.3 QUALIFICATIONS OF BIDDERS

The Contractor’s facility shall be located within a fifteen (15) mile radius from the City’s Department of Public Works . . . located at 30th and A.V.R.R.

The bidding specifications included numerous references to the Contractor’s “processing facility” and a “receiving site.”  As a result, the trial court concluded that Section 3.3 was ambiguous because the word “facility” could reasonably be used to denote either “other receiving site” or the “Contractor’s processing facility.”

On appeal, the Commonwealth Court affirmed the trial court’s decision.  In affirming the trial court, the Commonwealth Court first noted the law governing ambiguity in public bidding specifications:

Our Supreme Court has also recognized that the common standard required to ensure free and fair competition among bidders extends to the form as well as the substance of an invitation to bid for a public contract. In Guthrie v. Armstrong, 303 Pa. 11, 154 A. 33 (1931), the Court concluded that: “The form of the contract is often as vital as anything involved in the transaction, and, unless bidders are on an equality as to knowledge of its proposed provisions, there may be a great advantage to a bidder who has a certain understanding with which the public authorities may agree, over a bidder whose understanding is otherwise.” 303 Pa. at 18, 154 A. at 35. Where a public authority has issued an invitation to bid with provisions subject to more than one reasonable interpretation, while the authority may not have acted in bad faith, the effect may be the same: the common standard is eroded and the public authority can no longer ensure that the public has gained the benefit of fair and just competition among bidders. … As with an ambiguous contract provision, if a provision in bidding specifications is subject to more than one reasonable interpretation, the ambiguous provision must be interpreted against the drafter.

In affirming, the Commonwealth Court agreed that it was reasonable to interpret Section 3.3 to mandate the contractor’s processing facility or the contractor’s other receiving site to be located within the specified 15 mile radius, and concluded that Section 3.3 was ambiguous on its face. Because of this ambiguity, the Commonwealth Court recognized that the pool of bidders interested in participating in the bidding process could be impacted:

We are left to speculate how many potential bidders failed to participate in the bidding process because they did not have the interpretation shared by [Allegheny County and Pittsburgh] and PRS and instead shared the same reasonable interpretation of Section 3.3 made by Greenstar.

The hallmark of public bidding is a level playing field, and ambiguous bid specifications are an inherently unleveling force.  Greenstar recognizes this.  So, if you are a bidder encountering an ambiguous bid specification which can affect, e.g., how you compute your bid price, or whether you are qualified to bid, you have encountered an unlevel playing field.  In such case, it is extremely likely that your bid protest will be successful.

The decision in Greenstar Pittsburgh LLC v. Allegheny County can be found here.

A hat tip to my friend and former colleague Wally Zimolong, Esq., who brought this case to my attention and who also blogged about it at his blog Supplemental Conditions.

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Posted on by Christopher I. McCabe, Esq. in Bid Protests, Bid Responsiveness, Bid Specifications, Court Decisions Leave a comment