Public works contracts customarily are awarded to the lowest bidder. Such clauses are uniformly upheld to prevent favoritism, improvidence, extravagance, fraud and corruption in the selection process, and to avoid excessive cost, which would eventually be imposed on the taxpayer.

However, a recent Missouri Court of Appeals decision departed from this general rule and awarded a public contract to the second-lowest bidder. In the case, the appellant, Contractor X, submitted the lowest bid for a construction project. Contractor Y submitted the second-lowest bid. The board awarded the contract to Y and the trial court affirmed the board's decision.

According to the Missouri statute, contracts must "be awarded to the lowest and best bidder." However, the appellate court held that the monetary amount is not the only factor an owner can take into account when awarding a public contract.

The court held that an owner in a public works contract is vested with wide discretion and its decision when made honestly and in good faith, will not be interfered with by the court.

The court noted that the board can consider other factors to determine the best contractor, such as "the honesty and integrity of the bidder necessary to a faithful performance of the contract; the bidder's skill and business judgment; the bidder's experience and facilities for carrying out the contract; previous conduct of the bidder under other contracts; and the quality of the bidder's previous works."

The court said because the city had good relations with Contractor Y in the past and because Contractor Y was known to complete projects on time, the board did not act unreasonably in

Courts generally hold that a public works contract be awarded to the second lowest responsible bidder. The court departed from this trend, giving the board substantial discretion in selecting a contractor. According to this court, the lowest bid is only one of many factors taken into account by an owner when awarding a contract.

In the majority of states the contract awards are to be given to the "lowest responsible bidder," which is distinguishable from the lowest and best bidder. If Contractor X was determined to be a responsible bidder, then using the "lowest responsible bidder" standard, the board would have been required to award the contract to Contractor X.

The "lowest responsible bidder" standard is a far fairer standard than the "lowest and best bidder," and avoids political or fraudulent manipulation of the public bidding process.

Goetz is a senior partner of Goetz, Fitzpatrick, Carbone, Eisman, Finegan and Rubin, L.L.P., a law firm specializing and representing contractors and sub contractors on construction law, including labor, nationally. Questions and comments may be directed to Goetz, One Penn Plaza, New York, New York 10119.

Despite gasoline's recent price rise... U.S. gasoline remains cheap compared with other counties. And it remains amazingly inexpensive vs. other "liquid products."

This year has been another year of rapid growth in our area. I've attended numerous township and city meetings and know what a tremendous challenge it is for you to cope with the demands created by that expansion. 

From providing culverts for new residence approaches to large sewer and water projects, from routine maintenance to paving miles of roadway...every project big or small is as important to us as it is to you. 

We will continue to do our very best to give you the finest in 
service, quality information and 
leadership during this growth. 
Our company welcomes the 
opportunity to assist you in 
planning for the future with design and budget ideas.

We appreciate your business and look forward to serving you and your communities in the future. Our goal is to constantly improve our level of service. We always appreciate any feedback that you provide to us.

Eric Anderson
Division Manager
Townships and Cities

Anderson Brothers
Box 668
Brainerd, MN 56401
218-829-1768