Irvine Unified School District broke the law when it awarded $6.9 million in contracts to construction companies without giving the lowest-priced bidders full review, a state court of appeal ruled.
The California Public Contract Code requires that public projects of more than $15,000 be given to the lowest responsible bidder.
A panel of judges with the Fourth Appellate Court in Santa Ana found that when district officials rejected Great West Contractors Inc.'s bids and went with higher bidders for renovations to Northwood and Eastshore elementary schools in 2008, the district paid $800,000 more than it would have.
In issuing its opinion, the panel described the district's choices as "favoritism most foul," writing that, "It doesn't take Hamlet to figure out that something rotten happened in this case."
According to their opinion, the district's rejection of the lowest bids centered around Anaheim-based Great West's response on a bid document regarding whether the company had ever been license under a different name or license number.
Great West answered "no," but soon after the bids were submitted, the district received a letter from Construct 1 One Corp., a competing contractor based in Tustin.
The letter argued that Great West failed to disclose that it had indeed operated under different license numbers. After a staff review, the district's director of construction and facilities informed Great West that the district was rejecting its bid.
The district did not give Great West a chance to respond, and at a school board meeting, the company's bid was not listed, just the words "non-responsive."
IUSD awarded the Northwood contract to Construct 1 and the Eastshore contract to JRH Construction, also based in Tustin. The appellate court questioned this, as well as why Construct 1 was able to obtain and respond to Great West's bid so quickly — within 24 hours — but when Great West's legal counsel asked to review the bids, the district stalled.
Great West filed a lawsuit against the district in May 2008, asking the district to void its existing contracts and award them to Great West. The license-number issue, the company argued, was a misunderstanding: The other numbers were joint-venture licenses.
A trial court sided agreed with the district, but the appeals court sided with Great West.
On Dec. 1, the California Supreme Court denied the district's appeal to rehear the case.
District spokesman Ian Hanigan wrote in an e-mail that the district was justified in rejecting Great West's bids, and the district intends to move forward with litigation.
"The Irvine Unified School District is proud of its construction and modernization program, which has earned a well-deserved reputation for producing world-class facilities on time and under budget," he wrote. "While we are disappointed by the appellate court's ruling with regard to the Great West lawsuit, it should be noted that the case has simply been remanded back to the trial court, where we look forward to demonstrating — for a second time — that our actions in rejecting this particular bid were justified."
In an e-mail, the district's legal counsel Edmond Connor of Connor, Fletcher & Williams LLP said that Great West also omitted other important facts, such as that it had been involved in six other lawsuits, some of which involved school projects.
"The bottom line is that, despite an unfavorable appellate court opinion about whether the district should have provided Great West with a responsibility hearing before rejecting its bid, there has been no judicial determination that the district did not have grounds to reject Great West's bid," Connor wrote. "More importantly, neither the trial court, nor the appellate court, has found that Great West was a 'responsible' bidder. Indeed, it is common knowledge that just because a contractor submits the 'lowest' bid does not mean that the contractor is competent or trustworthy or should be awarded a contract."
The statement also asserted that the denial of the California Supreme Court to review the case does not mean the appellate court was right, as it only agrees to review a small percentage of civil cases.
According to the statement, the appellate court has ordered the trial court to start the case over, and the new case will give both sides a chance to include all the relevant evidence.
Connor wrote:"[T]he case is far from over and there is every reason to believe that the district will be vindicated a second time."