Background (Bid & Protest): On April 15, 2015, the City of Sparks publicly opened Bid #14/15-017 for the 2015 Permanent Patch program.  Bids were received from:
Andersen Asphalt

Arrow Construction

Q & D Construction

Sierra Nevada Construction

Spanish Springs Construction

Vega Asphalt Paving

West Coast Paving

As noted at all bid openings held by the City, the information read at the public bid opening is unofficial until the bids may be fully reviewed for math errors, as well as responsiveness to the bid requirements.  In formal bids, the term “responsive” refers to whether or not the bid that was submitted was complete with respect to the information provided by the bidder.

At the bid opening on April 15, following the reading of all numbers, the bidder that provided the 3^rd ranked price at that time (Sierra Nevada Construction) made an immediate inquiry as to whether the 2 bidders that submitted the first and second ranked apparent lowest prices had also included information regarding their asphalt cement costs as required by the Special Conditions of the bid document. 

The language in the bid that is the cause of concern states:

“The CONTRACTOR shall furnish with his proposal a certified supplier’s price quotation for delivered asphalt. The CONTRACTOR’s bid price for asphaltic items will be based upon the price quotation furnished with the proposal. If at any time during the life of the contract covering this proposal, the price of asphalt to the bidder is increased or decreased by the supplier or by the U.S. Government or any of its agencies, in an amount which exceeds twenty-five percent (25%) of the certified price quotation furnished with the original CONTRACTOR’s proposal, the CONTRACTOR and the City may negotiate a new price for asphaltic concrete, open grade seal, tack coat or any other bid item which uses asphalt.”

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As noted, the City uses this information to protect the interests of the City and the contractor in cases where the cost of oil has the potential to adjust significantly over the period of the contract.

Submittals were reviewed and it was determined immediately that the bids then ranked in the first two positions were lacking this information.  Upon further review, following the public bid opening, it was determined that only one bidder (Sierra Nevada Construction) had provided this information with their bid.

After reviewing bids with the Community Services Department as well as the City Attorney’s Office, it was determined that the bidders that did not supply this information with their bid would be determined “non-responsive” and therefore not ranked for consideration for the Recommendation to Award of the contract to the City Council.  The Purchasing Division posted a “Recommendation to Award” notice on the City website on April 16, 2015, indicating that recommendation would be made to award the contract to Sierra Nevada Construction.  This posting “starts the clock” on the bid protest period as defined in the bid document as well as NRS and Sparks Municipal Code.  This section allows for a protest to be filed by any person who submitted a bid on the project in question, within 5 business days of that “Recommendation to Award.”

On April 20, 2015, the Contracts and Risk Manager received a notice of protest (hand delivered and later followed by fax and Certified Mail on April 21) from Chris Rusby, legal counsel for Vega Asphalt Paving, asserting their concerns regarding this determination.  Their full protest letter and supporting documents are attached to this Staff Report and titled “Vega Asphalt Letter of Protest.”

Per NRS 338.142 “A notice of protest filed in accordance with the provisions of this section operates as a stay of action in relation to the awarding of any contract until a determination is made by the public body on the protest.”  Therefore, this item has been scheduled before considering the award of this project under another item of the May 11 meeting of the City Council.  Further, the same section of NRS notes that, “A person who makes an unsuccessful bid may not seek any type of judicial intervention until the public body has made a determination on the protest and awarded the contract.”

Background (Bid Document Responsiveness): Every formal Request for Bids issued by the City of Sparks includes the requirement that certain documents be submitted at the time of the bid deadline.  While those may generally be described as “forms” that are of a general purpose (bidder information, etc.), there are other forms that will be specific to the bid that include pricing, sub-contractor listing, bonds, etc.  In some cases, the Special Conditions of the bid document (those that are specific to the project) may call out further requirements.  That is what occurred in this case.

Due to the volatility of oil prices, the City has worked to identify services that may be affected by changes in oil or gasoline prices.  By identifying these services and then isolating those costs within the bids being submitted, the City is better positioned to address requests for price changes over the life of the contract.  By providing that information at the time of their bid, the contractor and the City can then negotiate in good faith over changes to prices that may significantly affect delivery of the contracted services. 

Of concern in the case of this bid is the requirement that is clearly stated in Section 20 of the Special Conditions:

“The CONTRACTOR shall furnish with his proposal…”

While there are instances and specific examples of other documents that may be provided to public agencies within subsequent timeframes following the opening of bids, the language quoted here does not allow for delayed delivery of the information. 

In this case, the City defined a requirement within the Bid Document that was lacking by six out of the seven bidders.  All bidders sign a form that was included in their bid submittals that is titled “City of Sparks Acknowledgement and Execution.”  A sample of the form is attached as “Acknowledgement and Execution Form.”  Language within that notarized document includes, “he/she has read the Plans, Specification, and related documents including but not limited to any addenda issued and understands the terms, conditions, and requirements thereof…”  Later in the same document it states, “the Bidder is fully informed respecting the preparation and contents of the attached Bid and all pertinent circumstances respecting such Bid…”

By signing, notarizing and returning this statement to the City, it is clear that all bidders should have been aware of the clear requirement spelled out in Section 20 of the Special Conditions of the Bid Document.

Vega Asphalt Paving Protest Letter

The letter provided on behalf of Vega Paving is detailed and the exhibits attached to their letter are accurate.  As to their specific concerns:

1) Irregularities in Bidding Process
The argument is asserted that because 6 of the 7 bidders did not provide the required information that the process must somehow be flawed and that the information should have been provided or otherwise emphasized elsewhere in the Bid document.  As noted previously, the language was very specific as to the City’s requirement and contained with the “Special Conditions” section of the Bid document that cover all items specific to this project.

Reference is also made that the document may be irregular in the fact that the provision of the pricing sheet was not included in the “Bidder’s Checklist” that the City routinely provides as a guide at the front of every bid document.  Vega is correct in the point that the form was not included on this checklist.  However, it is the position of the City Purchasing Division that this list is not always exhaustive and that Bidders should always be aware of the requirements that are called out in the Special Conditions section of every bid document where the title page includes the sentence, “In instances where the Special Conditions conflict with the General Conditions, The Special Conditions will prevail with respect to that instance or item(s).”

Finally in this section, Vega Asphalt asserts that the process was irregular because of the questions posed by Sierra Nevada Construction at the Bid Opening.  From the perspective of City staff, Sierra Nevada Construction is simply asserting their rights as a bidder in the process and their questions are not any different than if they were to ask whether other bidders submitted other required documents such as bonds or sub-contractor lists.
 

2) City Right to Waive Informalities
Vega Asphalt notes correctly that the City has the right to waive informalities in the bids, including technical defects and minor irregularities.  This language is correct and the City Council retains that right with respect to all bids.  A public body is permitted a great deal of latitude in this area.

However, City Staff does not view the lack of pricing detail as a minor or technical defect.  In the protest information provided by Vega Asphalt, they have provided a pricing information sheet that is dated April 16, 2015, or the day AFTER the information was required to be provided as part of their bid submittal.  To allow for the information to be waived as a minor item or technical defect would call in to question the other items that have been deemed time-sensitive to the bidding process such as the provision of bid security (bonds) or sub-contractor lists.  Allowing for late submittals in the case where the bid language clearly calls for the submittal at the time of the proposal is a practice that would cause confusion in the future.
 

3) Purpose of Section 20
Vega Asphalt correctly outlines the purpose of the section of the Bid that requires the submittal of pricing information.  The argument is made that by allowing the late submittal, the City could take the bid that would be of “economic benefit” to the City.  Should the City Council choose to accept the arguments made by Vega Asphalt and affirm their protest, the City would potentially gain the savings offered in the bid amount provided over the bid amount provided by Sierra Nevada Construction.

 It is the belief of City staff that the bid protest should be rejected for the following reasons:

1) The Bid package provided by Vega Asphalt Paving was incomplete and lacking the information called out and required by Section 20 of the Special Conditions.  This issue is not in dispute and is affirmed in the information provided in the Letter of Protest provided on behalf of Vega Asphalt Paving.
 

2) Sierra Nevada Construction is the only bidder on this project that provided a complete bid as required in the Bid document. 
 

3) If the City Council were to waive this issue as an informality, it is possible that Sierra Nevada Construction would then file a protest, asserting their own rights to this contract, noting that their bid was complete, per the City’s requirements.

The City Council may uphold the protest made by Vega Asphalt Paving and direct further action.

If it is determined to uphold the protest, the next Agenda Item, awarding the bid to Sierra Nevada Construction will need to be addressed under the “alternatives” section of that item which may include either directing for a new Staff Report to award the contract to Vega Asphalt Paving (allowing for a new Recommendation to Award and potential protest period), or the rejection of all bids for the purpose of issuing a new Request for Bids on this service.
 

“I move to reject the bid protest made by Vega Asphalt Paving, Inc. concerning the bid for the 2015 Permanent Patch program (Bid #14/15-017).”