Georgia Lawsuit: What is a Material Irregularity in a Bid?

A contractor has filed a lawsuit against the City of Augusta, Georgia contending its bid should not have been thrown out on a technicality after the company had been awarded a repair project. No decision has been made in this case yet that was filed on April 14, 2010 in the Superior Court of Richmond County, Georgia.

Bid Rejection After Award:  The City of Augusta notified Ammar Construction Co. that its bid was "noncompliant" eight days after the City had awarded the contract to Ammar, and after Ammar had already obtained and paid for a performance bond.  At issue is the completion of a "Subcontractor's Affidavit" by the contractor.  Ammar asserts that the form, to be completed and submitted by subcontractors, does not have instructions or blanks when a contractor will not be using any subcontractors.

History of Lawsuits Against City:  Apparently, Ammar is not the only company concerned with Augusta's procurement practices, and there has been a history of lawsuits over the years against the city's application of the "materiality provision" in their bidding documents.  The "materiality provision" requires the city to reject any bids that contain any irregularity, even if the irregularity is immaterial. 

What is a Material Irregularity in a Bid:  The "materiality provision" language from the City's standard Invitation to Bid reads as follows:

"All specific requirements contained in the invitation to bid including, but not limited to, the number of copies needed, the timing of the submission, the required financial data, and any other requirements designated by the Procurement Department are considered material conditions of the bid which are not waiveable or modifiable by the Procurement Director."

The general test, of course, as to whether an irregularity in a bid is material is whether it gives one bidder an advantage or benefit not enjoyed by others. Augusta, however, has determined that any irregularity should result in rejection of the bid as non-responsive, without evaluating whether the irregularity gives one bidder an advantage or benefit not enjoyed by others.  Augusta has also been criticized for its inconsistent application of the provision, sometime waiving irregularities and at other times strictly enforcing them.  

Judge Criticizes Augusta's Poor Procurement Process:  In a separate lawsuit decided in April 2010, Augusta was criticized for its poor procurement practices and for throwing out bids on technicalities.  Even though the City won that lawsuit, U.S. District Court Judge J. Randal Hall wrote that "The city should not interpret this decision as endorsing the quality of its procurement operations.  In fact, the record in this case suggests otherwise.  The court empathizes with the plaintiffs' understandable frustration with the city's poor administration of the procurement process."

Augusta Revising Policies:  The City is apparently working on revising its procurement ordinance to address its administration of whether bid irregularities are material or immaterial.

Additional information is available in an article on the website of the Georgia Tech Procurement Assistance Center.