In Dragani v. Borough of Ambler and BFI Waste Services of PA, 2012 Pa. Commw. LEXIS 52 (February 6, 2012), a Pennsylvania appellate court addressed the question of noncomforming bids for public works and to what extent such nonconformities could be waived.

The invitation for bids required that each bid be accompanied by a document called the “Consent of Surety”, signed by an officer of a surety licensed to transact business in the Commonwealth of Pennsylvania, listed on the current United States Department of Treasury Circular 570, and with an underwriting limitation at least equal to $20,000,000. 

The Consent of Surety was required at bid time, and pursuant to the invitation for bids, failure to provide the Consent at the time of the bid and in the form required, would preclude a bid from being considered.

However, the invitation for bids also stated that the Borough “reserves the right to accept any Bid. . . when such is deemed by the Borough to be in its best interest.”  The invitation also reserved the right to the Borough to “waive any informality in bids received. . .” 

BFI and Mascaro submitted bids.  BFI included with its bid a Consent of Surety, cover letter, and sample performance bond from Fidelity and Deposit Company of Maryland (“F&D”).  At the time, F&D had an underwriting authority of approximately $16 million dollars.  Mascaro notified the Borough that BFI’s bid did not meet the requirements of the bid invitation in two respects:  first, F&D did not possess sufficient underwriting authority to comply with the bid requirements ($20,000,000).  Second, F&D’s Consent only agreed to provide a performance bond for one rather than the required three years.   BFI responded these defects were nonmaterial and could be cured or waived.  

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           Mascaro sought to permanently enjoin award of the contract.  The trial court rejected the bid protest.  On appeal, the appellant asserted the bid defects were material and could not be waived.   The court of appeals agreed.   The court of appeals examined whether the waiver either deprived the Borough of adequate assurance of performance, or whether the waiver would confer a competitive advantage on the noncompliant bidder.  Applying these two inquiries to the case, the court found that the bidder’s failure to include a Consent of Surety from a company with at least $20 million in underwriting authority, was a defect that could not be waived. 

Submitted by Anna Oshiro