Pending Dispute Over Contract Performance Prompts Agency to Find Contractor Non-Responsible and Rescind Bid Award on Separate Project

This past summer, the Alaska Department of Transportation and Public Facilities (“DOTPF”) rescinded a bid award after determining that the awardee was not a responsible contractor within the meaning of DOTPF’s bid specifications.

The primary basis for this determination? An unresolved dispute over the contractor’s performance on a separate project.

On April 20, 2017, DOTPF advertised a project to repave a road in southeastern Alaska. Miller Construction Company (“MCC”) submitted a bid and was determined to be the lowest responsible bidder.  DOTPF issued a notice of intent to award the project on June 1.

When an unsuccessful bidder protested the award decision, DOTPF invoked Section 102-1.13 of the Standard Specifications for Highway Construction to find MCC non-responsible and rescind the award. Among the grounds for a non-responsibility determination under that specification is “[u]nsatisfactory performance on previous or current contracts.”  Section 102-1.13(4).  This provision served as DOTPF’s primary grounds for rescinding the award.

At the time, MCC was in the process of completing a separate road rehabilitation project for DOTPF. Differences between MCC and DOTPF had arisen concerning certain aspects of project performance.

This dispute, however, had not resulted in any contractual findings of non-compliance, such as a notice of default, notice of termination, or any other formal notice of non-conforming work.

Nevertheless, DOTPF relied upon allegations by its own personnel on that project to conclude that MCC had not performed satisfactorily, and thus, was non-responsible for purposes of the separate bid award.

DOTPF’s reliance on an unresolved performance dispute on a separate project to rescind a bid award on the basis of non-responsibility is unsettling. A finding of non-responsibility can severely harm a contractor’s business by disqualifying them from future bid opportunities and harming their reputation.  Given the severity of this penalty, it is disturbing for an agency to invoke it based on an unresolved dispute on a separate project—especially one where no formal contract sanctions were imposed and where the contractor may yet prevail through the administrative process designed to resolve such disputes. If you have questions about whether your business could be harmed by a similar agency action, please don’t hesitate to contact us for advice.