20111/20651, 20112; Ed. Code, § 81641.)
This section will discuss the conceptual and legal difference between a request for bids and a request for proposals. Also discussed are two situations in which the Legislature, by statute, has authorized modified forms of competitive bidding.
School districts are required to let any contracts for a public project involving an expenditure of more than $15,000 or any contracts involving an expenditure of more than $50,000, as adjusted, for (i) the purchase of equipment, materials, or supplies to be furnished, sold, or leased to the district, (ii) services, except construction services, and (iii) repairs that are not a public project, to the lowest responsible bidder who shall give such security as the board requires or else reject all bids. Pub. Contract Code, §§ 20111, 20651. In order to secure bids, the board must publish a notice calling for bids stating the work to be done or materials or supplies to be furnished and the time when and the place where bids will be opened. The notice must be published at least once a week for two weeks in a newspaper of general
circulation published in the district, or if there is none, then in a newspaper of general circulation circulated in the county. A bid may not be received after the time fixed in the public notice for the opening of bids. Pub. Contract Code, § 20112; Ed. Code, § 81641.
The competitive bid process is one in which a district publishes bid specifications and contractual provisions which all of the bidders must meet. Pursuant to the competitive bidding statutes, there is no general authority to let a contract upon specifications submitted by the bidders, because there would be no standard by which to measure the bids, and thus there would be no competition in the bidding. Ertle v. Leary (1896) 114 Cal. 238. The courts have recognized a long and well-established rule that where municipal contracts are required to be let upon public bidding, the proposals and specifications inviting the bids must be sufficiently detailed, definite and precise so as to provide a basis for full and fair competitive bidding upon a common standard and must be free from any restrictions tending to stifle competition. Baldwin- Lima-Hamilton Corp. v. Superior Court of San Francisco (1962) 208 Cal. App. 2d 803. Consequently,
[e]very element which enters into the competitive scheme should be required equally for all and should not be left to the volition of the individual aspirant to follow or disregard and thus to estimate his bid on a basis different from that afforded the other contenders, a common standard by which all bidders are to be measured being implied by the bidding law. 10 McQuillin, Municipal Corporations (3d ed.) § 29.44.
If any bidder does not meet all of the material bid specifications or agree to all of the material contractual provisions, that bidder must be deemed a non-responsive bidder and its bid rejected. Menefee v. County of Fresno (1985) 163 Cal.App. 3d 1175. Unless otherwise authorized by statute, in the competitive bid process a contract must be awarded to the lowest responsive responsible bidder.
A request for proposals is not a competitive bid process. In this situation, a public entity merely asks vendors to submit their own proposals containing whatever specifications they desire, so long as they meet certain general requirements. The bidders are required to explain how their equipment or systems meet the general requirements as well as how they may provide other services or advantages to the district for the stated price. In the request for proposal situation, the public entity need not choose the low monetary bidder, but may evaluate the proposals based upon the needs and desires of the district and award a contract based upon its determination of the best quality, services, functions, quantity, etc., for the price. After proposals have been received, it is not unusual for the public entity to negotiate with one or more of the proposers in terms of the equipment or services to be furnished and the price to be paid. In the request for proposal situation, it is usually impossible to determine who the low bidder is since the bidders will have usually offered dissimilar services and equipment of different value.
A request for proposals may be used by a public entity in those situations where the Legislature has specifically authorized its use, or where competitive bidding is not required by statute. In some instances, the Legislature has authorized public entities to request proposals from qualified persons. In Government Code section 4217.16, the Legislature has provided that in entering into energy services contracts, a public entity may "request proposals from qualified persons. After evaluating the proposals, the public entity may award the contract on the basis
of the experience of the contractor, the type of technology employed by the contractor, the cost to the local agency, and any other relevant considerations." Another example of a statutorily authorized request for proposal process is found in provisions for the state acquisition of electronic data processing and telecommunications goods and services. Contract awards for these goods and services must be based on the proposal which provides the most value- effective solution to the state's requirements as determined by evaluation criteria which may provide for the selection of a vendor on an objective basis other than cost alone. Pub. Contract Code, § 12102. Additionally, acquisition of such goods and services may provide for price negotiation with respect to the contracts to be entered into. Pub. Contract Code, § 12103.
1.
Award to Any of Three Lowest Responsible Bidders for Data Processing
Systems and Supporting Software (Pub. Contract Code, § 20118.1; Ed.
Code, § 81645.)
The authority for a school district to acquire computer hardware and software is contained in Public Contract Code section 20118.1 which provides as follows:
"The governing board of any school district may contract with an acceptable party who is one of the three lowest responsible bidders for the procurement or maintenance, or both, of electronic data-processing systems and supporting software in any manner the board deems appropriate."
See Ed. Code, §1276 for similar section applicable to the County Superintendent of Schools. The language of this section has occasionally caused confusion as to whether it authorizes a request for proposals as opposed to a request for bids.
Your attorney may conclude that Public Contract Code section 20118.1 only authorizes a competitive bid process with the anomaly that instead of awarding the contract to the lowest responsible bidder, the school district may choose any one of the three lowest responsible bidders, based upon the language of the statute which requires the school district to contract with any one of the three lowest bidders. The only manner in which it may be determined which of the bidders are the three lowest is if the bidders have responded to and agreed to meet the same bid specifications. A district desiring the flexibility to award to one of the three lowest responsible bidders must advise bidders of that fact in the bid documents and should refer to Public Contract Code section 20118.1. As shown by Education Code section 81645, discussed below, when the Legislature has desired to authorize a public entity to request proposals not requiring competitive bidding it has used clear and unambiguous language to provide that authorization. The language in Public Contract Code section 20118.1 requiring the award to one of the three lowest responsible bidders cannot be so read as to authorize a request for proposals.
In 1990, Education Code section 81645, which previously contained the same language as Public Contract Code section 20118.1, was amended to read as follows:
The governing board of any community college district may contract with a party who has submitted one of the three lowest responsible competitive proposals or competitive bids, for the acquisition, procurement, or maintenance of electronic data-processing systems and equipment, electronic telecommunication
equipment, supporting software, and related materials, goods, and services, in accordance with procedures and criteria established by the governing board. (Emphasis added.)
This section authorizes community college districts to follow a request for proposal procedure rather than a formal bidding procedure for the procurement or maintenance of certain equipment, software, and related materials, goods and services. Because the proposals must be competitive, they must be the subject of advertising and not be structured to exclude vendors who are capable of meeting a district's needs. In fact, at the same time Education Code section 81645 was amended, Education Code section 81641 was also amended to require the publication of a notice calling for proposals in the same manner as publication of a notice calling for bids.
Education Code section 81645 provides that a community college district may contract "in accordance with procedures and criteria established by the governing board." The procedures and criteria which a community college district will use to evaluate proposals and determine which of the three lowest proposers will be awarded a contract can be either general procedures applicable to all requests for proposals under Education Code section 81645, or can be specific procedures established for each request for proposal prior to publication of a notice calling for proposals. The established procedures and criteria should be included in the request for proposals along with a statement that pursuant to Education Code section 81645 the district may award to any one of the three lowest proposals meeting the district's requirements.
A request for proposals should clearly and precisely describe the equipment or system which is being sought or the service to be performed. It should contain a description of the format which proposals must follow and the elements they must contain. It should also set forth the standards the district will use in evaluating proposals.
A difficulty with Education Code section 81645 is that instead of merely authorizing districts to use a request for proposal process, it requires the contract to be awarded to one of the three lowest proposers. As discussed, many times proposals may be so dissimilar that it is impossible to determine which proposal is the lowest in light of all the equipment and services to be provided. Requiring that the award be made to one of the three lowest will force the proposers to offer merely the basic elements required by the district, rather than proposing what may be a more cost effective, although more expensive, alternative.
2.
Transportation Contracts (Ed. Code, § 39802.)
In authorizing school districts to enter into transportation contracts the Legislature has authorized a modified form of competitive bidding as follows:
In order to procure the service at the lowest possible figure consistent with proper and satisfactory service, the governing board shall whenever an expenditure of more than ten thousand dollars ($10,000) is involved, secure bids pursuant to sections 20111 and 20112 of the Public Contract Code whenever it is contemplated that a contract may be made with a person or corporation other than a common carrier or a municipally owned transit system or a parent or guardian of the pupils to be transported. The governing board may let the contract for the service to other than the lowest bidder. Ed. Code, § 39802.
Although the statute provides that the governing board may let the contract to other than the lowest bidder, the courts have held that it does not authorize a district to accept a higher bid for the same services and comparable acceptability. Educational & Recreational Services, Inc. v. Pasadena Unified Sch. Dist. (1977) 65 Cal. App. 3d 775. By using these words, the Legislature gave the district the right to use judgment and discretion in awarding the contract and did not bind it to accepting the lowest bidder provided it first determined that the prevailing bidder could supply the better service under the enunciated standard. Id. at p. 782. A district cannot act arbitrarily and, if the award of a contract is challenged, must be able to demonstrate the factors that establish that the prevailing bidder could supply the better service. Id. at p.783.